OTC appreciates the efforts put forth by EPA to work with all interested 

stakeholders in developing a CAIR replacement rule based on sound science. OTC 

further acknowledges that air pollutant transport within the OTC region is a significant 

issue that EPA should also address. The CAIR replacement rule should also recognize 

that our planning processes continue to evolve in the face of ever-tightening standards 

and newly uncovered air quality concerns, such as the impact of peaking unit emissions 

on high electricity demand days (HEDD). As such, OTC recommends that EPA propose 

measures to address HEDD emissions in the CAIR replacement rule. 

Our recommendations are provided below in three parts. OTC considers these 

recommendations feasible, practicable and operable within the framework of the existing 

Clean Air Act, all of which facilitate a rapid adoption process as directed by the D.C. 

Circuit Court of Appeals in remanding CAIR. The CAIR replacement rule offers an 

opportunity for transformational change over incremental improvement. Providing 

regulatory certainty to America’s electric generating sector promotes transformational 

change through business decisions that support our air quality goals. A summary of the 

technical analyses conducted by the OTC States and provided as support 

documentation for the recommendations provided in this letter and the September 2, 

2009 letter is attached to support these recommendations. 

A. Achievable EGU Limitations

The OTC States recommend that EPA consider a comprehensive, multi-layered, 

hybrid approach for obtaining further reductions from EGUs. This hybrid approach 

combines state and regional caps with phased-in performance standards to costeffectively reduce nitrogen oxide (NOx) and sulfur dioxide (SO2) emissions. The 

components of this strategy (enforceable conditions, state-by-state reductions, regional 

trading caps/program and phased performance standards), should coordinate with each 

other and other EGU control initiatives such as federal MACT standards and greenhouse 

gas reduction programs. 

A national strategy for EGUs should be implemented in phases. The first phase 

should combine federally enforceable NOx and SO2 reductions from each state with a 

regional trading program. A later phase should include performance standards to 

achieve continuing reductions from the EGU sector over the course of the regulatory 

time frame for implementation of the 2008 ozone and 2006 PM2.5 NAAQS. 

Timing is essential to meet attainment obligations. Three years of data are 

needed to demonstrate attainment; therefore reductions are needed three years prior to 

the attainment deadline. While we recognize that full implementation of all controls may 

not be achieved in that time frame, it is essential that enforceable mechanisms be 

provided to lock in controls that are achievable. The OTC-LADCO submission reflects 

the participating states’ agreement on state-specific caps that would be applicable no 

later than 2017. Years prior to 2017 may be critical for many states to demonstrate 

attainment with the applicable NAAQS. The OTC States seek to work with EPA to 

develop mechanisms for achieving interim reductions in the 2012-16 time period, 

including the possibility of interim state-specific caps in addition to a regional cap-andtrade program. 
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Since CAIR was not sufficient for attaining and maintaining the 1997 ozone 

NAAQS, EPA will need to make the limits in the CAIR replacement rule stricter to enable 

compliance with the recently revised ozone and PM NAAQS and any tighter standards 

that EPA enacts after reconsideration of those standards. The state caps are also 

necessary to ensure that each State contributes fully to the needed reductions. 

Specifically, the OTC States propose that EPA include phased state-by-state 

reductions, complementary regional emission trading caps as early as possible (but no 

later than 2014), and performance standards as follows: 

1. State-by-State Reductions 

The September 2, 2009 letter recommends the implementation of state 

caps by no later than 2017 that reflect the emission rates that would be achieved 

through installation of SCR and FGD controls on all coal-fired EGUs of 100 MW 

or larger in all significantly contributing states. In addition, the participating states 

recommend in that letter a number of interim measures including operation and 

optimization of all controls currently in place or being installed to meet other 

requirements, and installation and operation of all feasible, low capital cost NOx 

controls such as selective non-catalytic reduction (SNCR) and low NOx burners 

(LNB) not currently installed or in use on existing EGUs on a unit basis by 2015. 

 

The OTC States recommend that EPA analyze and determine the stateby-state reductions needed prior to 2017 in order to address CAA Section 

110(a)(2)(D) requirements to address interstate transport from EGUs within the 

NAAQS timeframe. The OTC States see interim state-by-state reductions prior 

to 2017 as a key part of addressing the Court of Appeals concerns over what is 

needed to satisfy the requirements of CAA Section 110(a)(2)(D). 

2. Regional Trading Programs for NOx and SO2.

As explained in the September 2, 2009 submission, the second key 

element of the OTC-LADCO agreed framework for a CAIR replacement rule is 

the implementation of regional trading programs for both NOx and SO2, to 

complement the state-by-state caps described above. The OTC States 

recommend that EPA consider the following in developing the regional caps: 

• The new regional caps should be implemented as early as possible 

and set at a level that will drive deeper regional NOx and SO2

reductions than the regional reductions that would result from the 

implementation of the state-by-state caps by themselves. This pairing 

of state-by-state caps with an aggressive regional trading program will 

guarantee specific reductions in each state while also using market 

forces to further reduce regional emissions at lowest cost. 

• OTC’s analysis (attached) and the analysis that EPA recently 

prepared for Senator Carper show that stringent regional trading caps 

for NOx and SO2, implemented as early as possible (but no later than 

2014), would provide significant public health benefits that 

substantially outweigh the costs. 

• Banking and inter-state trading would continue to be allowed in the 

regional trading program. 
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• To be creditable under Section 110(a)(2)(D), controls installed in 

response to the regional trading program should be made federally 

enforceable through an appropriate mechanism. 

3. Performance Standards

We understand that EPA is also considering a hybrid approach in its 

CAIR replacement rule involving regional emissions trading and unit-specific 

performance standards (cite: July 9, 2009, testimony by R. McCarthy before the 

Subcommittee on Clean Air and Nuclear Safety, Committee on Environment and 

Public Works, U.S. Senate). 

The OTC States request that EPA work with the states to develop and 

phase in unit-specific performance standards that owners of fossil fuel-fired units 

should comply with between 2017 and 2025, or earlier if EPA’s technical analysis 

demonstrates that an earlier date is reasonable. Performance standards should 

either be output-based or transition to output-based standards to reward 

efficiency. Such performance standards will give regulatory certainty to EGU 

owners and encourage transformational change in the energy market. In 

developing these performance standards: 

• EPA should consider fuels, types and sizes of EGUs, the timing of 

other requirements included in this and the September 2, 2009 letter, 

cost-effectiveness and the pollution control equipment already in 

place on the existing fleet of EGUs. 

• EPA should phase-in the performance standards to maximize 

efficiency and minimize costs to affected sources. For example: 

o The performance standards for coal-fired units greater than 

100 MW should be coordinated with the state-by-state caps 

that are recommended for no later than 2017. 

o The performance standards for units subject to the upcoming 

federal MACT requirements should be coordinated with the 

MACT requirements. 

• In later phases (2020 to 2025), the performance standards should be 

coordinated with greenhouse gas reduction programs and other 

energy efficiency initiatives and be output-based. 

• OTC’s analysis (attached) shows that performance standards on 

larger fossil-fuel fired EGUs (based on a 30-day rolling average) are 

feasible and should be implemented on an aggressive timeframe (as 

early as 2017). 

• EPA should consider including incentives (e.g., alternative compliance 

schedules not to exceed three years), to promote the repowering or 

replacement of existing units. 

• After the adoption and implementation of performance standards, 

EPA should evaluate the feasibility of eliminating the state-by-state 

caps. 
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B. State-led Planning Process 

The OTC States recommend that the state-led planning effort include all 

significantly contributing states (i.e., 1% of the NAAQS or greater impact) unless each 

state in the affected nonattainment area chooses to reduce the number of states 

involved. 

• The OTC believes that this is the most appropriate way to identify 

those states that are required to participate in the state-led planning 

process as model performance (related to long-range transport) varies 

from one nonattainment area to another and the meteorology that 

affects some nonattainment areas is very complex. 

• The states in the nonattainment area would use monitoring data, 

modeling and other information on ozone transport, meteorology, 

emissions, control programs, geography and chemistry to decide 

which significantly contributing states, if any, should be excused from 

the state-led planning process. 

• Two scenarios are outlined below: 

o If the states in a nonattainment area have technical data that 

show that the state-led planning process for that area should 

be limited to just three or four states, that would be 

appropriate. 

o If the states in a nonattainment area are subject to highly 

complex transport patterns, it is most likely necessary to 

include all significantly contributing states in the state-led 

planning process. 

• The OTC believes that the most appropriate way to address transport 

is through a suite of aggressive national programs to reduce NOx, 

VOC and SO2 emissions from EGUs, other stationary sources, area 

sources and off-road and on-road mobile sources and that the role of 

the state-led planning process should be secondary. 

• The OTC continues to have serious concerns over model 

performance related to long-range, aloft transport. It is critical for EPA 

to establish and implement performance criteria related to aloft 

transport to ensure that the process for identifying significantly 

contributing states is credible. 

• As indicated in the September 2, 2009 joint letter, additional controls 

may be required where needed. 

C. Eliminating Significant Contribution 

The OTC States recommend that under the state-led attainment planning 

process, both the upwind states and EPA remain accountable to address contributions 

to downwind areas’ nonattainment of both the ozone and PM2.5 NAAQS by the relevant 

attainment dates, without designing any new “off-ramp” that avoids direct and timely 

action to reduce emissions that are in violation of CAA Section 110(a)(2)(D). 

 In addition to a program of controls for EGUs, OTC also urges EPA to address 

interstate transport through the development and implementation of national rules in 
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2012 or as early as feasible for additional controls on non-EGU sources, as supported in 

prior statements of the OTC to EPA. (See, e.g., Statement on the Need for National 

Rulemaking and Implementation of Ozone Control Measures, November 14, 2007). 

 

In acting on these recommendations, EPA can use the CAIR replacement rule to 

provide regulatory certainty to the EGU sector, which will enable business decisions that 

will move us many steps toward improved air quality and a more efficient electricity 

generating sector. We look forward to talking with you further about our 

recommendations for the CAIR replacement rule, and working with your staff as you 

expeditiously develop this important air quality and public health program. 

Sincerely, 

______________________ _______________________ 

Connecticut District of Columbia 

_______________________ _______________________ 

Maine Maryland 

 

______________________ ______________________ 

Massachusetts New Hampshire

______________________ _______________________ 

New Jersey New York

 

______________________ _______________________ 

Pennsylvania Rhode Island 

______________________ 

Vermont 

Enclosures