1 **SNPR Response to**  **Comments Document**  **December 2011** I. **Determination of Significant Contribution to Nonattainment of Ozone NAAQS** 1. **General (A)**  **Commenter generally questions the validity of EPA’s conclusion regarding the six States determined to significantly contr**  **ibute to nonattainment in downwind States and covered in this SNPR, especially based on the Allegan, MI receptor.**  Comment : Why

were States that did not significantly impact a non - compliance monitor included in this rulemaking? The goal of the rulemaking is to ensure that all monitor locations are in attainment b y 2014. Including States that only showed a significant impact on a maintenance monitor is excessive and does nothing to accomplish the goal. [Oklahoma Municipal Power Authority (OMPA) (EPA - HQ - O AR - 2009 - 0491 - 4573), p. 2] **RESPONSE:** The comment is outside the scope of the SNPR because it addresses issues that were within the scope of the request for comments in the proposed Transport Rule but not in the SNPR. While EPA is not reconsidering or reo pening the issue, we note that the issue was previously

addressed in the final Transport Rule, section V.C.2, 76 FR 48227, August 8, 2011 and that the North Carolina v. EPA opinion requires EPA to give independent meaning to the interfere with maintenance prong of section 110(a)(2)(D)(i)(I). Further, EPA notes that the commenter incorrectl y describes the objective of the Transport Rule. Comment : PSO and AEP respectfull y submit that the data included in the proposal does not support EPA's conclusion that emissions from EGU sources in Oklahoma significantl y contribute to the projected maintenance issues at the Allegan County , Michigan monitor, or that further reductions in NO X emissions from these sources will address the modeled maintenance issue. The mo nitor in question has already attained the 1997 ozone standard, and EPA's modeling erroneousl y predicts a maintenance issue at this location. Moreover, even if the modeled values were accurate, they

are the result of a well understood phenomenon resulting from rush - hour mobile source emissions in the Chicago area and no additional reductions in Oklahoma will aid in maintaining the standard . [Public Service Company of Oklahoma (EPA - HQ - OAR - 2009 - 0491 - 4600), p. 2 - 3.] **RESPONSE:** EPA’s methodology for identifyi ng nonattainment and maintenance receptors is based on using modeling to project measured air quality for specific monitors, not on the designation status of an area as explained in section III.D of the preamble to the final supplemental . EPA believes thi s approach is appropriate for reasons explained in section V.C.2 of the preamble to the final Transport Rule . 76 FR 48230, August 8, 2011. The commenter claims that ozone at the Allegan County monitor is the result of rush - hour mobile source emissions in Chicago and no additional reductions in Oklahoma will aid in maintaining the standard. However, the commenter provides not analy ses or references to2

substantiate this claim. EPA’s CAMx source apportionment modeling shows that 10 states (including Oklahoma) contribute above the 1% of the ozone NAAQS threshold to Allegan County . EPA’s modeling does show that the largest ozone contribution is from I llinois. But that does not change the fact that 9 other states interfere with maintenance in Allegan County and it does not alleviate the need for those states , including Oklahoma, to eliminate their interference with maintenance. Further, the North Carolina v. EPA opinion requires EPA to give independent meaning to the interfere with maintenance prong of sec tion 110(a)(2)(D)(i)(I). Comment : EPA's decision to use the CSAPR program as the basis for further NO X reductions in Oklahoma is not sound for all of the reasons presented in previous comments submitted on the proposed Transport Rule by AEP, the Utility Air Regulatory Group (UARG). The Edison Electric Institute (EEI), the Midwest Ozone Group (MOG) and ignores the substantial additional reductions alread y required to be made under the Regional Haze SIP developed by Oklahoma, and proposed to be approved by EP A in a notice earlier this y ear. The reductions required under the Regional Haze SIP will more than adequatel y address an y contribution of NO X emissions by Oklahoma sources to the Allegan County , MI monitor. [Public Service Company of Oklahoma (EPA - H Q - OAR - 2009 - 0491 - 4600), p. 2 - 3.] **RESPONSE** : EPA’s methodology for identifying nonattainment and maintenance receptors is based on using modeling to project measured air quality for specific monitors, not on the designation status of an area as explained in section III.D of the preamble to the final supplemental. EPA believes this approach is appropriate for reasons explained in section V.C.2 of the preamble to the final Transport Rule, 76 FR 48230, August 8, 2011. Additional responses on the MOG modeling data are also conta ined in section V.C.2. Responses to CAIR - related baseline comments are in section V.B. of the preamble to the final Transport Rule, 76 FR 48223, August 8, 2011. EPA disagrees with the comment that the Regional Haze SIP will more than a dequatel y address an y contribution of NO X emissions by Oklahoma sources to the Allegan County , Michigan monitor. EPA agrees that the regional haze SIP requirements will require reductions in NO X emissions from several EGUs in Oklahoma, and EPA expects to issue a final approval of those regional haze NO X requirements by December 31, 2011. Those required reductions, however, have compliance dates five years after EPA’s SIP approval

— that is, late 2016. This time period is much later than 2012. Accordingl y, those requirements would not have affected EPA’s 2012 base case inventory for Oklahoma, nor would they have affected EPA’s determination of whether Oklahoma’s contribution was sufficient for inclusion under the Transport Rule. Comment : EPA's appli cation of its CSAPR modeling methodology to the state of Oklahoma requires the entire state (along with 3 other states in this supplemental notice of proposed rulemaking (SNPR) (Iowa, Wisconsin and Kansas)) to significantly reduce, at significant total cos t, EGU emissions of NO X during the ozone season to address a modeled maintenance issue. The area in question is a single count y (Allegan County) in Michigan. The county is located in western Michigan in an area directl y East across Lake Michigan from the Chicago/Milwaukee metro areas. It is important to note that the monitors in the area show the county to be in attainment. The modeling data developed b y the Midwest Ozone Group (MOG) and its Industrial Modeling Coalition, used in conjunction with ambient air quality data collected b y3

USEPA, show that not only are transport criteria met by the existing CAIR program, the requirements of which are still in effect and under which significant emissions reductions have been achieved and continue, but full comp liance with the NAAQS targeted by this rulemaking are satisfied for this county . [Public Service Company of Oklahoma (EPA - HQ - OAR - 2009 - 0491 - 4600), p. 2 - 3.] **RESPONSE :**  EPA’s methodology for identifying nonattainment and maintenance receptors is based on us ing modeling to project measured air quality for specific monitors, not on the designation status of an area as explained in section III.D of the preamble to the final supplemental. EPA believes this approach is appropriate for reasons explained in sectio n V.C.2 of the preamble to the final Transport Rule, 76 FR 48230, August 8, 2011. Additional responses on the MOG modeling data are contained in section V.C.2 of the preamble to the final Transport Rule, 76 FR 48230, August 8, 2011. The comment suggestin g that the transport criteria are met by the existing CAIR program is outside the scope of issues we requested comment on in this SNPR, ignores the fact that this rule is to replace, not supplement the CAIR, and was responded to in the record for the final Transport Rule. Responses to CAIR - related baseline comments are in section V.B. of the preamble to the final Transport Rule, 76 FR 48223, August 8, 2011. Responses to comments on current air quality in Allegan County

are in section III.D of the final su pplemental rule preamble. Comment : The reductions required in the six states are significant. The proposed 2012 Oklahoma budget 21,835 tons is 56% lower than the total of the highest emissions for each unit during 2006 through 2010, and 42% lower than the total 2010 emissions for the applicable units in the state. For PSO plants operating in Oklahoma, the allocations would require these facilities to reduce emissions by

65% from their maximum annual during 2006 through 2010, and 52% below their 2010 emi ssions. Of these units, only two are coal combustion units with the remaining being natural gas. PSO and AEP have developed plans and a schedule to install additional NO X controls on many of these units. However, those controls are scheduled to be phase d in over several y ears. Based on our experience of installing controls for NO X emissions over the past several ye ars, there would not be enough time to complete installation of all of these controls b y the 2012 ozone season, even if expedited delivery an d installation were feasible . [Public Service Company of Oklahoma (EPA - HQ - OAR - 2009 - 0491 - 4600), p. 2 - 3] **RESPONS E**  : E PA made a number of adjustments between proposal and final that affect the size of the Oklahoma budget . See the preamble to this final rule , section III.B.iv, for an explanation of how the final budget was calculated . Incalculating the 2012 budget, EPA did not assume NO X combustion control install at ion s or upgrade s in 2012. Sources will be able to phase in those controls as the above comme nt suggests. Comment : PSO does not believe that the timelines and stringent budgets within this Proposed Supplemental Transport Rule are justified b y the minimal maintenance impact predicted b y the model and the total costs of imposed reductions, especially considering the number of states/units affected onl y because of this one receptor. [Public Service Company of Oklahoma (EPA - HQ - OAR - 2009 - 0491 - 4600), p. 2 - 3] . Given that the model predicts that this single receptor still attains the ozone air quality st andard but is marginall y approaching levels that4

suggest additional reductions will assure maintenance of the standard, and that the integrity of the modeling results is uncertain as discussed below, it is excessive to require such significant reductions at such a significant cost. The cost to achieve this projected 0.1 ppb reduction is not justified. In addition, the short compliance timeframe imposes greater costs to expedite construction schedules than accounted for in EPA's estimate. Oklahoma should not be included in the CSAPR program. Public Service Company of Oklahoma (EPA - HQ - OAR - 2009 - 0491 - 4600), p. 2 - 3] **RESPONSE:** See preamble section III.D of this final rule for discussion of EPA’s justification for inclusion of the Allegan site as a receptor, incl uding discussion of how recent air quality monitoring reinforces EPA’s position. As noted in this preamble discussion, a very large proportion of ozone at the Allegan receptor is caused by upwind state contributions. Accordingl y, it is especially important for such a location to ensure that upwind states are meeting the requirements of section 110(a)(2)(D)(i). EPA finds that Oklahoma clearly contributes to this ozone problem receptor. Oklahoma contributes more than 2 ppb, which is more than twice the threshold. EPA finds the costs imposed by the rule to be modest in comparison to the ty pes of controls routinely in place elsewhere. For example, for Oklahoma EPA predicts, at most, additional low NO X burner (LNB) installations on certain facilities. Su ch technologies, and more stringent controls such as selective catal yt ic reduction (SCR) , have routinel y been in place for states in the areas of the eastern United States which contribute to downwind state ozone nonattainment. One illustration of the degree of SCR installation may be seen b y comparing 2008 and 2009 annual NO X emissions. Because CAIR essentially required SCR installations to operate ye ar round, which were not required to operate ye ar - round in 2008, nearl y one million tons of NO X was reduc ed between 2008 and 2009. EPA finds the costs of L NB controls that may

result from the rule’s inclusion of Oklahoma to be very reasonable. EPA has considered the comment er concerns with respect to the compliance schedule. In the final rule, EPA is sett ing the Oklahoma 2012 ozone season NO X budget at a level that reflects emission reductions achievable through actions (such as some changes in generation unit dispatch) that do not include additional LNB installations or significant changes in dispatch of certain oil/gas units . EPA is setting the Oklahoma ozone season NO X budget for 2013 and beyond at the level that was proposed in the SNPR , i.e., to reflect NO X levels achievable with additional L

NB installations that can be completed before the 2013 ozone season without necessitating the shutdown of units during the summer peak demand period in 2012. Comment : USEPA has failed to completely examine its own record relating to the Allegan County ozone monitor (260030005). In examining the emission inventory from the proposed rule to the new modeling supporting the final rule, the emission inventories offer several alternative perspectives on why this monitor has suddenly changed from a monitor that was not of interest to a monitor that is now classified as Maintenance. These alternatives clearly show that this monitor should not be used to include additional states in the CSAPR program. [ Public Service Compan y of Oklahoma (EPA - HQ - OAR - 2009 - 0491 - 4600), p. 4 - 6.]5

**RESPONSE:** EPA disagrees with the comment. EPA has carefull y examined the information regarding the Allegan County o zone monitor and explained the relevance of this information in Section III.D of the preamble to the final supplemental rulemaking. Comment : First, the states that are shown to co ntribute to the monitor based on the 2012 source apportionment modeling should be considered. These states can be grouped roughl y as follows: Lake Michigan States Michigan, Indiana, Illinois, Wisconsin Intermediate Range States - Iowa, Kansas, Missouri Lo ng Range States - Arkansas, Oklahoma, Texas When the NO X inventories in the Lake Michigan and Intermediate Range States are examined based on the information in the Technical Support Documents for both the Proposed and Final Modeling, the total NO X invento ries for these states have changed very little (2,683,513 Tons vs. 2,684,457 Tons). The state level changes are shown in a table (see Table 1 of the comment letter) for these states. This state level analy sis shows that while significant decreases in the EGU portion of the inventory o ccur in all of the Lak e Michigan and intermediate range states, the total NO X inventory d ecreases by

l ess, or increases. The contributions of other source categories from these nearer states therefore play a f ar more signifi cant role in any pr ojected maintenance for the Allegan County

monitor. Past studies that USEPA modeling staff is aware of (as at least two of them were participants in various of these studies), determined that two of the critical states for driving ozon e levels in western Michigan are Il linois and Wisconsin. For those two states, the total NO" inventory increases while the EGU contribution decreases by s ome 34,728 tons between the cases. This clearl y shows that other source categories are growing the inventory by some 97,699 tons. Many of these other source categories also generate organic emissions concurrentl y with the NO X emissions, which then reacts in the atmosphere over Lake Michigan to become ozone. This ozone then blows on shore in Western Mich igan giving the elevated readings observed. Taking this one step further, if the four Lake Michigan States are considered, the numbers become an increase in total NO X of 16,316, but a decrease in EGU NO X of 150,850 tons, giving a total increase in NO" fo r all non - EGU sources of 167,166 tons. The inventory changes in just these four key

states impacting the Allegan County monitoring site suggest that the VOC/NO X ratio in the Lake Michigan area has been significantly shifted toward VOC's between the Propos al and Final Modeling. Since these changes have occurred in areas known to contribute to elevated ozone levels in Western Michigan, this strongl y suggests that local, non - EGU sources are the cause of the increase modeled at the Allegan County monitor. Wi th the reduced emission inventories of the EGU Sector in relation to the total NO X inventory , addressing the maintenance issues at the Allegan County monitor is being wrongl y placed on the shoulders of EGUs and USEPA must perform more detailed source apportionment modeling that is able to identify responsible source categories as well as states. Inaddition, this modeling must be extended to6

the 2014 Remedy

Case, at a minimum, to properly demonstrate that the remedy USEPA is attempting to impose will actua lly achieve the predicted reductions. [ Public Service Compan y of Oklahoma (EPA - HQ - OAR - 2009 - 0491 - 4600), p. 4 - 6.] **RESPONSE:** The comment is outside the scope of the SNPR to the extent it is suggesting EPA should make changes to the methodology used to quant ify

a state’s significant contribution. EPA addressed numerous comments regarding this methodology in the final Transport Rule and did not reopen this methodology for comment in the SNPR . . EPA agrees that there were numerous emission s updates, includi ng updates to both the EGU and non - EGU components of the inventory between the proposal and the final rule . Some components of the emissions inventory increased and some decreased. In some cases EGU emissions went down between proposal an d final. EPA ag rees that, i n general , mobile source emissions went up, due to the availability of updates to the mobile source emissions model (MOVES). EPA also agrees that changes to NO X and VOC emissions in the inventories used for air quality

modeling could change th e VOC/NO X ratio and thereb y change projected ozone concentrations and contributions. In this regard, EPA re ran CAMx for the final rule using the updated emissions inventories in order to explicitly account for any

chemistry

affects from the net changes in emissions. As a result of the updated modeling, the Allegan receptor went from a level that was slightl y below the NAAQS in the proposal modeling to a level that was slightl y above the NAAQS (for maintenance) in the final rule modeling. Therefore, the A llegan county monitor became a maintenance receptor for the final rule anal ys is. This receptor was treated in the same way

as every other potential nonattainment and/or maintenance receptor. EPA believes that the Allegan count y receptor is a valid mainte nance receptor and that it is not identified as a receptor due to an y errors in the modeling or the calculation of future design values (see also responses to comments on current air quality in Allegan County

are in section III.D. of the final supplemental rule preamble). The commenter say s that EPA’s approach to addressing the maintenance issues at the Allegan County monitor is being wrongly placed on the shoulders of EGUs and EPA must perform more detailed source apportionment modeling that is able to i dentify responsible source categories as well as states. The comment questions EPA’s approach that considers the collective contribution from all anthropogenic source categories of NO X (i.e., including both EGU and non - EGU emissions) from each upwind stat e along with cost in determining the amount of significant contribution. The commenter suggests an approach that is based on air quality contributions from individual sectors. This comment represents a broad challenge to EPA’s approach of considering cos t and collective contribution. The identification of EGU emission reductions by EPA in the remed y analysis was based on a determination that , at the cost thresholds selected under the final Transport Rule, the power sector offers the most cost - effective emission reductions to reduce a state’s significant contribution to nonattainment or interference with maintenance. Information on EPA’s decision to include cost as part of the anal ys is is provided in the final Transport Rule preamble.7

Comment : USEPA r edesignated Allegan County to attainment in 2009. In2010, the monitor had a three year average value of 74 ppb and for the period including through 7/21/2011 a three ye ar average of 77 ppb. As discussed in previous comments on the Transport Rule, the Mi dwest Ozone Group (MOG) supplied new modeling based on the use of a 2008 base y ear. That modeling does not indicate that the Allegan County monitor would be out of attainment with the 84 ppb standard in an y of the cases. The MOG modeling shows this monit or at roughl y 81 ppb in the base year, 76 ppb in 2014, and 73 ppb in 2018 with CAIR level reductions (which did not include Oklahoma) and other rules in place. The actual monitor three - ye ar average values are much more consistent with the 2008 values mode led by MOG and much less consistent with the values being generated by USEPA using the 2005 base year. We therefore continue to believe that USEPA has incorrectly used 2005 for the base y ear of its anal ys is and should re - perform its modeling using a base ye ar of 2008. [ Public Service Compan y of Oklahoma (EPA - HQ - OAR 2009 - 0491 - 4600), p. 6.] **RESPONSE:** The comment is outside the scope of the SNPR because issues concerning the base case were within the scope of the request for comments in the proposed Trans port Rule but not in the SNPR. While EPA is not reconsidering or reopening the issue, we note that the issue was addressed in the final Transport Rule, section V.B, 76 FR 48223 - 48224. Additional information is available in section III.D of the preamble t o the final supplemental rulemaking. Comment: In2008 the U.S. Court of Appeals for the D.C. Circuit found the Clean Air Interstate Rule (CAIR) to be “fundamentally flawed,” initially

vacating and remanding it to EPA See North Carolina v. EPA , 531 F.3d 896 (D.C. Cir. 2008). However some months later in December, the D.C. Circuit Court of Appeals remanded the CAIR without vacatur, North Carolina v. EPA , 550 F.3d 1176 (D.C. Cir. 2008), instead, leaving CAIR in place until EPA cured the flaws in CAIR. Th erefore CAIR is a viable rule and utilities must currentl y compl y with the stringent nitrogen oxide (NO X ) and sulfur dioxide (SO 2 ) limits prescribed by the rule. During the last half of the previous decade utilities have installed and continue to install equipment to control NO X to meet the requirements of CAIR. In Ameren’s case we have installed add - on controls including Selective Cataly tic Reduction (SCR) and combustion controls including low NO X burners and over - fire air s ys tems on Ameren's fleet of co al plants. Ameren has also been a pioneer in enhancing the use of combustion controls in addition to low NO X burners, such as over fire air and combustion optimization sy stems to achieve cost effective reduction in NO X emissions. In stallation of these co ntrols began in the 1990s to enable Ameren to comply

with the Acid Rain Program, state implementation plans and the NO X Budget Trading Programs and continued into the subsequent y ears to achieve regional reductions for the CAIR program. EPA has assumed as part of its regulatory analy sis that the CAIR program is not in place and that affected sources are not complying with the rules. This assumption is in error. By not including compliance with CAIR in its assumptions, the EPA anal ys es have over stated the impact of these sources prior to the imposition of the proposed inclusion of these six states into the ozone season control period of the CSAPR. This assumption completely invalidates EPA’s anal ys es and the results produced. EPA should redo the anal ys es assuming that CAIR is fully in place and the8

affected sources are complying with the regulations. EPA should view CAIR as the valid control program that it is and allow sources to smoothly transition to the future rules to be promulgated in a more reason able time frame, just as was done between the NO X SI P Call trading program and the CAIR. [Ameren Corporation (EPA - HQ - OAR - 2009 - 0491 - 4596), p. 2.] **RESPONSE:** The comment is outside the scope of the SNPR because it addresses issues that were within the scop e of the request for comments in the proposed Transport Rule but not in the SNPR. The comment also ignores the fact that the Transport Rule replaces, and does not simply supplement, the CAIR. While EPA is not reconsidering or reopening the issue, we note that the issue was previousl y addressed in the final Transport Rule, section s V.B and V.C, 76 FR 48223 - 48236 , August 8, 2011. **(B) Commenter supports generally EPA’s supplementary proposal.**  Comment : The Sierra Club commends the EPA for recognizing the important role of interstate air pollution in the non - attainment and interference with maintenance of National Ambient Air Quality Standards (“NAAQS”), and its efforts to address the issue in the proposed rule. The Sierra Club is the oldest and largest gra ssroots environmental group, with over 1.3 million members. Sierra Club members live, work, attend school, travel and recreate in areas adversel y by power plant emissions. Our members enjoy and are entitled to the benefits of natural resources that are adv ersely affected by

interstate air pollution, including air, water and soil; forests and cropland; parks, wilderness areas and other green space; and flora and fauna. Our membership and their families include sensitive populations such as asthmatics, the el derl y and children who are at elevated risk for deleterious health effects posed b y power plant emissions. Sierra Club supports EPA’s proposal to include six states in the cross - state rule’s ozone season NO X program: I owa, Kansas, Michigan, Missouri, Oklahoma and Wisconsin. Using the methodologies and modeling previousl y available for public comment, EPA identified two additional counties that are having trouble maintaining the 1997 ozone standards: Allegan County , MI and Harford County , MD. EPA found that I owa, Kansas, Missouri, Oklahoma and Wisconsin significantly

contribute to Allegan County ’s maintenance problem and Michigan significantl y contributes to the maintenance problem in Harford County. EPA’s proposal includes NO X emissions budgets for all th e covered units in the six states. The NO X emissions at issue, and the ozone it forms, causes significant harm to public health and the environment. As EPA explains in the proposed rule, there has been ample time and stakeholder process for public comment on all aspects of modeling and methodology . EPA made all the relevant background data available for public comment previously in connection with the proposed transport rule. Reopening public comment on methodology and modeling would serve onl y to delay emissions reductions that are long overdue. The six affected states had incentive to review that proposal closel y because it included all six states in at least one of the rule’s trading programs. All states that are included in the proposed rule signif icantly contribute to ozone maintenance in other states. Although Sierra Club continues to maintain that EPA’s threshold should be lower,9

EPA used 1 percent of the NAAQS as the threshold for determining which states to include in this rule. For the 1997 8 - hour ozone NAAQS of 0.08 ppm, the contribution threshold is 0.0008 ppm (0.8 ppb). All states that contribute .8 ppb or above to a nonattainment or maintenance receptor are included in the rule for ozone season. Most of the six states contribute much more . For Allegan County , MI, Oklahoma contributes over three times that threshold at 2.8 ppb. Missouri contributes even more at 4.8, Wisconsin 2.2 ppb, Kansas 1 ppb and I owa .9 ppb. The numbers show wh y it is vital that every contributing state do its fair share of reductions. If only the few largest state contributors were responsible for reductions, the air quality standards could not be achieved. The sum of all the many small contributors forms a substantial portion of the total. For Harford County , only 42% of the total contribution is captured if a 5% threshold is used (4 ppb). Using a 1% threshold captures 81% of the total contribution to exceedances. For Allegan County , onl y 72% of the total is captured with a 5% threshold, while 92% is captured with a 1% threshold. [Sierra Club (EPA - HQ - OAR - 2009 - 0491 - 4587), p. 1 - 2.] **RESPONSE:** EPA concurs with the comment s that issues concerning modeling and methodology

should not be reopened, because adequate opportunity for public comment was alread y provided on these matters, and the comments supporting the inclusion of Io wa, Michigan, Missouri, Oklahoma and Wisconsin in the Transport Rule ozone season NO X program. As explained in the preamble to this final rule, EPA is not finalizing a FIP for Kansas at this t ime for the reasons provided in section III.C. Comment : Inbrief, we support EPA’s conclusion that these six states significantly contribute to nonattainment and interference with maintenance of the 1997 ozone NAAQS, as well as EPA’s application of the CSAPR remedial program to power plants in those states. Given EPA’s anal ys is and methodology employ ed in CSAPR, and the emission inventories for those and other states, we do not think EPA could come to a different conclusion, either as a policy or legal matter. Specificall y, we find no error in EPA’s application of CSAPR methodologies with respect to the significant contribution of Iowa, Kansas, Michigan, Missouri, Oklahoma, or Wisconsin to nonattainment and interference with maintenance of the 1997 ozo ne NAAQS in downwind states. Furthermore, we support the Agency ’s decision not to reopen issues related to its overall methodology

employ ed in CSAPR. Clearly, EPA’s decision is final with respect to the contribution of 20 other eastern states to ozone no nattainment and maintenance problems in downwind states, and to the establishment of emissions budgets and related FIP provisions for power plants in those states. As a matter of law and policy , EPA is required to apply the same methodologies to the six s tates addressed b y the SNPR. Thus, we support EPA’s ozone season budgets and allocation of allowances to covered power plants in those states. [Clean Air Task Force, et al. (EPA - HQ - OAR - 2009 - 0491 - 4588), p. 2.] **RESPONSE:** EPA concurs with the comments su pporting the inclusion of Iowa, Michigan, Missouri, Oklahoma and Wisconsin in the Transport Rule ozone season NO X program and the comments that issues concerning modeling and methodology should not be reopened, because adequate opportunity

for public comment was already provided on these matters . As explained10

in the preamble to this final rule, EPA is not finalizing a FIP for Kansas at this time for the reasons provided in section III.C. 2. **Iowa A.**  **Commenter supports EPA’s decision to include Iowa in the ozo ne season NO**  **X program.**  Comment : Based on the ozone levels in I owa this y ear, as monitored by the statewide SLAMS network and reported b y the State Hygienic Lab and in light of EPA’s upcoming change in the ozone NAAQS, Iowa’s inclusion in the supplement is entirely warranted. [I owa Environmental Council (EPA - HQ - OAR - 2009 - 0491 - 4572), p. 1.] **RESPONSE:** EPA concurs with the comment supporting the inclusion of Iowa in the Transport Rule ozone season NO X program . Iowa is included in the Transport Rule ozone season NO X program because of the contributions from NO X emissions in I owa to the downwind maintenance receptor in Allegan County , MI. Reductions in ozone season NO X emissions in I owa from implementation of the Transport Rule will help reduce ozone conce ntrations within I owa in addition to reducing ozone in downwind states. **B. EPA’s approach improperly includes Iowa.**  Comment: The final Transport Rule elaborates extensively on EPA’s justification for not utilizing an updated emissions baseline to reflect reductions that have been made under the provisions of CAIR, attempting to draw a distinction regarding the enforceability or perceived lack thereof based on CAIR’s legal status because “unlike most regulatory requirements, the emission limitations contain ed in CAIR are onl y t emporary .” EPA’s distinction is disingenuous. Certainly , EPA would not have hesitated to utilize its enforcement authority against a facility that did not hold a sufficient number of emission allowances under CAIR. Controls were ins talled and are operated and emission limits imposed under state - issued permits that are federally enforceable, y et, EPA has not made it clear what, if any , controls are reflected in its modeling. Further, EPA takes the position that any costs associated w ith emission reductions alread y implemented are considered “sunk costs” and are not included in projected costs to comply with the Transport Rule’s requirements. Neither the emission reductions achieved to date nor the costs with achieving those emissions reductions are invisible. [MidAmerican Energy Company

(EPA - HQ - OAR - 2009 - 0491 - 4597), p. 3.] **RESPONSE:** The comment is outside the scope of the SNPR because issues concerning the legal status of CAIR were within the scope of the request for comments in the proposed Transport Rule but not in the SNPR. While EPA is not reconsidering or reopening the issue, we note that the issue was previously addressed in the final Transport Rule, sections V.B and V.C, 76 FR 48223 - 48236, August 8, 2011. Comment : Emissions of NO X in Iowa have declined substantially by virtue of the requirements imposed under CAIR; those emission reductions have a cost associated with them. As EPA recognized in the final Transport Rule, “ultimately we believe the electric power industry wil l11

pass along most of the costs of the rule to consumers, so that the costs of the rule will largel y fall on the consumers of electricity .” It is critical that in making its determination to impose another lay er of regulation on sources (and, most importantly , electricity consumers) in I owa for allegedl y making a less than 1 part per billion impact on an ozone monitor in Michigan that is in attainment of the ozone standard, EPA recognize both the emissions reduction efforts and cost impacts imposed on the c itizens of I owa. [MidAmerican Energy Company

(EPA - HQ - OAR 2009 - 0491 - 4597), p. 3.] **RESPONSE** : EPA used the best practices available to estimate the future costs and benefits of this action and found that the emission reductions implemented under this rul emaking , combined with the reductions of the final Cross - State Rule, provide annual net benefits starting in 2014 valued between $120 to $280 billion (2007$, 3% discount rate). The quantified PM 2.5 and ozone health benefits within Iowa alone are valued be tween $790 million and $1.9 billion (2007$, 3% discount rate). To put the benefits in Iowa in context, EPA estimates that the total social costs of the entire rule, across all states, is $810 million (2007$, 3% discount rate). EPA also chose to finalize interstate trading programs as the remedy for the emission reductions to provide for the most cost - effective implementation of an y emission controls. See section VII in the preamble to the final Transport Rule, 76 F R 48271, August 8, 2011. Comment: The Allegan County , Michigan ozone monitor has been in operation, collecting data, since 1992. On May

12, 2010, prior to the issuance of the proposed Transport Rule on July 6, 2010, the Michigan Department of Natural Resources & Environment (“DNRE”) submitted a request to EPA to redesignate Allegan Count y to attainment of the 0.08 parts per million 8 - hour ozone National Ambient Air Quality Standard, to change the legal status of the areas from nonattainment to attainment, and to approve the maintenance plan as a revision to the Michigan State Implementation Plan. The DNRE’s request included a maintenance plan consistent with Clean Air Act Section 175A which demonstrated an attainment year inventory for 2008, an interim y ear inventory

for 2018, and a projected maintenance inventory for 2021 under which the 2021 inventories for VOC and NOX remained below attainment y ear 2008 emissions levels. The DNRE noted that “continuing reductions in ozone precursor emissions will be realized from fleet turnover, Maximum Ach ievable Control Technology (“MACT”) standards for hazardous air pollutants and federal diesel emissions programs.” Inaddition to Michigan’s regulations requiring less volatile consumer and commercial products, the DNRE noted that: “Due to the legal unce rtainty of the Clean Air Interstate Rule (CAIR) future y ear NOX reductions, a conservative 2018 and 2021 inventory was prepared without the NOX reductions assumed from CAIR for the two subject sources in this county. ”(emphasis supplied) EPA approved Mich ig an’s request to redesignate the Allegan County , Michigan nonattainment area to attainment for the 1997 8 - hour ozone standard on September 24, 2010 (See 75 Fed. Register 58315), prior to issuance of the final Transport Rule. EPA’s redesignation and appro val of Michigan’s maintenance plan, assuming no underlying reductions from sources in Allegan County , or from upwind states under the Transport Rule is contrary to EPA’s assertion that NO X emissions from sources in I owa interfere with maintenance of the oz one standard in Allegan12

County , Michigan. MEC believes EPA has incorrectly included Iowa in the Transport Rule’s ozone season NO X reduction requirements. In addition, EPA should reject arguments that Iowa and other states should be included in the NO X o zone season reduction requirements because lower ozone standards may be promulgated in the future. First, 0.08 parts per million is the existing 8 - hour ozone National Ambient Air Quality Standard, and that is the standard which must be met today . Second, if the standard is ultimately

lowered, there is no certaint y that Allegan County, Michigan wouldn’t still be in compliance, as ozone levels in the area continue to trend downward. [MidAmerican Energy Company (EPA - HQ - OAR - 2009 - 0491 - 4597), p. 3 - 4.] **RESPONS E**  : See section III.D of the preamble to the final supplemental ; and the preamble (76 FR 48230) and Transport Rule Primary Response to Comments document in the docket to this rulemaking [EPA - HQ - OAR - 2009 - 0491 - 4513] . This issue was discussed in the preamble to the NO X SIP Call ( see 63 FR 57375, October 27, 1998, footnote 25 ) , and the U.S. Court of Appeals for the D.C. Circuit’s decision in Michigan v. EPA , 213 F.3d 663 (2000), further supports the position that determinations of significant contribution or i nterference with maintenance under CAA section 110(a)(2)(D)(i)(I) should not be based on an area’s attainment designation . Also , under the Clean Air Act statutory structure, section 110(a)(2)(D)(i)(I) SIPs are due 3 y ears from promulgation of a NAAQS, and the statute allows designations to be done, in some cases, as late as 3 y ears after promulgation of a new NAAQS. This statutory structure suggests that designations are not relevant to the anal ys is of what is required to satisfy section 110(a)(2)(D)(i)(I ). Finally , this rule addresses significant contribution with respect to the 1997 ozone standard only , and the requirements of the rule are necessary to address emissions that significantl y contribute or interfere with maintenance of that standard. The c ommenter, however, misstates the level of the existing 8 - hour ozone National Ambient Air Quality Standard, which is 0.075 ppm. 3. **Kansas (A)**  **Commenter(s) dispute EPA’s findings that Kansas significantly interferes with the Allegan, MI receptor.**  Comment : Co mmenters first note the inadequate opportunity to comment on this issue, and assert that EPA is committing reversible error in not providing adequate opportunity to comment. No prior notice was given that Kansas interfered with a receptor in Allegan County, MI; previously , Kansas was linked for interference with maintenance onl y with a receptor in Dallas, TX. See Proposed Air Transport Rule, 76 FR 45210, 45269 (Aug. 2, 2010). No explanation was given in the SNPR for the change or for how the model shifted from a receptor south of Kansas to one north of Kansas in the interim. As Allegan MIwas newl y identified in the SPNR, commenter, who is with other Kansas utilities engaging Trinity Consultants, Inc. to review the EPA data and modeling, had no prior notic e that this would be the area of concern, nor had Trinity had a prior opportunity

to consider "whether there are errors in the Agency 's application of the Transport Rule methodologies with respect to Kansas's significant contribution to13

nonattainment and i nterference of the 1997 ozone NAAQS" in Allegan County , MI. 76 FR at 40665/2. [Westar Energy (EPA - HQ - OAR - 2009 - 0491 - 4583), p. 1 - 3; Kansas City Board of Public Utilities (EPA - HQ - OAR - 2009 - 0491 - 4585), p. 1 - 3.] **RESPONSE:** The comment is outside the scope of th e SNPR to the extent it seeks to challenge the methodology

selected for quantifying significant contribution and interference with maintenance. EPA provided ample opportunity to comment on this methodology in response to the proposed Transport Rule. Whi le EPA is not reconsidering or reopening the issue in the SNPR, we note that o ur methodologies were documented in the preambles for the proposed rule and final rule and the proposal and final rule Air Quality Modeling TSDs. There was ample opportunity

to comment on these methods based on information provided in the proposed Transport Rule , three subsequent NODAs, and the additional opportunity to comment on the conclusion in the proposed SNPR. Further, EPA disagrees that the opportunity to comment on the linkage between Kansas and Allegan Count y was inadequate. The purpose of the SNPR was to provide notice of

, and an opportunity

to comment on , the linkage to Allegan (and Harford County , MD) that was identified in finalizing the Transport Rule. See the pr eamble, section III.C., of the final supplemental rule for the status of Kansas. Comment : Inan August 19, 2011 email denying requests for extension of time to file comments in this matter, EPA stated: "The supplemental proposal and all of the key sup porting documentation and model results were posted on our website on July 7, 2011 and the SNPR was formally published in the Federal Register on July 20, 2011." This statement is not true. Trinity determined after initially

reviewing the information poste d on EPA's website that only emissions data were available, and not the actual CAMx model input and output files. Those files contain key supporting documentation for the proposed results. After contacting EPA Staff to obtain the files, Trinity

sent on August 2 via overnight mail four 2 - TB hard drives for EPA to upload the previously - unavailable files. This process was finally completed on August 11, when Trinity received the uploaded files. August 11 thus is the date on which key supporting documentation w as actuall y made available to Trinity. Once the files were received, Trinit y began the weeks long process of transferring the data to Trinity 's computers, performing necessary model runs using the newly

available data, and processing results. Until those s teps are completed, Trinity will not be in a position to determine whether EPA made an y errors with respect to the claimed interference b y Kansas in Allegan, MI. [Westar Energy (EPA - HQ - OAR - 2009 - 0491 - 4583), p. 1 - 3; Kansas City

Board of Public Utilities (EPA - HQ - OAR - 2009 - 0491 - 4585), p. 1 - 3.] **RESPONSE :**  Air quality modeling input and output files developed b y EPA for the final Transport Rule were available in the docket on the date of signature of the final rule (see docket item EPA - HQ - OAR - 2009 - 0491 - 4228 , "Fin al Transport Rule Air Quality Modeling Data Drives"). This docket item provides instructions on how to obtain electronic copies of the final Transport Rule modeling input and output files. T he material that was available for instant access online was su fficient to understand the application of the modeling in order to provide meaningful comment. The modeling code is available as a public resource in concert with the substantive material presented for immediate consumption and review online. Additionall y, all of this material was available in the docket office as of the day of signature and prior to publication in the Federal Register . Also, a commenter submitted a follow - up anal ys is14

pertaining to certain modeling input files b y Trinity Consultants that came in after the close of the 60 - day

comment period. These comments are responded to in section 6 (B), below. Comment : As of the filing of the comments, Trinity has not had enough time to complete that process, which is critical to determining whether the SNPR modeling erred, and how such errors affected the final results. This precludes commenter from filing meaningful comments because of the limited nature of the topics (whether errors in the modeling occurred) allowed to be addressed at this time. A complete anal ys is of the actual CAMx model input and output files is needed to address matters of central relevance to the SNPR, and to show errors that would increase the likelihood that the current SNPR must be significantly changed. EPA's denial of an extension prevents the filing of meaningful anal ys is and comments that could invalidate any rule that results from the SPNR, and thus constitutes reversible error. [Westar Energy (EPA - HQ OAR - 2009 - 0491 - 4583), p. 1 - 3; Kansas City Board of Public Utilities (EPA - HQ - OAR - 2009 - 0491 - 4585), p. 1 - 3.] **RESPONSE** : Our methodologies were documented in the preambles for the proposed rule and final rule and the proposal and final rule Air Quality Modeling TSDs. There was ample opportunity

to comment on these methods b ased on information provided in the proposed rule. Comment : Trinity 's initial assessment of the SNPR modeling suggests several areas that could uncover errors in the final results after full examination and anal ys is. In this regard, the projected maxi mum ozone concentration at the Allegan receptor was 85.1 ppb, or 0.1 ppb over the threshold of 85 ppb for a maintenance site. Previously , EPA projected that the concentration at the Allegan receptor was 84.7 ppb. The increased projected concentration betwe en the Proposed Rule and the SNPR would seem to suggest that Kansas EGU emission projections increased since the prior projections were made. Yet, that is not the case; instead, Kansas EGU projected emissions dropped and other Kansas sources were projected to have higher emissions. Certainly , this calls into question whether Kansas EGU emissions should be considered to be the cause of interference at the Allegan MI receptor. [Westar Energy (EPA - HQ - OAR - 2009 - 0491 - 4583), p. 1 - 3; Kansas City

Board of Public Uti lities (EPA - HQ - OAR - 2009 - 0491 - 4585), p. 1 - 3.] **RESPONSE:** While EPA is not reconsidering or reopening the issue, we note that i n both the Transport Rule proposal and final rule, CAMx photochemical modeling for the 2012 “no CAIR” base case was used to determ ine nonattainment and maintenance receptors. The final rule modeling was updated based on comments from the proposal. There were numerous emissions updates, including updates to both the EGU and non - EGU components of the inventory . The commenter is corr ect that in some cases EGU emissions went down between proposal and final. In general mobile source emissions went up, due to the availability of updates to the mobile source emissions model (MOVES). EPA ran CAMx for the final rule and followed the propo sed rule methodology

for determining nonattainment and maintenance receptors and contributions from upwind states. The Allegan receptor went from a level that was slightly below the NAAQS in the proposal modeling to a level that was slightly above the NAA QS (for maintenance) in the final rule modeling. Specificall y, in the final rule modeling, ozone at the Allegan receptor was projected to be 85.1 ppb which is 0.2 ppb above the NAAQS (projected maximum design values of 85 ppb and higher are indicative of a maintenance problem). Therefore, the Allegan count y monitor became a maintenance receptor for the final rule anal ys is. This receptor was treated in15

the same way

as every other potential nonattainment and/or maintenance receptor. EPA believes that the Allegan count y receptor is a valid maintenance receptor and is not identified as a receptor due to an y errors in the modeling or the calculation of future design values . The modeling s ys tem was updated and the receptor was found to have a maintenance prob lem in 2012. The methodology

for the Transport Rule identifies the most cost - effective emission reductions available from upwind states, which are not necessaril y from whichever sector may be the largest absolute contributor of emissions at any specific r eceptor. All upwind state NO X emissions (including EGU, non - EGU point sources, and mobile sources) are tracked collectively to determine state - level downwind ozone contributions. The contribution modeling was used to identif y states with an ozone contrib ution that was at least 1% of the NAAQS. The identification of EGU emission reductions in the remedy analysis was based on a determination that , at the cost thresholds selected under the final Transport Rule, the power sector offers the most cost - effectiv e emission reductions to reduce a state’s significant contribution to nonattainment or interference with maintenance. Comment : Further, the 0.1 ppb differential between the maintenance threshold and the projected concentration at Allegan heightens th e possibility that any error could dramatically

change the results. One problem with EPA's approach involves its reliance on linear modeling to represent nonlinear photochemistry for ozone and secondary PM formation. Linear modeling does not account for li miting factors that act differentl y in various emissions scenarios. A related concern involves the use of a latter version (5.3 versus 5.01) of the CAMx modeling program for SNPR purposes. Different chemical parameter values are found in the two versions, with a possible key difference related to changed chemical reactivity values. What effect changes in these values, which are used to estimate the projected rates of ozone and PM species formation, had in the final results were not discussed in the SNPR. Be cause there simply has not been enough time since receipt of the previously unavailable files, Trinity has not yet been able to determine what effects these changes had on the results or whether they adequately

represent the complex photochemistry

involved in quantifying pollutant concentrations. It appears also that the SNPR modeling also is biased in favor of attributing emissions to anthropogenic, rather than to biogenic, sources. This bias does not reasonably represent the source contributions at recep tors, and fails to account for the limiting factor among the photochemical reactions when attributing source contributions to ozone formation. The SNPR modeling does not take into consideration the ozone formation conditions present near large water bodies , such as Lake Michigan where the Allegan M I receptor is located, which differ from those at other areas, and thus unless factored into the model, may lead to erroneous results. These preliminary

assessments of some possible areas of concern in the modelin g suggest areas that could produce erroneous results. Because an extension was not granted, commenter does not have a full anal ys is from Trinity that would determine whether these and possibly other problems have led to erroneous results. Commenter reserve s its right to submit supplemental comments into the docket that more fully explain the potential errors raised b y an y such concerns after Trinity has had adequate time to conduct a full analy sis of the model using the recently obtained data files. [Westar Energy (EPA - HQ - OAR - 2009 - 0491 - 4583), p. 3 - 4; Kansas City Board of Public Utilities (EPA - HQ - OAR - 2009 - 0491 - 4585), p. 3 - 4.]16

**RESPONSE:** These comments question our use of CAMx as the modeling tool for the Transport Rule and our choice of the source apportionm ent technique for ozone. Our methodologies were documented in the preambles for the proposed rule and final rule and the proposal and final rule Air Quality Modeling TSDs. There was ample opportunity to comment on these methods based on information provi ded in the proposed rule. The focus of the CSAPR transport anal ys is for ozone was on the contribution to ozone at downwind receptors resulting from emissions of NO X from anthropogenic sources in upwind states irrespective of whether the anthropogenic NO X formed ozone through reactions with anthropogenic VOC or biogenic VOC. For this purpose, the APCA ozone source apportionment technique was used for the proposed and final rule modeling because this technique allocates ozone formed from anthropogenic NO X r eacting with either anthropogenic or biogenic VOC to the sources of anthropogenic NO X . Ozone formed from reactions of biogenic VOC and biogenic NO X are allocated not includes as part of the state contributions in the CSAPR modeling. The commenter claims that only the portion of the ozone formed from the reaction of anthropogenic NO X with biogenic VOC under “NO X limited” conditions should be allocated to the anthropogenic NO X and that ozone formed under “VOC limited” conditions should be allocated to bioge nic sources. Specificall y, the commenter suggests that we should have used an alternative technique (OSAT) which splits the ozone from anthropogenic NO X plus biogenic VOC to the biogenic sources and anthropogenic sources based on assumptions as to whether the ozone is formed under NO X - limited or VOC limited regimes. EPA disagrees with this comment because even when the amount of ozone is limited about the amount of biogenic VOC, the ozone is still formed by reactions with anthropogenic NO X . We did not ge t an y comments on the proposed rule that said that we should have used OSAT. In addition, the commenter contends that EPA’s approach relied on a linear model. This is not correct since the chemical mechanism in CAMx includes non - linear chemistry associat ed with the formation of ozone and secondary PM 2.5 species concentrations. The rationale for changes in the chemical parameter file in CAMx v5.3 versus v 5.0 are documented in the CAMx v5.3 User’s Guide (docket item EPA - HQ - OAR - 2009 - 0491 - 4380). This docume nt clearl y states the users should not “mix and match” a version of CAMx with a different version of the chemical parameter file, as suggested b y the commenter. Rather, the chemical parameter files specified in the user’s guide for CAMx v5.3, as applied b y EPA, should be used when running CAMx v5.3. The commenter contends that the SNPR modeling does not take into consideration the ozone formation conditions present near large water bodies, such as Lake Michigan where the Allegan , MIreceptor is located. However, the commenter provides no information to support this contention. In fact, EPA’s CAMx air quality modeling and the MM 5 meteorological modeling used to provide weather inputs to CAMx do include Lake Michigan (and other large bodies of water) in t erms of the thermody namic effects and differential deposition properties of these bodies of water on pollutant concentrations. EPA compared the CAMx ozone predictions for Allegan Count y to monitored data and found that the model predictions closel y replic ate observations, adding confidence to EPA’s model predictions for this location (see Appendix A of EPA - HQ - OAR - 2009 - 0491 - 4 140 , "Air Quality Modeling Final Rule Technical Support Document"). 4. **Michigan** No comments received on this issue.17 5. **Missouri**

**(A) EPA’s su**  **pplementary proposal does not require full elimination of Missouri’s significant contribution.**  Comment : Finally , Sierra Club notes that the cross state rule does not eliminate each of these states’ significant contribution to downwind ozone nonattainment and/or interference with maintenance. The Act requires EPA to promulgate FIPs for states that contain inadequate provisions “prohibiting...any source or other t yp e of emissions activity within the State from emitting an y air pollutant in amounts which wil l contribute significantl y to nonattainment in, or interfere with maintenance b y, an y other State with respect to an y such national primary or secondary ambient air quality

standard...”. Nonetheless, EPA confesses in the Preamble to proposed rule that it ha s not satisfied this obligation for all of the states covered by the final rule’s ozone program, including, Missouri. EPA expressly explains that “[t]he one state addressed in the supplemental proposal for which EPA’s anal ys is identifies reductions that are necessary but may not be sufficient to satisfy section 110(a)(2)(D)(i)(I) with respect to the 1997 ozone NAAQS is Missouri.” For this reason, the cross state rule and proposed supplement will not fully satisfy EPA’s 110(a)(2)(D)(i)(I) FIP duty . EPA must require additional reductions in ozone forming emissions that are sufficient to eliminate Missouri’s significant contribution to ozone nonattainment and/or interference with maintenance in the States to which it is linked. [Sierra Club (EPA - HQ - OAR - 2009 - 0 491 - 4587), p. 3.] **RESPONSE:** EPA has noted that the Transport Rule FIP may not fully address Missouri’s obligations under section 110(a)(2)(D)(i)(I) with regard to the 1997 ozone NAAQS . The final rule states that further analy sis is needed to determine i f these FIPs do fully satisfy section 110(a)(2)(D)(i)(I) or if additional reductions are needed. The FIP for Missouri makes measureable progress toward satisfying the requirements of section 110(a)(2)(D)(i)(I) with respect to the 1997 ozone NAAQS. To the extent that significant contribution to nonattainment and /or interference with maintenance is not entirely eliminated, EPA will address these instances in a future action . For more information, see section s IV .C (76 FR 48218), VI .A (76 FR 48246), and VI. D (76 FR 48263, August 8, 2011) within the preamble of the final Transport Rule, and see section IV of the Transport Rule Primary Response to Comments document [EPA - HQ - OAR 2009 - 0491 - 4513]. **(B) EPA is using databases that are out of date and do not repres ent current air**  **quality.** Comment : EPA Should Use a More Recent Base Year Than 2005. EPA has used inventory and meteorological data that is not representative of current conditions. Inventories and meteorology are available for 2008. Currentl y the Lake Michigan Air Directors Consortium (LADCO) is performing modeling with both 2007 and 2008 emissions and meteorological data. In addition the Midwest Ozone Group has performed modeling (see comments submitted by the Midwest Ozone Group, October 1, 2010 to the original proposed rule (75 Fed. Reg. 45210 - 45465 (August 2, 2010)) that shows a totally different picture than that portray ed b y EPA’s modeling. EPA’s18

reliance on non - current data produces results that are not reflective of today's environment and shoul d not be relied upon as the basis of such a far reaching rule. EPA should redo its anal ys is with more recent and relevant data. In the case of Missouri's contribution to the maintenance and nonattainment monitors the July 11, 2011 Federal Register notice s ites 3 monitors; Harris County , TX, Brazoria County , TX and Allegan County , MI.

● Harris and Brazoria, TX Counties - Both of these counties are located in the Houston metropolitan area; the most populous city in Texas surrounded by

man y large VOC and NO X so urces from refineries, mobile sources, power stations and one of the largest ports in the US. Missouri's contribution to these monitors is 1 ppb ozone or less or approximately

0.2 ppb ozone over the 1% arbitrary threshold (0.8 ppb) EPA has chosen. EPA in i ts current anal ys is is using 2005 base case emissions that are significantly higher than those of later ye ars. Commenter provides table developed b y the Midwest Ozone Group using EPA compiled emissions data compares Missouri statewide NO X emissions from 19 99 to 2009. Using the information presented in that table, if EPA would have chosen 2008 as its base year the NO X inventory for Missouri would have dropped by 129,580 tons. This would lead to a similarly large drop in EPA 2012 and 2014 projected emissions. Clearly

this large of a reduction in NO X emissions would significantly lower Missouri's impact on these Texas monitors to the point of no significance. ● Allegan County , MI monitor

– This county according to EPAs designation in the modeling performed is con sidered a maintenance monitor since its maximum 2012 ozone design value is 85.1 ppb ozone; 0.2 ppb over the threshold for an attaining county. According to EPAs modeling Missouri significantly contributes to this monitor. However this significant contribut ion is based on the projected 2005 emissions inventory . Commenter provides table developed b y the Midwest Ozone Group using EPA compiled emissions data compares Michigan statewide NO X emissions from 1999 to 2009. Using the information presented in that tab le, if EPA would have chosen 2008 as its base y ear the NO X inventory

for Michigan would have dropped by 95,775 tons. This would lead to a similarly

large drop in EPA 2012 and 2014 projected emissions. Clearl y this large reduction in Michigan NO X emissions (as well as those in Missouri) would have lowered the Allegan County

monitor to an ozone level much below the significance threshold of 84.9 ppb ozone. Clearly if EPA would have chosen a more recent and relevant base emissions case that was reflective of current NO X emissions Missouri's impact on these 3 monitors would be insignificant. EPA needs to revisit this analy sis using more current data sets that reflect actual air quality . [Ameren Corporation (EPA - HQ - OAR - 2009 - 0491 - 4596), p. 4 - 7.] **RESPONSE :**  The comment about the base case is outside the scope of the SNPR because it addresses issues that were within the scope of the request for comments in the proposed Transport Rule but not in the SNPR. While EPA is not reconsidering or reopening the issue, we n ote that EPA took comment on the rationale for selecting 2005 as the base y ear and the use of monitoring data for the period 2003 through 2007 as the starting point for projecting ozone and PM 2.5 concentrations in 2012 and 2014 in the Transport Rule propos al . Also see the Transport Rule Primary

Response to Comments document in the docket to this rulemaking [EPA - HQ -19

OAR - 2009 - 0491 - 4513] on the use of 2005 as the base year and the use of 2003 through 2007 monitoring data . Comment: Current 2007 - 2009 8 - hour o zone design values show major inconsistencies with the results of EPA’s anal ys is for the CSAPR. Commenter provides a table that shows a comparison of 2003 - 2009 8 - hour ozone design values and EPA’s 2014 remedy case for selected monitors in Kansas and Missouri. As is evident from the table all of these monitors have current design values that are alread y lower than what EPA predicts for its 2014 remedy case. EPA by overestimating the impact of states on downwind nonattainment and maintenance areas will tend to increase the level of control perceived to be required to meet the desired goals. This will lead to the installation controls that in reality may not be needed. EPA’s base case selection and control assumptions are fatally flawed and need be re - anal y zed using a more recent and relevant information. [Ameren Corporation (EPA - HQ - OAR - 2009 - 0491 - 4596), p. 7 - 8.] **RESPONSE:** This comment is outside the scope of the SNPR because it addresses issues that were within the scope of the request for comments in the proposed Transport Rule but not in the SNPR. While EPA is not reconsidering or reopening the issue, we note that EPA took comment on the rationale for selecting 2005 as the base ye ar and the use of monitoring data for the period 2003 through 2007 as the starting point for projecting ozone and PM 2.5 concentrations in 2012 and 2014 in the Transport Rule proposal. Also see the Transport Rule Primary Response to Comments document in the docket to this rulemaking ( EPA - HQ - OAR - 2009 - 0491 - 4513 ) on the use of 2005 as the base year and the use of 2003 through 2007 monitoring data. In response to the assertion that EPA overestimates the impact of states on downwind nonattainment and maintenance and thus increases the level of control perceived to be required to me et the desired goals, EPA refutes this notion on two grounds. First, EPA does not overstate the emission impacts from individual sources. It is very clearl y described in the preamble section V.B of the program. Because the rule is substitution, not incr emental, for CAIR , it cannot assume CAIR in its b ase case and an y assertions that its base case overstates emissions because of its failure to reflect CAIR - driven reductions ignores this important component of the Court’s decision in North Carolina. On the second notion that it overstates the control required in the state, EPA also disagrees. The first controls that would be operated in a state would be those alread y in place (and in some cases already operating). Therefore, in many states the differenc e between the base case and the policy case emissions is not the installation of additional controls, but simply the operation of existing controls. The commenter’s generation portfolio is primarily

located in Missouri and I llinois. EPA does not anticipate an y new controls in these states in response to Transport Rule. In fact, for man y of the programs in these states, the state is alread y emitting at levels less than their 2012 budget level , suggesting no additional reductions/controls are required from current levels. Where this is not the case, EPA modeling may be capturing additional reductions that are on the way because of state rules (as is the case with I llinois and its multi - pollutant rule requirements in 2012). Finally , any additional reductio ns that are driven by the Transport Rule (through fuel switching or other means) are reductions that are incremental to current levels and are necessary to eliminate that state’s significant contribution.20 6. **Oklahoma**

**(A) Commenter generally opposes inclusion of**  **Oklahoma.** Comment : The inclusion of the new states in the ozone transport rule is another example of wh y EPA is getting beat up by the politicians and people who are in the know. As an environmental professional for 35 ye ars I’ve alway s said EPA is its own worst enem y. You lose the trust of the people, and it’s a matter of time. In this case, the EPA is working against the State of OK because OK is causing a violation in one county in MI . Great model! [EST Inc. (EPA - HQ - OAR 2009 - 0491 - 4570), p. 1] Sever al individuals in Oklahoma similarly stated that they question the logic that Oklahoma's emissions could, in fact, have an impact on one single county in Michigan, and that this implausible notion is being used as the basis for including their state in the se proposed rules. These commenters recommend that EPA should stop and consider the impact the proposed rule would have on PSC of Oklahoma and its generation fleet, and not include Oklahoma in the Transport Rule. [Individual email comments (EPA - HQ - OAR - 2009 - 0491 - 4 608 through 4618 ), p. 1 ] **RESPONSE:** As explained in the preamble to the final supplemental rule, EPA is obligated under its Clean Air Act authority to protect human health and welfare. Using the notice and comment process, EPA is finalizing the su pplemental rule based on our conclusions and taking into account public comments. The rule will help reduce ozone season NO X emissions that expose hundreds of million Americans to harmful health impacts from ozone pollution . EPA’s methodology

for identif

ying nonattainment and maintenance receptors is based on modeled projections of measured air quality at specific monitors, not on the designation status of an area. EPA believes this approach is appropriate for the reasons explained in section V.C.2 of th e preamble to the final Transport Rule . 76 FR 48230, August 8, 2011. Further, the North Carolina v. EPA opinion requires EPA to give independent meaning to the interfere with maintenance prong of section 110(a)(2)(D)(i)(I). **(B) EPA lacks a reasonable basis for concluding that Oklahoma significantly**  **interferes with maintenance of the 1997 Ozone NAAQS in Michigan.** Comment : Inthe 2010 Proposed Transport Rule, EPA linked sources in Oklahoma with significant impacts in a nonattainment area in Tarrant Co unty , Texas. The emission reductions required of Oklahoma in the 2010 Proposed Rule were not significant and did not require costl y controls or the shut - down of units. In the Supplemental Proposal, EPA now abandons its claim of significant impacts in Texas and for the first time asserts that Oklahoma interferes with maintenance of the 1997 ozone NAAQS based exclusively on a newl y - identified ozone maintenance receptor in Allegan County , Michigan. This new claim is not only based on a new wind direction, but also would require a 40% reduction from actual emissions in approximately six months time. The maintenance area in question is roughl y 700 miles from most of the affected EGUs in Oklahoma, and the area does not have a nonattainment problem.21

Some of the co mmenters note that EPA's determination that it is necessary to regulate Oklahoma under CSAPR is arbitrary and capricious. EPA is proposing to include Oklahoma in the ozone season NO X program based solely on its projected significant contribution to or inte rference with maintenance of the ozone NAAQS in Allegan County , Michigan. Allegan County currently is in attainment. EPA is proposing to include Oklahoma in the ozone - season NO X program not because emissions from Oklahoma are causing any nonattainment prob lems, but because EPA's models predict that ambient ozone concentration in Allegan County will increase to 85.1 parts per billion ("ppb"), just 0.1 ppb above the 1997 ozone NAAQS. See 62 Fed. Reg. 38,856 (July 18, 1997). EPA's decision to subject Oklahoma to regulation under CSAPR solely based on predicted increase in ozone of just 0.1 ppb is not supportable. The CAMx model is highl y variable and will produce significantl y different results based on relatively small changes in the underl yi ng emissions inve ntory

and other modeling assumptions. The emissions inventory data relied on b y EPA contain a significant number of errors and, thus, raise concerns regarding the validity of EPA's modeling results. Additionally , the model relied on by EPA has a significant degree of uncertaint y when used to predict future emissions. According to EPA's technical support documents, the predicted increase in ozone in Allegan Count y during the ozone season has degree of uncertaint y of - 3.0 to +3.6 percent of the normalized mean bias. The predicted exceedance of 0.1 ppb is well within the range of potential uncertainty and is not sufficient justification for subjecting Oklahoma EGUs to extremel y burdensome and costly regulatory requirements. [Oklahoma Gas & Electric Company (OG E) (EPA - HQ - OAR - 2009 - 0491 - 4590), p. 5; Oklahoma Utility

Group (EPA - HQ - OAR - 2009 - 0491 - 4591), p. 3 - 4; Public Service Company of Oklahoma (EPA - HQ - OAR - 2009 - 0491 - 4600), p. 6 - 7; Western Farmers Electric Cooperative (EPA - HQ - OAR - 2009 - 0491 - 4589), p. 6 - 7; Grand River Dam Authority ("GRDA") (EPA - HQ - OAR - 2009 - 0491 - 4586), p. 3 - 4.] **RESPONSE:** In response to comments on the proposed Transport Rul e , EPA made numerous updates to the emission inventories used for the final rule modeling. As a result of all of the updates made to the modeling platform, the maximum 2012 ozone design value at the Allegan receptor went from 84.7 ppb (i.e., a level that was slightly below the NAAQS) in the proposal modeling to 85.1 ppb (i.e., a level that was slightly above the NAAQS) in the final rule modeling. Th is relatively small increase in ozone concentration between the proposal modeling and final rule modeling of 0.4 ppb is not “highl y variable , ” as is contended by the commenter. The Allegan count y monitor was treated in the same way as ev ery other nonattainment and/or maintenance receptor. EPA believes that the Allegan count y receptor is a valid maintenance receptor and is not identified as a receptor due to any errors in the modeling or the calculation of future design values . As described in the Transport Rule Response to Comments document, EPA believes that it is inappropriate to use model performance results, such as normalized mean bias, as a quantitative indicator of model uncertainty in part because the modeling results are used i n a relative sense to project measured concentrations to 2012 and 2014. Inother words, EPA is not basing the Transport Rule purel y on air quality modeling output, but on an application of that modeling output to real observed air quality data at the rele vant sites. A 200222

report b y the National Research Council (Estimating the Public Health Benefits of Proposed Air Pollution Regulations) states that the accuracy of modeling is increased when the model predictions for a recent base period and a future tim e period are used in a relative sense as scaling (or response) factors to “calibrate” observed pollutant levels from the recent base period. The report states that , “This approach may help reduce the bias introduced by modeling errors and, therefore, may be more accurate than using model results directl y (absolute values) to estimate future pollutant levels.” Thus, it is not appropriate to simply use base y ear model performance results as a quantitative measure or gauge of the uncertainty in the air quality modeling process. Comment : Even assuming that EPA can include Oklahoma in the CSAPR based solel y on modeled impacts, commenters are concerned about several uncertainties in EPA's modeling that need to be addressed in order to reasonabl y evaluate whethe r the Allegan County monitor represents a maintenance issue for the ozone NAAQS. A report on these uncertainties was prepared b y Trinit y Consultants and is included with various comment letters as Attachment A. First, EPA's modeling overstates mobile sour ce emissions by failing to account for new corporate average fuel economy standards and greenhouse gas emission standards for mobile sources. The latest version of the Motor Vehicle Emission Simulator was not used in EPA's modeling and t ypically predicts l ess VOC emissions compared to the version used by EPA for CSAPR. Second, EPA used different chemical parameters in the CAMx for the Supplemental Proposal than for the 2010 Proposed Rule. This change in chemistry is not explained. Third, the location of the Allegan County monitor near the banks of Lake Michigan creates cause for concern that EPA's model may not adequatel y address certain unique aspects of near - water chemistry or atmospheric conditions. Other of the Oklahoma utility commenters referenced the following key findings from the Trinity Consultants report: Comparing the CSAPR to the proposed Transport Rule, NO X and VOC emissions were noticeabl y less. Considering that Allegan Count y was not identified as a non - attainment or maintenance concern in the proposed Transport Rule, EGUs do not appear to be the primary s ource category impacting Allegan County . Therefore, EGU s should not be required to make aggressive and disproportionate NO X reductions of 60% when other sources are having a more significant impact. Mobile source emissions increased from those predicted in the proposed Transport Rule. EPA did not apply

the most recent available version of MOVES for predicting the mobile emission impact. The newer version would likely p roject lower emissions from mobile sources which may

show Allegan County

to not be above the maintenance threshold. EPA changed the CAMx version used between the proposed Transport Rule and the CSAPR. The two versions of CAMx have different chemical parameters and represent a p otentially

s ignificant change in methodology r esults. These changes may b e enough to cause Allegan County

t o have been reclassified and a change in methodology this significant should not be made without the opportunity f or public comment or adequate explanation of the impact of the differences.23 EPA may h ave overestimated the anthropogenic contribution of NO X and VOC emissions. As a result, the costly

c ontrols imposed by

CSAPR may

not produce the reduced impact to Allegan County

p redicted. EPA should use the Ozone Source Apportionment Technology (OSAT) for CAMx and reevaluate the impacts to properly a ccount for the limiting photochemical factors. The Allegan Count y location has unique characteristics that may cause the modeling not to be representative of actual impacts. The effects of its proximity to Lake Michigan suggests that the impacts are more likely to be from more local sources that from such distances as Oklahoma sources. Since the Allegan County receptor exceeds EPA's threshold for being a maint enance receptor b y just 0.1 ppb, failure to account for these uncertainties in the modeling could significantl y impact EPA's conclusion in the Supplemental Proposal. EPA should address these uncertainties before including Oklahoma in the CSAPR based on mod eled impacts in Allegan County , Michigan. One commenter adds that they believe that the model has other errors that tend to overstate source emissions and the corresponding modeled impacts in Allegan County. Commenter reserves the right to supplement these comments if additional errors are identified. [Oklahoma Gas & Electric Compan y (OGE) (E PA - HQ - OAR - 2009 - 0491 - 4590), p. 5; Oklahoma Utility Group (EPA - HQ - OAR - 2009 - 0491 - 4591), p. 3 - 4; Public Service Company of Oklahoma (EPA HQ - OAR - 2009 - 0491 - 4600), p. 6 - 7; Wes tern Farmers Electric Cooperative (EPA - HQ - OAR 2009 - 0491 - 4589) , p. 6 - 7; Grand River Dam Authority ("GRDA") (EPA - HQ - OAR - 2009 - 0491 - 4586), p. 3 - 4.] In comments submitted in mid - November well after the close of the public comment period, some of these commente rs provided further comment on this issue and attached a follow - up study from Trinity

Consultants. The commenters note that EPA, in its Technical Support Document (“TSD”) for the Proposal, stated that onroad vehicle emissions were “primaril y based on the publicly

released 12/21/2009 version of the Motor Vehicle Emissions Simulator (MOVES2010).” However, Trinity Consultants was unable to replicate EPA’s mobile source emissions using the publicly available information for MOVES2010. Upon further corresponden ce with EPA after the close of the comment period, Trinity Consultants learned that different datasets need to be used in lieu of the publicly available database for MOVES2010 in order to duplicate EPA’s mobile source emissions in CSAPR. Trinity further id entified that EPA adjusted the MOVES2010 inventory output after processing by converting the model output into emissions per vehicle mile traveled (“VMT”) and then applied data from a separate VMT database. This is different from the approach explained in the TSD. The actual VMT information used by EPA to project Allegan County , Michigan as a maintenance interference location apparentl y has not been made available for public review and comment. The se commenters state that Oklahoma is included in the Propos al based solely on a link to a projected future maintenance problem in Allegan County . If EPA had used the publicly available default options for vehicle emissions in MOVES2010 as described in its TSD, Trinity ’s anal ys is shows that the vehicle emissions c ontributed to Allegan County from upwind states would be roughl y five percent less than what EPA actuall y modeled. Furthermore, because EPA predicts in the Proposal that future ozone concentrations in Allegan County will be just slightly24

above the ozone st andard (by just 0.1 ppb), this difference in vehicle emissions could affect whether or not Allegan County has a projected maintenance problem under CSAPR. These commenters continue by stating that i n other rulemaking actions unrelated to CSAPR, EPA has de signated Allegan Count y as an attainment area for ozone based on actual, real - world monitoring data. EPA also approved a revision to the Michigan State Implementation Plan (“SIP”) that will maintain compliance with the 1997 8 - hour ozone standard through 2 021 in Allegan County . The SIP does not require emission reductions from out - of - state sources to maintain attainment. It is only in CSAPR modeling that EPA projects a future maintenance problem for Allegan County , and even there onl y by a very slight margi n. If EPA were to utilize the public information as stated in the TSD for the vehicle emission modeling, we believe that the CSAPR modeling for Allegan County would show future attainment with the ozone standard consistent with actual monitoring data and the Michigan maintenance SIP for that area. The commenters conclude by arguing that EPA’s authority to impose emission reduction requirements based on modeling is limited in important respects. A complete anal yt ic defense of a model’s application is requir ed in each case, and EPA must consider real - world data to ensure that modeled predictions are reasonable and accurate. Where real - world data contradict a model, EPA must address with reasonable anal ys is the discrepancies between its model and the actual data. Based on Trinit y’s anal ys is, the commenters argue that it is not appropriate for EPA to issue a final rule without addressing the discrepancies noted and explaining why they deviated from the approach set forth in the TSD. EPA should also reconsider other aspects of the modeling, such as using maximum design values to identify maintenance sites, even though EPA guidance seems to call for the use of average design values in attainment modeling. [AES Shady Point et al. ( EPA - HQ - OAR - 2009 - 0491 - 4 739 ), p. 1 - 3 and attachment ] **RESPONSE** : These comments include question s about our use of CAMx as the modeling tool for the Transport Rule and our choice of the source apportionment technique for ozone. Our air quality modeling methodologies were documented in the preambles for the proposed rule and final rule and the proposal and final rule Air Quality Modeling TSDs. There was ample opportunity

to comment on these methods based on information provided in the proposed rule. The focus of the CSAPR transport anal ys is for ozone was on the contribution to ozone at downwind receptors resulting from emissions of NO X from anthropogenic sources in upwind states irrespective of whether the anthropogenic NO X formed ozone through reactions with anthropogenic VOC or biogenic VOC. For this purpose, the APCA ozone source apportionment technique was used for the proposed and final rule modeling because this technique allocates ozone formed from anthropogenic NO X reacting with either anthropogenic or biogenic VOC to the sources o f anthropogenic NO X . Ozone formed from reactions of biogenic VOC and biogenic NO X are allocated not includes as part of the state contributions in the CSAPR modeling. The commenter claims that only the portion of the ozone formed from the reaction of anthropogenic NO X with biogenic VOC under “NO X limited” conditions should be allocated to the anthropogenic NO X and that ozone formed under “VOC limited” conditions should be allocated to biogenic sources. Specificall y, the commenter suggests that we should have used an alternative technique (OSAT) which splits the ozone from anthropogenic NO X plus biogenic VOC to the biogenic sources and anthropogenic sources based on assumptions as to whether the25

ozone is formed under NO X - limited or VOC - limited regimes. EP A disagrees with this comment because even when the amount of ozone is limited about the amount of biogenic VOC, the ozone is still formed by

reactions with anthropogenic NO X . We did not get an y comments on the proposed rule that said that we should have used OSAT. The rationale for changes in the chemical parameter file in CAMx v5.3 versus v5.0 are documented in the CAMx v5.3 User’s Guide (docket item EPA - HQ - OAR - 2009 - 0491 - 4380). This document clearly states the users should not “mix and match” a version of CAMx with a different version of the chemical parameter file, as suggested by the commenter. Rather, the chemical parameter files specified in the user’s guide for CAMx v5.3, as applied by EPA, should be used when running CAMx v5.3. The commenter contends that the SNPR modeling does not take into consideration the ozone formation conditions present near large water bodies, such as Lake Michigan where the Allegan, MIreceptor is located. However, the commenter provides no information to support this c ontention. In fact, EPA’s CAMx air quality modeling and the MM - 5 meteorological modeling used to provide weather inputs to CAMx do include Lake Michigan (and other large bodies of water) in terms of the thermody namic effects and differential deposition pr operties of these bodies of water on pollutant concentrations. EPA compared the CAMx ozone predictions for Allegan County

to monitored data and found that the model predictions closely replicate observations, adding confidence to EPA’s model predictions f or this location (see Appendix A of EPA - HQ - OAR - 2009 - 0491 - 4 140 , "Air Quality Modeling Final Rule Technical Support Document"). The response to the commenter’s claims about the mobile emissions used in EPA’s air quality

modeling are provided below. Comment : Incomments submitted by AES Shady Point above, they claim that EPA did not apply the most recent available version of MOVES for predicting the mobile emission impact and that the newer version would likely project lower emissions from mobile sources whi ch may show Allegan County

to not be above the maintenance threshold. On November 11, after the close of the public comment period, further comment was provided on the modeled mobile source emissions along with a study from Trinity Consultants. In the No vember 11 submittal, the commenters note that in the Emissions Inventory Technical Support Document (“TSD”) for the final rule, EPA stated that onroad vehicle emissions were “primarily based on the publicly released December 2 1 , 2009 version of the Motor V ehicle Emissions Simulator (MOVES2010).” However, the commenters claim that Trinity Consultants was unable to replicate EPA’s mobile source emissions using the publicly available information for MOVES2010. Upon further correspondence with EPA after the cl ose of the comment period, Trinity Consultants learned that different datasets need to be used in lieu of the publicly available database for MOVES2010 in order to duplicate EPA’s mobile source emissions in CSAPR. Trinity further identified that EPA adjus ted the MOVES2010 inventory output after processing by converting the model output into emissions per vehicle mile traveled (“VMT”) and then applied data from a separate VMT database. This is different from the approach explained in the TSD. The actual V MT information used by

EPA to project Allegan County , Michigan as a maintenance interference location apparently

has not been made available for public review and comment. These commenters state that Oklahoma is included in the p roposal based solely on a link to a projected future maintenance problem in Allegan County . If EPA had used the publicly available default options for vehicle emissions in MOVES2010 as described in its TSD, Trinity ’s anal ys is shows that the vehicle emissions contributed to Allegan County from upwind states26

would be roughl y five percent less than what EPA actuall y modeled. Furthermore, because EPA predicts in the p roposal that future ozone concentrations in Allegan Count y will be just slightly above the ozone standard (by just 0.1 ppb), this difference in vehicle emissions could affect whether or not Allegan County has a projected maintenance problem under CSAPR. If EPA were to utilize the public information as stated in the TSD for the vehicle emission modeling, the commenters bel ieve that the CSAPR modeling for Allegan County would show future attainment with the ozone standard consistent with actual monitoring data and the Michigan maintenance SIP for that area. Based on Trinity ’s anal ysis, the commenters argue that it is not ap propriate for EPA to issue a final rule without addressing the discrepancies noted and explaining wh y they deviated from the approach set forth in the TSD. [AES Shady Point et al. ( EPA - HQ - OAR - 2009 - 0491 - 4739 ), p. 1 - 3 and attachment ] **RESPONSE** : The calculation of onroad mobile emissions involves the use of the MOVES model code along with several input data sets. The inputs include a “database” with information for calculating emissions factors, vehicle miles travelled (VMT) data, and meteorological data. For the final Transport Rule, EPA used the MOVES2010 code that was released to the public on 12/21/2009 (i.e., December 2009 release). In addition to the MOVES code, this release also included several default data sets that could be used as inputs for running MOVES. In general, the defaults are provided for users who do not have more appropriate, representative data for their particular application. There is no requirement to use the default data sets when running the MOVES model. As described in the E missions Inventory Technical Support Document (TSD) and summarized below, EPA did not use all of the default data sets that came with the December 2009 release for creating onroad mobile emissions for the final Transport Rule. The commenter misinterpreted the TSD and incorrectly assumed that EPA used all the default data sets that were included with the December 2009 release of MOVES. The TSD say s that we primaril y used MOVES 2010 to compute onroad emissions, but clearl y states that we did not use all of the default data provided with the December release. Instead, we strove to use the best available data at the time of the modeling as input to MOVES. For the final Transport Rule modeling, EPA did not use the default “database” that came with the December release . Rather, we u sed the “database” created and released publicly in May 2010. As noted by

the commenter, the December 2009 database contains errors that were subsequentl y corrected in the May

2010 version, and therefore EPA did not use the December 2009 version for the final Transport Rule Modeling. For 2005, the TSD states that , “ The onroad emissions were primarily based on the publicly released 12/21/2009 version of the Motor Vehicle Emissions Simulator (MOVES2010) (http://www.epa.gov/otaq/m odels/moves/). MOVES was run with a state/month aggregation using count y - average fuels for each state, state/month - average temperatures, and national default vehicle age distributions. 2005 Vehicle Miles Travelled (VMT), consistent with the 2005v2 NEI, wer e used. ” For 2012, the TSD states “ The onroad emissions were primarily based on the 2010 version of the Motor Vehicle Emissions Simulator (MOVES2010)

– the same version as was27

used for 2005. . . Vehicle Miles Travelled (VMT) were projected using growth rate s from the Department of Energy ’ s AEO2009. ” T he TSD states that we used state - month specific 2005 meteorology , not the default climatology that was included with the December 2009 release. The TSD also states that we used 2005 VMT from the 2005v2 NEI for our 2005 modeling, and that VMT based on DOE AEO2009 was used for our future y ear modeling. These are clearl y not the default datasets that were included in the December 2009 release. Thus, EPA disagrees with the commenter’s assertion that the TSD does n ot provide adequate documentation on the meteorological data, VMT, and VMT growth rates EPA used for the final Transport Rule. With a base ye ar of 1999, the default VMT is known to not properl y reflect different growth rates in different states

– even with a y ear as close to 1999 as 2005. The 2005 and 2012 state - specific VMT used b y EPA provide a more appropriate representation of VMT for these years versus using the default 1999 - based VMT data provided with MOVES. Since mobile source emissions of NO X an d VOC are sensitivity to temperature, the use by EPA of 2005 meteorology , rather than climatological data, provides for greater consistency with the 2005 meteorology used to drive the air quality

model. Thus, w e believe that the onroad emissions developed for the final Transport Rule using MOVES 2010 with the May 2010 database and other inputs developed b y EPA, as described in the TSD, provide a credible projection of onroad emissions for use in the Transport Rule air quality modeling. The commenter als o ran the MOVES model using the “database” and other default inputs that came with the December release and found that using these default data produced onroad mobile NO X and VOC emissions that were lower than those generated by EPA. EPA disagrees with th e commenter that onroad mobile emissions using the December 2009 defaults, which contain known errors, should be used for the Transport Rule modeling. The onroad mobile emissions EPA created and used for the final Transport Rule were provided as state tot als in the TSD and as count y totals in files in the docket. Thus, the commenter had ample opportunity

to review the actual emissions data used b y EPA. T he commenter requested and received from EPA the version of the “database” and other inputs that EPA u sed for calculating onroad mobile source emissions for the final rule. With these inputs, the commenter was able to successfull y replicate EPA’s onroad mobile emissions. The commenter did not provide comments saying that EPA had made any errors in the ap plication of these data. Comment : Inaddition, the anal ys is provided b y Trinity Consultants suggests that EPA's model tends to overstate the contribution of Oklahoma sources to ozone formation in Allegan Count y. Commenters are concerned that the drastic emissions reduction required for Oklahoma in the Supplemental Proposal goes beyond what is required to address Oklahoma's impact. EPA also should consider that NO X emissions predicted for all source groups in Oklahoma, other than mobile sources, were lowe r in the modeling for the Supplemental Proposal than in the modeling for the 2010 Proposed Transport Rule. EGUs showed a decrease of 20,493 tons per y ear of NO X , while NO X emissions from mobile sources increased by 21,344 tons per y ear. Oklahoma showed an overall increase in VOC emissions in the modeling for the Supplemental Proposal compared to the 2010 Proposed Rule, but this VOC emissions increase is attributable to an increase in modeled emissions from mobile and non - point sources rather than EGUs. A ll told, these changes indicate that EGUs are not the likely cause of the newl y identified maintenance28

issue in EPA's modeling for Allegan Count y, Michigan. EGUs in Oklahoma should not be held responsible for remed yi ng an increase in emissions from other ty pes of sources. [Oklahoma Gas & Electric Compan y (OGE) (EPA - HQ - OAR - 2009 - 0491 - 4590), p. 6; Oklahoma Utility Group (EPA - HQ - OAR - 2009 - 0491 - 4591), p. 4.] **RESPONSE:** The comment concerning overstating the contribution of Oklahoma sources to ozone in Allegan C ount y is outside the scope of the SNPR because it addresses modeling and inventory issues that were within the scope of the request for comments in the proposed Transport Rule but not in the SNPR. While EPA is not reconsidering or reopening the issue, we note that i n both the Transport Rule proposal and final rule, CAMx photochemical modeling for the 2012 “no CAIR” base case was used to determine nonattainment and maintenance receptors. The final rule modeling was updated based on comments from the propos al. There were numerous emission updates, including updates to both the EGU and non - EGU components of the inventory . Comment : Furthermore, commenters question EPA's authority to include Oklahoma in the Supplemental Proposal based solel y on modeled imp acts in Allegan County, which is in attainment with the applicable ozone NAAQS. As noted, EPA is predicting possible impacts in Allegan County

from Oklahoma sources based on its use of the CAMx. EPA's use of this computer - modeling approach is overl y cons ervative and tends to exaggerate the impact of source emissions on air quality . EPA's modeling, at most, establishes a tenuous link to a predicted problem in Michigan, but does not establish that Oklahoma sources actuall y "contribute significantl y to nonattainment, or interfere with maintenance of NAAQS," as contemplated by the CAA. EPA oversteps the bounds of its authority by proposing to impose stringent requirements on Oklahoma sources to address an issue that does not exist in the real world. [Oklahom a Gas & Electric Company (OGE) (EPA - HQ - OAR - 2009 - 0491 - 4590), p. 6; Oklahoma Utility Group (EPA - HQ - OAR - 2009 - 0491 - 4591), p. 4.] **RESPONSE:** The comment is outside the scope of the SNPR because it addresses EPA’s authority and modeling issues that were within the scope of the request for comments in the proposed Transport Rule but not in the SNPR. While EPA is not reconsidering or reopening these issues, we refer the commenter to section IV.A of the final Transport Rule for a discussion of EPA’s authorit y, as well as section III.D of the preamble to the final supplemental rule for a discussion of the Allegan County , MI receptor. Additionally , i n response to comments on the proposed rule, EPA performed a trajectory anal ys is to examine the upwind transport patte rns on day s with measured exceedances at the Transport Rule nonattainment and maintenance sites (see docket item EPA - HQ - OAR - 2009 - 0491 - 4360). EPA’s trajectory anal ys is included backward trajectories from Allegan C ounty for multiple times on exceedance day s at Allegan not only for 2005 , but also for other years during the period 2003 through 2007. This analysis shows multiple day s when air crosses portions of Oklahoma within three day s of passing over Allegan County on day s when an exceedance was measured at the Allegan County monitor in 2005 and on several day s in the other years examined. EPA believes that the trajectory anal ys is corroborates the air quality contribution modeling which links emissions in Oklahoma to the ozone maintenance problem in Allega n County .29

Comment : AES Shady

Point believes there are significant technical flaws in the modeling and allocation process. In general terms, the need for significant reductions in Oklahoma for the maintenance of attainment in Allegan Count y, Michigan, whi ch is over 900 miles from the AES Shady Point facility , does not make logical sense because Allegan Count y is directly across Lake Michigan from the Chicago/Milwaukee airshed. The emissions from that airshed (and Gary , I N and St. L ouis, MO) would seem to dwarf an y contribution from several hundred miles further away in Oklahoma. Modeling b y Midwest Ozone Group does not indicate that Allegan County is expected to have attainment maintenance issues. The fact that Allegan County , Michigan alread y is in attainment with the NAAQS supports the exclusion of Oklahoma in the proposed rule. There is not an immediate non - attainment issue that needs to be addressed. It is appropriate to allow an orderl y process and period to achieve compliance with a rule that is int ended solely

for maintenance of current attainment. [AES Shady Point (EPA - HQ - OAR - 2009 - 0491 - 4595), p. 5.] **RESPONSE:** EPA’s methodology for identifying nonattainment and maintenance receptors is based on modeled projections of measured air quality at speci fic monitors, not on the designation status of an area. EPA believes this approach is appropriate for the reasons explained in section V.C.2 of the preamble to the final CSAPR. 76 FR 48230, August 8, 2011. EPA does not believe it would be appropriate to rely on the designation status of an area. The statute does not require EPA to do so. Infact, the statutory requirement that section 110(a)(2)(D)(i)(I) SIPs be submitted within 3 years of promulgation or revision of a NAAQS would make it difficult to do so, suggesting that Congress did not intend section 110(a)(2)(D)(i)(I) SIPs to be linked in any way to designation status. Further, even areas that have never been in nonattainment or that have been re - designated to attainment (including those where th e majority of pollution comes from out of state) continue to be at risk for falling into nonattainment due to the impact of emissions from upwind states. We therefore disagree with the commenter and continue to believe that Allegan was appropriately deter mined to be a maintenance receptor. See Section III.D of the preamble to the final supplemental. Furthermore, the Transport Rule CAMx source apportionment modeling shows that 10 states (including Oklahoma) contribute above the 1% of the ozone NAAQS thre shold to Allegan County . As would be expected, the largest ozone contribution is from I llinois. But that does not change the fact that 9 other states interfere with maintenance in Allegan County and it does not alleviate the need for those states to elim inate their interference with maintenance. Further, the North Carolina v. EPA opinion requires EPA to give independent meaning to the interfere with maintenance prong of section 110(a)(2)(D)(i)(I). Comment : Inaddition to the Trinity Consultant's eval uation of the modeling methodology , AEP/PSO found a specific apparent error in the IPM TR Base Case Final results. PSO operates a combined cycle at its Northeastern Power Station. Units 1A and 1B are combustion turbines equipped with heat recovery steam ge nerators that provide steam to the original Unit 1 turbine. The Unit 1 boiler has not operated since about 1999. Although the NEEDS v4.1 database does not include the Unit 1 boiler as an emission source, EPA's IP M file shows Unit 1 as emitting 0.0789 Mton of NO X in the 2012 Base Case. This raises the question whether EPA has double counted Units 1A and 1B's emissions and whether EPA has accuratel y quantified emissions in30

the IPM projections. [Public Service Compan y of Oklahoma (EPA - HQ - OAR - 2009 - 0491 - 4600), p . 7 plus attachment.] **RESPONSE:** EPA did not double count units 1A and 1B emissions in its base case modeling. Double counting would suggest a number that was higher than historic levels. However, EPA’s base case modeling shows total ozone - season emissi ons for the Northeastern combined cycle facility of approximately

102 tons, where as the 2010 emission levels were approximately 145 tons. EPA uses the three units as reported in EIA 860 by the source owner. The units are modeled as two combustion turbin es and one steam turbine, as supported by the commenter. The model accounts for unit level emissions by taking the facility

level emissions and distributing them among the three units. The steam turbine is dependent on the combustion turbines for operatio n, therefore , emissions from the facilit y are spread across all three units proportional to their generation. A failure to do so would suggest a unit that could generate electricit y without an y associated fuel use related to that generation. In reality, these emissions (the 79 tons referenced by commenter) would still occur, but would be emitted from the other two units at the facility . However, IPM attributes the emissions to the steam turbine to appropriatel y capture the economics. If this was not the case, and the model could generate electricit y from a steam turbine without any corresponding emissions, then it would dispatch steam turbines as economic before the combustion turbines

– a sequence that is not possible. In short, the facility

level emis sions are correctl y captured at the Northeaster unit noted above and there is no double counting as speculated b y the commenter. Comment : AEP PSO did an anal ys is of air parcel back trajectories for day s in 2005 when ozone exceeded 80 ppb at the Allegan monitoring site. Their anal ys is identified two “elevated ozone day s where the winds were originating far to the south of the Lake Michigan region showing a reasonable possibility

of Oklahoma emissions participating in ozone formation that impacts the Al legan County

region”. The commenter claims that this “calls into question the accuracy of the meteorological fields being used b y USEPA as they relate to the transport from elevated sources in the Oklahoma region and the potential benefits of NO X emission s reductions from elevated sources in Oklahoma in reducing ozone at the Allegan County monitor in a meaningful fashion”. This work is included in an attachment to this letter titled "USEPA's Anal ysis of the Allegan County Ozone Monitor Is Incomplete and D oes Not Demonstrate a Connection to the CSAPR Remedy Proposed in the SNPR". [Public Service Company of Oklahoma (EPA - HQ - OAR - 2009 - 0491 - 4600), p. 7 plus attachment.] **RESPONSE:** In response to comments on the proposed rule, EPA performed a trajectory anal ys is to examine the upwind transport patterns on day s with measured exceedances at the Transport Rule nonattainment and maintenance sites (see docket item EPA - HQ - OAR - 2009 - 0491 - 4360). EPA’s trajectory anal ys is was more extensive than the anal ys is performed b y AEP PSO in that EPA’s analysis included backward trajectories from Allegan C ounty for multiple times on exceedance days at Allegan not only for 2005 but also for other years during the period 2003 through 2007. In general, backward trajectory anal ys es are intended to show the upstream pathway followed b y air that arrives over a particular location at a particular time. In EPA’s trajectory anal ys is we examined the airflow pathway s within 3 day s of when air crossed Allegan County on each day

that an excee dance was measured at the Allegan County monitor. EPA’s31

trajectory anal ys is shows that air crosse d over portions of Oklahoma within three day s before passing over Allegan County on several of the day s when an exceedance was measured at the Allegan County monitor . EPA believes that the trajectory anal ys is corroborates the air quality contribution modeling which links emissions in Oklahoma to the ozone maintenance problem in Allegan County . Comment : Under the EPA's Supplemental Proposal, the State of Okl ahoma is being required to significantl y reduce emissions of NO X during the ozone season for the maintenance of a single county in Michigan (Allegan Count y). The county in question is hundreds of miles away from Oklahoma, and modeling data shows that Alle gan County , Michigan, is not expected to have attainment maintenance issues and, in fact, is already in attainment with the NAAQS targeted by the proposed rulemaking. Itdoes not make sense for the EPA to require significant reductions in Oklahoma for att ainment in Allegan Count y, Michigan, in an area directly across Lake Michigan from the Chicago/Milwaukee airshed (and also the Gary , Indiana, and St Louis, Missouri, airsheds), where these areas would be far greater contributors to nonattainment in Allegan County , Michigan, than any contribution from Oklahoma. In addition, the fact that Allegan County , Michigan, is already in attainment, as shown by modeling, supports the exclusion of Oklahoma in the Supplemental Proposal rulemaking. [Oklahoma Attorney Ge neral (EPA - HQ OAR - 2009 - 0491 - 4592), p. 8.] **RESPONSE:** EPA’s methodology for identifying nonattainment and maintenance receptors is based on modeled projections of measured air quality at specific monitors, not on the designation status of an area. EPA be lieves this approach is appropriate for the reasons explained in section V.C.2 of the preamble to the final CSAPR. 76 FR 48230, August 8, 2011. EPA does not believe it would be appropriate to rely on the designation status of an area. The statute does n ot require EPA to do so. In fact, the statutory requirement that 110(a)(2)(D)(i)(I) SIPs be submitted within 3 y ears of promulgation or revision of a NAAQS would make it difficult to do so, suggesting that Congress did not intend 110(a)(2)(D)(i)(I) SIPs to be linked in any way to designation status. Further, even areas that have never been in nonattainment or that have been re - designated to attainment (including those where the majority of pollution comes from out of state) continue to be at risk for fal ling into nonattainment due to the impact of emissions from upwind states. We therefore disagree with the commenter and continue to believe that Allegan was appropriatel y determined to be a maintenance receptor. See Section III.D of the preamble to the f inal supplemental. Furthermore, the Transport Rule CAMx source apportionment modeling shows that 10 states (including Oklahoma) contribute above the 1% of the ozone NAAQS threshold to Allegan County . As would be expected, the largest ozone contribution is from I llinois. But that does not change the fact that 9 other states interfere with maintenance in Allegan County and it does not alleviate the need for those states to eliminate their interference with maintenance. Further, the North Carolina v. EPA opinion requires EPA to give independent meaning to the interfere with maintenance prong of section 110(a)(2)(D)(i)(I). Comment : The DEQ does not believe that the conclusion that Oklahoma significantl y impacts the air quality

in Allegan County , Michigan is accurate. The modeling conducted by EPA32

alleged that the NO X sources in the state of Oklahoma interfere with maintenance of the ozone standard for Allegan County , Michigan. Allegan Co. was designated attainment of the ozone standard on July

20, 2010, and is now a maintenance area. The design values for Allegan Co. for the y ears 2005, 2006, 2007, 2008, 2009, and 2010 are 89, 88, 93, 86, 81, and 74 ppb respectivel y. It is apparent that the emission reductions obtained from the CAIR sources have helped to lower recent design values to well below the standard, and that Allegan County ’s maintenance of the standard is not threatened (even the modeled value of 85.1 in the CSAPR was just over the standard). If EPA were to update their base case to the ye ar 2 008 or later, Allegan Co. would model attainment with no threat to their maintenance status in a normal weather year. The monitor in Allegan County is the only

monitor projected to be above the standard that EPA identified Oklahoma as impacting; therefore, if Allegan County is in attainment of the standard, then Oklahoma can and should be completel y removed from the rule. It is DEQ’s belief that the conclusion that Oklahoma emissions impact Michigan is false. [Oklahoma Department of Environmental Quality

( EPA - HQ - OAR - 2009 - 0491 - 4593), p. 1 - 2.] **RESPONSE** : See section III.D of the preamble for the final supplemental regarding Allegan County . The comments on CAIR , modeling, and the base case are outside the scope of the SNPR because they

address issues that we re within the scope of the request for comments in the proposed Transport Rule, but not in the SNPR. While EPA is not reconsidering or reopening these issues, we note that these issues were previously addressed in sections V.C.2 (76 FR 48230, August 8, 20 11) and V.B (76 FR 48223, August 8, 2011) of the preamble to the final Transport Rule. Comment: Itis important to note that Oklahoma is currentl y being included for its alleged impact on one count y in the entire United States. Commonsense suggests that carbon emissions in Oklahoma are not dictating the air quality of Allegan County , Michigan, while somehow having little or no impact on states with which we share a border. Without additional and conclusive scientific data, Ireject the EPA’s conclusions in this instance, which Ibelieve call into question the overall validity of its study

and modeling data. I strongly advocate that further scientific and empirical modeling is necessary to truly determine if Oklahoma is impacting an y area of the country in relation to air quality . I am asking today that the EPA revisit this important issue to ensure that it is using proven science and techniques to make an informed decision on this issue. [Governor, State of Oklahoma (EPA - HQ - OAR - 2009 - 0491 - 4594), p. 1.] **RESPONSE:** See section III.D of the preamble to the final supplemental. Regarding the comment on carbon emissions, **t**he Transport Rule does not regulate carbon emissions. Regarding comments on the validity of EPA’s modeling, the comment is outside the sc ope of the SNPR because it addresses issues that were within the scope of the request for comments in the proposed Transport Rule but not in the SNPR. While EPA is not reconsidering or reopening the issue, we note that o ur methodologies were documented in the preambles for the proposed rule and final rule and the proposal and final rule Air Quality Modeling Technical Support Documents. See EPA - HQ - OAR - 2009 - 0491 - 4372, "Air Quality Modeling Final Rule Technical Support Document". There was ample opportunity to comment on these methods based on information provided in the proposed rule .33

Comment : Since its promulgation in 2005, CAIR has achieved significant emissions reductions. For the purpose of determining the base case (i.e., the anal yt ical baseline emis sions scenario), EPA arbitraril y assumed that CAIR is not in effect. EPA claims that it is required to do so because if it "were to consider all reductions associated with CAIR in the 'base case,' the baseline emissions would not adequately reflect the tru e 2012 baseline in each state." 76 Fed. Reg. at 48,223. EPA incorrectly

assumes that pre - CAIR emission levels represent the emissions that "would occur in each state in 2012 if the Transport Rule did not require an y reductions in that state." Id . EPA's r easoning is arbitrary because it lacks a "rational relationship to the real world." See, e.g., Appalachian Power Co. v. EPA, 249 F.3d 1032, 1053 (D.C. Cir. 2001) (citing Chemical Mfrs. Ass'n v. EPA, 28 F.3d 1259, 1265 (D.C. Cir. 1994»("While courts routin el y defer to agency

modeling of complex phenomena, model assumptions must have a 'rational relationship' to the real world."); Columbia Falls Aluminum Co. v. EPA, 139 F.3d 914, 923 (D.C. Cir. 1998) ("An agency 's use of a model is arbitrary if that model be ars no rational relationship to the realit y it purports to represent.") (internal quotations omitted). In light of the numerous regulatory developments since 2005 and the billions of dollars invested in installing controls at EGUs, it is unreasonable for EPA to assume that all of the EGUs currentl y subject to CAIR would instantly stop operating these controls on January 1, 2012. The D.C. Circuit in North Carolina remanded without vacatur the federal CAIR program; it did not in any way invalidate state regulations implementing CAIR. Since 2005, EPA has set significantl y more stringent NAAQS for Ozone, SO2, NO X , and PM. Many states have become dependent on the emissions reductions achieved by their CAIR programs to attain or maintain these newl y promulgate d, and more stringent, NAAQS within their own borders. EPA cannot assume that these states will forgo these reductions simply because the federal mandate to implement CAIR expires. It is far more rational for EPA to acknowledge the emissions reductions a chieved by CAIR. EPA cannot simply

assume that pre - CAIR emission levels are an appropriate base case without first determining whether states will continue to require CAIR reductions. The U.S. Court of Appeals remanded CAIR without vacatur and has consis tently declined to set a deadline for EPA to replace CAIR. See North Carolina v. EPA, 550 F.3d 1176 (D.C. Cir. 2008) (remanding without vacating CAIR); Order, North Carolina v. EPA, No. 09 - 1316 (D.C. Cir. Feb 2, 2010) (den yi ng request for writ of mandamus ordering EPA to issue proposed rule). Nothing requires EPA to discount emissions reductions achieved by CAIR. Failing to account for CAIR undermines the ability of EPA's model to accuratel y determine whether states significantly contribute to nonattainment or maintenance of the NAAQS. Michigan is a CAIR state and Allegan County currently is in attainment of the 1997 ozone NAAQS. In 2010, the Holland monitor, located in Allegan, Michigan, had a three - year average of 74 ppb. If EPA used this actual data, which reflects CAIR reductions, its modeling would show that Allegan, Michigan would remain in attainment. See Docket No. EPA - HQ2009 - 0491 - 2809 (Comments Submitted by the Midwest Ozone Group). Modeling submitted by the Midwest Ozone Group in response to the 2010 Proposal shows that if EPA considered CAIR, and other rules currently

in place, ambient air quality at the Holland monitor would be approximately 81 ppb in the base year, 9 76 ppb in 2014, and 73 ppb in 2018. See id. There simply is no rational34

basis for EPA's determination that Oklahoma will significantl y contribute to nonattainment or interference with the 1997 ozone NAAQS in Allegan Count y, Michigan. [Western Farmers Electric Cooperative (EPA - HQ - OAR - 2009 - 0491 - 4589), p. 6 - 7; Grand River Dam Authorit y ("GRDA") (EPA - HQ - OAR - 2009 - 0491 - 4586), p. 4 - 5.] **RESPONSE:** The comment is outside the scope of the SNPR because it addresses issues that were within the scope of the request for comments in the proposed Transport Rule but not in the SNPR. While EPA is n ot reconsidering or reopening the issue, we note that EPA took comment on the rationale for selecting 2005 as the base ye ar and the use of monitoring data for the period 2003 through 2007 as the starting point for projecting ozone and PM 2.5 concentrations in 2012 and 2014 in the Transport Rule proposal. See section V.B of the final Transport Rule preamble. Also see section IV.A of the Transport Rule Primary Response to Comments document in the docket to this rulemaking [EPA - HQ - OAR - 2009 - 0491 - 4513] . **7 .**  **W isconsin**  No comments received on this issue. **II . FIPs (use of ozone season NO**  **X program in Transport Rule as FIP)**  1. **General (A) EPA lacks authority to promulgate the proposed FIP.**  Comment : For the reasons discussed in detail in its comments on the Prop osed Transport Rule, UARG opposes EPA’s imposition of FIPs establishing ozone - season NO X emission reduction requirements in these states without first giving the states adequate time and opportunity to develop and submit state implementation plans (“SIPs”) implementing section 110(a)(2)(D)(i) of the Clean Air Act (“CAA”). See Docket ID No. EPA - HQ - OAR - 2009 - 0491 - 2756.1, at 19 - 26 (Oct. 1, 2010). For example, UARG notes that, even assuming for the sake of argument that, as EPA asserts, CAA section 110(a)(2)(D ) “requires all states, within 3 y ears of promulgation of a new or revised NAAQS, to submit SIPs that prohibit certain emissions of air pollutants because of the impact they

would have on air quality in other states,” 76 Fed. Reg. at 40664 -- an assertion that ignores that the 3 - ye ar SIP submission deadline appears onl y in CAA section 110(a)(1), which explicitly applies to SIPs that “provide[] for implementation, maintenance, and enforcement” of NAAQS “within,” not outside, the state that submits the SIP -- that is no basis for EPA’s imposition of FIPs in this rule. As UARG notes in its comments, any schedule for submission of section 110(a)(2)(D)(i) SIPs for the 1997 NAAQS should be restarted “upon EPA’s promulgation of a valid final rule” replacing the currently effective Clean Air Interstate Rule.5 Docket ID No. EPA - HQ - OAR - 2009 - 0491 - 2756.1, at 26. [Utility Air Regulatory

Group (EPA - HQ - OAR - 2009 - 0491 - 4598), p. 2 - 3.] **RESPONSE** : The comment is outside the scope of this action because it questions the legali ty of using a FIP, not whether the Transport Rule FIPs are the appropriate method for addressing the emissions. While EPA is not reconsidering or reopening the issue, we note that the legality question was previousl y addressed in section IV.A of the preamble to the final Transport Rule . 2. **Iowa**35

No comments received on this issue. 3. **Kansas** No comments received on this issue. 4. **Michigan (A)**  **Commenter disagrees with use of the FIP and the associated timeframe.** Comment : Within the proposed rules, the U.S. Enviro nmental Protection Agency (EPA) again indicated their decision to use the final Transport Rule program's federal implementation plans (FIPs) to address the emissions in these six states. Once again, and as also stated in our original comments to the Augus t 2, 2010, Federal Register, "Federal Implementation Plans to Reduce Interstate Transport of Fine Particulate Matter and Ozone," and comments to the January 7, 2011 Federal Register, "Notice of Data Availability

for Federal Implementation Plans to Reduce Interstate Transport of Fine Particulate Matter and Ozone," one of the MDEQ's most critical concerns is "the implementation timing for the proposed Interstate Transport Rules, where Phase One begins in 2012 and Phase Two in 2014. The MDEQ continues to beli eve the shortened timeline for implementation of the Transport Rule has adverse impacts on the states and sources affected." The MDEQ requests the implementation of the FIP be delayed a minimum of 18 months, until states can finalize an approvable state implementation plan (SIP) to effectivel y replace the FIP requirements. [Michigan Department of Environmental Quality (EPA - HQ - OAR - 2009 - 0491 - 4606), p. 1.] **RESPONSE:** The comment is outside the scope of the SNPR because it addresses issues that were within th e scope of the request for comments in the proposed Transport Rule, but not in the SNPR. While EPA is not reconsidering or reopening these issues we note that the issues were previously

addressed in sections VII.C and section X of the preamble to the fina l Transport Rule, as well as in the Transport Rule Primary Response to Comments document in the docket to this rulemaking [EPA - HQ - OAR - 2009 - 0491 - 4513]. Additionally , questions regarding the legalit y of using a FIP were addressed in the preamble. 5. **Missour i**  No comments received on this issue. 6. **Oklahoma (A) EPA lacks authority to promulgate the proposed FIP for Oklahoma.**  Comment : The proposed FIP for Oklahoma is premature and inconsistent with the structure of CAA. Inthe Supplemental Proposal, EPA cla ims that it has authority to include Oklahoma in the CSAPR by

virtue of the Agency 's general finding on April 25, 2005 that all 50 states,36

including Oklahoma, failed to submit State Implementation Plans ("SIPs") to address the requirements of CAA Section 1 10(a)(2)(D)(i) with respect to the 1997 ozone NAAQS. In a Technical Support Document ("TSD") for the Supplemental Proposal, EPA say s that it "has not, subsequent to that date, received or approved a SIP revision to correct the deficiency" for Oklahoma. C ommenters disagree with EPA's characterization of the status of Oklahoma's SIP. First, EPA's claim misrepresents the status of Oklahoma's SIP and ignores subsequent actions taken b y Oklahoma to implement the good neighbor requirements. It also ignores the reality that EPA only in this proposal gave Oklahoma any notice about the putative contribution to Allegan County 's prospective and/or projected nonattainment. Itwould have been impossible for Oklahoma to have taken steps previously to ensure that it is meeting its good neighbor obligations because EPA had never identified the potential problem which Oklahoma must address. Also, contrary

to EPA's assertion in the TSD, Oklahoma submitted an interstate transport SIP on May 1, 2007 to address the requireme nts of CAA Section 110(a)(2)(D)(i). In the 2007 SIP, the State informed EPA as follows: “As required b y Section 110(a)(2)(D)(i) of the Clean Air Act, the State of Oklahoma submits to the USEPA that it has met the requirements for the 8 - hour ozone and PM 2 .5 National Ambient Air Quality Standards ("NAAQS") and does not significantly contribute to nonattainment or interfere with maintenance of the NAAQS in another State.” On December 5, 2007, the State supplemented its interstate transport SIP with addition al assessments and also provided EPA with the following certification regarding the adequacy of its SIP under CAA Section 110(a)(1) and (2): “We have evaluated our existing SIP for implementation of the 1997 8 - hour ozone NAAQS to determine if it includes all the requirements in Section 110(a)(1) and (2) of the CAA and is consistent with the guidance provided to the Regional Air Division Directors from William T. Harnett, Director, Air Quality Policy Division on October 2,2007. We conclude and certify that our SIP does meet these requirements.” The guidance referred to in this certification is an EPA memorandum titled "Guidance on SIP Elements Required Under Sections 110(a)(1) and (2) for the 1997 8 - hour Ozone and PM 2.5 National Ambient Air Quality Standar ds." The memorandum lists the basic elements that EPA thinks should be part of a SIP and also say s, "To the extent that existing SIPs for ozone and particulate matter already meet these requirements, States need only certify that fact to [EPA] ." Consistent with EPA's guidance, Oklahoma certified in 2007 that the State's Interstate Transport SIP met all of the requirements of CAA Section 110(a)(l) and (2), which includes the interstate transport requirements related to NAAQS under CAA Section 110(a)(2)(D)(i )(I). Since then, EPA has not approved or disapproved of the State's conclusion in 2007 that its SIP meets the requirements of CAA Section 110(a)(2)(D)(i)(I) related to the 1997 8 - hour ozone NAAQS. EPA has approved certain portions of the Oklahoma SIP re lating to Prevention of Significant37

Deterioration ("PSD") requirements and has also issued a proposal to partially approve and partially disapprove other specific portions related to visibility . EPA is now proposing to move directl y to imposing a Federal Implementation Plan ("FIP"), eliminating the State's opportunity to receive notice of, and correct, a perceived deficiency in the 2007 SIP submittal as it relates to the requirements of CAA section 110(a)(2)(D)(i)(I). The EPA does not have authorit y under the CAA to proceed with implementing a FIP prior to approving or disapproving the State's 1997 SIP as it relates to the requirements of CAA section 110(a)(2)(D)(i)(I). The CAA requires the EPA to act on a SIP revision within 12 months of having received a completed submission (such SIP submissions are deemed complete after 6 months unless EPA makes a finding otherwise) see CAA section 110 (k)(l)(B), (k)(2). When a State submits a SIP, the CAA allows EPA to issue a FIP within 2 y ears after the Administrator disapproves the SIP in whole or part. Also, the CAA gives the EPA the authority to issue a FIP within two y ears after finding that a State failed to submit a SIP, or submitted a SIP that was found to be incomplete. However, the authority t o issue a FIP expires two y ears after EPA issues a finding of failure to submit a SIP. The EPA has missed that two y ear deadline here and therefore, lacks authority under the CAA to issue the proposed FIP. Furthermore, where a State submits a SIP after the issuance of a d eficiency finding by

the Administrator, the EPA must act on the SIP submittal before issuing a FIP. Pursuant to 42 U.S.C. § 7410(c)(l)(B): (1) The Administrator shall promulgate a Federal implementation plan at any time within 2 y ears after the Administr ator

– (A) finds that a State has failed to make a required submission or finds that the plan or plan revision submitted by the State does not satisfy the minimum criteria established under subsection(k)(l)(A) of this section, or (B) disapproves a State implementation plan submission in whole or part, unless the State corrects the deficiency , and the Administrator approves the plan or plan revision, before the Administrator promulgates such Federal implementation plan. In this Supplemental Proposal, the EPA has not followed the CAA mandate requiring that prior to promulgating a FIP, the EPA must find that a State has failed to make a required submission, or find that the plan or plan revision submitted by the State does not satisfy minimum criteria, or mu st disapprove a SIP submission in whole or part. As set forth above, the EPA has not taken any action in regards to the May 1, 2007, Interstate Transport SIP that addressed the requirements of CAA 1l0(a)(2)(D)(i). In addition, the EPA has not taken action to approve or disapprove the December 2007 State of Oklahoma SIP revision and certification that was submitted pursuant to an October 2007, EPA guidance document. In that submission, Oklahoma certified (following the dictates in the EPA Guidance Document) in December 2007 that Oklahoma's Interstate Transport SIP met all the requirements of CAA section 11O(a)(I) and (2), which includes CAA section 110(a)(2)(D)(i)(I). Therefore, the EPA does not have the authorit y under the CAA to issue the FIP it is proposin g in this Supplemental Rule under the CSAP38

Program. [ Oklahoma Attorney General (EPA - HQ - OAR - 2009 - 0491 - 4592), p. 3 - 6 ; Oklahoma Gas & Electric Compan y (OGE) (EPA - HQ - OAR - 2009 - 0491 - 4590), p. 3 - 5 ; AES Shady Point (EPA - HQ - OAR - 2009 - 0491 - 4595), p. 3 - 4 ; Western Far mers Electric Cooperative (EPA - HQ OAR - 2009 - 0491 - 4589), p. 5 - 6 .] **RESPONSE:** For the reasons explained in section IV.C.2 of the preamble to the final Transport Rule (76 FR 48208, August 8, 2011) and in the TSD entitled “Status of CAA 110(a)(2)(D)(i)(I) SIP s Supplemental Rule ” TSD (December 2011), EPA has the legal obligation to promulgate all of the FIPs in this rule. This conclusion is based on the plain language of the Clean Air Act as applied to the specific circumstances of each state. Section 110(c )(1) of the Act requires EPA to promulgate FIPs within two y ears after finding that a state has failed to make a required SIP submission or disapproving a SIP. Specificall y, section 110(c)(1) states that the Administrator shall promulgate a Federal Implem entation Plan within two y ears after the Administrator "(A) finds that a State has failed to make a required submission or finds that the plan or plan revision submitted by the State does not satisfy the minimum criteria established under subsection (k)(1) (A) of this section or (B) disapproves a State implementation plan submission in whole or in part." 42 U.S.C. § 7410 (c)(1)(A) & (B). EPA is relieved of the obligation to promulgate a FIP only if the state corrects the deficiency and EPA approves the SIP before promulgating a FIP. 42 U.S.C. § 7410(c)(1). The Act does not create any exceptions to this rule. EPA has not approved a SIP for Oklahoma that addresses this requirement; rather, EPA has proposed to disapprove Oklahoma’s SIP submittal that addres ses 110(a)(2)(D)(i)(I). EPA is promulgating FIPs only in those circumstances where the Clean Air Act explicitly

provides that it shall do so. The commenter does not identify an y provision that would give EPA authority to alter the deadlines established in the statute or delay implementation of the Transport Rule as requested. In this case, the Act explicitly provides that the SIP submission deadline runs from the date of promulgation or revision of a NAAQS and the FIP clock starts when EPA finds that a state has failed to make a required SIP submission or EPA disapproves a SIP submission. Nothing in the Act requires EPA, where it has already made findings of failure to submit or disapproved SIP submissions, to promulgate a SIP Call to give the states an other opportunity to promulgate a SIP before promulgating a FIP. Section 110(a)(2)(D)(i)(I) SIP submittals are due 3 ye ars after promulgation or revision of a NAAQS. See 42 U.S.C. § 7410(a)(1). Thus, 110(a)(2)(D)(i)(I) SIPs for the 1997 ozone NAAQS were due in 2000. While the statute gives EPA authority

to prescribe a shorter period of time for states to make SIP submissions, it does not give EPA authorit y t o extend the 3 - ye ar deadline established by statute. See 42 U.S.C. § 7410(a)(1). Moreover, ther e is no requirement that EPA promulgate a rule or issue guidance regarding the specific requirements of section 110(a)(2)(D)(i)(I) in advance of the SIP submittal deadline. The plain language of section 110(c)(1) of the Act provides that EPA shall promulg ate a FIP at any time within 2 y ears after the Administrator finds that a state has failed to make a required submission or after disapproving a state implementation plan submission in whole or part, unless39

the state corrects the deficiency , and the Admini strator approves the plan or plan revision, before the promulgation of a FIP. See 42 U.S.C. § 7410(c)(1). Far more than 2 years has now elapsed since EPA first made these findings with respect to the 1997 ozone and 1997 PM 2.5 NAAQS. There is nothing in the plain language reading of the Act that say s that EPA’s obligation “expires” at the end of the 2 y ears. Finally , nothing in the Act requires EPA, where it has already made findings of failure to submit or disapproved SIP submissions, to promulgate a SIP Call to give the states another opportunity to promulgate a SIP before promulgating a FIP. Section 110(a)(2)(D)(i)(I) SIP submittals are due 3 y ears after promulgation or revision of a NAAQS. See 42 U.S.C. § 7410(a)(1). While the statute gives EPA auth ority to prescribe a shorter period of time for states to make SIP submissions, it does not give EPA authority to extend the 3 - ye ar deadline established by statute. See 42 U.S.C. § 7410(a)(1). Comment : The EPA's Supplemental Rule Proposal for Oklahoma under the CSAP Program intrudes upon the role generall y left to the States under the CAA. In Train v. Natural Resources Defense Council, Inc., 421 U.S. 60 (1975), the United States Supreme Court found that although the CAA plainly

charges the EPA with the r esponsibility for setting the national ambient air quality standards, the Act, just as plainly , relegates the EPA to a secondary role in the process of determining and enforcing the specific, source - by - source emission limitations that are necessary if the national standards are to be met. According to the Court, the Act gives the agency no authority to question the wisdom of a State's choice of emission limitations if they are part of a plan that satisfies the standards of section 110(a)(2), and the agency may devise and promulgate a specific plan of its own only if a State fails to submit an implementation plan that satisfies those standards. To this point, the Court stated: "So long as the ultimate effect of a State's choice of emission limitations is comp liance with the national standards for ambient air, the State is at liberty to adopt whatever mix of emission limitations it deems best suited to its particular situation." Id. at 79. The CAA then "establishes a partnership between EPA and the states for the attainment and maintenance of national air quality goals." See Natural Res. De f Council, Inc. v. Browner, 57 F.3d 1122, 1123 (D.C. Cir. 1995). "Air pollution prevention ... at its source is the primary responsibility

of States and local governments... ." 42 U.S.C. § 7401(a)(3). Congress "carefully balanced State and national interests by providing for a fair and open process in which State and local governments, and the people they represent, will be free to carry out the reasoned weighing of environmental and economic goals and needs." In the current Supplemental Proposal, the EPA is proposing a FIP in Oklahoma regarding summertime NO X reductions under the CSAP ozone - season control program. The EPA is proposing to promulgate this FIP despite the fact that Oklahoma has submitted a SIP that meets the requirements of the CAA and despite the fact that EPA has not taken any action on Oklahoma's SIP, as required in the CAA. Such action by the EPA is an impermissible intrusion upon the authority

reserved to Ok lahoma and exceeds the authorit y granted to the EPA under the CAA.40

Another commenter makes similar arguments, citing the same case law. The commenter also notes that The Act expressly allocated to states the initial responsibility for determining the manner in which air quality standards are to be achieved. Train v. Natural Resources Defense Counsel, 421 U.S. 60,64 (1975). EPA "may devise and promulgate a specific plan of its own only if a State fails to submit an implementation plan which satisfies those standards." Commonwealth of Virginia, 108 F.3d at 1482. The CAA is an experiment in federalism "and the EPA may not run roughshod over the procedural prerogatives that the Act has reserved to the states ... " Id at 1408 (internal citation omitted). [ Okl ahoma Attorney General (EPA - HQ - OAR 2009 - 0491 - 4592), p. 6 - 8 ; Western Farmers Electric Cooperative (EPA - HQ - OAR - 2009 - 0491 - 4589), p. 4 .] **RESPONSE:** For the reasons explained in section IV.C.2 of the preamble to the final Transport Rule (76 FR 48208, August 8, 2011) and in the TSD entitled “Status of CAA 110(a)(2)(D)(i)(I) SIPs Supplemental Rule ” TSD (December 2011), EPA has the legal obligation to promulgate all of the FIPs in this rule. This conclusion is based on the plain language of the Clean Air Act as a pplied to the specific circumstances of each state. Section 110(c)(1) of the Act requires EPA to promulgate FIPs within two y ears after finding that a state has failed to make a required SIP submission or disapproving a SIP. Specificall y, section 110(c )(1) states that the Administrator shall promulgate a Federal Implementation Plan within two y ears after the Administrator "(A) finds that a State has failed to make a required submission or finds that the plan or plan revision submitted by the State does not satisfy the minimum criteria established under subsection (k)(1)(A) of this section or (B) disapproves a State implementation plan submission in whole or in part." 42 U.S.C. § 7410 (c)(1)(A) & (B). EPA is relieved of the obligation to promulgate a FIP only if the state corrects the deficiency and EPA approves the SIP before promulgating a FIP. 42 U.S.C. § 7410(c)(1). The Act does not create any exceptions to this rule. EPA has not approved a SIP for Oklahoma that addresses this requirement; rather, EPA has proposed to disapprove Oklahoma’s SIP submittal that addresses 110(a)(2)(D)(i)(I). EPA is promulgating FIPs only in those circumstances where the Clean Air Act explicitly

provides that it shall do so. EPA has considered the specific circumstan ces of each state in determining whether it has an obligation to promulgate a FIP for that state with respect to a particular NAAQS. More detailed information regarding Oklahoma - specific actions taken by EPA and the status of its 110(a)(2)(D)(i)(I) SIP ap pears in the TSD entitled , Status of CAA 110(a)(2)(D)(i)(I) SIPs Supplemental Rule TSD (December 2011). The TSD explains the current status of the Oklahoma 110(a)(2)(D)(i)(I) SIP. Further, the cases cited by the commenter do not support the commenter's c onclusion that it is improper for EPA to promulgate the FIPs in this rule. The cases discussing the s ys tem of cooperative federalism established by the Clean Air Act explain both the primary role given to states with regard to the protection of air quality and EPA’s obligation to promulgate federal plans “if a State fails to submit an implementation plan which satisfies [the standards of 110(a)(2)]”. Train, 421 U.S. at 79.41

Comment: Commenter incorporates b y reference comments filed by Oklahoma Gas and Electric and Western Farmers Electric Cooperative. [ Oklahoma Utility Group (EPA - HQ - OAR - 2009 - 0491 - 4591), p. 3 .] **RESPONSE** : See above responses in this section. 7. **Wisconsin** No comments received on this issue. **III. Ozone Season NO**  **X Em**  **ission Budgets 3.**  **1 .**  **Gen eral**  No comments received on this issue. **3.2 Iowa** No comments received on this issue. **3.3 Kansas (A) Commenters(s) raise issues with the budgets established for Kansas.**  Comment : The allowances allocated to sources in these rules are se verel y s hort for the SO2 and NO X programs. This presents difficult compliance challenges for Empire District as well as other sources in Kansas that have either maintained compliance with previous rules via banked or purchased allowances and have not previousl y been subject to the Clean Air Interstate Rule and subsequently

do not have the needed controls installed. Empire District compared 2010 SO2 actual emissions with the 2012 SO2 allowance allocations and the initial analy sis shows that SO2 Group 1 allocations wi ll be approximately 600,000 tons short and SO2 Group 2, of which the state of Kansas belongs, allocations will be short approximately

300,000 tons. Since it is apparent there will be a shortage of SO2 allowances in 2012 available to purchase for compliance , it is critical that sources have more time to install the controls needed to comply with the CSAPR and supplemental rule to the CSAPR. According to the technical supporting document for Final Transport Rule analy sis in EPA’s application of the Integrat ed Planning Model, Appendix 3 - 3 New Source Review settlements in Base Case v 4.10_F Transport (05 - 16 - 11), the state of Kansas SO 2 budgets were developed without considering the allowance restrictions contained in the consent agreement for Westar’s Jeffrey Energy

Center. Because of the consent agreement restrictions there will be approximately 13,700 SO 2 allowances unavailable for trading. This egregious error severely restricts Kansas42

utilities ability

to comply with the CSAPR via the SO 2 allowance trading program and represents approximately

34 percent of the total state SO 2 budget. Empire District questions how many other consent agreements were ignored or erroneously missed. Furthermore, what is the true number of total allowances available across Group 1 and Group 2 if EPA considers all consent agreements in its respective state budgets? This is a serious issue that must be addressed prior to the commencement of the CSAPR going into effect in January 2012. [ Empire District Electric Company (EPA - HQ - OAR - 2009 - 0491 - 4581), p. 2 ] **RESPONSE:** These comments are outside the scope of this rulemaking. EPA is addressing the role of consent decrees in unit - level allowance allocation in a separate rulemaking . See Revisions to Federal Implementation Plans to Reduce Interstate Transport of Fine Particulate Matter and Ozone, 76 FR 63860, October 14, 2011. **3.4 Michigan** No comments received on this issue. **3.5 Missouri** No comments received on this issue. **3.6 Oklahoma**  **(A) EPA's Supplemental Proposal requires an over ly drastic reduction in ozone**  **season NO X**  **emissions for commenter and the State o**  **f Oklahoma generally.** Comment : EPA's Supplemental Proposal marks a significant change in the Agency's treatment of Oklahoma compared to the 2010 Proposed interstate Transport Rule, and also would require a drastic reduction in the State's actual ozone season NO X emissions. Commenter include a table that summarizes the differences between the ozone season NO X emissions budget for Oklahoma in the Supplemental Proposal, the same budget in the 2010 Proposed Rule, and the State's actual NO X emissions from EGUs during the 2010 ozone season. As shown in the table, the Supplemental Proposal assigns to Oklahoma a statewide ozone season NO X emissions budget of just 21,835 tons per y ear, which represents a reduction of more than 15,000 tons (roughl y 41%) from the state's budget in the 2010 Proposed Transport Rule. Compared to 2010 actual emissions, this budget requires a reduction of more than 13,000 tons (37%) statewide. The budget propo sed for Oklahoma is inadequate because EPA relies on a collection of flawed assumptions about unit shutdowns and curtailments. For example, OG&E's Mustang units are allocated no allowances and are therefore assumed to retire. OG&E does not expect shutdown of these units to be feasible while still meeting consumer demand. For OG&E's units, the total emission reduction required under the Proposal would be roughly 6,000 tons or 38.6% percent less than actual 2010 emissions and 6,800 tons or 41.5% percent le ss than the allowances provided to OG&E's units under the 2010 Proposed Rule. Certain43

OG&E units would bear the bulk of this impact. As an example, OG&E's Muskogee and Sooner units (the base load units of OG&E's generation) are assumed to achieve a 50% red uction in NO, emissions during the ozone season. Simply put, this would mean that these base load units could only run during 50% of the ozone season, which is the hot period in Oklahoma. Based on the demand for recent operations, OG&E believes that these reductions are not feasible. EPA claims that the drastic reductions in ozone season NO X emissions called for by the Supplemental Proposal can be achieved b y installing emission controls, or by purchasing allowances to cover emissions. It is not realistic, however, to expect EGUs to install controls prior to the proposed compliance deadline of May I, 2012. Nor has EPA accounted for the likelihood of allowance shortfalls in light of the drastic emission reductions that EGUs would be required to achieve b y M ay 2012. Furthermore, as discussed in more detail in Section IV, the compliance schedule may not allow enough time for OG&E to purchase power to replace what would be lost through curtailments. [ Oklahoma Gas & Electric Compan y (OGE) (EPA - HQ OAR - 2009 - 0491 - 4 590), p. 6 - 8 ; Oklahoma Utility Group (EPA - HQ - OAR - 2009 - 0491 - 4591), p. 5 .] **RESPONSE:** See the preamble to this final rule, section III.B.iv. and section III.E. Comment : Oklahoma’s ozone - season NO X budget is unreasonabl y low. In the proposed rulemaking for the Transport Rule (published in the Federal Register on August 2, 2010), the ozone - season NO X budget for the state of Oklahoma was set at 37,087 tons (Table IV.E - 2 of the preamble to the proposed rule, 75 FR 45291). In the SNPR, the ozone - season NO X bud get for the state of Oklahoma was set at 21,835 tons (Table I.C - 1 of the SNPR, 76 FR 40666). Between the issuance of the proposed rule in 2010 and the issuance of the SNPR in 2011, EPA reduced the state budget b y 41.1%. In the proposed rule, the state bud gets were set using a process that started with a baseline developed using the Integrated Planning Model (IPM), based on historic emissions data and projections about future growth in demand for electricity. After setting the emissions baseline, EPA used an air quality assessment tool (AQAT) and cost curves to determine the amount of NO X reduction that would be required to comply with the “good neighbor” requirements of the Clean Air Act. Using this method, EPA set the state ozone - season NO X budget at 37, 087 tons for Oklahoma. Despite some concerns about some aspects of the process, we believed the state budget established in the proposed rule to be fair and achievable. In the final rule and in the SNPR, EPA made a radical and previousl y unannounced departure from the previous method. Inthe preamble for the final rule, EPA stated that, based on emissions inventory

data for 2009, they

were changing the ozone - season emissions baseline. In the final rule, EPA acknowledged this change, but did not provide a clear description of the process. Was the new baseline based almost exclusively on the 2009 emissions inventory data? Did the EPA take into consideration the reduced demand associated with the recession as mentioned in section IV? How much did the IPM anal ys is performed previously factor into the new state budgets? The criteria used to set the new baseline remain unclear. We believe this change in methodology

fails to meet the standards for prudent rulemaking and that, by failing to re - propose the rul e and accept comments on this aspect of the rule, EPA has acted in an arbitrary and capricious manner **.** [ Oklahoma Department of Environmental Quality (EPA - HQ - OAR 2009 - 0491 - 4593), p. 5 - 6 .]44

**RESPONSE:** First, EPA has finalized in this action an ozone - season NO X budget for the state of Oklahoma that is significantly larger than the budget in the proposed Supplemental r ulemaking. This higher budget for 2012 addresses the commenter’s concerns about compliance with the 2012 proposed budget. In regards to quest ions about 2009 data informing the baseline, the 2009 data was one of several variables that influenced the final rule emissions baseline for 2012. For instance , lower natural gas prices are another variable that w ere updated that would also impact the ba seline between proposal and final. EPA did consider the recessionary impact of 2009 on emissions levels. We did not use emission levels in our modeling, onl y emission rates

— which are minimally impacted by

an y recessionary

impacts. Comment : The Oklaho ma emission budget is not based on accurate data and operational assumptions. EPA may

not impose requirements on sources or states without authorization by Congress through the CAA. See, e.g., Michigan v. EPA, 268 F.3d 1075, 1081 (D.C. Cir. 2001) ("It is axiomatic that an administrative agency 's power to promulgate legislative regulations is limited to the authority

delegated b y Congress.") (quoting Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 208 (1988». EPA has not demonstrated that the severel y restri ctive budget proposed for Oklahoma would achieve onl y those emissions reductions required by Section 110 of the Act. Emissions reductions beyond what is required to eliminate significant contribution to downwind nonattainment are an abuse of EPA discretion and in excess of the Agency 's authority under the Act. The unit - specific data and operational assumptions relied on b y EPA to establish the State emissions budget contains numerous inaccuracies. Comments on the 2010 Proposal submitted by

the Oklahoma D epartment of Environmental Quality ("ODEQ") identified a significant number of errors in EPA's Integrated Planning Model ("IPM") files. See Docket No. EPA - HQ - OAR - 2009 - 049I - 2662 . ("The IP M model run results are very erratic, retiring both coal and natural gas facilities that have no plans to retire, increasing and decreasing electricity production at various facilities, and adding solar power to Oklahoma when none has been planned.") Similarly , WFEC notified EPA that the IPM files contained no heat input d ata for units 4, 5, and 6 at its Anadarko facility . See Docket No. EPA - HQ - OAR - 2009 - 0491 - 2642. The heat input of EGUs within a state play a crucial role in EPA's methodology for establishing the state's emissions budget. EPA's failure to correct these errors "bespeaks a 'let them eat cake' attitude that ill - becomes an administrative agency whose obligation to the public it serves is discharged if onl y it avoids being arbitrary and capricious." Chemical Mfrs. Ass'n v. EPA, 28 F.3d at 1266. The emissions bu dget for the State of Oklahoma cannot accuratel y reflect emissions reductions necessary to eliminate onl y those emissions that significantly contribute to downwind pollution because it is not based on the most accurate data available to the Agency . EPA cannot impose emissions reductions beyond those required to address Oklahoma's significant contribution to downwind pollution. In North Carolina v. EPA, the D.C. Circuit rejected EPA's attempt to require some states "to exceed the mark" in reducing upwind e missions because the Act gave "EPA no authority to force an upwind state to share the burden of reducing other upwind states' emissions." 531 F.3d 896, 921. Because the state budgets at issue in North Carolina "shifted the burden of emissions reductions," the Court invalidated the budgets as45

arbitrary and capricious. Id In CSAPR, EPA claims that the methodology used to set state emissions budgets evaluates only cost and state - specific contributions to downwind pollution. 76 Fed. Reg. 48,211 - 12. EPA compl etel y disregards the fact that an y m ethodology would produce inaccurate emissions budgets if fed inaccurate data and assumptions. Because the emissions budget proposed for Oklahoma is based on inaccurate data, modeling and assumptions, there is every reas on to believe that it too "exceeds the mark." [ Western Farmers Electric Cooperative (EPA - HQ - OAR - 2009 - 0491 - 4589), p. 9 - 10 .] **RESPONSE:** R egard ing the “solar” issue, EPA is not aware of any projected new solar in the IPM outputs, and the commenter does not specify what solar in the IPM outputs they are referring to. There are only 7.5 MW of O klahoma solar generating capacity (or about 0 .03% of more than 20,000 MW of total O klahoma generating capacity) in the NEEDS input files , reflecting what is reported t o be recently installed Southern Great Plains Commercial Solar. However, this appears to already exist and the source did not comment on its existence when depicted in the proposed modeling, so this is unlikely what commenter is addressing. Moreover, the relative size of these existing solar units would not have an y meaningful impact on emissions modeled at the state level. In regards to IPM projections of unit level heat input, they are just that

– projections of what would likely be the least - cost resp onse to the state budget or cost threshold modeled. EPA was very clear about how IPM does not reflect how the unit may ultimately

decide to operate. CSAPR is not a unit - level control program and the allocations are not based on its projections. Therefor e, the projection has no bearing on how the unit chooses to operate. The commenter ’s suggestion that simply substituting historic data from a period when a source was not subject to an ozone season emission reductions program for a period when it is subje ct to an emission reductions program is not reasonable and fundamentally inconsistent with the notion of emission reductions. In regards to the viability of the state budget in 2012, this final rule addresses those concerns b y increasing the budget to a l evel where no combustion controls are assumed. ( **B) There are errors in EPA’s methodology as applied to calculation of Oklahoma’s budget.**  Comment: DEQ’s anal ysis of the application of EPA’s methodologies for determining state budgets and allocations to individual units demonstrates clear errors were made in determining Oklahoma’s allowances. By changing the method of calculation for the state allowance budgets from using the IP M modeling to a reliance on 2009 emissions inventory data, EPA made a number o f errors that have resulted in assigning an ozone - season NO X allowance budget for the State of Oklahoma which is lower than is warranted. The Excel spreadsheet titled “Proposed CSAPR Unit L evel Allocations under the SNPR and Underl yi ng Data” provides basel ine data used to calculate the state budgets. A number of units are listed in the spreadsheet, because they will be subject to the Cross - State Air Pollution Rule even though they are not currentl y subject to the Acid Rain Program (ARP). These units do not report emissions to the Clean Air Markets Division (CAMD), and their emissions are not included in the CAMD database. EPA obtained some historical emissions data for these units, and those data are included in the spreadsheet. However, for the ye ars 2008, 2009, and 2010, many of these units appear in the table as having46

zero emissions for the ozone season. The absence of an y emissions data for these units has the effect of lowering the baseline from which EPA set the state budget. The agency provides a in the comment letter to provide a comparison of EPA and DEQ data for the total emissions from all subject units for the 2008 through 2010 ozone seasons. Two key observations are noteworthy : (1) due to the recession, the 2009 ozone season represented an anoma lously low y ear for ozone - season emissions and (2) the failure to capture ye ar - to - ye ar trends in emissions from units not subject to the ARP yielded a state budget baseline that is nearl y 3,000 tons too low. In addition, we calculate that utilities operati ng in Oklahoma will need to retrofit 43 individual combustion units with lo w - NO X burners to comply with the requirements of the new rule. This number is substantially larger than the 30 units in a four - state area predicted in EPA’s TSD, “Installation Timin g for Low NO X Burners (LNB).” To remedy these failings, we recommend that EPA increase the state ozone - season NO X allowance budget by 1,500 tons and that the compliance date for units operating in Oklahoma be pushed back to the 2015 ozone season. We beli eve that our request for this increase in the state budget is justified for four reasons: (1) the 2009 emissions estimate data are unrepresentative due to the recession, (2) the failure to include non - ARP sources in the budget baseline lead to a baseline n earl y 3,000 tons below actual values, (3) assuming a 50% control efficiency for low - NO X burners applied to a baseline elevated b y 3,000 tons would yield an additional 1,500 tons of allowances for the state budget, and (4) this increase in the budget still retains over 90% of the reductions from the initial proposal. We believe the fourth point to be particularly salient, and we would ask EPA to use their AQAT to determine whether, with a state ozone - season NO X budget of 23,335 tons, Oklahoma would be expect ed to make a significant contribution to the ozone levels in Allegan Co., Michigan. [ Oklahoma Department of Environmental Quality (EPA - HQ - OAR - 2009 - 0491 - 4593), p. 3 - 4 .] **RESPONSE** : The 2012 state budget has been increased . S ee section III.B.iv and section III.E. in the preamble of the final rule. EPA has finalized an ozone - season NO X budget for the state of Oklahoma that is significantly larger than the budget in the proposed Supplemental . T his higher budget for 2012 addresses the commenter’s concerns ab out compliance with the 2012 proposed budget. In regards to questions about 2009 data informing the baseline, the 2009 data was one of several variables that influenced the final rule emissions baseline for 2012. For instance , lower natural gas prices ar e another variable that w ere updated that would also impact the baseline between proposal and final. EPA did consider the recessionary impact of 2009 on emissions levels. We did not use emissions levels in our modeling, onl y emission rates

— which are m inimally

impacted by

any recessionary

impacts. **3.7 Wisconsin** No comments received on this issue. **IV. Proposed Unit**  **- Level Ozone Season NO**  **X Allowance Allocations (data inputs & new**  **unit set -**  **asides)**47 **4.1 General**

No comments received on this issue. **4.2 Iowa** No comments received on this issue. **4.3 Kansas** No comments received on this issue. **4.4 Michigan (A) Commenter disagrees with set**  **- aside for Indian Country in Michigan.**  Comment : The MDEQ believes that the proposed new unit set - asides of 26 allowan ces for 2012 and 25 allowances for 2014 are not necessary and should be returned to the allocation pools for the electric generating units main allowances. At this time and into the foreseeable future, the MDEQ is not aware of any proposed power plant inst allations on Michigan tribal lands. In addition, the EPA has indicated that even if a state received federal approval for a SIP, the EPA will continue to allocate allowances to Indian Country units. The MDEQ believes it is more appropriate for states to have the abilit y to process an y new source requests and allowance determinations for the entire state, including tribal lands, rather than having a split allocation sy stem once the state's SIP is approved. [Michigan Department of Environmental Quality

(EP A - HQ - OAR - 2009 - 0491 - 4606), p. 1 - 2.] **RESPONSE** : EPA retains administration of new unit set - asides designated for Indian country because EPA, rather than the states, has the authority and responsibility

of administering the Transport Rule with regard to new units that locate in Indian country . Under the FIP, any allowances from the Indian country new unit set - aside that are not allocated in a given control period are redistributed to the state’s new unit set - aside for allocation to new units not in Indian co untry . Any

allowances not allocated from the state’s new unit set - aside are redistributed to existing units , which are not in Indian country . Under a SIP, the state may determine how unallocated allowances in the Indian country set - aside are to be alloc ated within the state. For details, see section VII.D.2.e of the preamble of the final Transport Rule and see section XX.D of the Transport Rule Primary Response to Comments document [EPA - HQ - OAR - 2009 - 0491 - 4513]. **4.5 Missouri** No comments received on this issue.48 **4.6 Oklahoma**

**(A) Commenter(s) state that facility -**  **specific allowance allocations are based on flawed and/or incomplete data.**  Comment : The data used in the proposed allowance allocations in the NODA for the proposed rule and supporting technic al information are in error. The allowance allocations in the Technical Support Documents are based on flawed and incomplete historical data and emissions level model inputs. These errors were identified in previous comments regarding this rulemaking b y th e AES Corporation, but have thus far not been corrected. The NO X allocations provided for the AES Shady Point facility do not reflect historical actual NO X emissions. As indicated in the Unit Allocation Table in the Administrative Record, the source of the NO X data for AES Shady Point is Energy

Information Administration (EIA) data. However, in y ears 2005 - 2006, for the AES Shady Point facility , despite non zero data entry entries for heat input, data entries for NO X emissions were omitted, and apparentl y treated as zero within the allocation methodology . This omission must be a clerical error since it cannot be assumed that the facility generated heat without generating NO X . The facility was unquestionably

in existence and operating at the time. More s pecificall y, the State of Oklahoma authorized NO X emissions for this facility (Permit Number) and included AES Shady Point facility

emissions in its State Implementation Plan (SIP) emissions inventory . For example, for calendar year 2009, the facility repo rted a total of 1315.7 tons NO X (2009 Point Source Emissions, ODEQ, August 22, 2011, http://www.deq.state.ok.us/AQDnew/emissions/index.htm). Based on an engineering review utilizing actual facility

NO X emission data (in place of the omitted data) and the proposed USEPA methodology , these data omissions appear to yield erroneousl y low NO X allocations. A copy of these engineering calculations including proposed corrected NOX allocations are attached. AES asks that the above clerical error be corrected and the facility 's actual emissions be recognized in the allocation methodology . If the clerical error is not corrected AES will be significantl y and unfairl y impacted. While NO X emissions from other company 's facilities would be recognized - the NO X emissions f rom AES would not - resulting in a significant competitive disadvantage to AES. Such an unfair application of the law would appear to be both arbitrary and capricious, and a Federal due process violation. [ AES Shady Point (EPA - HQ - OAR - 2009 - 0491 - 4580), p. 1 . ] **RESPONSE:** The AES Shady Point facility ’s historic data has been updated in this final rulemaking to reflect the data submitted during the comment period and described above. The final unit level allocations reflect these updates and can be seen in the allocation Technical Support Document , “Final Unit - Level Ozone Season NO X Allowance Allocations to Existing Units in 5 States: Supplemental Final Rule,” in the docket to this rulemaking.49 **4.7 Wisconsin**

No comments received on this issue. **V. Other In**  **- Sco**  **pe Issues 5.1 Implementation Issues (e.g., timing for installation of controls)**  A. **Commenter supports EPA’s compliance timetable.** Comment : Sierra Club also supports EPA’s proposal to implement the NO X emissions reductions on the same schedule for the 20 other states subject to the transport rule. Each state has been well aware that it could be subject to ozone season NO X emission requirements. Four of the states were subject to the ozone season NO X requirements in the Clean Air Interstate Rule, and thre e were subject to 2010 cross state proposal. Another compelling reason why these six states must start making reductions immediately is that the proposed cross state rule only aims to achieve compliance with 1997 ozone standard of .08 ppm. The standard wa s decreased in 2008 to .075 ppm and EPA has proposed to lower the standard even further to .06 to .07 ppm. Indeed, Sierra Club’s position continues to be that the transport rule, and this supplement, is deficient because it fails to prevent significant co ntribution to nonattainment of 2008 ozone NAAQs. [ Sierra Club (EPA - HQ - OAR - 2009 - 0491 - 4587), p. 2 - 3 .] **RESPONSE:** EPA concurs with the comments supporting the application of the same schedule under the Transport Rule ozone season NO X program to I owa, Michig an, Missouri, Oklahoma , and Wisconsin as to other states. To the extent the comment addresses the 2008 Ozone NAAQS, the comment is outside the scope of this rulemaking, which addresse s the 1997 ozone NAAQS. Comment : We also support EPA’s proposal to imp lement the ozone season NO X emission requirements for the six states subject to the SNPR (including SIP submissions) on the same schedule as those requirements for the 20 other states subject thereto, that is, beginning May 1, 2012. Those six states and po wer plants located therein should be able to meet this schedule, as each state has been subject to (or on notice that it could be subject to) ozone season NO X emission requirements. Of the six states subject to the SNPR, four (Iowa, Michigan, Missouri and Wisconsin) were subject to the ozone season NO X requirements in the Clean Air Interstate Rule (“CAIR,” which CSAPR replaces), while three (Kansas, Michigan, and Oklahoma) were subject to the 2010 CSAPR proposal. [ Clean Air Task Force, et al. (EPA - HQ - OAR - 2009 - 0491 - 4588), p. 3 .] **RESPONSE** : EPA concurs with the comments supporting the application of the same schedule under the Transport Rule ozone season NO X program to I owa, Michigan, Missouri, Oklahoma , and Wisconsin as to other states.50 B. **Commenter(s) ques tions the feasibility and/or validity of the compliance deadline.** 

Comment : How does EPA expect the States to comply with this rule by

the 2012 compliance date? In the Fact Sheet for the Cross - State Air Pollution Rule, EPA notes that “This action builds on more than fifteen y ears of progress...” The six States in the Supplemental Rule will have approximately

6 months to prepare and implement a method of compliance. [ Oklahoma Municipal Power Authority (OMPA) (EPA - HQ - OAR - 2009 - 0491 - 4573), p. 2 .] **RESPONSE:** See the preamble of final Transport Rule, section VII.C and the "Transport Rule Engineering Feasibility

R esponse to Comments" document in the docket to this rulemaking (Docket ID No. EPA

–HQ

– OAR

–2009

– 0491). T he Transport Rule does not apply unit - specific requirements, thus provides flexibility f or compliance across units with various control capacities. While the NO X ozone season program begins in May 2 012, sources have until Septemb er 30, 2012 to achieve emission reductions and can purchase allowances to cover emissions until December 1, 2012 when they have to comply

by holding allowances sufficient to cover their ozone season NO X emissions. Comment: Empire District believes the short time frame whereb y affected sources must comply with the provisions o f both the final CSAPR as well as the proposed supplemental rule to the CSAPR is not realistic. Affected sources are allowed less than five months to comply with the annual NO X and SO 2 emissions requirements in the final CSAPR and allowed less than nine m onths ( to comply

with the ozone season NO X emission requirements in the proposed supplemental rule to the CSAPR. In the proposed Transport Rule Empire District commented that during a 2010 study of our Asbury facility to determine the Air Qualit y Contro l Sy stems (ACQS) needed for the future, including a scrubber, that the actual projected timeline from project planning to project completion is approximately 60 months. Using this as an example, it will take more time than allowed for b y these rules for so urces to install the controls that will be required for compliance. [ Empire District Electric Company (EPA - HQ - OAR - 2009 - 0491 - 4581), p. 1 .] **RESPONSE: S**  ee the preamble of final Transport Rule, section VII.C.2 and the "Transport Rule Engineering Feasibility Response to Comments" document in the docket to this rulemaking (Docket ID No. EPA

–HQ

– OAR

–2009

– 0491). The Transport Rule does not apply unit - specific requirements, thus provides flexibility for compliance across units with various control capacities. Co mment : EPA indicates that it expects to finalize this rulemaking on or before November 1, 2011 which allows for only a six - month lead time prior to the 2012 ozone season which commences on May

1, 2012. See 76 Fed. Reg. 40667, Section I(E). KCP&L has coal - fired units that are part of what EPA describes as the “vast majority of covered sources already have combustion controls installed”, but also has units that are part of the “small number of sources will need to install combustion controls to comply”. Id . KCP&L does not concur that for this later group of sources it is “practical” to install combustion controls to achieve compliance “within the time period” allowed. Id .51

Installation of these combustion controls on KCP&L’s coal - fired units is a time - consum ing, expensive process. Steps in this process include: initial design, development of project specifications, procurement (identification of bidders, solicitation, review of bids, and contract negotiations), permitting including in some cases New Source Re view Presentation of significant Deterioration permits, regulatory approvals, obtaining financing, final design, mobilization of the needed workforce, construction, process tie - ins and process startup testing. These activities cannot commence until a final rule is issued and the compliance requirements known. KCP&L believes several of these steps alone can exceed six months much less all the steps in total. [ Kansas City

Power & Light (EPA - HQ - OAR - 2009 - 0491 - 4584), p. 2 .] **RESPONSE :**  See the preamble of final supplemental rule, section III.B.iv. Also see the preamble to the final Transport Rule, section VII.C.2 and the "Transport Rule Engineering Feasibility

Response to Comments" document in the docket to this rulemaking (Docket ID No. EPA

–HQ

– OAR

–2009

– 0491). The Transport Rule does not appl y unit - specific requirements, thus provides flexibility

for compliance across units with various control capacities. Comment : Inthe Supplemental Proposal, EPA say s that it expects to finalize a rule for Oklahoma and the other five states on or before November 1, 2011, which would allow approximately

six months of lead time before the start of the 2012 ozone season. EPA claims that only "a small number" of sources would need to install combustion controls in order to comp ly with the CSAPR, and that this small number of required installations can be achieved in just six months. EPA's assumptions are incorrect for Oklahoma and the surrounding region. To comply with the Supplemental Proposal (without considering other EPA ru lemakings on air emissions), one commenter anticipates that it would need to install L ow NO X Burners ("LNBs") on all five of its coal - fired units, which represent a significant portion of the generating capacity in Oklahoma. Another utility

group commenter states broadl y that it will need to install controls on many of its affected units. EPA itself estimates that L NBs will need to be installed on 30 coal - fired boilers, mostly in Oklahoma and surrounding states. In Oklahoma alone, EPA assumes that L NBs will be responsible for 9,900 tons of ozone season NO, emission reductions in Oklahoma during 2012. Commenters therefore disagree with EPA's notion that L NB retrofits will impact a "small number" of units in the region. Furthermore, it will not be possible to procure, permit, and install the necessary controls on these units before May

of 2012. Some commenters estimate that it will need roughl y three years from the date of an appropriate final rule before the required controls could be operational on the appro priate units. Overall, this process requires project scoping, budgeting, engineering and design, bidding, permitting, outage planning, equipment fabrication, delivery , and installation. One utility

group commenter estimates that it will need somewhere between 2 1⁄2 to 3 y ears, before the required controls can be installed and are functionall y operational. This is ty pical for this kind of installation of air emission controls. It will take 12 - 18 months to bid and acquire the necessary equipment. Assuming perm its and regulatory approvals can be obtained52

simultaneously

with this procurement process, the timing to apply for and receive the required permits and approvals will require approximately 12 - 18 months. Another 12 - 18 months of construction time may

be need ed once equipment, permits and approvals are available for the controls to be operational. In some instances the controls may require additional tuning over a period of four (4) to six (6) months to achieve the designed reductions. Overall, this process re quires project scoping, budgeting, engineering and design, bidding, permitting, outage planning, equipment fabrication, delivery , and installation. While not included in this estimate, another timing requirement will be to schedule and determine how the un its will be allowed to be taken off - line for the installation

– whether during scheduled outages or if other timing involved with the SPP approval. This comprehensive planning and schedule coordination will require additional time and may

prevent the contr ols being installed as quickl y as they might without these important considerations for electricity reliability

on the grid. Another commenter states that it is estimated that affected units would need 12 - 18 months to acquire the necessary

equipment and p ermits, and that it is estimated that 21 months of construction time would be necessary once equipment and permits are available. EPA's two anecdotal instances of LNB installations in Texas and Georgia from the two page TSD for this rulemaking do not supp ort a six - month schedule for installing LNBs on commenters’ units. Two commenters note that as an initial matter, the "similar schedule" mentioned in the TSD for the Southern Company units was actuall y ei ght months, not six. Furthermore, these examples do not account for the entire process leading up to operation. Specification, selection, procurement, and permitting are not discussed in one or both examples. Optimization is also not taken into account. Reliant Energy , for example, installed L NBs in May but then spent through September tuning the controls to achieve performance guarantees. One of the commenters notes that unit - specific characteristics distinguish EPA's two examples from its units. The document cited for Reliant Energy mentions additional b oiler modifications that would be required when burning Powder River Basin coal, which commenter uses in its units. For the Southern Company units, the retrofit sy stem consisted of burners only and did not require the design or installation of overfire air sy stems, as would commenter's units. The examples were 1990 - 2001 retrofits, whereas commenter would need to install controls under different circumstances and at a time when contractor and equipment availability will be at a premium. Commenter also differ s from EPA's two examples in that it will need to proceed on its units in phases for demand reliability reasons. For all these reasons, EPA has no basis for setting a compliance schedule based on two isolated examples that are not comparable to LNB install ation schedules for EGUs in Oklahoma. Some commenters also noted in conjunction with these examples cited by EPA that, contrary

to those examples, it is infeasible for WFEC to install controls by May 1, 2012 that will be necessary to achieve the emissions reductions required by the proposed unit - specific allowance allocation for its units. Under the Proposal, WFEC must reduce its overall emissions by 30 percent. Installation of dry low NO X burners on Anadarko units 4, 5, and 6 is the quickest and most cost effective way

for WFEC to achieve the required reductions through controls. EPA makes the unfounded assumption in its technical support documents that low NO X burners can53

be purchased, installed, and tuned within 6 months. EPA's assumption is based on ven dor papers developed as marketing tools. These papers are not an unbiased technical assessment representative of industry practices. EPA cannot rely on promotional materials to determine the feasibility of installing controls. WFEC has solicited bids fo r low NO X burners from several vendors. Simply obtaining the equipment will take WFEC between 12 and 18 months. After WFEC obtains the necessary equipment, there are numerous other factors that will further delay installation of the controls. First, WFEC must obtain approval from Southwest Power Pool ("SPP") before it takes the units offline for an extended outage (it will take approximately six to eight weeks to install the low NO X burners at each unit). SPP has members in nine states; eight of those state s are affected b y either CSAPR or the Proposal. EGUs in each of these states also will need to install controls. Second, WFEC must undertake extended outages during shoulder seasons. Due to increased demand, it cannot shut down a unit for a significant amo unt of time during the winter and summer months. Finally , WFEC must obtain the necessary permits before it begins installation of the low NO X burners. The permitting process can take between 12 and 24 months, depending on the potential affect of the propos ed project on emissions. Even if WFEC beings the process of obtaining the necessary

equipment and permits now, it would be impossible for the compan y to install controls by

the compliance deadline for the first ozone - season NO X trading program. Another co mmenter (GRDA) stated that it must reduce its overall NO X emissions by over 50 percent. Installation of low NO X burners with over fire air and computerized combustion controls is the most expedient and technicall y established method for GRDA. To implement such a customized solution requires substantially more time than the six (6) months allowed by the Proposal. GRDA has carefully studied EPA's explanation of its decision to allow Oklahoma utilities only

six (6) months to implement multiple and complex NO X reduction projects, and it is apparent EPA's six month allowance is unreasonable, and not consistent with EPA's own statement of facts. For example, EPA expressly acknowledges on page 48281 of the published rule that "historical projects suggest a more typ ical schedule would be 12 to 16 months for the contractors' portion of the work. A plant owner's project planning and procurement work in advance of a contract award would typically involve several additional months." The coal fired units in Oklahoma are the primary and most reliable base load providers of electricity . Of these, nine units totaling over 4,000 megawatts will require design and installation of customized low NO X burner s ys tems. The installation and startup time for such s ys tems is a minimum of several months, and electric s ys tem needs would necessitate that all nine Oklahoma units be scheduled between March 20 - May 1, 2012. Successfull y mobilizing the necessary experienced engineers and technicians for installation and successful startup would be in grave doubt. Industry experience has clearly

shown that tuning of new low NO X sy stems often takes several months. GRDA has consulted with a highl y experienced engineering firm (Black & Veatch), and also obtained preliminary

conceptual proposal s from vendors of low NO X burner sy stems. Based on these consultations, an achievable and prompt implementation schedule for customized and effective low NO X burner sy stems in Oklahoma (and GRDA) needs to include a number of elements totaling 36 months as outlined in a full detailed list in the commenter’s letter.54

Another commenter states that it will need roughly three y ears from the date of an appropriate final rule before the required controls can be installed and operation. This amount of time is ty pic al for the kind of work required, and other EGUs are likel y to be in a similar position. Therefore, in addition to revising the Supplemental Proposal to set forth a reasonable degree of emission reductions, the Agency should allow no less than three y ears from the date of a final rule for sources to comply . [ Oklahoma Gas & Electric Compan y (OGE) (EPA - HQ - OAR - 2009 - 0491 - 4590), p. 8 - 9 ; Oklahoma Utility Group (EPA - HQ - OAR - 2009 - 0491 - 4591), p. 6 - 7 ; AES Shady Point (EPA - HQ - OAR - 2009 - 0491 - 4595), p. 5 ; Western Farmers Electric Cooperative (EPA - HQ - OAR - 2009 - 0491 - 4589), p. 10 - 11 ; Grand River Dam Authority ("GRDA") (EPA - HQ OAR - 2009 - 0491 - 4586), p. 6 - 8 .] **RESPONSE:** See the preamble of final supplemental rule, section III.B.iv. Also see the preamble to the final Transport R ule, section VII.C.2 and the "Transport Rule Engineering Feasibility

Response to Comments" document in the docket to this rulemaking (Docket ID No. EPA

–HQ

– OAR

–2009

– 0491). The Transport Rule does not appl y unit - specific requirements, thus provides flexibil ity

for compliance across units with various control capacities. Comment : EPA's claim of two (2) low NO X burner projects requiring onl y six (6) months is incorrectly

assessed and should not be utilized for the following reasons:

● In the case cited b y EPA (subscript 62) b y Riley Power, this project only included low NO X burners, and was specificall y implemented without the use of overfire air (OFA) or burner sizing changes. The actual NO X emissions attained after this example project was only a pitiful .36 lb/MMBtu. In the case of GRDA, this .36 level is already surpassed and GRDA must achieve a reduction to approximately 0.16 lb/MMBtu to meet Proposal allowances. Clearl y, much more sophisticated, and customized, burner technology sy stems will be needed than this EPA example. Lastly , this "paper" cited by EPA was obviously written b y the vendor as a sales promotional tool. This "paper" should not be relied on b y EPA as representing an independent and impartial assessment of the facts, and a basis for issuing enforceable regulations. ● In the case cited b y EPA (subscript 63) b y Foster Wheeler, this "paper" is again obviously a sales promotional tool, and should not be relied on b y EPA as representing an independent and impartial assessment of the facts, and a primary basis for establishing enforceable regulations. The paper claims 16 weeks to engineer and fabricate low NO X burners, and 7 weeks to install them. However, no facts are presented that demonstrated the project onl y took six months total and no mention was made of how this base load unit was scheduled for its nearl y two month outage. In addition, the paper states "The sy stem was fully

operational in May

of 2000 and was tuned by September to consistently achieve a NO X performance guarantee". This statement positively shows an additional four months were needed to actually get burners to work properly , which is not unusual for low NO X sy stems. The "paper" states the design was simply copied from a similar Foster Wheeler design and it is therefore clear the engineering time was minimal. The paper states the burners were for tangential st yl e burners which are known to be easier to achieve results than those at GRDA. Clearly , this case does not warrant EPA establishing55 a six (6) month implementation regulation for the Oklahoma base load coal units. [ Grand

River Dam Authority

("GRDA") (EPA - HQ - OAR - 2009 - 0491 - 4586), p. 6 - 7 .] **RESPONSE:** EPA is not basing this final rule’s 2012 state budget for Oklahoma on the installation of new combustion controls by that control period. See the preamble of final supplemental rule, section III.B.iv. Also see the preamble to the final Transport Rule, section VII.C.2 and the "Transport Rule Engineering Feasibility Response to Comments" document in the docket to this rulemaking (Doc ket ID No. EPA

–HQ

– OAR

–2009

– 0491). The Transport Rule does not apply

unit - specific requirements, thus provides flexibility for compliance across units with various control capacities. Inaddition, sources in four of the states covered by this final rule ( Iowa, Michigan, Missouri, and Wisconsin) are already covered b y the final Transport Rule’s annual NO X program, which was finalized almost a y ear in advance of the 2012 ozone season; these sources should have already begun implementing an y desired NO X combu stion controls well before finalization of this rule. Comment : EPA'S referenced Technical Support Document (TSD) "Installation Timing for Low NO X Burners (LNB) ” states that EPA "analyzed" the installation of NO X burners on 30 boilers in the four affecte d states that are not in CAIR, with Oklahoma being one of these four states. This TSD is defective in several aspects. First of all, the TSD assumes the proposal will be finalized in June 2011 and burner modifications will be performed during fall of 201 1 and spring of 2012. However, the Proposal final rule is now planned for October 2011. The TSD was not updated to consider this four month delay of the rule. No implementation of low NO X burners can be done in the fall of 2011 which means all 30 boilers must be modified in the spring of 2012. These 30 boilers are the primary

base load electric generators for the involved utilities. In particular, taking out the affected boilers in Oklahoma, Kansas and Nebraska at the same time would be irresponsible and threatens public safet y and health. EPA could have learned this with a few simple phone calls, but no evidence is included this was done. EPA has apparentl y instead relied on a single telephone discussion with a vendor, and two sales promotion "papers" issued by vendors. No apparent effort was made to obtain independent and non - biased assessment from a competent engineering firm. There is no evidence that EPA contacted utilities, the Southwest Power Pool or NERC. As such, EPA has failed to meet its requ ired consideration of such impacts on the electric energy

s ys tem. Secondly , the referenced paper by Foster Wheeler contains no statement the entire project was done in a total of six months. In fact, the paper admits that tuning to meet burner guarantees t ook four months (during the critical summer months). Thirdly , both referenced examples were clearl y non - ty pical situations where minimal boiler modifications and engineering was performed. EPA should not base their rule making on such non - ty pical examples. Fourthly , EPA's overly "aggressive" six month schedule will prevent GRDA and other Oklahoma utilities from obtaining competitive and fair pricing, and is therefore not in the public interest. Vendors will be able to charge exorbitant prices, overtime and support fees. GRDA's ability to negotiate NO X performance guarantees will be impaired and this is not in the public interest. In summary , GRDA strongl y objects to the six (6) month implementation and requests EPA to utilize the 36 month implementation sch edule described earlier. [ Grand River Dam Authorit y ("GRDA") (EPA - HQ - OAR - 2009 - 0491 - 4586), p. 7 - 8 .]56

**RESPONSE:** EPA is not basing this final rule’s 2012 state ozone season budget for Oklahoma on the installation of new combustion controls by that control p eriod. S ee the preamble of final supplemental rule, section III.B.iv. Also see the preamble to the final Transport Rule, section VII.C.2 and the "Transport Rule Engineering Feasibility Response to Comments" document in the docket to this rulemaking (Dock et ID No. EPA

–HQ

– OAR

–2009

– 0491). The Transport Rule does not apply

unit - specific requirements, thus provides flexibility for compliance across units with various control capacities. Comment: Even if EPA retains the allowance budget that is currentl y pr oposed for Oklahoma, an initial compliance deadline of May 1, 2012 is not reasonable and must be revised. The Agency should allow no less than three y ears for utilities to evaluate generating options, obtain allowances, arrange for the purchase of replacem ent power where possible, and install controls to achieve the actual emission reductions that will drive the trading program in Oklahoma. Commenters state that a compliance schedule of three ye ars is especiall y appropriate in light of the fact that Oklaho ma was not included in CAIR and has relatively tenuous modeled impacts compared to other states. As evidenced b y the shifts in EPA's modeling and emission budgets for Oklahoma over the ye ars, affected sources in the State have faced significant uncertainty regarding whether, and to what extent, they would be subject to interstate transport requirements. This uncertaint y translated into Oklahoma sources having less notice of the requirements than sources in other states. One of the commenters also argues th at EPA should consider that capital expenditures for environmental controls cannot be included in customer rates until state regulatory agencies authorize cost recovery . The commenter notes that controls were not going to be necessary for its units based o n the 2010 Proposed Rule. As a final alternative, if EPA retains the allowance budget and the May

1, 2012 deadline in the Supplemental Proposal, EPA should at the very least delay application of the assurance provisions until 2014 so that interstate tradin g can provide more allowances to Oklahoma EGUs while the markets for instate allowances develop. Otherwise, if faced with inadequate lead time for installing controls and a shortfall of emission allowances, commenter and other electric utilities would be f orced to curtail operations to avoid noncompliance with CSAPR. As noted, the commenter's coal - fired units could need to curtail operations b y roughl y 50% during the ozone season, compared to their operations in 2010, if sufficient allowances are not availa ble. EPA has not provided an adequate assessment of the impacts on electric reliability from this level of curtailment. [ Oklahoma Gas & Electric Company (OGE) (EPA - HQ - OAR - 2009 - 0491 - 4590), p. 10 ; Oklahoma Utility Group (EPA - HQ OAR - 2009 - 0491 - 4591), p. 7 .] **RESPONSE:** EPA has proposed to adjust the effective date of the Transport Rule assurance provisions in a separate rulemaking (see 76 FR 63860, October 14, 2011). EPA believes that this final rule’s 2012 state budget for Oklahoma represents feasible emissi on reductions in that timeframe (see section III.B.iv of the preamble to this final rule) . The Transport Rule does not apply unit - specific requirements, thus provides flexibility for compliance across units with various control capacities. See comments i n other areas of this Response to Comment document57

regarding EPA’s assessment of current and future market liquidity and allowance availability based on current reports from the market place. Comment: The timeline for compliance with the rule’s requireme nts is not realistic. The final rule (published in the Federal Register on August 8, 2011) establishes a compliance schedule for both the PM - 2.5 and ozone portions of the rule that makes sense onl y for those states that were previously

covered by

the Clean Air Interstate Rule (CAIR). The final CAIR was published in March of 2005, allowing utilities owning or operating units subject to the rule y ears to come into compliance with the cap - and - trade sy stem set up by the rule. Key

components of any

successful market - based program include (1) sending clear signals to the market regarding the number of allowances which will be issued and (2) allowing the companies owning and operating units subject to the rule sufficient time to plan for future needs. DEQ recognize s that the vacatur and associated holding b y the Court of Appeals for the District of Columbia Circuit put the EPA in a position which necessitated that EPA set the compliance date for states already covered by

CAIR such that there would be no gap between compliance with CAIR and compliance with CSAPR. DEQ appreciates that this was needed to retain the reductions in emissions associated with the installation of new controls and other changes required by CAIR. A seamless transition from CAIR to CSAPR makes s ense for facilities located in those states; however there is no similar justification for the short time period between the issuance of the final rule and the requirements for compliance for states like Oklahoma that were not part of CAIR. Based on the st ate budgets announced in the Proposed Transport rule, it appeared that EPA was taking those concerns into account b y establishing budgets that could realistically be achieved b y the non - CAIR states in general and Oklahoma in particular. However, if the SN PR is finalized by the target date of October 1, 2011, that will only allow utilities seven months to plan, acquire capital, design, and install the control sy stems that will be required to allow those units to operate in compliance with the rule. Even the EPA’s own Technical Support Document (TSD), “Installation Timing for Low NO X Burners,” (issued July 2010), assumes that there are onl y 30 boilers located in the four states not already covered b y CAIR and that utilities would be able to install low NO X burners on those boilers if EPA was able to finalize the rule by June 2011. EPA has missed that target. The rule covering the six states (including Oklahoma) will not likely be finalized until October of 2011; therefore, even EPA’s own documents show the fal se premises upon which the assumption of a smooth transition to compliance with CSAPR were constructed. For Oklahoma utilities who were first excluded from CAIR and then led to believe based on the allowances in the proposed Transport Rule that compliance could reasonably be achieved, seven months is not enough time to accomplish the required measures based on the new timeline and new allowances in the SNPR. First, before installation can even begin, utilities will have to have the capital expenditures app roved, get designs in place, and obtain the required permits. If PSD is triggered, permit issuance could possibly take 9 - 12 months, 3 - 6 months if PSD is not triggered. Secondly , Oklahoma utilities must obtain permission from the Southwest Power Pool to und ertake the substantial downtimes that will be required to install control equipment (upwards of 40 - 50 day s). Based on power demand and the short timeline, brown - outs could very likel y occur.58

The pace and aggressiveness of these environmental regulations s hould be adjusted to reflect and consider the overall risk to the bulk power s ys tem. EPA, FERC, DOE, and state utility regulators, both together and separatel y, should employ the array of tools at their disposal to moderate reliability

impacts, including, among other things, granting required extensions to install emission controls. [ Oklahoma Department of Environmental Quality (EPA - HQ - OAR 2009 - 0491 - 4593), p. 2 - 3 .] **RESPONSE:** S ee the preamble of final supplemental rule, section III.B.iv. Also see the pre amble to the final Transport Rule, section VII.C.2 and the "Transport Rule Engineering Feasibility

Response to Comments" document in the docket to this rulemaking (Docket ID No. EPA

–HQ

– OAR

–2009

– 0491). The Transport Rule does not appl y unit - specific requir ements, thus provides flexibility

for compliance across units with various control capacities. Comment : Agenc y commenter calculates that utilities operating in Oklahoma will need to retrofit 43 individual combustion units with low - NO X burners to comply w ith the requirements of the new rule. This number is substantially larger than the 30 units in a four - state area predicted in EPA’s TSD, “Installation Timing for Low NO X Burners (LNB).” To remedy these failings, agency recommends that the compliance date f or units operating in Oklahoma be pushed back to the 2015 ozone season. We believe that our request for a minimum of a three - ye ar extension of the compliance date is justified for four reasons: (1) that is the minimum time necessary between issuance of the final rule (which will set the allowance budget) and the time the utilities will need to be able to plan for compliance with the rule

– this is an essential component of an y market based approach, (2) the failure of the EPA to abide by the assumptions ide ntified in their own TSD regarding the time required to install low - NO X burners, (3) the large number of units (43) that will need to be retrofitted in Oklahoma and the burden that will place on engineers, equipment suppliers, and the utilities, and (4) th e need to allow for utilities to apply for PSD permits as well as the time required to evaluate and draft the permits and that needed for the public and EPA to review them. [ Oklahoma Department of Environmental Quality (EPA - HQ OAR - 2009 - 0491 - 4593), p. 4 - 5 . ] **RESPONSE:** S ee the preamble of final supplemental rulemaking, section III.B.iv. Also see the preamble to the final Transport Rule, section VII.C.2 and the "Transport Rule Engineering Feasibility

Response to Comments" document in the docket to this rule making (Docket ID No. EPA

–HQ

– OAR

–2009

– 0491). The Transport Rule does not appl y unit - specific requirements, thus provides flexibility

for compliance across units with various control capacities. Comment : Should the EPA proceed with this rule making I wou ld request that Oklahoma be granted a more reasonable implementation timeline. Because we are so close to the effective date, it will be impossible for Oklahoma sources to comply and be fitted in time with the appropriate emission controls, which require c ustom design, engineering, and installation specific to each source. With an unrealistic implementation timeline such as the one proposed, the reliability

of electrical generation in the state of Oklahoma and the livelihood of many Oklahomans is at stake. [ Governor, State of Oklahoma (EPA - HQ - OAR - 2009 - 0491 - 4594), p. 1 .]59

**RESPONSE:** S ee the preamble of final supplemental rulemaking, section III.B.iv. In addition, note that the Transport Rule does not apply unit - specific requirements, thus provides flexibili ty for compliance across units with various control capacities. Comment : Our preliminary review of the proposed rule and the supporting documentation brings us to the same conclusion for both the final rule and the proposed supplemental rule, which is th ere is insufficient time for Kansas utilities to comply with either rule. Of the 28 states that will be subject to the Cross State Air Pollution rule (CSAPR) starting in 2012, all but three were subject to the Clean Air Interstate Rule (CAIR) prior to CSA PR. The three non - CAIR states are Kansas, Nebraska, and Oklahoma. CAIR states have had several ye ars to prepare plans, obtain construction permits, and commence or complete construction of projects to reduce emission of nitrogen oxides and sulfur dioxide. Until very recently , Kansas and the other non CAIR states have shared uncertaint y with respect to interstate transport and future control requirements. Kansas finds itself at a disadvantage, when compared to the CAIR states, when faced with a 2012 complian ce deadline. In section VII C. 2. of the CSAPR preamble (76 FR 48279), EPA states: "In 2012, the industry

will largel y meet the rule's NO X requirements by : Operating an extensive existing set of combustion and post - combustion controls on fossil fuel - fired generators; dispatching lower emitting units more often; and installing and operating a limited amount of relatively simple NO X pollution controls in states not previously subject to CAIR." EPA acknowledges that utilities in non - CAIR states likely will n eed to install "relatively simple NO X pollution controls," such as low - NO X burners and overfire air, to meet the state emissions budget for 2012. EPA further posted a NO X cost threshold of$500 per ton for states under the Cross - State Air Pollution Rule. In stalling combustion NO X pollution controls is not a simple task and cannot be completed in the six months time frame the proposed rule would allow. We have current real world costs for installation of such controls and they are higher than the $500 cost threshold. The rush for Kansas utilities to comply with a 2012 deadline will result in increased costs and the potential for stranded investments resulting from interim measures or "temporary fixes." For a utility

to install low NO X burners, a prevention of significant deterioration (PSD) permit generally

will be required due to an increase in carbon monoxide emissions. The PSD construction permitting process alone would normally take more than five months. It is highl y unlikely that Kansas utilities will be able to install controls and meet the state's emissions budget for 2012. Many Kansas facilities are in the planning stages for installation of additional controls to be completed between 2012 and 2015, and have received permits or have applications in pro cess. Emission reductions from approved projects now underway and in 2012 will reduce over 14,000 tons of NO X and 18,133 tons of SO2. Once these controls are in place, the State of Kansas should be able to meet the assurance levels established in the Cross State Rule. Kansas needs the time for these plans to be put in place to comply with the proposed rule. We believe that the assumptions made by

EPA in terms of cost of compliance and ability to complete pollution control projects in time for the 2012 ozone season are fundamentall y flawed and therefore do not60

accuratel y reflect the actual impacts the proposed rule will have on the Kansas econom y. We formally request that EPA provide the State of Kansas and its affected utilities two additional ye ars to compl y with the provisions of the proposed supplemental Cross - State Air Pollution Rule. [ Kansas Department of Health & Environment (EPA - HQ - OAR - 2009 - 0491 - 4582), p. 2 .] **RESPONSE: S**  ee the preamble of final supplemental rule, section III.C regarding the status o f Kansas in the final rule. Also see the preamble for the final Transport Rule, section VII.C.2 and the "Transport Rule Engineering Feasibility Response to Comments" document in the docket to this rulemaking (Docket ID No. EPA

–HQ

– OAR

–2009

– 0491) regarding timing and feasibility of controls installation. Note that the Transport Rule does not apply unit - specific requirements, thus provides flexibility

for compliance across units with various control capacities. Comment : PSO and AEP believe that if these st ates are required to reduce emissions, the level of reductions and the schedule for the emission reductions can and should be relaxed. There is no immediate need associated with potential health impacts since the Michigan County at issue is alread y in atta inment and predicted to remain in attainment. This clearl y illustrates that there is no need to rush the emission reductions EPA proposed for 2012. The proposed time schedule for emission reductions will greatl y impact the availability of existing generat ing sources in these states by requiring controls be added prior to the 2012 ozone season. Very few units will be able to install controls in order to comply with the 2012 ozone season and generation may not be available during high demand periods. Given the uncertain availability of NO X allowances and the compliance risk associated with utilizing allowances above the assurance level, sources will likely curtail operation to achieve compliance. The result could be either insufficient generating capacity to meet load demands during peak summer conditions and/or much higher prices for power purchases during these periods which will significantl y impact customer costs. We are also uncertain of the availability and price of NO X allowances for the 2012 ozone seas on. We expect the State as a whole to require allowances greater than the 21% assurance level above the state budget which will add an undue burden on the rate pay ers of Oklahoma. By extending the compliance dates b y 2 - ye ars or more, the industry would h ave time to properly plan and install any needed controls in Oklahoma and other states. [ Public Service Company of Oklahoma (EPA - HQ - OAR - 2009 - 0491 - 4600), p. 3 - 4 .] **RESPONSE** : See section III.B.iv in the preamble to the final supplemental rule. Also, s ee the preamble of final Transport Rule, section VII.C.2 and the "Transport Rule Engineering Feasibility

Response to Comments" document in the docket to this rulemaking ( Docket ID No. EPA

–HQ

– OAR

–2009

– 0491 ) . Note in addition that the Transport Rule does not ap ply unit specific requirements, thus provides flexibility for compliance across units with various control capacities. **(C) Commenter(s) disagree with statement that ability to purchase allowances helps address concerns over compliance timetable.**  Comment : EPA recognizes in the Supplemental Proposal that some sources will need more than six months to procure, permit and install combustion controls. In this situation, EPA say s that sources may

comply through the purchase of additional allowances. Commenter s have not been61

able to identify

how sufficient allowances could be available in Oklahoma while still allowing EGUs to meet consumer demand. They believe there will be a shortfall of allowances, especially during the 2012 ozone season. With no sy stem of in formation available with which to discern allowances and their pricing, commenters assert that more time is needed before the start of CSAPR in order to appropriately manage the supply

(and cost) of allowances available for purchase. Table A in the comments shows that a reduction of close to 13,000 tons, or roughl y 40%, from actual 2010 state - wide NO, emissions would be needed in order to make sufficient in - state allowances available to EGUs in Oklahoma. The group of commenters represents roughl y 80% of th e generating capacity in the State of Oklahoma and, as noted, will be unable to install controls by

May 2012. The group of commenters would need to purchase roughl y 16,000 tons of ozone season NO X allowances prior to that date. One of the commenters state s that it will have to purchase up to 6,000 allowances, mostly from EGUs that make up the other 50% of the State's generating capacity . Those other units, however, would themselves be required to reduce (or obtain allowances for) an additional 7,000 tons o r so of NO X emissions. Because man y of these units will be unable to reduce emissions in less than six months time, there is not likely to be a sufficient supply

of in - state allowances available for purchase in the earl y day s of CSAPR in Oklahoma. Moreove r, even if some units reduce emissions in 2012, they could choose to bank rather than sell their allowances in light of EPA's stated intent to promulgate further interstate transport requirements in the future. Allowances that are available for purchase ar e likely to be at a premium price. While commenters agree that allowance banking is a cost - effective and important feature of an y emissions trading program, EPA should recognize that banking also can lead to an allowance shortfall (and high prices) at the beginning of a trading program when drastic emission reductions are required without sufficient time to install controls, and further, unspecified reductions are likely to be required in the future. Interstate trading will be of limited use to commenters and other utilities that must obtain thousands of allowances at the start of the CSAPR program, if EPA applies the assurance provisions starting in 2012. The assurance provisions would mean that interstate trading could provide no more than 4,585 tons of o zone season NO X allowances (i.e. the variability limit) to EGUs in Oklahoma during 2012, or else penalties would be imposed on the State and its sources. One of the commenters notes that it alone will require more allowances than interstate trading could p rovide. Given the lack of sufficient allowances, EPA should revise the Supplemental Proposal to allow a reasonable allowance budget. Once a reasonable budget is established, utilities will need at least three ye ars from the date of a final rule to comply , which is the amount of time needed to install controls for achieving actual emission reductions. One of the commenters notes here, echoing similar remarks summarized above, that EPA should at the very least delay

application of the assurance provisions until 2014 so that interstate trading can provide more allowances to Oklahoma EGUs while the markets for instate allowances develop. Otherwise, if faced with inadequate lead time for installing controls and a shortfall of emission allowances, commenter62

would be forced to curtail operations to avoid noncompliance with CSAPR. EPA has not provided an adequate assessment of the impacts on electric reliability from this level of curtailment. [ Oklahoma Gas & Electric Compan y (OGE) (EPA - HQ - OAR - 2009 - 0491 - 4590), p. 9 - 10 ; Oklahoma Utility

Group (EPA - HQ - OAR - 2009 - 0491 - 4591), p. 7 .] **RESPONSE:** Market liquidity is already

developing in the Transport Rule (TR) emission markets, including in the ozone season NO X market relevant to this rule. Facilities have been trading all owances since EPA formally recorded 2012 Transport Rule allowances into designated facility accounts on October 18, 2011. In fact, several trades of Transport Rule allowances took place prior to the formal distribution of allowances. Initial transactions have been followed by further trades and options contracts in all of the trading programs. Further, on Thursday , November 17, 2011, First Energy held a successful auction of a minimum of a 100,000 SO 2 allowances, 50,000 each from 2012 and 2013 markets, al ong with an undisclosed amount of annual and ozone season NO X allowances. This auction is a significant injection of liquidity

into the market by

a single entity , further indicating that a sufficient numbers of allowances will be available to meet the need s of sources. They are planning to hold another auction on April 30, 2012. 1 Market liquidity

has developed rapidl y in all of the previous emission trading programs that EPA has implemented, including the Acid Rain Trading Program, the NO X SI P Call, the N O X Budget Program, and most recently CAIR, the predecessor to the Transport Rule. In both CAIR and the Transport Rule, individual units have the flexibility to supplement their own allowance allocations with the acquisition from the marketplace of an y add itional allowances needed to cover emissions under the Transport Rule programs. Healthy markets for the CAIR annual NO X , CAIR ozone - season NO X , and Acid Rain (SO 2 ) program allowances have been in existence for many y ears and delivered compliance costs bel ow EPA’s estimates. Further, as mentioned, trades have alread y taken place for allowances in the seasonal NO X market and other TR markets in anticipation of program implementation. Also see “Sam Napolitano Omnibus Declaration” in the docket to this final rulemaking. EPA is addressing the timing of the assurance provisions in a separate rulemaking (76 FR 63860, October 14, 2011) . Comment : EPA say s in the Supplemental Proposal that individual sources may comply through the purchase of additional allowan ces in the event that it takes a particular source more than six (6) months to install combustion controls. EPA fails to acknowledge the potential for allowance shortfalls, especiall y leading up to the proposed 2012 compliance deadline. EPA allowance allo cation shows that a 37.5% reduction in actual state - wide NO X emissions are needed for sufficient in - state allowances to be available. EPA has not suggested any means for achieving this sort of reduction in the few short months before the beginning of the 2 012 ozone season.

1 First Energy. FirstEnergy Successfully Concludes Emission Allowance Auction. Press release. November 18, 2011. Available on the Internet at <http://www.fescsaprauction.info/Portals/0/Documents/News/2011 - 11 - 18%20FES%20Successfully%20Concludes%20Emission%20Allowance%20Auction.pdf>.63

Interstate trading is limited by assurance provisions that restrict EGU emissions within each state to the state's budget plus the variability limit. The number representing a state's budget + variability

limit is referred to as the "ass urance level." For Oklahoma, the assurance level in 2012 for ozone season NO X from EGUs is 21,835 (budget) + 4,585 (variability limit) = 26,420. The purchase of allowances by individual sources cannot authorize the state to go above 26,420 tons of ozone se ason NO X emissions. Otherwise, penalties will be imposed on the state and its sources. Note that EPA originall y proposed to apply the assurance provisions starting in 2014, but the final rule implements the provisions starting in 2012. Commenters favor a 2014 start date for assurance provisions. If faced with inadequate lead time for installing controls and a shortfall of emission allowances, utilities would be forced to shut down some units or curtail their operation to avoid noncompliance with CSAP program requirements. If curtailment becomes necessary for CSAP compliance, the onl y other alternative to serve customers is to purchase power from out - of state generators. It is unknown if sufficient additional generating capacity will be available from units within the Southwest Power Pool. Additionally power which is available to be supplied by the Southwest Power Pool would increase NO X emissions in the generating state as well. [ AES Shady Point (EPA - HQ - OAR - 2009 - 0491 - 4595), p. 5 - 6 .] **RESPONSE** : Market liqui dity is already

developing in the Transport Rule (TR) emission markets, including in the ozone season NO X market relevant to this rule. Facilities have been trading allowances since EPA formally recorded 2012 Transport Rule allowances into designated facil ity accounts on October 18, 2011. In fact, several trades of Transport Rule allowances took place prior to the formal distribution of allowances. Initial transactions have been followed by further trades and options contracts in all of the trading program s. Further, on Thursday , November 17, 2011, First Energy held a successful auction of a minimum of a 100,000 SO 2 allowances, 50,000 each from 2012 and 2013 markets, along with an undisclosed amount of annual and ozone season NO X allowances. This auction i s a significant injection of liquidity

into the market by

a single entity , further indicating that a sufficient numbers of allowances will be available to meet the needs of sources. They are planning to hold another auction on April 30, 2012. 2 Market liquidity

has developed rapidl y in all of the previous emission trading programs that EPA has implemented, including the Acid Rain Trading Program, the NO X SI P Call, the NO X Budget Program, and most recently CAIR, the predecessor to the Transport Rule. In bo th CAIR and the Transport Rule, individual units have the flexibility to supplement their own allowance allocations with the acquisition from the marketplace of an y additional allowances needed to cover emissions under the Transport Rule programs. Healthy markets for the CAIR annual NO X , CAIR ozone - season NO X , and Acid Rain (SO 2 ) program allowances have been in existence for many y ears and delivered compliance costs below EPA’s estimates. Further, as mentioned,

2 First Energy. FirstEnergy Successfully Concludes Emission Allowance Auction. Press release. Nove mber 18, 2011. Available on the Internet at <http://www.fescsaprauction.info/Portals/0/Documents/News/2011 - 11 - 18%20FES%20Successfully%20Concludes%20Emission%20Allowance%20Auction.pdf>.64

trades have alread y taken place for allowanc es in the seasonal NO X market and other TR markets in anticipation of program implementation. EPA is addressing the timing of the assurance provisions in a separate rulemaking (76 FR 63860, October 14, 2011. Comment : Itis equally

infeasible for WFEC t o comply with the required emissions reduction by purchasing allowances. EPA anticipates that EGUs that cannot install controls by the compliance deadline will avoid violating the regulatory program by

purchasing allowances. However, EPA's expectations for the liquidity of the allowance market are greatl y inflated. ODEQ analyzed the state emissions budget information provided b y EPA in its technical support documents for CSAPR and determined that, of the 26 states included in the ozone season NO X trading pr ogram, only five states are predicted to have excess allowances. See ODEQ Anal ys is, Attached. None of these states are in the SPP. The remaining states are expected to have allowance shortfalls that range between 4.5 and 42 percent. ld. Accordingl y, the P roposal would place WFEC in the untenable position of having to choose between violating the requirements of the program or derating or shutting down units. Derating or shutting down units would jeopardize WFEC's ability to fulfill its contractual obligati on to supply power to the cooperatives it serves and ultimately to their retail, residential, commercial and industrial consumers. WFEC currentl y relies on some bilateral and market purchases to satisfy its obligations. If WFEC is forced to derate its EGUs to avoid violating CSAPR, it will need to significantl y increase its power purchases. WFEC is concerned that if the Proposal is finalized, it will be unable to purchase sufficient power to cover the shortfall in generation. Eight of the nine states in the SPP are affected b y either CSAPR or the Proposal and, thus, are unlikel y to generate excess power for sale. Derating or shutting down units also would pose a significant risk to the public health and welfare. The cooperatives served by WFEC do not have ac cess to other sources of power. If WFEC cannot respond to demand, the rural areas served b y the cooperatives will experience potentiall y dangerous brownouts and blackouts. 16 WFEC urges EPA to seek additional information from SPP regarding the potential af fect of the Proposal on reliability before issuing a final rule. GRDA has studied the NO X allowances for EGU's under the Proposal and is deeply concerned that sufficient NO X allowance will not be available in 2012 and that Oklahoma utilities will be gou ged exorbitant millions of dollars to purchase allowances from eastern utilities which have had ample opportunity

to accumulate such NO X allowances. To force Oklahoma utilities like GRDA to transfer man y millions of dollars of wealth is patently unfair and serves no environmental benefit. GRDA estimates that its public power customers will express great outrage if such a wealth transfer was forced on them. Again, GRDA urges EPA to reconsider the Proposal schedule and allow a minimum of 36 months for impleme ntation by Oklahoma EGU's. [Grand River Dam Authority ("GRDA") (EPA - HQ - OAR - 2009 - 0491 - 4586), p. 5 - 6] **RESPONSE:** Market liquidity is already

developing in the Transport Rule (TR) emission markets, including in the ozone season NO X market relevant to this ru le. Facilities have been trading allowances since EPA formally recorded 2012 Transport Rule allowances into designated65

facility accounts on October 18, 2011. In fact, several trades of Transport Rule allowances took place prior to the formal distribution of allowances. Initial transactions have been followed by further trades and options contracts in all of the trading programs. Further, on Thursday , November 17, 2011, First Energy held a successful auction of a minimum of a 100,000 SO 2 allowances, 50,000 each from 2012 and 2013 markets, along with an undisclosed amount of annual and ozone season NO X allowances. This auction is a significant injection of liquidity

into the market by

a single entity , further indicating that a sufficient numbers of allowance s will be available to meet the needs of sources. They are planning to hold another auction on April 30, 2012. 3 Market liquidity

has developed rapidl y in all of the previous emission trading programs that EPA has implemented, including the Acid Rain Trad ing Program, the NO X SI P Call, the NO X Budget Program, and most recently CAIR, the predecessor to the Transport Rule. In both CAIR and the Transport Rule, individual units have the flexibility to supplement their own allowance allocations with the acquisi tion from the marketplace of an y additional allowances needed to cover emissions under the Transport Rule programs. Healthy markets for the CAIR annual NO X , CAIR ozone - season NO X , and Acid Rain (SO 2 ) program allowances have been in existence for many y ear s and delivered compliance costs below EPA’s estimates. Further, as mentioned, trades have alread y taken place for allowances in the seasonal NO X market and other TR markets in anticipation of program implementation. EPA is addressing the timing of the a ssurance provisions in a separate rulemaking (76 FR 63860, October 14, 2011. Comment : EPA indicates that, “Individual sources may compl y through other measures (such as purchasing additional allowances) in the event that it takes a particular source more than six months for installation of a given combustion control.” See 76 Fed. Reg. 40668, Section I(E). KCP&Ldoes not agree with this statement. For example, KCP&Loperates the La Cygne Generating Station in Kansas. This Station is the only coal - fired uni ts operated by KCP&L in Kansas. The proposed 2012 ozone season allowance allocation shortfall is substantially greater than the Station’s share of the Kansas variability limit. So even if KCP&Lwas able to procure allowances to cover its shortfall at the Station, it would be exceeding its share of the Kansas variability

limit. This puts KCP&Lat risk of a significant penalt y if the state exceeds it assurance level even though KCP&L La C ygne Generating Station had allowances to cover its emissions. See 76 Fed. Reg. 48296. This risk of penalty illustrates that EPA’s statement that the sources may

purchase additional allowances is not a viable option to comply with our allowance shortfall at the Station. [Kansas City Power & Li ght (EPA - HQ - OAR - 2009 - 0491 - 4584 ), p. 2 - 3.] **RESPONSE:** EPA is not finalizing the FIP for Kansas at this time. See the preamble to the final supplemental, section III.C, for a discussion on Kansas’ current status.

3 First Energy. FirstEnergy Successfully Concludes Emission Allowance A uction. Press release. November 18, 2011. Available on the Internet at <http://www.fescsaprauction.info/Portals/0/Documents/News/2011 - 11 - 18%20FES%20Successfully%20Concludes%20Emission%20Allowance%20Auction.pdf>.66

**(D) The rule presents reliability concerns.** Comment: Inorder to provi de electrical service to our customers Empire District must maintain sy stem reliabilit y. Considering the severe shortage of allowances that will be available for purchase in 2012, sources that do not receive sufficient allocations permitting them to operat e normally must install pollution control equipment. And given the fact that sources will not have enough time to install the proper pollution control equipment before January 1, 2012, to meet customer electrical demand will be forced to de - rate the unit(s ) in order to comply with these rules. This will have an effect on s ys tem reliability . [Empire District Electric Company (EPA HQ - OAR - 2009 - 0491 - 4581), p. 2.] **RESPONSE:** EPA rejects the commenter’s assertion that there will be no allowances available to pur chase in 2012. As explained above, ample evidence already exists that viable allowance markets for Transport Rule compliance are already developing and trading has alread y begun. Furthermore, sources have the benefit of accessing the allowance market not just ahead of the commencement of the programs, but also over the entire time horizon ahead of the allowance transfer deadlines b y which sources must demonstrate compliance (December 1, 2012 for the 2012 ozone season and March 1, 2013 for the annual progr ams in 2012). As a result, the Transport Rule offers substantial unit - level flexibility that will allow sources to continue to meet whatever obligations they may have concerning electric reliability . See also “Sam Napolitano Omnibus Declaration” in the d ocket to this rulemaking. Comment: The Attorney General is also concerned about the effect of compliance upon the availability

of electricit y and the reliability of the grid in this region. To the knowledge of the Attorney General, there has been no complete or formal electric reliability assessment in cooperation with FERC for the CSAP Program, either alone or in combination with EPA's other proposed rules. FERC's informal anal ys is regarding the CSAP Program indicates that over 80 gi gawatts of coal - fire d generation may be retired in response to EPA regulations. Instead of obtaining a complete reliability assessment from FERC, EPA instead relied upon emission projections and analy ses developed using its Integrated Planning Model ("IPM"). However, a major limitation of the IPM model is that it assumes adequate transmission capacity exists to deliver an y resource located in, or transferred to, the region in question and thereb y fails to accuratel y evaluate impacts on reliability resulting from EPA programs s uch as CSAP, or combinations of EPA programs. The Attorney General is concerned that deficiencies in the IPM modeling could result in a shortage of replacement purchased power during the times in which either generating units are down or usage is curtailed due to efforts to comply with CSAP or other EPA rules. Electricity shortages could also result from the inability of utilities to timely obtain needed permits and control equipment. Oklahoma electric utilities doubt that they can take the measures require d to attain compliance with CSAP Rules within the six - month time frame currentl y allowed b y EPA. Instead, they estimate needing twelve to eighteen months to acquire all necessary

permits and equipment is given, with a total of twent y - one months estimated f or the controls to be operational. Failure to obtain needed permits and control equipment by May 2012 would result in the utilities' de - rating its non - compliant generating units to a point necessary to comply with ozone standards, meaning each of those uni ts would be operating at far less than its rated capacit y. As a result, uncertaint y currentl y exists regarding the availability and price of67

purchased power, even assuming adequate transmission capabilities, due to the widespread imposition of CSAP require ments across man y states. [Oklahoma Attorney General (EPA - HQ OAR - 2009 - 0491 - 4592), p. 2 - 3.] **RESPONSE** : The commenter erroneousl y attributes “FERC’s informal analy sis” of 80 GW of potential retirements to the Transport Rule, while in reality the commenter i s citing a preliminary FERC estimate that was based on a wide spectrum of several regulations, many of which had not even been proposed, and about which FERC made highl y conservative assumptions about stringency

of required controls that were not borne out by the rules as they

were subsequentl y proposed. FERC’s own chairman has emphasized that FERC staff had to make assumptions about EPA regulations before they were proposed and that these regulations have changed , has characterized this document as only “an adequate back - of - the - envelope first assessment” and has stated that it “cannot be relied on to determine specific effects on s ys tem reliability . Therefore, it is “inadequate to use as a basis for decision making.” 4 EPA disagrees with the commenter ’s unsupported allegation that its analy sis, included in the final Transport Rule, “fails to accuratel y evaluate impacts on reliability .” EPA’s modeling includes interregional transmission limitations based on parameters published by the North American El ectric Reliability Corporation, and those modeling assumptions were subject to public comment in the Transport Rule proposal as well as that rule’s IPM NODA. As explained in section III.B.iv of this rule’s preamble, as well as in the Determination of Stat e Budgets for the Final Ozone Season Supplemental of the Transport Rule” TSD in the docket to this final rule, EPA has carefull y examined the feasibility of emission reductions required for Oklahoma under this final rule, and EPA’s anal ys es show that the T ransport Rule does not threaten the availability or reliability

of electricit y for Oklahoma’s citizens. **(E) A more complete electric reliability assessment is needed for Oklahoma and the surrounding region.**  Comment : EPA has y et to provide an appropriate electric reliability assessment for the CSAPR and EPA's other rulemaking initiatives for the electric power sector. Requiring compliance with the Supplemental Proposal by May 2012 without a more complete assessment of reliability would create an unaccep table risk, especially if 2012 brings weather patterns similar to those experienced in Oklahoma this y ear. Commenters’ generating resources are currentl y operating at maximum capacity

to meet consumer demands during a record - breaking heat wave. A more comp lete reliability

assessment is critically

important to evaluate whether Oklahoma EGUs could meet these kinds of demands if curtailments were required as a result of EPA rules. According to the Federal Electric Reliability Commission ("FERC"), "the appropr iate vehicles for addressing the impact on electric reliability of the EPA rules in detail are the planning processes used b y utilities to identify and plan for the infrastructure and resources they will need to meet future needs." The processes FERC is re ferring to are implemented by regional planning authorities, including the Southwest Power Pool ("SPP") for the States of Arkansas, Kansas, 4 Testimony of Chairman Jon Wellinghoff, Fed eral Energy Regulatory Commission, Before the House Subcommittee on Energy and Power of the Committee on Energy and Commerce United States House of Representatives, September 14, 2011.68

Louisiana, Mississippi, Missouri, Nebraska, New Mexico, Oklahoma, and Texas. EPA should coordinate with FERC and the SPP to prepare a more complete electric reliability assessment for the implementation of CSAPR and other major EPA rulemakings in Oklahoma. In response to comments submitted on the final CSAPR, EPA claims that it has "been in contact" with many

of the re gional planning authorities concerning the impact of CSAPR on electric reliability . EPA does not elaborate on its consultations with the SPP or other regional authorities, but instead relies on the fact that regional authorities "have not filed comments or expressed concerns over reliability

in the record for this rule. . . . EPA's response misses the point. Numerous entities have expressed concern over the lack of a complete assessment of electric reliability impacts from EPA rules, especially during the earl y ye ars of CSAPR. The way to obtain a complete assessment is for EPA to prepare one in consultation with FERC and the regional authorities. It is not sufficient for EPA to point to a lack of comments from these entities in the official record. Rather than performing a complete reliability assessment, EPA claims that the flexibility allowed by an interstate trading program structure will inherentl y promote electric reliability , and that "basic reliability

requirements are already incorporated into the anal ys is" of its IPM. With respect to the structure of CSAPR, allowance trading alone will not ensure electric reliability in Oklahoma during the initial phase of the CSAPR for the reasons discussed previously in commenters’ letters. Rather, unit curtailments are possible on a scale that could impact electric reliability , if sufficient replacement power is not available for purchase and transmission into and within the State. Commenters are concerned that the IPM does not sufficiently account for restriction s on purchase power availability and transmission capabilities. In particular, the IPM sets certain limits on the ability to transfer power between model regions using the bulk power transmission sy stem. One of the commenters recentl y performed a Linear F irst Contingency

Incremental Transfer Capability Single Transfer Analysis to determine the deliverability

of a resource in another region and found that the capacit y from that resource was not deliverable, even though the capacity studied was less than the Joint Capacit y and Energy Limit used b y the IPM. Furthermore, the IP M' s inter - regional limits were determined from the 2004 NERC Reliability

Assessments, which were performed at a time when energy sales in Oklahoma were 7% less than in 2010. The IPM also assumes that, within each model region, "adequate transmission capacity exists to deliver an y resources located in, or transferred to, the region. . . This is a major limitation on the model's ability

to accurately

evaluate impacts on electric reliability in Oklahoma from major federal rules like the CSAPR. While the IPM can determine that a given region could meet reserve requirements with imported resources, it performs no assessment of the reliable delivery of the needed capacit y. Regarding the legacy s ys tems of its members in the 2010 State of the Market Report, the SPP stated that "[w]hile these systems may be functionally

sufficient for their respective areas, they

may not be sufficient for macro transfers across the region." Also, of the 20 most cong ested flowgates identified by the SPP in the July

2011 Monthly

State of the Market Report, 18 were within the SPP region as designated in the IPM.69

EPA should consider that purchasing replacement power of this magnitude may require OG&E to go through a competitive procurement bid process pursuant to the Oklahoma Corporation Commission ("OCC") electric utility rules and also may

require OCC approval. Depending on the complexity

of the issues involved and the timelines prescribed by OCC rules, this process co uld require one ye ar or more to complete, which could frustrate commenters' ability to arrange for replacement power if needed during the 2012 ozone season. Commenters are also concerned that an increase in demand for purchase power of this magnitude could impact the electricit y prices during 2012. Finally , the IPM does not substitute for an operational study of the generation capacity that would be available in the SPP during the ozone season if the Supplemental Proposal is finalized. The assumptions made in the IPM tend to overestimate unit availability , and commenters are concerned that EPA has not adequatel y evaluated how the Supplemental Proposal would impact the ability

to meet peak loads on a month - to - month basis during the summer time. In addition, while it is theoretically

possible that generation capacity might be available within the region, it is also necessary

to consider potential limitations in gas suppl y and transportation deliverability to ensure that fuel switching from coal to natural gas can be accomplished, along with the costs. These are select examples of commenters’ concerns about the IPM as a means of evaluating electric reliability

for the Supplemental Proposal, especially during the 2012 ozone season. More time is needed to review the model's assumptions and incorporate additional considerations related to generation capacity and transmission in the SPP. It will not be possible to prepare a sufficient assessment in time for compliance by May 2012. Furthermore, requiring compliance b y that date without an appropriate assessment would create an unacceptable risk to electric reliability . Commenter AES Shady

Point raises some of the same concerns in its comments. [ Oklahoma Gas & Electric Compan y (OGE) (EPA - HQ - OAR - 2009 - 0491 - 4590), p. 11 - 13 ; Oklahoma Utility Group (EPA - HQ - OAR - 2009 - 0491 - 4591), p. 8 - 10 ; AES Shady Point (EPA - HQ - OAR - 2009 - 0491 - 4595), p. 6 - 7 .] **RESPONSE:** As the commenter s note in quoting FERC, utility planning processes are the appropriate vehicle for addressing the impact on reliability of EPA rules. EPA has been working with RTOs, utilities, state commissions , and other appropriate entities in developing this rule , and others , and will continue working with these agencies as the rules are finalized and implemented. EPA co nsiders all rules that are in effect when it evaluates each proposal, so that the cumulative impact of rules are evaluated as they are put into effect. EPA evaluates all comments that are filed on each proposed rule in finalizing the rule. EPA believes the limitations on inter - regional power transfers used in IPM are appropriate; these limits are evaluated and modified when information is provided that i s sufficient to update these limits. Broad references, such as those in these comments, do not prov ide sufficient information to update these limits. Although the commenters ’ information that sales in Oklahoma are 7% higher today

than they were in 2010 is relevant to the determination of resource adequacy , IPM alread y captures these impacts through its use of reserve margin requirements.70

EPA believes commenters are wrong to dismiss the flexibility of the rule and then claim reliability problems. The rule’s inherent flexibility permits all utilities many alternatives to comply with the requirements of the rule: to purchase allowances from the market, to choose the best units to dispatch, to change fuel supply , or to import power from other regions. These comments provide no substantive reasons wh y these alternatives

– either singl y or in combination

– are not viable way s of meeting the rule’s requirements. With respect to comments on the operational limitation of the IPM model, IPM is not intended to be a model of operating capability within a region, nor does it need to be for the purposes used in dev eloping the rule. IPM is an economic model of the operation of the overall power sy stem in the lower 48 states; it projects generation and emissions in each region to meet electricity demand using engineering, environmental , and economic information on ge nerating units and information on the inter - regional transmission grid. The rule does not set operating requirements on individual units and provides operators of units the flexibility to choose how units should be operated. IP M models the loads in each region using a load curve that represents the amount of load that must be served at each load level; load levels are designed to reflect key operational peak, intermediate , and baseload conditions, thus capturing differing monthly load levels where these are important for operation of the s ys tem. The model also contains a detailed representation of the natural gas pipeline s ys tem, and incorporated the cost of increased suppl y of natural gas and additional pipeline capacity in deciding whether fuel switchin g is the best economic choice. EPA has developed a balanced set of data on unit availabilities to accuratel y represent plant availabilities in the IPM modeling: coal unit availabilities are based on historical data used b y the Energy

Information Administration , and other availabilities for other t ypes of units are based on the GADS data ( see IPM Documentation in the docket to this rulemaking ) . **5.2 Statutory and Executive Order Reviews (e.g., ICR)**  **(A) Commenter questions how the health benefits of this rule we**  **re determined.** Comment : How does EPA justify /calculate the numerous health benefits to this rule? L imiting emissions from any

source will of course provide health benefits; however, the numbers being issued with this rule seem to have no basis in fact. They appear to be based on estimations such as number of cases, severity of cases, and costs associated with treatment. Using those estimations to build a case to justify the action does not seem fair to the States that will pay the actual costs for esti mated benefits. [Oklahoma Municipal Power Authority (OMPA) (EPA - HQ OAR - 2009 - 0491 - 4573), p. 2.] **RESPONSE** : The comment is outside the scope of the SNPR because it addresses issues that were within the scope of the request for comments in the proposed T ransport Rule but not in the SNPR. While EPA is not reconsidering or reopening the issue, we note that the issue was previously

addressed in section VIII.C of the preamble for the final Transport Rule and in chapter 5 of the final Transport Rule Regulatory Impact Anal ys is , in the docket for this rulemaking .71 **(B) Rule does not take into consideration inability of independent power**  **producers to recover compliance costs.** Comment : Additionally

and most importantly , the FIP does not take into consideration that the AES Shady

Point facility, as a contracted independent power producer under long term contracts, does not currently

have mechanisms in place to recoup the implementation costs of this rule. This lack of a cost sharing mechanism unfairl y penalizes indepen dent power producers, and thereb y jeopardizing facility profitability , economic viability , regional grid stability , and employ ment of 90 workers, not including trickling economic impacts. [AES Shady Point (EPA HQ - OAR - 2009 - 0491 - 4580), p. 1 - 2.] **RESPONSE** : The comment is outside the scope of the SNPR because it addresses issues that were within the scope of the request for comments in the proposed Transport Rule but not in the SNPR. While EPA is not reconsidering or reopening the issue, we note that the iss ue was previously

addressed in the under the subject of long term contracts in the final Transport Rule RTC. S ee section V.D.2.a. , Applicability /Opt - in Units in the Transport Rule Primary Response to Comments for more details. **(C) Commenter questions fi nding of no significant or unique impacts on small**  **governments.** Comment : BPU questions EPA's finding that "[n]either the final Transport Rule nor the provisions in this SNPR have regulatory requirements that might significantly or uniquel y affect small g overnments." 76 FR at 40669/1. BPU, an administrative agency of the Unified Government of W yandotte County /Kansas Cit y, Kansas, operates an electric utility on a not - for profit basis for the benefit of approximately 65,000 residential, commercial, and ind ustrial customers in Wy andotte County /Kansas City , Kansas. The final Transport Rule and the SNPR will significantl y affect BPU b y requiring it to spend substantial sums of money to compl y with these rules. Raising those amounts through bonds, as BPU must d o, places additional burdens on the regulatory

and political process. Moreover, the final Transport Rule and the SNPR require instantaneous results in comparison to the amount of time needed to obtain bond financing thus significantl y affecting the ability of a small government to timely react to such requirements without facing the possibility of enforcement of the new rules against BPU. Finally , any increased costs related to new emission controls required by the rule will strain the finances of all BPU's customers, which include the count y, the city and their citizens. [Kansas City Board of Public Utilities (EPA - HQ - OAR - 2009 - 0491 - 4585), p. 4 - 5.] **RESPONSE:** A s already stated, EPA believes that no unfunded mandates have been created by the Transport Rule pr ogram inclusive of this supplemental rule. This comment does not provide evidence to demonstrate that this rule uniquely affects small governments or that the magnitude of the impact should be considered “significant.” EPA has not changed its finding base d on the fact that most of the costs are to be incurred b y the private sector. In the economic anal ys is for this rule, EPA’s projected impacts on electricity prices are small

— around 1% on average nationwide. See Chapter 8 of the RIA for more on economic impacts.72

**(D) The cost of compliance creates a substantial burden upon consumers and may affect the availability of electricity and the reliability of transmission within the region.**  Comment: The Attorney General is concerned about the cost of complianc e for utilities within Oklahoma and the effect those costs will have on consumers when they are inevitably

transferred to ratepay ers. The cost of compliance for just the two largest electric utilities in Oklahoma is estimated to be approximately $150 milli on. Those costs, when combined with the substantial costs of compliance with other EPA mandates and proposed rules create an unprecedented burden upon the electric energy consumers of Oklahoma. The EPA should be mindful of the fact that electricit y consume rs are not onl y pa yi ng the cost of compliance with its rules, they are also responsible for additional costs mandated b y other entities for transmission development, demand - side management and energy efficiency

programs, renewable energy programs, etc. [O klahoma Attorney

General (EPA - HQ - OAR - 2009 - 0491 - 4592), p. 2.] **RESPONSE** : EPA’s projected impacts on electricity prices are small

— around 1% on average nationwide. These are the incremental rate increases attributable to compliance with the Transport Rule. The total retail electricit y prices forecasted b y EPA do take into account non Transport Rule variables such as those cited above. EPA appreciates the comment and believes its modeling exemplifies its awareness of the millions of variables factored into electricity prices. See Chapter 8 of the RIA in the docket of this rulemaking for more on economic impacts. **(E) Commenter believes that EPA has failed to consider costs and impacts properly n applying the rule to Iowa.**  Comment : The 2012 and 2014 base case modeling runs conducted to determine, among other things, NO X emissions in I owa and their purported interference with the maintenance of the 1997 8 - hour ozone standard in Allegan County , Michigan utilized NO X values from IPM that did not account for the Utility

HAPs MACT or the Boiler MACT, both of which will serve to lower emissions nationwide through the installation of controls or shutdown of facilities. Utilization of old base case data that fails to consider the real emission reductions achieved by the CAIR (as discussed above) and the emission reductions that will be achieved b y the MACT standards, MEC does not believe EPA has, in this instance, achieved the requirements of Executive Order 13563 of January

18, 2011, to “tailor its regulations to impose the least burden on societ y, consistent with obtaining regulatory objectives, taking into account, among other things, and to the extent practicable, the costs of cumulative regulations” in requiring ozone season NO X reductions from Iowa sources. [MidAmerican Energy Company

(EPA - HQ - OAR - 2009 - 0491 - 4597), p. 4.] **RESPONSE:** The comment is outside the scope of the SNPR because it addresses issues that were within the scope of the request for comments in the proposed Transport Rule but not in the SNPR. While EPA is not reconsidering or reopening the issue, we note that the issue regarding the baseline was previously addressed in the preamble to the final Transport Rule, section VI. Also see the Regulatory

Impact Assessment for the final Transport Rule in the docket to this rulemaking.73

Comment : EPA is quick to point out that since I owa and other states subject to the supplemental notice provisions are already subject to other requirements to reduce NO X emissions under the final Transport Rule, there ar e, effectivel y, no additional costs to comply with the ozone season requirements. EPA’s proposed allocation of seasonal NO X allowances is insufficient to cover Io wa’s compliance burdens without additional controls, leaving Iowa sources with a choice to spe nd money

on controls or in the purchase of allowances. Further, there are incremental administrative costs associated with maintaining compliance under the ozone season NO X reduction requirements, both from a reporting and allowance management perspective. EPA’s anal ys is fails to account for these incremental costs (as it does for the so - called “sunk costs” associated with compliance with the legall y enforceable requirements of CAIR); MEC believes that the EPA should be required to inform the public in gene ral, and MEC’s customers, of the full costs associated with reducing emissions in Michigan at an ozone monitoring station that indicates the count y is in attainment of the standard. [MidAmerican Energy Compan y (EPA HQ - OAR - 2009 - 0491 - 4597), p. 4 - 5.] **RESPON SE**  : While EPA is not reconsidering or reopening the issue, we note that the issue regarding the treatment of CAIR was previousl y addressed in section V.B of the preamble of Federal Implementation Plans: Interstate Transport of Fine Particulate Matter and Ozone and Correction of SIP Approvals ( EPA

–HQ

– OAR

–2009

– 0491 ) and Transport Rule Primary Response to Comments ( EPA - HQ - O AR - 2009 - 0491 - 4513) Section IV.A. In regards to the assertion that Iowa will need to install additional controls or purchase additional al lowances, the commenter has not provided significant evidence of that. For instance, the 2010 ozone - season emissions in I owa were 17,179 tons ; the preliminary 2011 emissions for ozone - season NO X in Io wa are 17,179 tons, and their 2012 budget is 16,532 ton s. I f Iowa continues to lower emissions at the rate it has been, its 2012 emissions will be well below its 2012 budget (meaning the state will likely

have a surplus of allowances, not a shortage). EPA does not anticipate any additional controls or allowance purchase for the state. In fact, EPA modeling projects the state to be a seller of allowances in 2012. As for the incremental cost of operating controls that would not otherwise operate in the base case, that t ype of cost is captured in EPA’s analysi s. Additionally , the $1.6 billion in capital cost already sunk into controls for CAIR is also cited in EPA’s rollout of the final Transport Rule. In regards to an y administrative or reporting cost, these are not reflected in the model , as they are neglig ible. **(F) EPA’s cost thresholds do not support retrofit environmental controls.** Comment : EPA's anal ys is suggests that additional combustion controls can be added to man y units within Oklahoma in 2012 at or below the cost effective threshold of $500/ton of seasonal NO X . However, based on the data contained within the IPM v4.10 documentation and the NEEDs input file, the cost of some of the projected controls exceeds the cost - effective threshold. As an example, Northeastern unit 3 is projected to change f rom a NO X rate of 0.382 lb/MMBtu in the base case to a NO X rate 0.251 lb/MMBtu in the policy case. According to EPA documentation this project would cost almost $13 million and remove approximately 860 tons of NO X per ye ar. Using the retrofit capital charg e rate of 11.3%, this project would effectivel y cost more than $1,600 per ton, before even consideration of O&M impacts. Therefore, it is unclear why this project would be selected in the policy case. There appears to be a fundamental74

discrepancy

with the IP M model logic surrounding control cost - effectiveness. [ Public Service Company of Oklahoma (EPA - HQ - OAR - 2009 - 0491 - 4600), p. 4 .] **RESPONSE** : The commenter does not provide its underlying calculations for the $13 million in capital cost referenced in the co mment. EPA’s calculations reveal a much smaller number for total capital cost and $/ton figures. It appears that the comment er may have erred b y reflecting the total capital cost of “LNC3” controls in its assessment. However, the only cost incurred to a chieve incremental tonnage reductions noted above are the incremental cost of upgrading combustion controls from L NC1 to LNC3 figures. Table 5 - 5 of EPA’s IP Mv4.10 documentation provides the capital cost and scaling factor assumption necessary to calculate the upgrade cost at this particular unit. Therefore, EPA believes that the reductions can be made cost - effectively and that the commenter has misinterpreted EPA data in forming its capital cost projection. EPA believes that the capital cost s postulated by the commenter are drasticall y overstated. However, even if one were to assume that all the commenter’s calculations are correct, their observation should be of no surprise. The EPA remedy modeling that the commenter is referencing projects an ozone se ason allowance price that exceeds $1600/ton in future years, which would make the upgrade decision for the Northeastern 3 unit economic even at the conservative parame ters assumed in the comment. Finally , the commenter assumes that the emissions avoided are 860 tons annually

(as shown in 2012). However, this does not take into account the ability of the unit to increase utilization in future years and thus generate even more emission reductions thereb y further lowering the $/ton cost of the control upgrad e. Finally , in this IPM remedy scenario, the state emissions are less than the budget. That is, EPA does not assume that this control is part of necessary emission reductions to reach the budget level, but rather part of a strategy that allows the state to outperform its budget (emit less than its budget). There are no source specific requirements that the unit install any controls under Transport Rule. Moreover, in this rulemaking, EPA has removed an y such assumption that these controls are installed i n 2012 in Oklahoma . **5.3 Miscellaneous Issues (A) Several commenters claimed that EPA has not provided a valid opportunity for public**  **review and comment of the supplemental proposal. [**  **Note: R ESPONSE**  **at end of this set of comments**  **]** Comment: Commenter s who submitted follow - up comments had earlier submitted requests for an extension of time to submit comments based on the size of the rulemaking record and the late date b y which the input and output files were provided for CAMx modeling used to support the Supplementary

Proposal. [AES Shady

Point (EPA - HQ - OAR - 2009 - 0491 - 4578), Oklahoma Gas & Electric Compan y (EPA - HQ - OAR - 2009 - 0491 - 4577), Westar Energy (EPA - HQ - OAR - 2009 - 0491 - 4575).] Comment : For the reasons set forth in earlier extension request letters, commenters request that EPA extend the applicable comment period to provide sufficient time for commenter to thoroughl y review and further inform its comments on this important proposal. The need for additional time is especially compelling for Oklahoma sourc es. As mentioned above, Oklahoma was not previousl y included in CAIR, and whether or not Oklahoma would be included in any75

interstate transport rule, and the basis for such inclusion, has been a moving target. EPA included Oklahoma in its 2010 Proposed Transport Rule on the basis that sources within the State contributed to nonattainment with NAAQS in Tarrant County , Texas, with those allowances and actual emissions not requiring that an y control equipment be installed. EPA now proposes to include Oklahoma based on modeled impacts in Allegan Count y, Michigan, and also proposes to require a nearly

40% reduction in emissions in a six month period. Oklahoma's purported connection to Allegan County , Michigan is based on new modeling data. The CAMx input and outp ut files for this modeling were not available online like other technical support documents, and it took more than a week to receive the 8 TB of data once requested. Additionally , it can take weeks to re - run the same CAMx model runs that EPA completed in s upport of the CSAPR and the 42 day comment period is not enough time to allow a thorough review. Given the nature of this data and the tenuous link between Oklahoma and Allegan County purportedl y established by it, it is important that commenters be provid ed additional time in which to conduct an in - depth anal ys is of the methodology used b y EPA as the basis for including Oklahoma in the Supplemental Proposal. The 42 day s that EPA allows for public comment is not enough. Furthermore, the comment period allow ed b y EP A is inconsistent with Executive Order 13563, which was signed b y the President on January 18, 2011, as well as with other recent rulemakings by EPA. Executive Order 13563 (Improving Regulation and Regulatory Review), provides that in order to faci litate public participation in the regulatory process, "each agency

shall afford the public a meaningful opportunity to comment ... with a comment period that should generall y be at least 60 day s." Although EPA followed this mandate in other rulemakings th at also required time - intensive review, such as the 2010 Proposed Transport Rule and the Utility MACT, EPA inexplicably

fails to do the same here. Commenters request that EPA reconsider its August 19, 2011 decision not to extend the comment period for the Supplemental Proposal. Commenter AES Shady

Point raises some of the same concerns in its comments. [Oklahoma Gas & Electric Compan y (OGE) (EPA - HQ - OAR - 2009 - 0491 - 4590), p. 13; Oklahoma Utility Group (EPA - HQ - OAR - 2009 - 0491 - 4591), p. 10 - 11; AES Shady Point (EP A - HQ - OAR - 2009 - 0491 - 4595), p. 7.] Comment : EPA has failed to provide an adequate notice and opportunit y for public comment on the Proposal. The Administrative Procedures Act ("APA") requires the EPA to provide notice of a proposed rulemaking "adequate to afford interested parties a reasonable opportunity to participate in the rulemaking process." Florida Power & Light Co. v. United States, 846 F.2d 765, 771 (D.C.Cir. 1988); SENATE JUDI CIARY COMMI TTEE, ADMINISTRATIVE PROCEDURE ACT, S. REP., No. 752, 77th Co ng., 1st Sess. 14 (1945) ("Agency notice must be sufficient to fairl y apprise interested parties of the issues involved, so that they may present responsive data or argument relating thereto."). This requirement serves both (1) "to reintroduce public parti cipation and fairness to affected parties after governmental authority has been delegated to unrepresentative agencies"; and (2) to assure that the "agency will have before it the facts and information relevant to a particular administrative problem." Nati onal Ass'n of Home Health Agencies v. Schweiker, 690 F.2d 932, 949 (D.C. Cir. 1982); see also, MCI76

Telecommunications Corp. v. FCC, 57 F.3d 1136, 1141 (D.C. Cir. 1995) (same). The Proposal does not provide potentially affected parties with sufficient opportunity to understand and respond to the data and highl y technical modeling utilized by EPA and, thus, does not satisfy the notice and comment requirements of the APA. The Proposal does not provide affected source with sufficient notice and opportunity to c omment. The Proposal is just eight pages long and does not have its own technical support documents. EPA directs sources to the preamble and the technical support documents associated with CSAPR See 76 Fed. Reg. at 40,666. Sources affected b y the Proposal do not have a similar short - cut available for parsing through the relevant information and developing responsive data and arguments. CSAPR covers 27 states and establishes four different trading programs. The amount of information underlying the rule is vo luminous. The CSAPR preamble is 146 pages long and has over 147 technical support documents. EPA has made no effort to organize the CSAPR materials in a way that clearl y identifies information relevant to the Proposal. Additionally , the Proposal itself lac ks an y meaningful explanation of EPA's significant contribution analy ses, state emissions budget determination, or allowance allocation calculation. EPA's cursory

treatment of the Proposal undermines "the values of public participation, fairness, and infor med agency

decision making that the notice - and - comment process is designed to foster." City of Idaho Falls v. FERC, 629 F.3d 222,229 (D.C. Cir. 2011). The comment period for the Proposal is too short for affected sources and states to verify the accuracy o f the data and anal ys es relied on b y EPA. To develop meaningful comments on the Proposal, affected sources faced the daunting tasks of (1) locating and verifyingthe data EPA attributes to their EGUs; (2) understanding the complicated methodology used by E PA to determine unit - specific emissions allowances; (3) determining whether EPA correctl y calculated the number of allowances to be allocated to their EGUs; (4) understanding the complicated methodology

used b y EP A to calculate state emissions budgets; (5) locating all the relevant information for EGUs in the state of interest and determining whether EPA correctly calculated the state emissions budget; and (6) understanding the highl y technical model used by EPA to determine that the state of interest signi ficantl y contributes to downwind pollution. Even with the assistance of expert consultants, it is impossible to complete all anal ys es necessary to fully address the Proposal in the 43 - day comment period. EPA's failure to provide a reasonable comment period is inconsistent with Executive Order 13563. The order requires EPA to "afford the public a meaningful opportunity to comment" on proposed rules, "with a comment period that should generall y be at least 60 days." 7'6 Fed. Reg. 3,821 (Jan. 21, 2011). EPA ha s had nearl y three ye ars since the decision in North Carolina to develop the Proposal. It expects the general - public and affected sources, which are far less equipped than EPA to conduct technical anal ys es and air qualit y modeling, to develop comments in just 43 day s. Given the scope of the technical analy sis required, that timeframe is clearl y insufficient and not in accordance with the mandate of Executive Order 13563 to allow for meaningful public comment. [Western Farmers Electric Cooperative (EPA - HQ - OAR - 2009 - 0491 - 4589), p. 12 - 13.]77

Comment : EPA set a 30 - day comment period ending August 22, 2011. Despite EPA's efforts to post every

thing related to this rule on the EPA website, key decisions and assumptions made in the rulemaking, particularly changes f

rom proposed to final, have not been readil y accessible. Although the emissions data are available in the docket, the modeling input and output files are not. As late as a month after signing the rule, information is still being posted to the website. The technical and supporting documentation for the final and proposed rules is over 132,000 pages. Parsing how and wh y Kansas fits into the proposed rule has been an extremely difficult task for KDHE staff. In the proposed rule, Kansas is linked only to mainte nance of the ozone standard in Allegan County , Michigan. The proposed rule is the first opportunity for KDHE to review the technical information supporting Kansas' significant contribution to Allegan County . A complete anal ys is of these data will take more time than the current comment period allows. KDHE requests an extension of time to file a more complete set of comments from the currently set date of August 22, 2011 to October 1, 2011. [Kansas Department of Health & Environment (EPA HQ - OAR - 2009 - 0491 - 45 82), p. 1 - 2.] **RESPONSE:** EPA disagrees with the commenter s for the following reasons. Section 307(d)(5) of the CAA requires the Administrator to give an opportunity for written or oral comments. The Act does not specify

the length of time, other than the record must be open 30 day s after holding public hearings - with which EPA has complied. There was no request for a public hearing on the Supplemental Notice of Proposed Rulemaking (SNPR). EPA posted the signed version of the Proposed Transport Rule to the web when it was signed on July 6, 2010. The proposal was published in the Federal Register on August 2, 2010, and the public comment period closed on October 1, 2010. This provided a 60 day comment period (and also provided 90 day s of public notice fr om the date posted to the web). EPA posted the signed version of the first Transport Rule Notice of Data Availability (NODA) addressing its power sector model (IPM) to the web when it was signed on August 25, 2010. The first NODA was published in the Fede ral Register on September 1, 2010, and the public comment period closed on October 15, 2010. This provided a 45 day comment period (or 52 day s from the date posted to the web). EPA posted the signed version of the second Transport Rule NODA (addressing e missions inventories) to the web when it was published in the Federal Register on October 27, 2010. The public comment period closed on November 26, 2010, which provided a 30 day

comment period. EPA posted the signed version of the third Transport Rule N ODA (allocations and related matters) to the web when it was signed on December 30, 2010. The third NODA was published in the Federal Register on January 7, 2011. The public comment period closed on February 7, 2011, which provided a 30 day comment perio d (or 38 day s from the date posted to the web). EPA posted the signed version of the Supplemental Notice of Proposed Rulemaking to the web when it was signed on July 6, 2011. The SNPR was published in the Federal Register on July 11, 2011. The public co mment period closed on August 22, 2011, which provided a 6 week comment period from publication in the Federal Register (and 47 day s from availabilit y of the proposal on the web).78

Given the timeframe EPA provided to the public for submission of comments, and indicative of the fact that the Agency

received several thousand substantive comments, commenters did, in fact, have a reasonable opportunity to submit their comments for consideration. **A. Commenter states broadly that for all of the various reasons in th**  **e comments, EPA has acted arbitrarily and capriciously in the rulemaking as it affects Oklahoma.**  Comment: While DEQ is in support of reducing NO X emissions in Oklahoma, it is our belief that the implementation of this rule in this manner undermines the credibility of the EPA and that this particular rulemaking has crossed the line between prudent rulemaking and practices that can only be characterized as arbitrary and capricious. We believe that the best way forward would be for the EPA to remove the State of Oklahoma from the states included in the CSAPR. DEQ wishes to express its support for emission reductions in the state of Oklahoma. Unfortunatel y, it appears that compliance with the heavily reduced emission budget and the tight timeline will be extremely difficult, if not impossible for Oklahoma utilities. EPA has acted in a manner that is arbitrary

and capricious in: (1) changing the methodology used to set state allowance budgets without allowing public comment, (2) failing to make those procedure s clear and unambiguous in a timely manner, and (3) delaying the final rulemaking which will set state ozone - season budgets for the six states (including Oklahoma) covered b y the Supplemental Notice of Proposed Rulemaking (SNPR). This is particularl y burde nsome for utilities operating units located in the state of Oklahoma. In fact, Oklahoma is the only state covered b y the SNPR that has no requirements whatsoever in the CSAPR as finalized on August 8, 2011. EPA’s actions have jeopardized the market - based b enefits of the rule by failing to issue clear and unambiguous signals regarding the allowances that will be allocated on a unit - by - unit basis and by holding the potentially

subject units hostage to another proposed rulemaking. As of the date these comments were prepared (August 22, 2011), utilities operating units located in Oklahoma do not know whether those units will be subject to the rule at all and, if they are subject, how many allowances each unit will be issued for the 2012 ozone season beginning in May of that ye ar. After the issuance of the proposed rule in 2010, many Oklahoma utilities pointed out inconsistencies in the IPM assumptions and problems with specific allocations, but, in general, the utilities expected to be able to compl y with the ru le. All of these assumptions were upended this summer and, based on the changes between 2010 and 2011, it would be imprudent for the utilities to assume consistency between the SNPR and whatever will be included in the rule when it is finalized this fall. We believe that the best way to remedy these problems would be for the EPA to remove the State of Oklahoma from this version of the CSAPR altogether. We acknowledge that we may well need to be included in a future extension of CSAPR in a future rulemaking. If and when that occurs, it is essential that EPA provide sufficient time between the publication of the final rule and the beginning of the compliance period to allow utilities operating subject units to adapt to the new requirements. By failing to provi de that time, EPA undercuts its credibility

and makes it more difficult for states to defend rules which, if implemented properl y, would provide substantial benefits to our citizens.79

DEQ respectfull y requests that EPA exclude Oklahoma from the rule altog ether, but requests that at the very

least, EPA increase the state ozone - season NO X allowance budget by 1,500 tons and that the compliance date for units operating in Oklahoma be pushed back to the 2015 ozone season. [ Oklahoma Department of Environmental Quality (EPA - HQ - OAR - 2009 - 0491 - 4593), p. 5 - 7 .] **RESPONSE** : EPA disagrees with the commenter for the following reasons. Section 307(d)(5) of the CAA requires the Administrator to give an opportunity for written or oral comments. The Act does not specify

the length of time, other than the record must be open 30 day s after holding public hearings - with which EPA has complied. There was no request for a public hearing on the Supplemental Notice of Proposed Rulemaking (SNPR). EPA posted the signed version of the Proposed Transport Rule to the web when it was signed on July 6, 2010. The proposal was published in the Federal Register on August 2, 2010, and the public comment period closed on October 1, 2010. This provided a 60 day comment period (and also provi ded 90 day s of public notice from the date posted to the web). EPA posted the signed version of the first Transport Rule Notice of Data Availability (NODA) addressing its power sector model (IPM) to the web when it was signed on August 25, 2010. The first NODA was published in the Federal Register on September 1, 2010, and the public comment period closed on October 15, 2010. This provided a 45 day comment period (or 52 day s from the date posted to the web). EPA posted the signed version of the second Tr ansport Rule NODA (addressing emissions inventories) to the web when it was published in the Federal Register on October 27, 2010. The public comment period closed on November 26, 2010, which provided a 30 day

comment period. EPA posted the signed versio n of the third Transport Rule NODA (allocations and related matters) to the web when it was signed on December 30, 2010. The third NODA was published in the Federal Register on January 7, 2011. The public comment period closed on February 7, 2011, which provided a 30 day comment period (or 38 day s from the date posted to the web). EPA posted the signed version of the Supplemental Notice of Proposed Rulemaking to the web when it was signed on July 6, 2011. The SNPR was published in the Federal Register o n July 11, 2011. The public comment period closed on August 22, 2011, which provided a 6 week comment period from publication in the Federal Register (and 47 day s from availabilit y of the proposal on the web). Given the timeframe EPA provided to the publi c for submission of comments, and indicative of the fact that the Agency

received several thousand substantive comments, commenters did, in fact, have a reasonable opportunity to submit their comments for consideration. See section III.B.iv of the preambl e to this final rule regarding the Oklahoma budget. EPA has considered the comment concerns with respect to the compliance schedule. In the final rule, EPA is setting the Oklahoma 2012 ozone season NO X budget at a level that reflects emission reductions achievable through actions (such as changes in generation unit dispatch) that do not include additional LNB installations. EPA is setting the Oklahoma ozone season NO X budget for 2013 and beyond at the level that was proposed, i.e., to reflect NO X levels achievable with80

additional L

NB installations that can be completed before the 2013 ozone season without necessitating the shutdown of units during the summer peak demand period in 2012. **(C) EPA’s refusal to consider data is improper.** Comment: EPA’s supplemental notice of proposed rulemaking seeks to limit the scope of public input, nothing that: EPA is not taking comment on an y aspect of the final Transport Rule, including an y aspect of the methodology used to identify receptors for nonattainment; the methodology used to identify

receptors for maintenance; the methodology used to identify

any specific state’s significant contribution and interference with maintenance; the methodologies used to establish state budgets, variability limits, and state assurance levels; or the methodologies used to allocate allowances to existing units, to establish new unit set asides and Indian country new unit set - asides, or to allocate allowances in these set asides. EPA’s refusal to take comment on these issues is premised on its theory that “EPA provided an adequate opportunity

for public comment on all of these issues during the comment period for the proposed Transport Rule and during the comment periods for the associated Notices of Data Availability .” MEC resp ectfully disagrees that EPA has provided an adequate opportunity for public comment on the issue of the methodology used to identify

receptors for maintenance. EPA’s previous proposal to include “all six states in at least one of the Transport Rule trading programs” does not (and in this case, cannot) mean that entities impacted by this supplemental notice had the same opportunity to review the potential impacts at a receptor that EPA itself admits was not identified or included in the July 6, 2010, propose d rule. [ MidAmerican Energy Company (EPA - HQ - OAR - 2009 - 0491 - 4597), p. 2 .] **RESPONSE** : EPA disagrees with the commenter for the following reasons. Section 307(d)(5) of the CAA requires the Administrator to give an opportunity for written or oral comments. T he Act does not specify

the length of time, other than the record must be open 30 day s after holding public hearings - with which EPA has complied. There was no request for a public hearing on the Supplemental Notice of Proposed Rulemaking (SNPR). EPA pos ted the signed version of the Proposed Transport Rule to the web when it was signed on July 6, 2010. The proposal was published in the Federal Register on August 2, 2010, and the public comment period closed on October 1, 2010. This provided a 60 day comment period (and also provided 90 day s of public notice from the date posted to the web). EPA posted the signed version of the first Transport Rule Notice of Data Availability (NODA) addressing its power sector model (IPM) to the web when it was signed on August 25, 2010. The first NODA was published in the Federal Register on September 1, 2010, and the public comment period closed on October 15, 2010. This provided a 45 day comment period (or 52 day s from the date posted to the web). EPA posted the sign ed version of the second Transport Rule NODA (addressing emissions inventories) to the web when it was published in the Federal81

Register on October 27, 2010. The public comment period closed on November 26, 2010, which provided a 30 day

comment period. E PA posted the signed version of the third Transport Rule NODA (allocations and related matters) to the web when it was signed on December 30, 2010. The third NODA was published in the Federal Register on January 7, 2011. The public comment period closed on February 7, 2011, which provided a 30 day comment period (or 38 day s from the date posted to the web). EPA posted the signed version of the Supplemental Notice of Proposed Rulemaking to the web when it was signed on July 6, 2011. The SNPR was publishe d in the Federal Register on July 11, 2011. The public comment period closed on August 22, 2011, which provided a 6 week comment period from publication in the Federal Register (and 47 day s from availabilit y of the proposal on the web). Given the timefram e EPA provided to the public for submission of comments, and indicative of the fact that the Agency

received several thousand substantive comments, commenters did, in f act, have a reasonable opportunity to submit their comments for consideration. **6. Out of Scope Comments**  **1. Significant Contribution Methods**  A. Commenter requests additional clarification on the data used to determine that Oklahoma is a significant contributor to downwind ozone nonattainment. 1. How were the wind patterns developed? For example , there are numerous monitoring locations between Oklahoma and Michigan (including large metropolitan areas such as Kansas City

and St. L ouis). None of these monitors showed a significant contribution from Oklahoma. [ Oklahoma Municipal Power Authority (O MPA) (EPA - HQ - OAR - 2009 - 0491 - 4573), p. 2 .] **RESPONSE:** The model meteorological estimates from MM - 5 used as inputs for CAMx are described in EPA - HQ - OAR - 2009 - 0491 - 4140, the "Air Quality Modeling Final Rule Technical Support Document . " Furthermore, examining the state - by - state ozone contribution estimates from the 2012 base case air quality modeling for the final rule, Oklahoma clearl y contributes at or above the 1% contribution threshold to a number of monitor - receptors in downwind states (e.g., Texas, Missouri, Indiana, Illinois, and Michigan) (see the “Contributions of 8 - hour ozone, annual PM 2.5 , and 24 - hour PM 2.5 from each state to each monitoring site ” excel workbook accessible on the EPA transport rule website for the contributions. This is part of EPA - H Q OAR - 2009 - 0491 - 4228 in the docket to this rule ). However, with the exception of the Allegan, Michigan receptor, these monitors were modeled not to have nonattainment and/or maintenance issues. Thus, they

were not further used to examine significant contribution and/or interference with maintenance in the Transport Rule. Comment : Have there been an y third part y evaluations of the results of the CAMx model? The results of this model will subject the State of Oklahoma, cities within the state, and busine sses to numerous requirements costing billions of dollars. The results of this model need to be verified. [ Oklahoma Municipal Power Authorit y (OMPA) (EPA - HQ - OAR - 2009 - 0491 - 4573), p. 2 .]82

**RESPONSE:** There have been a number of third party evaluations of CA Mx model predictions. Several of these are listed below. Additional information on the development and use of CAMx can be found on the web site: www.camx.com . (1) Tesche, T. W.; Morris, R.; Tonnesen, G.; McNally , D.; Bo yl an, J.; Brewer, P., CMAQ/CAMx annual 2002 performance evaluation over the eastern US. Atmospheric Environment 2006, 40(26), 4906 - 4919. (2) Hogrefe, G., Civeroio, K.L ., Hao, W., Ku, J - Y., Zalewsky, E.E., and Sistla, G., Rethinking the Assessment of Phot ochemical Modeling Sy stems in Air Quality Planning Applications. Air & Waste Management Assoc., 58:1086 - 1099, 2008. (3) Implementation of State - of - Science PM Modules into the PMCAMx Photochemical Grid Model. R.E. Morris, G. Yarwood, C. Emery , Spy ros Pandis, and F. Lurmann. Presented at the 96th Annual Conference and Exhibition of the A&WMA, San Diego, California (June 2003). (4) Arunachalam, S. Peer Review of Source Apportionment Tools in CAMx and CMAQ, EP - D 07 - 102. Universit y of North Carolina, Institute fo r the Environment, August 2009. **2. Budget/Variability/Assurance Methods**  No comments received on this issue. **3. Allocation Methods**  No comments received on this issue. **4. Emission Inventories**  A. **Commenter asserts that the types of sources affected by the SNPR sh ould be expanded**  **so that the burden of precursor emissions reduction is more widely shared.** 1. The Midwest has numerous Title V stationary sources that rel y on coal - generated heat for process boilers. Notable among these are grain handling and processing f acilities, of which there are several in Iowa. For Iowa and other Midwestern states, the focus on fossil fuel - fired energy facilities is too narrow. One major source, a value - added grain products facility , is proposing to increase the stack height of a mai n stack in order to solve local problems. However, the NO X and volatile organics from this source will continue to blow downwind, barring upgrades to NO X controls under other rules and the current SIP call for Muscatine. [ Io wa Environmental Council (EPA - H Q - OAR - 2009 - 0491 - 4572), p. 2 .] **RESPONSE** : This issue is beyond the scope of the Supplemental rulemaking. Although the cost curves presented in th e Transport Rule only include d EGU reductions, EPA also assessed the cost of NO X emission reductions available for source categories other than EGUs in the rulemaking. This a ssessment for the Transport Rule concluded that there are little83

or no reductions available from non - EGUs sources, such as those noted by the commenter, at costs lower than the $500/ton thres hold for NO X . **5. Kansas Proposed SIP Call**  No comments received on this issue. **6. Other Out of Scope Comments**  A. **Commenter expresses concern that the SNPR does not include Nebraska and South Dakota for ozone season NO**  **X emissions.**  At the current 75 ppb stan dard, Iowa does not have an y nonattainment areas for ozone, which is the primary

driver for the rule and the Supplemental Action. However, a 65 ppb standard could mean nonattainment in several Iowa cities, and an even lower standard of 60 ppb would put muc h of the state in nonattainment. Clearly I owa’s own upwind air shed play s a role in the State’s ozone levels, and these may become problematic when the new NAAQS standard comes into play

— as it should, given the health benefits. [ Io wa Environmental Council (EPA - HQ - OAR 2009 - 0491 - 4572), p. 1 - 2 .] **RESPONSE:** The Transport Rule and the SNPR address ozone transport under the 1997 ozone standard. These comments regarding transport to areas at potential 60 or 65 ppb standards are thus beyond the scope of the rule. B. **Commenter expresses concern that the SNPR does not anticipate or address scenarios associated with a revised 8**  **- hour NAAQS for ozone.**  1. EPA’s online materials (fact sheets, presentations) do not make mention of any scenarios under a revised eight - hour NAAQS. And yet these clearl y are factors in determining ozone nonattainment. It is likely that many

more downwind counties than the ones shown in the presentation at http://www.epa.gov/airtransport/pdfs/CSAPRPresentation.pdf will be affected by nonattainme nt designations once the NAAQS is changed. [ Iowa Environmental Council (EPA - HQ - OAR - 2009 - 0491 - 4572), p. 2 .] **RESPONSE:** The Transport Rule and the SNPR address ozone nonattainment and maintenance for the 1997 ozone standards. Because revised NAAQS are bey ond the scope of this rulemaking, and because the levels of the NAAQS under these revisions are not yet known, it would not be appropriate to include consideration of them in our online materials for this rule. Other communications materials will address ozone attainment under subsequent standards. For example, EPA will be developing online materials for area designations under the 2008 ozone standard of 75 ppb. **(C) EPA’s opportunity for comment should allow for changes in coverage in the other direct**  **ion (adding states).**84

(1) Finall y, we note that EPA’s SNPR provides opportunity for comment for changes in coverage of the rule onl y in one direction. In particular, opportunit y for comment is provided with respect to states linked to downwind monitors sh owing nonattainment and maintenance problems in the revised analy sis for CSAPR that were not so linked in the prior anal ys is in the August 2010 proposed rule, but not for the reverse. That is, EPA has not provided an opportunity for interested persons to c hallenge the removal of a state from the rule’s requirements as proposed last August on the grounds that the downwind monitors to which those states were then linked did not evidence nonattainment and maintenance problems in the revised CSAPR anal ys is. We believe that EPA should adopt an even - handed approach to changes in requirements of the rule resulting from revised analy ses, both with respect to subjecting additional states to the rule and to removing states from coverage of the rule. While we are not r equesting that EPA reopen this rulemaking solely to address this issue, we do request the Agency to consider this issue of fundamental fairness in future rulemakings (or in further iterations of this one). [ Clean Air Task Force, et al. (EPA - HQ - OAR - 2009 - 04 91 - 4588), p. 3 .] **RESPONSE:** Comment noted and appreciated. EPA will take this comment into consideration in future rulemakings.