1 

## Recommendations to the Cl ean Air Act Advisory
Committee

A i r Q u a l i t M a n a e m e n t S u b c o m m i t t e e y g P h a s e I I R e c o m m e n d a t i o n s J u n e 2 0 0 72Air Quality Management Subc ommittee Final Report



### Tribute to Gregg Cooke

Gregg Cooke served on the AQM Subcom mittee until his passing on September 17, 2006. Through all of his public life Gregg sought to forge partnerships and creatively solve problems. Gregg was widely recognized as an air quality policy expert, respected for his knowledge and insight, and trusted as a partner in working to resolve many complex problems. The AQM Subcommittee dedicates the AQM report to him. This dedication affirms that the subsequent improvements in air quality management are a product of Gre gg’s seemingly tireless efforts, his legacy to us, and to the people he so ably served.

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### AQM Subcommittee Phase II Report

June 2007

Table of Contents

I. Introduction.................................................................................6

II Air Quality Management (Phase I) Work Group....................................8

III. Current Air Quality Management System............................................9

IV. Challenges for Air Quality Management.............................................10

V. Approach for Phase II AQM Subcommittee.........................................14

VI. Recommendation for a Comprehensive Air Quality Management Planning

Process......................................................................................17

VII. Recommendations Related to the Comp rehensive Air Quality Management Planning Process..........................................................................21

Recommendation 1: Improve environmental and health data........22

Recommendation 2: Improve the priority setting process.................23

Recommendation 3: Improve accountability mechanisms..............24

Recommendation 4: Take climate change into account................26

Recommendation 5: Support transportation and land use scenario planning...........................................................................30

Recommendation 6: Integrate air quality planning into land use, transportation and community development plans......................35

Recommendation 7: Encourage pollution prevention, energy efficiency and renewable energy................................................................37

Recommendation 8: Expand the use of episodic controls..............40

Recommendation 9: Overcome potential barriers to clean energy/air quality integration........................................................................41

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Recommendation 10: Provide incentives for voluntary and innovative land use, energy, and transportation approaches..............................46

Recommendation 11: Develop programs to reduce public demand for polluting activities...............................................................48

Recommendation 12: Establish an inter-agency liaison group to coordinate land use, energy, transportation, climate change, and air quality goals

......................................................................................50

VIII. Need for Tools to Address Remaining Air Quality Problems and Planning

Needs........................................................................................53

IX. Unresolved Areas of Discussion.......................................................61

X. Conclusions................................................................................71

XI. Appendices.................................................................................72 Appendix A: Membership and Organizatio nal Structure of the Air Quality Management Subcommittee..................................................73 Appendix B: Need for Tools to Im prove Air Quality Matrix and Needs and Tools Paper.........................................................78 Appendix C: Proposed Framework for an Air Quality Management

Plan..................................................................................91 Appendix D: Letter Transmitti ng Final Report to EPA.................93 Appendix E: Commentary from stakeholders..............................96

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I. Introduction

In March 2005, the Clean Air Act Advisory Committee (CAAAC) formed the Air Quality Management (AQM) Subcommittee to continue efforts to improve the air quality management process in the Unite d States. The primary charge of the AQM Subcommittee was to develop recommendations that would improve the air quality management system and address the air quality challenges in this country expect ed over the next 10 to 20 years. This report addresses those challenges and includes recommendations for the United States Environmental Protection Agency (EPA), states, tribes, and othe rs to improve the planning and implementation of air quality protection programs. The work of the AQM Subcommittee continues air quality improvement efforts started by:

• The National Research Council of the Na tional Academies of Sciences in its January 2004 report entitled “Air Quality Management in the United States,” and

• The Air Quality Management Work Group, also established by the CAAAC, and its January 2005 report “Recommendations to the Clean Air Act Advisory Committee: Phase I and Next Steps.”

From May 2005 to October 2006, the AQM Subcommittee convened to discuss changes to the AQM system and develop recomme ndations. The Subcommittee had a diverse membership with representatives from industry, state and tribal air agencies, regional planning organizations, environmental and health communities, and EPA.

The AQM Subcommittee recommends in this report that EPA transition its current AQM paradigm from a single pollutant focus to an integrated, multiple pollutant model that: 1) recognizes and encourages consideration of th e related and sometimes conflicting national air quality, land use, transportati on, and energy goals and policies a nd 2) recognizes the range of benefits realized by consolidati ng the elements of an implementi ng authority’s clean air program into one comprehensive Air Quality Manage ment Plan (AQMP). The proposed AQMP will make implementation of air quality programs mo re effective by realizi ng the co-benefits of control measures, and creating a one-stop shop fo r the public and regulated entities to understand all of the elements of a clean air program. The ch ange advocated in this report will require a new way of thinking about air quality management by federal, state, tribal , and local officials. Initially, AQMPs would likely be resource in tensive. However, the AQM Subcommittee’s recommendation comes with the expectation that an AQMP will, in the longer term, lead to improved air quality through more efficient air qu ality protection strategi es that utilize fewer resources than the current State Implementation Pl an (SIP) and Tribal Implementation Plan (TIP) processes. Over time, the AQMP process would also enhance coordination between federal, state, tribal, and local governments; provide more access and transparency to the public regarding what its government agencies are doing to protect public he alth; and, serve as a valuable tool that identifies gaps where more needs to be done. The proposed AQMP, through more coordinated revision cycles, would also de liver the regulatory certainty that industry requires to remain competitive.

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During its deliberations, the AQM Subcom mittee considered a wide range of

recommendations and after extensive discus sion is advancing a number of those for

consideration. Most of the recommendations ma de by the AQM Subcommittee in this report are part of the overarching comprehensive AQM P recommendation. While the AQM Subcommittee urges that the recommendations be considered as a whole, each of the recommendations should be implemented regardless of whether the comp rehensive AQMP approach is undertaken by a particular state or tribe.

The recommendations in this report, if impl emented, would result in improved air quality management by creating a more comprehensive appr oach that necessitates consideration of land use, transportation, energy, and ot her related issues into the ai r quality planning process. The AQM Subcommittee believes that the recommendati ons in this report may be implemented under the current Clean Air Act (CAA).

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II. Air Quality Management (Phase I) Work Group

In June 2004, the Clean Air Act Advisory Committee (CAAAC) formed an Air Quality Management Work Group to evaluate the Natio nal Research Council’s (NRC) comprehensive recommendations and to advise EPA on ways to improve the Air Qual ity Management (AQM) system. The Work Group included representative s from industry, state and local governments, tribal interests, regional organizations, environmental and public health organizations, and EPA.

In December 2004 the CAAAC submitted the Phase I AQM report which included 38 recommendations to EPA. The recommendations fall into the five broad categories outlined in the original NRC report:

(1) Strengthening scientific and technical capacity; (2) Expanding national and multistate control strategies; (3) Transforming the SIP process; (4) Developing an integrated program for criteria pollutants; and (5) Enhancing protection of ecosy stems and public welfare.

The Work Group recommended several improvements be made to the AQM system as a whole that would greatly increase its effectiven ess. Because of the pending SIP deadlines faced by states for ozone, fine particles, and re gional haze, the Work Group chose to make recommendations that could be implemented in the nearer term. The Work Group also agreed

that it would focus on recommendations that were responsive to the issues raised by the NRC, but when implemented would not require statut ory changes, and in many cases would not involve regulatory or policy ch anges. The Work Group also r ecommended that a second phase focusing on additional and more compre hensive improvements be undertaken.

The Phase I recommendations are describe d in full in the Work Group’s Report,

“Recommendations to the Clean Air Act Advi sory Committee: Phase 1 and Next Steps,” which was fully adopted by the CAAAC and submitted to EPA in January 2005. In April 2005, EPA conveyed to the CAAAC its agreem ent with the recommendations, its intent to implement the Phase I recommendations, and to report to the CAAAC on progress. While there was unanimous agreement among both EPA and the CAAAC that al l of the recommendations should be pursued, they also recognized that resour ce considerations would dictat e the manner and time in which certain recommendations could be pursued and satisfied.

Implementation of Phase I Recommendations EPA has completed work on many of the Phase I recommendations and is making progress on addressing the vast majority of th e recommendations. Longer-term projects such as improving information through monitoring, emissi ons inventories, modeling; developing a framework for accountability; a nd improving ecosystem protecti on are moving forward and may take several years to complete. The Phase I report, current EPA implementation updates, and

additional information can be found on the CAAAC website at http://www.epa.gov/air/caaac

.

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III. Current Air Quality Management System

The CAA created a framework for authorities to manage air quality, assigning different roles to federal, state, tribal , and local governments. The CAA requires EPA to set standards for “criteria” pollutants. A criteria pollutant is one of the six pollutants that EPA has found to damage public health and the e nvironment, for which EPA has se t National Ambient Air Quality Standards (NAAQS). While other pollutants can cau se such damage, there are only six for which EPA has set this type of standard.

There are two types of NAAQS, primary and secondary

. Primary standards are set to protect public health with an adequate margin of safety, including the health of "sensitive" populations such as asthmatic s, children, and the elderly. Secondary standards are set to protect public welfare, including protection against visibility impairment, damage to animals, crops, vegetation, and buildings. 1

For the criteria pollutants, EPA and stat es designate those geographic areas that experience unhealthy levels of those pollutants. Once an area has been designated as out of compliance (nonattainment) for a particul ar NAAQS, state and local governments are responsible for implementing and enforcing rules th at reduce air pollution. The responsible state or local government has three y ears to develop a body of rules th at will lower po llution in order to comply with (or attain) the standard. States use computer-based modeling to show (demonstrate) that the body of rules (collectivel y called a SIP) will bring about compliance with the standard (attainment). Tribes may develop Tribal Implementation Plan s (TIP) to address the NAAQS in Indian Country. In areas where tr ibes choose not to develop a TIP, EPA is responsible for implementing the program in Indian Country. Once EP A approves the SIP or TIP, it has the force of federal law. States and tribes retain prim acy for developing and implementing the SIPs and TIPs, thus allowing th em to tailor air quality approaches to their

individual local or re gional concerns.

Aside from setting the standards, EPA has addi tional roles. EPA issues national rules that reduce pollution through out the country, such as on cars and tr ucks. EPA also issues procedures and guidance to ensure consistency and certainty to states and tribes as SIPs and TIPs are developed and implemented. EPA then reviews SIPs and TIPs and approves them when they meet federal requirements, or takes action when plans are inadequate or not submitted. On occasion EPA must take action when mandated pr ogress goals are not met within the required timeframes. EPA may also enforce st ate or tribal programs that are included in a SIP or TIP, if

for some reason a state or tribe fails to do so. As required or appropriate for pollutants other than criteria pollutants, EPA may issue national em ission control programs such as the maximum achievable control technology (MACT) standard s for stationary sources of hazardous air pollutants.

Air Quality Management in the 21 st Century

While much progress has been made in air quality management, the Subcommittee sees clear need for improvement. The NRC report iden tifies a number of signi ficant challenges that

1 http://www.epa.gov/particles/standards.html

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require a more comprehensive perspective, ne w and improved tools, and innovative strategies. Addressing these challenges will help ensure future progress and keep pace with meeting current and future clean air goals.

Presently, EPA, states, tribes, and local agen cies are well underway in their efforts to achieve the NAAQS. EPA has con tinued efforts to routinely review the NAAQS as required under the CAA. In 2006, EPA revised the particul ate matter (PM) standards and is currently reviewing the standards for oz one, lead, nitrogen oxides, and sulfur oxides. Such reviews underscore the need for a dynamic air quality planning strategy approach. The Phase I recommendations by the CAAAC along with the Phase II recommendations in this report are designed to assist EPA and st ate, tribal and local agencies to improve air quality, protect public health, and protect the environment. Not onl y will it enable agencies to achieve the NAAQS, but it also aims to take a more holistic multipolluta nt approach, including reducing air toxics a nd greenhouse gases.

IV. Challenges for Air Qualit y Management – A Look Ahead

The economic and societal activities that genera te air pollution conti nue to grow. Despite this growth, air quality management programs in the United States have made significant progress in several key areas. Concentrations of key pollutants have improved considerably in much of the country. This progress has resulted in substantial public health benefits, economic savings, ecosystem protection, and improved aes thetics during a period of growth in the economy, energy production, vehi cle use, and population.

A number of serious AQM challenges persist, especially areas that continue to have public health and nonattainment problems with gr ound-level ozone and particulate matter. There is also a heightened awareness and concern ove r exposure to air toxics , increasing levels of pollution transported from abroad, ecosystem effect s, and effects of air po llution on visibility in and near national parks, effects of air pollution on climate change, and th e feedback effects of climate change on air pollution. The AQM Subco mmittee believes that to be more effective, future air quality management should address all of these challenges in a more holistic manner.

Nonattainment Problems: Ground-level Ozone and Particulate Matter

Following the anticipated emissions reductions from implementing the federal SIP Call for Nitrogen Oxides (NO

x ), the Clean Air Interstate Rule (C AIR), federal mobile source rules, existing state and tribal air pollu tion control programs, and existi ng local initiatives, federal air quality modeling suggests that a number of ar eas, especially heavily populated areas, will

continue to violate the curre nt NAAQS for ground-level ozone and PM (See Figure 1). The

number of nonattainment areas is expected to increase in light of the more protective 2006 fine particles (PM2.5) standard. The geographic scop e and number of nonattainment areas is also expected to increase if a new, more pr otective ozone standard is promulgated.

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Area Count

3

14

8

104 Legend

Both PM and Ozone Nonattainment

PM Only Nonattainment

Ozone Only Nonattainment

Nonattainment areas projected to attain Area Count

3

14

8

104 Legend

Both PM and Ozone Nonattainment

PM Only Nonattainment

Ozone Only Nonattainment

Nonattainment areas projected to attain

Figure 1. Areas Projected to Exceed the PM2.5 and 8-hour Ozone Standards in 2015 with Clean Air Interstate Rule (CAIR), Clean Air Mercury Rule (CAMR), and the Clean Air Visibility Rule (CAVR) Absent Additional Local Controls.

Nonattainment areas are of particular c oncern, given the increased evidence linking ozone and PM exposure to a wide range of serious human health effects. In addition to the longrecognized effects of ozone on lung function, more recent scientific studies have linked ozone to increases in mortality (especially among the elderly), hospital admissions for respiratory ailments (particularly children), school abse nteeism, and incidence of asthma.

The most recent scientific information on the health and environmental effects of particles, ozone, and related pr ecursor pollutants suggest that the NAAQS will likely remain at

current or more restrictive levels in the fores eeable future. Developing strategies to attain and maintain these standards over the long term poses a significant challenge, es pecially in light of growth that is expected to continue. New a nd innovative strategies will likely be needed to

achieve reductions from emissions sources that have the potential for co st-effective reductions, such as marine vessels, locomotives, existing legacy fleets and off-road vehicles, as well as under-controlled and “grandfathered” industrial facilities. It c ould also include instituting additional transportation control measures to a ddress increased vehicle use and initiating local and regional planning efforts to engage in a mo re holistic approach to air quality management.

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Air Toxics

Historically, the AQM system has not allocated the same level of resources to air toxics control and management efforts as compared to criteria pollutants. While the air toxics standards, ozone, and PM programs have yielde d reductions of a number of toxic components and precursor pollutants, air toxics problems continue to exis t on local, regional, and even global scales. The NRC report and EPA’s most recen t National Air Toxics Assessment (NATA), suggests a background cancer risk as sociated with air toxics for much of the nation between 1 to 25 in one million, with much of the risk being attributed to benzene. 2

A growing body of evidence suggests a potential overlap between air toxics and PM. The overlap creates potential expos ure and health effects concer ns for populations that spend significant time on or near heavily-traveled road ways. This issue may be related to direct localized emissions of particles, organic or inorganic gaseous tailpi pe emissions, or toxic subcomponents. While exposure to air polluti on along roadways is th e subject of ongoing research, EPA and states also need to focus on st rategies to deal with “hotspots.” Air quality planning for localized areas will require innovative management techniques that could include transportation planning, city planning, and a variety of mitigating actions.

Other Effects of Air Pollution/Interactions

Air quality management, in addition to a ddressing the lingering nonattainment problems for ozone and PM, and air toxics problems, should include consideration of the interplay between air quality objectives and othe r policies such as national land use, energy, transportation, and climate. These other programs are intertwine d with air quality policies and programs and sometimes may cause increases in air emissions that make meeting ai r quality goals more difficult. Similarly, air quality policies and prog rams may conflict with land use, transportation, and energy goals. Where possible, the AQM Subc ommittee recommends that these programs be better aligned and functi on more effectively.

A similar interplay can exist between air quali ty and climate change. Climate change can influence the concentration and distribution of air pollutants through a va riety of direct and indirect processes, including: (1) temperature increases and decreases which affect biogenic emissions, atmospheric water vapor content, an d the reactions forming ground-level ozone and PM; and (2) altered weather patterns that a ffect wind speed and dire ction, vertical mixing, precipitation, lightning frequency, and clouds. Part iculate matter emissions have direct effects by scattering and absorbing heat. The scattering of heat generally means that PM has a cooling

effect. Particulate matter also inte racts with clouds, ther eby indirectly affecti ng climate. Indirect effects arguably represent the greatest uncertainty in our understanding of PM effects on climate.

During the past several years, many cities a nd states have initiated actions to reduce greenhouse gases. To date, 41 states and Puerto Rico have completed greenhouse gas

inventories and 28 states and Pu erto Rico have completed, or are working on, action plans that identify options for reducing greenhouse gas emissions or enhancing greenhouse gas sequestration. Over 300 mayors representing more than 50 million Americans have signed the

2 http://www.epa.gov/ttn/atw/nata1999/natafinalfact.html

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U.S. Mayors Climate Protection Agreement that commits cities to take action to meet or exceed the Kyoto Protocol targets 3 . The AQM Subcommittee believes that a number of cities and states are interested in integrating air quality pla nning with their climate change programs. For example, California has established greenhouse ga s standards for passenger vehicles beginning with the 2009 model year. Seve ral Northeast and Western stat es have also adopted these California measures. In addition, eight northeast states (CT, DE, ME, NH, NJ, NY, RI and MD) participate in the Regional Greenhouse Ga s Initiative (RGGI) to reduce greenhouse gas emissions from the electric generating sector through a cap and trade program, and they have issued a model rule. Two northwest states, Oreg on and Washington, are also considering similar greenhouse gas control initiatives.

Environmental Effects

Prior to the 1990 CAA Amendments, federal, state, tribal, and local air quality management programs focused on health-based programs. The U.S. Congress amended the CAA

in 1990 to enhance the health-b ased programs, including setti ng a new national air toxics program, programs to address visibility, and reduc tions in pollutants that cause acid rain. The programs mandated by Congress in the 1990 CAA Amendments resulted in substantial reductions in emissions of air toxics, sulfur oxides, and nitrogen oxides. EPA has launched research on ecosystem health and the CAA cont ains requirements for secondary standards for certain criteria pollutants to protect public we lfare, including the e nvironment. The 2004 NRC report recommended establishing ecosystem protect ion as an AQM priority. In addition, the NRC suggested the need for more monitors to measure ecosystem health, improved meteorological and exposure models, risk assessme nt research, and resear ching the interplay of ecosystems with factors such as ai r quality, climate, and topography.

3 For more information visit http://usmayors.org/climateprotection.

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V. Approach for Phase II AQM Subcommittee

Air Quality Management Subcommittee and Phase II Process

In its Phase I recommendations, the CAAAC recommended that a new subcommittee be

established to continue the assessment and development of recommendations for long-term changes to the air quality management system. It recommended that discussion of all remaining issues and options be directed towards furthe r strengthening the U.S. air quality management

framework over the next decade. 4

In response to this recommendation, the CAAAC established the AQM Subcommittee in March 2005. The AQM Subcommittee was charge d with developing Phase II recommendations for long-term systemic changes to the AQM syst em and with monitoring EPA’s implementation of the AQM Phase I recommendations. As with the original AQM Work Group, the Subcommittee’s membership was comprised of repr esentatives from industry, state, tribal and local governments, regional organizations, environmental and public health organizations, and

EPA. The list of Subcommittee members and othe r participants can be found in Appendix A of this report and is availabl e at the CAAAC website at http://www.epa.gov/air/caaac/aqm.html

.

The AQM Subcommittee established two teams to facilitate data collection efforts and develop recommendations. The first team was charged with evaluating improvements to the AQM process. This team focused on three areas: 1) problem definition and priority setting; 2) the AQM planning process; and 3) strategies for improved coordination and communication. The second team was charged with exam ining and developing tools to s upport state, tribal, and local agencies to improve air quality. An organizational chart is provided on page 76 of this report.

The AQM Subcommittee deliberated on recomme ndations developed by both teams. The Subcommittee reached agreement on many of the recommendations; for other recommendations,

substantial consensus could not be reached. In addition, the S ubcommittee spent considerable time and effort on two significant overarchi ng areas for improvement: 1) developing a comprehensive AQM planning process; and 2) establishing a revised process for setting

nonattainment boundaries.

In October 2006, the AQM Subcommittee reached agreement on recommendations to present

to the CAAAC. Where there was not substantia l consensus on proposed recommendations (i.e., reasonable performance levels, continuous im provement, and the process for setting nonattainment boundaries), the Subcommittee de cided to document discussions where

substantial consensus could not be reached. (see Section IX of this report). In January 2007, the Subcommittee presented draft Phase II recommendations to the CAAAC.

4 CAAAC, Air Quality Management Work Group. January 2005. Recommendations to the Clean Air Act Advisory Committee. http://www.e pa.gov/air/caaac/aqm/re port1-17-05.pdf

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Decision Making Process

Prior to drafting recommendations, the AQM Subcommittee agreed to use substantial consensus as the means for deciding which r ecommendations to adopt and forward to the CAAAC. Using this process, the AQM Subcom mittee achieved substantial consensus on the 13 recommendations presented in this report. Ho wever, the Subcommittee found that it was unable to develop consensus on a few recommendations that would have substantial regulatory impact. Such proposals, such as the ones listed in the Unresolved Areas of Discussion section below, often require tradeoffs. For example, a stricter standard could be balanced with a longer period of repose. The Subcommittee found that th is forum did not allow for such specific

considerations.

Recommendations on Changes to the Air Quality Management System

The recommendations contained in this report represent the AQM Subcommittee’s vision of a comprehensive AQM system that can assist in meeting future air quality challenges in this

country.

As such, the AQM Subcommittee is making an overarching recommendation for taking a holistic approach to AQM through utilization of a more comprehensive planning process. The Subcommittee is making 12 additional recommendati ons that serve as integral components of this improved process. Though these recomm endations work together, each should be considered on its specific merits and implemented regardless of the extent to which a comprehensive AQM plan is implemented.

The AQM Subcommittee considered recommendati ons based on their merit, separate from

consideration of whether curre nt statutory authority supports them. Tremendous progress has

occurred as a result of the CAA as it exists t oday, and the Subcommittee believes that changes to the CAA are unnecessary to implement the Phas e II recommendations in this report. In particular, it is important to note that th e primary recommendation – to establish a comprehensive AQM process – would be volunt ary. This recommendation is intended to provide a vision for states, tribes and local gover nments, as well as EPA, to enhance clean air planning by being more proactive and comprehensive.

Unresolved Areas of Discussion

The Subcommittee discussed at great lengt h three AQM system changes on which the

members were unable to reach substantial consensus: (1) boundaries, (2) reasonable performance levels, and (3) continuous improveme nt. The areas are highlighted here and are discussed at greater length in Section IX of the report.

With respect to boundaries, the AQM Subcomm ittee was in substantial agreement on two concepts related to boundary setting, and achieve d consensus on a set of principles to guide the development of a new approach to establishing boundaries. The Subcommittee agreed on the need for an airshed approach to boundaries and on the need to replace the cu rrent system with an

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approach where areas that violate NAAQS and areas where controls ar e needed are defined independently based on scientific assessments. The Subcommittee al so agreed that control areas should encompass all significant co ntributors to the NAAQS violati on, without regard to state, tribal, or other geo-political boundaries, such that by controlli ng emissions from the sources included within the control area boundary, timely attainment of the NAAQS will be assured. The AQM Subcommittee could not, however, reach agreement on the details of how these concepts and the underlying princi ples should be implemented.

The Subcommittee considered a concept calle d “reasonable performance levels” (RPL). It is based on the idea of treating airsheds as a finite and essential reso urce, and sources are not entitled to pollute. The RPL approach would requi re all categories of air pollution to take steps

to limit their emissions. RPLs would be establis hed and periodically updated for all air pollution sources and all pollutants, beginning with the sources and pollutants that pose the greatest risk to public health and ecosystems. The RPL appro ach would provide a foundation for additional controls that might be needed to address existing or potentia l area-specific problems. For example, due to transport issues from upwi nd sources implementing RPLs, an area may still violate a NAAQS. Under these circumstances, attain ment SIPs with specific deadlines may still be needed to protect public health. An RPL pr ogram would likely requ ire amendments to the CAA. Several Subcommittee members supported this concept as a recommendation, but several Subcommittee members had significant concerns th at prevented substantial consensus of this

recommendation.

Finally, the Subcommittee discussed the concep t of “continuous improvement.” The idea is defined as continuous improvement in emissi ons reductions from all stationary, mobile and area sources that would lead to continuous air qu ality improvement in all geographic regions of the nation. The improvements would be achieve d via a combination of mechanisms, including voluntary programs at the local level, continue d use of a national pr ogram of command and control emission standards, and several options for strengthening and enhancing various marketbased programs to encourage continuous improvements. The goal of Subcommittee members who developed the concept was to design a program that would result in more efficient and cost

effective reductions of emissions associated with manufacturing and energy generation, while maintaining or improving environmental and/ or public health conditions. The AQM Subcommittee members had a wide range of disagreement about this concept. Some Subcommittee members supported the concept. Others felt the proposed options lacked certainty and were cost prohibitive if there was no relate d limit. They also saw the programs as redundant with programs yielding reductions achiev ed through the NAAQS and national emission

standards.

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VI. Recommendation for a Comprehensive Air Quality Management Planning Process



### The AQM Subcommittee makes the following overarching recommendation for improving the current AQM system: EPA, states, local governments, and tribes shou ld adopt a comprehensive AQM planning process and, thr ough this process, create plans to move from a single pollutant approach to an integr ated, multiple pollutant approach to managing air quality.

The NRC report noted that an integrated, multiple pollutant approach to managing air quality would be more effective, efficient and timely th an the current pollutant-by-pollutant approach. The concept of a comprehensive air quality ma nagement plan, or AQMP, is to provide a framework that could be used to integrate an alysis, planning, and implementation of air quality

management programs.

The AQMP would be developed at th e discretion of the state, tribal, or local government, or a multijurisdictional organization that is responsible for dealing with air quality issues in a geographic area. The plan would outline how a juri sdiction(s) intends to address air pollutants in an integrated manner, including, but not limited to, attainment and maintenance of the NAAQS,

sector-based reductions of criteria pollutants and air toxics, im provements for visibility in Class I areas, area-wide strategies for reducing air toxics, ecosystem pr otection, and local environmental issues. The AQMP would document the critical planning process and decisions made. Because the AQMP would be developed on a vol untary basis at the discretion of the state, tribal, or local governments, or a multijurisdictional organization, only the CAA mandated components contained in the AQMP (e.g., the SIP) would be required to be submitted to EPA.

Development of an AQMP is envisioned by th e Subcommittee as a broad, iterative process that would reflect significant inte raction between all stakeholders at the state, tribal, local and regional levels, as well as the full range of affected parties. Issues that re late to air quality, such as energy policy, climate change, transportation, a nd land use should, to the extent possible, be considered in a comprehensive AQMP. The goal woul d be to create a compre hensive plan that is multipollutant based, addresses all of the critical air pollution issues within the jurisdiction, focuses on other important air qual ity goals in the geographic area, sets priorities, and provides an overall plan for moving forward with the stra tegies outlined in the plan. The AQMP also should be revised periodically (e .g., every five to 10 years).

At the same time that initial AQMPs are under development, EPA, and, as appropriate, the states should be developing multipollutant regu lations. This concept affirms a recommendation

from the NRC that EPA should address mu ltiple-related pollutants in parallel.

The NRC encouraged a new approach in the steps and processes in setting the NAAQS that

could result in better coordination of deadlin es and would facilitate the development of multipollutant AQMPs. While the AQM Subcomm ittee agrees that better aligned deadlines between various NAAQS revisions and their subs equent SIPs/TIPs could maximize planning

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efforts, any alignment should not result in the delay of any CAA mandate d deadline. Finally, the NRC also recommended that the hazardous air po llutants that pose the highest risk to human

health and welfare be incl uded in multipollutant AQMPs. 5

Benefits of AQM Development

The AQM Subcommittee achieved broad consensus on the concept and desirability of a comprehensive AQM planning process and associated AQMP. The Subcommittee proposes a framework for the plan which incorporates federa lly required elements for criteria pollutants (State Implementation Plan elements) and non-SI P elements (e.g., MACT standards) in addition to elements that are not federally required such as local planning, growth forecasts, and communication strategies. The framework found in Appendix C provides a proposed structure that a state, tribe, local government and/or multijurisdictional organization could use when developing an AQMP.

The merits of preparing an AQMP include:

• Relationships between federal, state, tribal, and local governments would be enhanced through the coordinated planning effort;

• The public would have greater access to ai r quality information and greater ease in participating in the programs to manage ai r quality via centraliz ation of one easy-toaccess plan;

• The role for local governments and multiju risdictional organizations in air quality planning would be facilitated;

• The AQMP would be a valuable tool that highl ights gaps where more air quality planning needs to occur;

• The AQMP could initiate a process to coor dinate multiple emission requirements and deliver regulatory certainty, enabling industr y to optimize emission control decisions; and

• The AQMP would better enable the selection of effective contro l strategies. More effective control strategies would insure th at in the process of reducing a pollutant,

increases in one or more othe r pollutants do not occur.

The AQM Subcommittee agreed that states and tr ibes should not be requ ired to develop an AQMP. Instead, the benefits of having an AQMP, coupled with new and expanded incentives for developing these plans, could pr ovide sufficient motivation for a jurisdiction to prepare an AQMP voluntarily. The comprehensive AQMP r ecommendation does not contemplate changes to the CAA with respect to the NAAQS or air toxics standards or processes.

Resources, Incentives, and EPA Oversight

Two major issues were identified by the Subcommittee that would need to be addressed

before most areas could consid er developing and implementing an AQMP. First is the issue of resources, including staff time and funds to implement comprehensive planning. The second

5 National Research Council, Air Quality Management in the United States, (Washington, D.C.; National Academies Press, 2004), p. 21, 310.

18Air Quality Management Subc ommittee Final Report

issue is EPA oversight; for example, the extent to which a state that develops an AQMP would be required under the CAA to secure EPA approval of plan revisions.

The AQM Subcommittee suggested that EP A consider the fo llowing incentives:

• Offer in-kind resources from EPA staff to assist in developing the AQMP;

• Streamline the SIP and TIP process through measures like parallel processing;

• Provide states and tribes with flexibility to place a lower priority on administrative obligations that achieve little in terms of public health protection for air quality improvement. Instead, those resources could be devoted to activitie s that enhance public health protection, which could constitute an appropriate “trade-off.” For example, Title V sources are required to undergo two sets of reviews for federal and state approvals. If EPA were to merge its review of Title V pe rmit actions with state Title V permit notice and public review processes, significant state, federal, and permittee time and resources could be saved; and

• Explore CAA section 110 authorities for the purpose of providing support for the development of AQMPs. Such support could include expedited EPA approval of regulatory measures that have been adopted or are in the process of approval by a state or

tribe outside of a nonattainme nt area, but would benefit the area in a ttaining the

standards.

These incentives would provide motivation for an area to commit resources to the development of an AQMP. The Subcommittee recommends that EPA fully assess the implications and options related to these ince ntives including, but not limited to, the legal implications, the impact on inter-state obligatio ns/expectations, the basis for approval, and the

need for consultation with various stakeholders.

EPA has broad authority to prescribe what is included in a SIP or TIP to decide which proposed actions are acceptable and to determine when revisions to the SIP/TIP are consistent with CAA requirements. The NRC noted in its report that the current planning system has significant flaws. The AQM Subcommittee believes that these flaws could be minimized with implementation of the AQMP recommendation. Regarding EPA’s oversight, the AQM

Subcommittee recommends that a state or tribe would need to submit only the provisions of the AQMP that are federally required and would include in the submission evidence that the state or tribe has developed a comprehensive AQMP.

The current CAA emphasizes a pollu tant by pollutant approach fo r criteria pollutants, and a source sector-based approach to regulating air toxics. The AQM Subcommittee believes that a multi-pollutant approach to air quality manageme nt can function within the framework of the

current CAA and it offers several advant ages. These advantages may include:

• Reaching attainment in a more cost-effective, efficient way, thus reducing public health and ecosystem impacts, while yielding gr eater overall reduct ions of pollutants;

• Optimizing the mix of control measures for multiple pollutants, thus avoiding control measures that, while beneficial in reducing one pollutant, may result in increases in others;

19Air Quality Management Subc ommittee Final Report

• Making better use of limited federal, state, tribal, and local resour ces, and those of the regulated community, for improving air quality;

• Providing a more proactive, predictable, a nd manageable air quality planning process;

and

• Making it easier and less expensive for potentially affected sources to plan the

installation of controls and/or the implementation of process changes, rather than having to install controls in a piecemeal fashion.

In addition, the AQMP would provide a formal mechanism for providing the public with a comprehensive picture of air quali ty where they live. It would also show how state agencies, tribes, local governments and multijurisdictional organizations are working together and in coordination with EPA to protect public hea lth and ecosystems. Moreover, the AQMP would help to highlight to the public and govern ment decision-makers where there may still be significant air quality issues that need to be addressed and raise the profile of these issues for

consideration for further action.

20Air Quality Management Subc ommittee Final Report

21 VII. Recommendations Related to the Comprehensive AQM Planning Process

In addition to the overarching recommendation related to the AQMP, the AQM Subcommittee is making 12 supporting recomme ndations to expand on the concept of the comprehensive air quality management proces s. The Subcommittee believes that these recommendations will lead to improvements in how information is gathered and analyzed, how air quality management strategies are develope d, and how the strategies are implemented. The Subcommittee realizes that many decisions rema in regarding how changes in the air quality management system will evolve, but that th e recommendations in this report should be implemented regardless of whether a state, tribe, or local agen cy implements a comprehensive AQM planning process and an associated AQMP.

A comprehensive AQM system must address thre e principle components: assessing current air quality, air quality management planning, a nd implementing air quality strategies.

Figure 2: The Air Quality Management System is comprised of three iterative steps: 1) Assessing Current Air Quality; 2) Air Quality Management Planning; 3) Implementing Air Quality Strategies. Air Quality Management

Planning Assessing
Current Air

Quality

Implementing Air Quality Strategies



### Assessing Current Air Quality

The AQM Subcommittee is making the following four recommendations related to assessing current air quality (Recommendations 1 thr ough 4). The recommendations are based on the premise that a comprehensive AQM needs to in clude programs to assess current air quality impacts on public health and ecosystems and a means by which the effectiveness can be

measured.Air Quality Management Subc ommittee Final Report



### Recommendation 1: Improve environmental and health data - Improve the accuracy, robustness, and availability of environmental and health data (1) to enable more complete characteri zation of air quality, emissions, and

environmental and health outcomes and (2) to facilitate the assessment and characterization of relative risks.

Background/Explanation: To meet future air quality management need s and to help air quality planning agencies prioritize those needs, the supporting data must be continuously improved. Scientific advancements continue to improve our unders tanding of air pollution and its impacts on public health and the environment. Severa l of the following recommended actions are expansions of recommendati ons that were made in the Phase I AQM report

, “Recommendations to the Clean Air Act Advi sory Committee: Phase 1 and Next Steps” (January 2005) and will improve the quality of the data that help inform air quality management decisions.

Recommended Actions:

A. EPA, states, tribes, and others should work to improve air quality data by continually improving air quality monitoring networks to collect data on pollutants of concern, in

areas of concern.

B. Fill in the information gaps and continually improve emissions inventories and air quality modeling.

C. EPA should improve the information on hea lth endpoints and on th e relative risk of exposure to single and multiple pollutants, at both the population and individual level.

D. Air quality planning agencies should im prove the coordination and communication between environmental groups, governmental agencies and external stakeholders, including health agencies, academic in stitutions, and the medical community.

E. EPA should improve the collection of control a nd cost data to fac ilitate analysis of projected and actual implementati on costs for major regulations.

Benefits:

• Improved air quality data and information will improve decisions related to control strategies.

• Better environmental and health data will enha nce the ability of governmental agencies to evaluate the results of implem ented strategies and to make changes as needed to improve air quality resulting in improvements to public health and the environment.

• Improved communication between multiple parties will help ensure that information is shared and used to enhance program results.

22Air Quality Management Subc ommittee Final Report



### Recommendation 2: Improve the priority setting process - Improve the priority setting process by creating mechanisms to systematically realign resources and regulatory focus toward areas of grea test health and environmental risk.

Background/Explanation: To address current and future air quality issu es, the AQM system should be realigned to more effectively address the interaction of multiple pollutants. While some progress has been made in addressing some multi-state tran sport of air pollution, transport issues still need to be identified and proactively addresse d. In addition, urba n areas have a mix of emissions that may be more appropriately addr essed in a multipollutant fashion than on an individual pollutant by pollutant basis.

Problem/Challenges Addressed:

• Ability to address new priorities promptly.

• Identification and assessment of most significant exposures and problems.

• Integration of a multi pollutant approach.

Recommended Actions:

A. EPA should use the updated information provi ded by the state, tribal, and local air agencies in AQM planning to develop nati onal regulatory priorities. EPA should also, through modeling and monitoring, help define problems that occur on a national scale that can be used to support state and tribal plans.

B. EPA should start discussions w ith the Centers for Disease Co ntrol (CDC) and state health agencies to determine if it is feasible to pr oduce an air quality health trends report. The report would attempt to link changes in ambien t air quality to health data on a five-year cycle, using the best available information while recognizing the limitations of those data.

C. EPA, the Federal Land Managers, and other agen cies, working with the states, tribes, and local agencies should report on links between ambient air quality and the health of ecosystems on a five year cycle, using the best available information while recognizing

the limitations of that information.

D. EPA and other stakeholders should strengt hen the link between improved science and improved policy by developing new mechanisms to encourage more rapid adjustment of policy priorities in the face of new scient ific information. EPA should investigate mechanisms (incentives and hammers) to encourage the realignment of regulatory priorities and implementation efforts to deal with the highest priority problems, both within the Agency and among implementing authorities.

Benefits:

• The additional considerati on given to pollutant intera ctions will produce a more comprehensive approach to improving ai r quality than the current process.

• Using updated information to develop national pr iorities will allow stat e, tribal, and local agencies to better align and shift re sources to areas of higher priority.

23Air Quality Management Subc ommittee Final Report

• An air quality health trends report will l ead to improved communi cation with the public on public health impacts from poor air quality.

• New regulatory programs can be adapted that improve the linkages between emissions and public health and ecosystem impacts.



### Recommendation 3: Improve accountability mechanisms - Improve accountability by systematically monito ring progress and evaluating results, by ensuring that data collection is meaningful and that feedback loops exist so actual environmental results inform the fu ture allocation of resources and the establishment of priorities.

Background/Explanation: The AQM system must include an ongoing pr ocess for accountabilit y, evaluating progress and developing ways to make adjustments in activities and resource allocations based on the success or failure of existing programs. Part of this process involve s continuing investments in technical tools, such as modeling, monito ring, and emissions inventory capabilities, to ensure decisions are informed by the best possible information. AQM Phase I focused on needs in this area. In addition, it is important to evaluate prog ram performance relative to air quality and cost-benefit goals, a nd to adjust program efforts and priorities accordingly.

In the past, EPA has had difficulty shifti ng resources and establishing programmatic momentum in the face of new problems. For ex ample, EPA first promulgated a fine particle national ambient air quality standard in 1997 af ter evaluating available health data that indicated fine particles posed a significan t health risk. However, attainment and nonattainment designations were not effective until April 2005, the SIPs are not due until 2008, and the first attainment deadlines are due in 2010. States ha ve little discretion in how they devote SIP development resources. States a nd tribal air agencies are trying to integrate planning and reduction programs in a multipolluta nt framework. However, the rigid statutory structure and unaligned dead lines make it difficult.

Even when targeted programs are develope d to tackle a specific problem, measuring progress accurately and assuri ng that the programs are actu ally reducing the targeted pollutants and improving public and ecosystem h ealth can be difficult. Current ways of measuring progress are slow and, in some cases, not very accurate.

The current system is extremely cumbersome wh en faced with new information about health and air pollution priorities, no ma tter how compelling the evidence.

Problems/Challenges Addressed:

• The need to be able to ad dress new priorities promptly.

24Air Quality Management Subc ommittee Final Report

• Lack of confidence in the effectiveness of pollution reduction programs because of weak accountability systems (and therefore potential lack of support for continuing or future programs).

• Evaluation of the effectiveness of cont rols and adjustment as necessary.

Recommended Actions:

A. EPA should make information available to the Clean Air Science Advisory Committee (CASAC) 6 , state, tribal, and local agencies, and the public on an ongoing basis about significant new research and st udies on the health, welfare a nd ecosystem impacts of air pollution. Provide a summary of significant new studies annually to the CASAC and to the CAAAC. Provide notice in the Federal Regist er as to the availabi lity of this summary and prominently display the summary on EPA’s website.

B. EPA and other regulators should include me trics and schedules for tracking progress within programs and rules at the time they are initiated. Using these metrics, EPA and state, tribal, and loca l agencies should evaluate the progress that is being made under various regulatory control programs by asse ssing compliance rates, actual reductions achieved, and cost-benefit anal ysis. EPA and other stake holders should improve the

collection of control and cost data to facilitate analys es of projected and actual implementation costs for major regulations, as follows:

a. EPA should develop an improved means of assessing control and compliance

measures and actual costs of these meas ures. Prospective modeling to estimate

costs and benefits in advance of new rule s should be matched with retrospective analyses of actual implementation costs, so that results and impacts can be assessed more accurately.

b. EPA and state, tribal, and local agencies should invest jointly in a complete, upto-date system to catalog available pollu tion control technologies and reduction strategies and their associ ated costs and benefits.

c. EPA and other stakeholders, including the CDC, should improve the assessment of the prospective and re trospective benefits asso ciated with avoiding air pollution-related health impacts and pr emature mortality, ecosystem damage, agricultural impacts and other public welfare impacts.

d. Pollution control information and cost-benefit calcula tions should be combined

with the information in EPA’s Trends Reports to produce a more comprehensive “accountability” assessment that tracks pr ogram progress in a transparent and publicly accessible way.

e. Initial accountability efforts should focu s on major rules such as the Clean Air Interstate Rule (CAIR), the Clean Air Mercury Rule (CAMR), and mobile source rules. Accountability metrics should ultimat ely be incorporated into all types of

programs.

Benefits:

• The public will benefit if regulators are focu sing on the more important public health issues and have more flexibility to re spond to newly developed information.

6 For more information about the Clean Air Science Comm ittee visit the EPA Science Advisory Board website at http://www.epa.gov/sab/about.htm

.

25Air Quality Management Subc ommittee Final Report

• Publicizing significant new health and ecosystem studies on a regular basis will increase focus on public health and environmental goals.

• Publicizing these studies should help st reamline the review/revision of primary standards and facilitate the development of meaningful secondary standards that will

protect ecosystems.

• Furthermore, ongoing efforts to track effectiveness and cost/benefit of programs should enhance program design and effectiven ess in the future. Accountability is always necessary to ensure public and privat e resources are being us ed to the greatest purpose, and to assure confidence in the e ffectiveness of current and future programs.



### Recommendation 4: Take climate change into account - Take climate change into account in air quality management strategies.

Background/Explanation:

The NRC report includes the following discussion on climate change:

The earth’s climate is warming. Although uncertainties remain, the general consensus among the scientific community is that this warming trend will continue or even accelerate in the coming decades. The AQM system will need to ensure that pollution reduction strategies remain effective as the climate changes, beca use some forms of air pollution, such as ground-level ozone, might be exacerba ted. In addition, emissions that contribute to air pollution and climate change are fostered by similar anthropogenic activities, that is, fossil fuel burning. Multipollutant approaches that include reducing emissions contributing to climate warming as well as air pollution may prove to be desirable.

Air Quality Management in the United States , National Research Council (January 2004) p. 16.

During the past several years, many cities and states have initiated actions to inventory and/or reduce greenhouse gases. For instance, acc ording to EPA, 41 stat es and Puerto Rico have completed greenhouse gas inventories and 28 states and Puerto Rico have completed, or are working on, action plans that identify options for re ducing greenhouse gas emissions or enhancing greenhouse gas sequestration. Ma ny cities and states are interested in integrating air quality planning with their climate change programs.

California has established greenhouse gas stan dards for passenger vehicles beginning with the 2009 model year, a move seve ral northeast and west coast states have also adopted. Eight northeast states (CT, DE, ME, NH, NJ, NY, RI and MD) participate in the Regional Greenhouse Gas Initiative (RGGI) to reduce CO 2 emissions from the electric generating sector through the application of a cap and trad e program. A draft model rule was issued in 2006. California, Oregon and Washington are currently considering similar greenhouse gas

26Air Quality Management Subc ommittee Final Report

control initiatives. The AQM Subcommittee di scussions and recommendations preceded the

Massachusetts v. EPA Supreme Court decision. The AQM Subcommittee recognizes ongoing discussions on climate change will occur outside of the AQM process.

Problems/Challenges Addressed: In the January 2005 AQM Phase I Report, a recommendation was made that “EPA should

assist states and localities in quantifying the potential increas es or decreases in greenhouse gas (GHG) emissions from reduction measures primarily designed to address ozone, fine particles, regional haze, and ai r toxics.” This recommenda tion was made in the Phase I report in the context of the NRC core reco mmendation titled, “Develop an integrated program for criteria pollutants.”

Many AQM Subcommittee (Phase II) members fe lt that with the recommendation made in the Phase I report that the scope of the AQM in Phase II shoul d be further expanded on the topic of climate change. Most Subcommittee members agreed that climate change was an important issue worthy of further discussion as it relates to air quality. However, some members believed that climate change was be ing expanded beyond the intended scope of the AQM Subcommittee and should not be the forum for this topic as more qualified experts, not present in this process, should be a part of a broader national debate. Therefore, the AQM Subcommittee agreed to narrow discussion to ce rtain aspects of thr ee air quality related linkages to climate change:

• Maintenance of AQM efficiency in the face of changing climate;

• Consideration of the effects of climate change in air quality decision making; and,

• Coordination of air quality and urban planning strategies.

Recommended Actions:

A. EPA should continue to pursue Recomme ndation 4.3 from the AQM Phase I Report:

“Greenhouse Gas Co-Benefits and Disbenefits” – EPA should assist states and localities, in quantifying the potential gr eenhouse gas co-benefits and disbenefits of emissions reduction measures primarily designed to address ozone, PM2.5, regional haze and air toxics. In evaluating control measures, EP A should assist states and localities in quantifying potential greenhouse ga s emissions increases and d ecreases. Many states and localities have adopted policies to assess a nd/or reduce greenhouse gas emissions. Under this recommendation, where requested, EPA shoul d support state, tribal, or local efforts to determine how pollution reduction alte rnatives might also impact greenhouse gas

emissions.

B. EPA should undertake a comprehensive assessm ent of the implicati ons climate change will have on future air quality objectives a nd include other federal agencies and climate change scientists in that endeavor. 7 The assessment should include estimation of the

7 Aspects of the activities described under “B” are being carried out by EPA. For example, the EPA Office of Research and Development (ORD) initiated a large program in 2001 to assess the impact of climate change on US regional air quality. The EPA STAR Grant program funded 25 climate change-related projects; ORD and the

27Air Quality Management Subc ommittee Final Report

potential increases in the average and high temperatures during ozone season and the impacts of such increases on ozone formation. An estimate of the air quality impact of secondary effects of temperature increases, such as wildfires, heat island effects, increased electric use, decrea sed hydroelectric generation, et c. should also be provided.

The assessment should include an estimation of costs and savings associated with mitigation strategies to address impacts of climate change or temperature increases associated with these potential secondary impacts.

C. EPA should assist states in the development of annual greenhouse gas emission

inventories. 8 The Emission Inventory Improvement Program quantification guidance

should be finalized and made available to st ates to promote compar ability between state

inventories. 9 These enhanced inventories should be reflected in the assessment

conducted under recommended action B and should enable states to better evaluate the air quality benefits associated with various control strategies. Coordination with greenhouse gas emissions inventories collected by other governmental entities, such as the U.S. Department of Energy (DOE), should be pursued to avoid duplication of efforts and to ensure integrity of the data. EPA, at the request of state, tribal, or local

governments, should also provide additional technical assistance to states so they may effectively evaluate greenhouse gas reducti on strategies in conjunction with the development of their air quality management plans.

Implementation:

• For recommended actions A and C, EPA should work with states, local agencies and tribes to provide technical assistance to assess greenhouse gas emission co-benefits and disbenefits, and associated ai r pollution reduction strategies, as well as provide states, tribes, and local agencies with the improved emission inventory information called for in

recommendation C.

• For recommended action B, EPA should conduct the comprehensive assessment of the air quality implications associated with climat e change in a manner that utilizes the best information available, and provides for stakeholder input.

National Exposure Research Laboratory (NERL) began a large project involving global and regional simulations, in conjunction with DOE through a cooperative agreement. In addition, ORD’s National Risk Management Research Laboratory (NRMRL) began development of data resources and tools for emissions projections. These activities will yield results that will be summarized in two assessment reports due in 2007 and 2010, to be produced by ORD’s National Center for Environmental Assessment (NCEA) in collaboration with EPA’s Office of Air and Radiation and key stakeholders.

8 Aspects of the activities described under “C” are being (or ha ve been) carried out by EPA. For example, 42 states and Puerto Rico have completed their own greenhouse gas emission inventories in partnership with EPA. EPA's draft guidance and draft State Inventory Tool have been instrumental in the progress to date.

9 See http://www.epa.gov/ttn/chief/eiip/t echreport/volume08/index.html for more information regarding the Emission Inventory Improvement Program.

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Benefits:

• These three initiatives will provide critical info rmation to states, tribes, and local agencies to use in any air quality and climate change program assessment or development they may be pursuing.

• Recommended action C will provide essentia l guidance on potential adjustments to be considered in the air quality planning process as a result of climate change.

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### AQM Management Planning

The three recommendations the AQM Subcom mittee is making regarding air quality management (AQM) planning (Recommendations 5 through 7) represen t an expansion of traditional air quality management where the stat es play the lead role and the focus is on point and mobile sources. The propos ed comprehensive AQM planning process

recommends an enhanced role for tribal , local governments, and multijurisdictional organizations, including the ut ilization of scenario planning and other tools. The AQM

Subcommittee also recommends an increased effort to encourage pollution prevention, energy efficiency, and renewable energy as a means to reduce emissions.



### Recommendation 5: Support transportation and land use scenario planning - The AQM Process should support transpor tation and land use scenario planning at the multijurisdictional, state, tribal, an d local levels and other means to identify emissions reduction opportunities and im prove tribal and local engagement. 10

Background/Explanation: Tribal and local governments have critical control and approval authority over land use choices that significantly imp act air pollution, transportation systems (which some would argue is the most critical dr iver of locally controlled de velopment), air pollution, energy use and greenhouse gas emissions. Multi-juris dictional planning orga nizations are also significantly involved in local land use and transportation planning in several ways, such as providing technical planning support to local governments. For example, tribes, local governments, and multi-jurisdictional plan ning organizations have the power to determine or influence the way in whic h land is developed, how vehicle use and transportation patterns evolve, which land is opened to developmen t, and whether local funds and land use are used to support mass tran sit, rather than discourage it. Some may also influence whether energy efficiency or demand side management techniques are required or implemented (e.g., in residential a nd commercial development). There is no single federal requirement for coordina tion among transportation, land use and air quality. Metropolitan and statewide transporta tion planning must address land use, air quality factors, and transporta tion conformity. The conformity process seeks to integrate transportation planning to the SIP’s purpose of reducing violations and contributing toattainment of the NAAQS. By virtue of their role in these multiple areas, multijurisdictional planning orga nizations, tribal and local governments have a unique opportunity to coordinate ai r quality, land use, energy, transportation, and climate programs. For these and other reasons, the AQM Subcommittee recommends that

10 For purposes of Recommendation 5, “multi-jurisdictional planning organizations” include, but are not limited to, multi-state organizations such as state transportation departments, multijurisdictional and regional planning organizations (MJOs and RPOs), council of governments (COGs), nonprofit planning organizations and independent system organizations.

30Air Quality Management Subc ommittee Final Report

multijurisdictional planning organizations , including all governments and planning organizations be an integral part of the AQM process.

The AQM Subcommittee recognizes that cons iderations such as quality of life are frequently the drivers for planning orga nizations (often with the support of multijurisdictional planning organizations) to recommend and adopt land use restrictions and other practices that are also good for air quality. EPA can play a constructive role in supporting such practices by providing tools and resources to assess the air quality

benefits of alternative land use scenarios.

Problems/Challenges Addressed:

• Attaining and maintain ing the NAAQS for ozone and PM2.5 and reducing regional haze.

• Addressing air quality on the appropriate geographic scale (locally, regionally and globally).

• Addressing remaining pollution problems , including unregulated and smaller

“area sources”.

• Coordinating air quality, energy, trans portation and urban planning strategies.

Recommended Actions:

To achieve enhanced multijurisdictional plan ning organization, stat e, tribal, and local governments involvement in the AQM process and better coordination of AQM, land use, energy, transportation and climate programs, the AQM process should be modified so that multijurisdictional planning organizations including local planning choices are better integrated with, and have meaningful input int o, federal, state, and tr ibal AQM processes. To accomplish this objective:

A. EPA should encourage states a nd tribes to coordinate with multijurisdictional planning organizations and tribal and local govern ments by aligning planning schedules. EPA should provide resources to multijurisdictional planning organizations, and tribal and local governments so they can better unders tand the impact that land use, energy, and transportation decisions in their areas will have on air quality and greenhouse gas emissions. EPA (in consultation and coordina tion with DOT, states, and tribes) should assist, where appropriate, in linking multijurisd ictional planning organizations and tribal and local governments that are actively impl ementing integrated planning approaches (e.g., Sacramento, Portland, Chicago, Minneapolis ) with those that are considering, but not yet implementing, such approaches (e.g., Atlanta).

EPA, drawing on outside expertise), shoul d also develop a cl earinghouse of planning related resources and tools, as proposed in the 2005 AQM Phase I report. Over the longer term, multijurisdictional planning organi zations, including governmental and other planning organizations, need more sophisticated transportation and land use models that adequately capture local land design issues, bicycle and pedestrian travel, and reduced

demand. These models will need to be supported by high quality, sufficiently disaggregated land use, and travel data. In the nearer-term, regions, communities and

31Air Quality Management Subc ommittee Final Report

tribal entities need s cenario analyses and visioning tool s that allow them to understand, visualize and quantify the opportunity costs of business-as-usual development trends and the benefits of more efficient transportati on and land use scenarios. Local land use and transportation infrastructure decisions are typi cally driven more by the quality of life and economic concerns than by air quality and envi ronmental issues. Thus, it is critical that scenario analysis tools address multiple f actors (such as emissions, mobility, consumer fuel costs, water quality, infras tructure costs, etc.) of concer n to the public and the private

sector.

B. EPA, in partnership with states, tribes, a nd DOT in consultation with other interested stakeholders, should encourage multijurisdic tional planning organi zations, tribal, and local governments to conduct a visioning and s cenario planning process in which the area in question decides where it wants to be in the future with regard to land use, transportation, and energy; and, the area in question adopts a plan to incorporate the necessary policies and requirements/mandates th at further its vision. These efforts should be coordinated with and supported by the tr ansportation planning process. This could produce an “integrated” strate gy that addresses land use, en ergy, and trans portation in a manner that is directionally corre ct for air quality or explicitly tied to attainment. As part of their visioning and scenario planning process, multijurisdictional planning organizations, tribal, and local governments should be encouraged to work with state and/or tribal planning organiza tions to identify strategically located communities that are appropriate for new fuel and energy genera tion, storage, trans portation technologies, facilities, and infrastructure requiring cha nges to the existing land and built environment.

C. EPA, in partnership with states, tribes, and DOT and in consultation with other interested stakeholders, should explore the advantag es and disadvantages of mandatory and voluntary visioning and scenario planning th at, among other things, identifies the

environmental benefits and detriments of va rious land use choices. Such a program could be conducted as part of the multijurisdictional planning organizations or tribal or local government’s transportation planning and air quality planning process. 11 If a mandatory program is appropriate, significant changes would be required not just to the AQM system, but to the transportation planning and conformity processes and underlying

statutes.

D. EPA should allow SIP/TIP credit and make available other forms of recognition or alternative “credit” for multijurisdictional planning organizations, tribal, and local governments that revise their land use laws consistent with EPA’s model goals and ordinances, or that implement quantifiable la nd use, energy or tran sportation technologies or approaches that benefit air quality.

11 A recommendation to mandate scenario planning for Transportation Improvement Plans and Long Range Transportation Plans was initially developed by a group of transportation, land use and air quality experts convened by the Center for Clean Air Policy and the local Government Co mmission in December 2004. See http://www.ccap.org/transp ortation/smart_two.htm for more information.

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Implementation:

• For recommended action A, EPA should develop a plan in consultation with states, tribes, DOT, and the various associations that represent municipalities (e.g., National Association of Regional Councils ). The plan should include a mechanism for facilitating communication and scheduling between and among multijurisdictional planning organizations, tribal, and local governments, as well as issuing guidance on integrated planning approaches.

• Further, with respect to th e clearinghouse of planning reso urces and tools, EPA (drawing on outside expertise) should gather items that will help multijurisdictional planning organizations and tribal and local gove rnments achieve planning and development practices that benefit air quality. The clearinghouse of resources and tools should include, without limitation:

1) Software that enables multijurisdictional pl anning organizations and tribal and local governments to model current and alternativ e land use patterns, energy trends and transportation options so th at they can study how different land use, energy and transportation scenarios would impact future emissions; 2) Modeling software that enables multijurisdic tional planning organiza tions and tribal and local governments to quantify the emission redu ctions associated with certain land use, energy and transportation t echnologies or approaches; 3) On-line tutorials and manuals for use of modeling software; 4) Model codes and ordinances that benefit ai r quality (e.g., model c odes and ordinances that promote increased urban density, multiu se clustering, energy efficiency and public transportation); 5) Guidance that identifies land us e, energy and transportation technologies or approaches that benefit air quality and establish cer tain minimum steps that multijurisdictional planning organizations and tribal and local gov ernments should take to obtain SIP or TIP credit when pursuing such t echnologies and approaches; 6) Model educational and citizen involvement practices; and, 7) Guidebooks that identify funding opportuni ties for innovative land use, energy and transportation approaches.

• In assembling this clearinghouse, EPA should de termine what tools have been developed

and what items need to be enhanced or developed. EPA and the Federal Highway Administration (FHWA) curren tly provide some technical assistance and guidance on scenario planning tools and integrating tran sportation and land use planning. Increasing awareness of these existing tools would be straightforward and low cost. For tools needing to be enhanced or developed, EPA should decide which ones to develop first

based on stakeholders’ needs.

• To help ensure these tools are readil y accessible to multijurisdictional planning organizations and tribal and local gove rnments, EPA should make the clearinghouse available in a central place on the web. EPA sh ould also consider featuring the tools at a conference with a particular emphasis on creati ng champions or advocates such as local

33Air Quality Management Subc ommittee Final Report

politicians and land planners w ho can utilize the information to promote beneficial landuse practices in their communities.

The clearinghouse and the other recommendations in this proposal are intended to deepen current support and systematize it so these t ools and approaches can be implemented more broadly. The clearinghouse would require addi tional staff and financial resources for implementation, especially for new tool development.

For recommended actions B and C to improve the effectiveness of scenario planning, EPA should partner with states, tribes, local governments, and DOT to suppor t pilot transportation and land use scenario analyses in a few metr opolitan regions across the U.S. These pilot efforts would test the premise that scenario analyses can identify cost-effective emissions reduction options that would otherwise be mi ssed in the current system that does not explicitly consider land use as a policy variable. The pilots would assess whether scenario analyses yield persistent emissi on reduction strategies that will help maintain air quality and aid in meeting future SIP/TIP objectives. Th ese pilot efforts should be designed to fully understand what is involved in making scenario analysis requirement a mandatory feature of AQM and inform how it would be structured a nd implemented. Anothe r goal of the pilots should be identifying next steps to make us e of scenario planning more widespread, including consideration of whether making such analyses should be mandatory.

For recommended action D, EPA should give st ates and tribes the option to include the visioning and scenario planning proc ess as an input into their SI Ps or TIPs in one of three ways: 1) as a measure in the baseline; 2) a measure warranting credit; and/or, 3) a growth assumption. EPA has developed several useful gu idelines for calculating SIP and TIP credit. For example, EPA has provided guidance on SIP cr edit for emission reductions from electric sector energy efficiency and renewable ener gy projects and plans to provide guidance on SIP credit for emission reductions from highway and off-road diesel vehicles and retrofits. EPA should continue developing guidelines for calcu lating SIP and TIP cred it associated with other land use, energy and transp ortation technologies and appr oaches and should work with EPA regional offices and in cons ultation with states and tribes to follow such guidelines for SIP and TIP planning and development. EPA should develop guidance that explains how areas can get SIP/TIP credit for well documente d land use measures that multijurisdictional planning organizations and tribal and local governments adopt that yield emission reductions. EPA should also develop new guidance to allo w some amount of SIP/ TIP credit where the

total reductions for innovative st rategies would exceed the three percent for mobile voluntary measures and six percent for stationary source related VOC measures under current guidance. Recommendation 10 details measures that EPA could pursue to further credit and other recognition programs outside the SIP/TIP process.

Benefits:

• Current land use and transportation decisions will impact emissions over many decades. Providing multijurisdictional planning organiza tions, tribal, and local governments with

tools and resources to better understand th e interaction among land use, transportation, energy, and greenhouse gas emissions, will empower them to make better decisions over the short- and long-term.

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• Alternative transportation and land use scenario analyses have been used to identify costeffective emissions reduction options that would otherwise be missed in the current system that does not explicitly consider land use as a policy variable.

• In addition to emissions benefits, smart growth policies can yield multiple benefits on issues of significant public and private sector concern including: energy security, traffic congestion, ecosystem preservation, reduced infr astructure costs, and protection of water

resources.



### Recommendation 6: Integrate air quality planning into land use, transportation and communi ty development plans - Local planning organizations should integrate air quality planning into their land use, transportation and community development pl ans when high population growth is occurring in order to prevent signific ant deterioration of air quality.

Background/Explanation As America grows, it is particularly important that land use, transportation, and air quality linkages be established in a manner that educ ates, provides incentives , and flexibility for local officials and governing boards or commi ssions. Local forums have great power to design and manage growth in ways that stimul ate creative, cost effective solutions that

maintain clean air.

During the history of the CAA, air quality planning by local governments has primarily occurred when a nonattainment problem had to be solved. Local governments, elected officials, and the business community can re act quickly to bring about cost-effective solutions to air quality problems when they understand the possible adverse impacts of inaction. Opportunities for flexib ility and inventiveness should be encouraged early in the AQM process to avoid a nonattainment designa tion and the prescriptive programs that would accompany those designations.

Preservation of clean air is no longer solely focused on large industrial and mobile source challenges. Local governments and leaders have a growing a ppreciation of the value of clean air as a health, quality of life, and econom ic resource. Chronic erosion of air quality that gradually builds to violations of the NAAQS is an outcome Congress foresaw in 1977. While Prevention of Significant Deterioration (PSD) increment standards and baseline dates set the foundation for preserving clean air, they are no longer sufficient to address the challenge of urban expansion, where air quality is often eroded by small point, area, and mobile source air pollution.

Comprehensive state-wide or regional airshe d planning could potentially be developed from a mosaic of local plans. However, if all ar eas were required to unde rtake local planning, it could become a significant and unnecessary burden for local governments. This planning requirement would need to be accompanied by new planning tools and educational components to aid local governments.

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Problems/Challenges Addressed:

• A new local planning paradigm is needed if states, tribes, and local governments are going to preserve clean air below the NAAQS level while also promoting population and economic growth.

Recommended Actions:

A. Engage local leaders early in the AQM process by encouraging flexibility and customized solutions that would spur preemptive acti on. This could help avoid a nonattainment designation and the more prescriptive program s that would accompany nonattainment. Local governments and the business community can react quickly to bring about costeffective solutions to air qua lity problems when they understand the possible adverse economic impacts of inaction.

B. Selected local areas, particul arly those with high population growth, should be required to develop local air quality plans. This planning requirement would need to be accompanied by new planning tools to aid the selected tribal and local governments.

Benefits:

• This recommendation fills a gap in the existing AQM system to manage chronic pollution increases in high population grow th areas of the country in order to preserve existing clean air areas. Some recent examples have shown this can be achieved in a way to stimulate local leaders’ protection of air reso urces, promoting health, quality of life, and the economic vitality of our cities and communities.

• This recommendation also relates to eco system protection and creates stronger opportunities for local government air quality management that may also assist environmental justice goals.

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### Recommendation 7: Encourage pollution preven tion, energy efficiency and renewable energy - Analyze existing laws to determ ine the extent to which they can be used to encourage pollution preven tion, energy efficiency, and renewable energy as they may be eff ective in reducing emissions.

Background/Explanation: Tremendous progress has been made in the U.S. over the past 30 years in reducing air pollution using primarily command and control approaches under the CAA. In addition, several environmental and energy statutes directly or indirectly address energy efficiency, cleaner energy, and renewable energy and may present a nother means of achieving CAA air quality objectives. These statutes are potentially am enable to a number of legally permissible interpretations and the regulations implementing them are amenable to a number of legally permissible regulatory frameworks.

For example, the CAA Amendments of 1990 es tablish prevention as “a primary goal” of the Act (see Title 1, Part A, section 101 (a ) (3) and section 101 (c)). The Act also addresses concerns related to multi-media transfer of pollutants.

The Pollution Prevention Act establishes as national policy:

“...that pollution should be prevented or reduced at the source whenever feasible; pollution that cannot be prevented should be recycled in an en vironmentally safe manner, whenever feasible; pollution that cannot be prevented or recycled should be treated in an environmentally safe ma nner whenever feasible; and that disposal

or other release into the environment should be empl oyed only as a last resort and

should be conducted in an e nvironmentally safe manner.”

Similarly, the Energy Policy Act in S ection 2108 (a) (titled Energy Efficient Environmental Program) states:

“(a) PROGRAM DIRECTION- Th e Secretary, in consultati on with the Administrator of the Environmental Protection Agency, is au thorized to continue to carry out a five year program to improve the energy effici ency and cost effectiveness of pollution prevention technologies and processes, including source reduction and waste minimization technologies and processes. The purposes of this section shall be to

(1) apply a systems approach to minimi zing adverse environmental effects of industrial production in the most cost e ffective and energy efficient manner; and

(2) incorporate consideration of the enti re materials and energy cycle with the goal of minimizing adverse environmental impacts.”

A clean air strategy that takes full advantage of opportunities to us e pollution prevention, energy efficiency and renewable energy measures may offer three advantages. First, such an approach could, with a single investment , reduce multiple emissions and reduce and/or

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eliminate pollutants and emissions to other medi a, as well as emissions that are currently unregulated but which may be in the future. Second, viewed from a systems perspective (as the Energy Policy Act dictates) pollution prevention, energy efficiency and renewable energy measures may be more cost effective than command and contro l strategies. Third, such measures may help the U.S. accomplis h important public polic y goals outside the environmental and clean air arena, such as energy security, na tional security, and homeland security. Many states have established pollution prevention programs that have garnered tremendous successes.

Problems/Challenges Addressed:

• Coordinating air quality and energy strategies;

• Meeting the NAAQS for ozone and PM 2.5 and reducing regional haze; and

• Addressing impacts on specific communities (environmental justice).

Recommended Actions:

A. EPA should examine the scope and extent of pollution prevention-based strategies permissible under the CAA, Pollution Preventi on Act and Energy Policy Act; assess the cost effectiveness of such strategies as co mpared to current regulatory strategies; and identify opportunities for taking advantage of pollution prevention-base d approaches that may exist in the current legal framework. In addition, EPA should examine the potential for new enforceable regulatory requirements which allow for use of pollution prevention strategies where they prove to be more effective from cost- and performance-based perspectives.

B. Existing and prospective prevention-base d strategies should be identified and implemented, particularly where they offer th e opportunity to achieve national goals such as greater energy independence and energy security, and/or where they allow the nation to accomplish reductions in greenhouse gas emissions as an ancillary benefit that imposes

low net costs.

Implementation:

• For recommended action A, EPA should conve ne a team including state and local officials, the Environmental Law Institute, Energy and Environmental Analysis, Inc., the National Association of Clean Air Agencies (NACAA), National Association of State Energy Officials (NASEO), American C ouncil for an Energy Efficient Economy (ACEEE), DOE’s energy laboratories, Electric Power Research Institute, Environmental Council of States (ECOS), and representative s from tribes, industry, and environmentaladvocacy groups, to thoroughly examine the scope and extent of pollution preventionbased strategies permissible under the CAA, the Pollution Prevention Act and the Energy Policy Act, including pertinent rules, regul ations, and other policy documents. The review and analysis should include examples of where pollution preven tion strategies that have been tried, used, and wher e opportunities exist to further th e use of these strategies.

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• Second, for recommended actions A and B, EPA should convene an analytical team including state and local officials, DOE , National Renewable Energy Laboratory (NREL), NACAA, NASEO, ECOS, and repres entatives from tribes, industry, and environmental advocacy groups, to gather all information and data on the pollution prevention provisions of all pert inent statutes, rules, guidance, and policies. In addition, the team should gather and analyze performa nce and cost data on energy efficiency and renewable energy technologies to examine th eir performance and cost-effectiveness as compared to current regulatory strategi es in achieving air qua lity objectives and providing other ancillary benefits.

• The above two teams should be asked to merge their findings and any proposed recommendations into a single document and to present that document to EPA and DOE

for consideration.

Benefits:

• This recommendation promotes meeting air quality objectives in the most cost-effective manner, with lower compliance and administ rative costs, conservation of fuels and resources, enhanced national and energy secu rity, and reductions of greenhouse gases at little or no additional expense while providi ng new and clean sources of electricity generation, and enhanced local a nd regional economic development.



### Implementing Air Quality Strategies

The Subcommittee recommends an integrated approach for implementation that calls for air quality goals, strategies, and plans to be implemented in coordination with a range of related

issues. EPA should work with state air and energy organizations, tribal governments, and regional air quality plan ning organizations to overcome poten tial barriers to clean energy/air quality integration. Incentives (including, but not limited to, mo re flexible forms of credit, regulatory incentives and economic incentives) for voluntary and innovative land use, energy, and transportation technologies or approaches need to be developed and promoted. In addition a federal inter-agency liaison group should be established with EPA and other federal agencies to coordinate land use, energy, transportati on, greenhouse gas, and air quality goals.

The AQM Subcommittee is making five recomme ndations related to implementation of a comprehensive AQM system (Recommendations 8 through 12).

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### Recommendation 8: Expand the use of episodic controls - Expand the use of episodic control measures to help attain and maintain national ambient air quality

standards in areas where all reason able continuous and seasonal control measures have already been required.

Background/Explanation:

The U.S. AQM system relies on the use of continuous (i.e., y ear-round) and seasonal

control measures. A number of communities have supplemented the use of continuous and seasonal control measures with pub lic information campaigns and voluntary programs designed to reduce emissions on specific days when high ozone or PM concentrations are expected. In 1977, Congress rejected the use of “intermittent” controls as part of a SIP for achieving the NAAQS. Since that time, EPA has concluded that the CAA does not restrict SIP approval (or cred it) for peak day (i.e., episodic) reduction measures that apply to: (1) consumer products or services (2) certa in consumer actions, (3) episodic transportation c ontrol measures, and (4) certain other mobile source measures that may be approved for SIP cred it. EPA maintains, however, that the CAA limits the use of intermittent controls at stationary sources as part of an approvable SIP.

Recommended Actions:

A. Expand federal research and technical assi stance to communities regarding the design, implementation and evaluation of successful programs to reduce peak day emissions from non-stationary sources

B. Expand the use of stationary source episodi c control measures as a backup insurance mechanism (i.e., outside the scope of an appr oved SIP) for areas str uggling to attain or

maintain the short-term ambient standards.

Implementation

If the use of episodic control measures is to be expanded, a number of implementation issues must be addressed, including:

• How the results of such programs are measured; • How well high pollution days are predicted and how best episodic measures can be called into effect in a timely manner; and, • What types of episodic control measures will be practical, enforceable, and cost

effective?

Benefits

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• Episodic control measures can provide an expanded set of cost-effective control opportunities for states and local communitie s that are capable of yielding emission

reductions. • A variety of measures that could not be implemented on a continuous or seasonal basis could prove to be suitable and cost effective for episodic use. • For areas that are working to attain or maintain a NAAQS, episodic control measures can serve as a backup insurance mechanism by prev enting air quality violations on days when meteorological conditions might otherwise cause a violation. • By reducing peak concentrations on the highe st pollution days, episodic control measures may provide considerable health and environm ental benefits to all affected populations.



### Recommendation 9: Ove rcome potential barriers to clean energy/air quality integration - EPA should work with state, tribal , and local air agencies, energy organizations, and regional air quality planning organizations to overcome potential barriers to clean en ergy/air quality integration.

Background/Explanation:

Many states and tribes have developed programs to implement energy efficiency/renewable energy measures. Several states and tribes have expressed interest in implementing these energy related measures to help achieve their air quality objectives. Toward that end, EPA has esta blished the Clean Energy-Environment State Partnership Program, a voluntar y state-federal partnership to support state efforts to

increase the use of clean ener gy to achieve environmental, energy and economic benefits.

To support state, tribal, and local clean energy programs, EPA has issued three key

documents:

1. “Guidance on State Implementation Plan Credits for Emission Reduction

Measures from Electric-sector Ener gy Efficiency and Renewable Energy Measures,” August 2004 (hereinaft er, EPA SIP Energy Guidance);

2. "A Toolkit for States: Using Supplemen tal Environmental Projects (SEPs) To Promote Energy Efficiency (EE) and Renewable Energy (RE)," January 2005; and,

3. “ Clean Energy-Environment Guide to Action : Policies, Best Practices and Action Steps for States,” February 2006.

The requirement for SIP and TIP revisions to meet the new 8-hour ozone standard and the PM 2.5 standard provides an opportunity fo r clean energy and air quality integration. This integration can be achieved through the inclusion of energy efficiency and renewable energy measures into SIPs/TIP s utilizing state and EPA programs and

resources like the ones cited above.

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There is limited precedent for adoption of energy efficiency and renewable energy

measures within SIPs and TIPs. States mu st submit ozone and PM2.5 SIPs over the next two years, leaving little time to accommodate the lengthy process required for incorporating energy efficiency and renewa ble energy measures into the plans. Notwithstanding, EPA should lead the way now to overcome real and perceived obstacles to including energy efficiency and renewabl e energy measure adoption and inclusion in

SIPs and TIPs.

Barriers to clean energy/air quality integration :

• Some states have indicated that they ar e unlikely to pursue energy efficiency and renewable energy measures as part of their SIPs to meet the ozone and PM standards because they believe that an insignificant am ount of SIP credit may be obtained or that EPA requirements (including inc onsistent application of requi rements across the regions) for documenting the benefits within the SIP will be too burdensome. For example, the EPA SIP Energy Guidance is unclear as to what extent states and local governments can rely on existing modeling under the Clean Ai r Interstate Rule (CAIR) to document upwind areas, thereby av oiding the need for extensive new modeling.

• EPA is currently working with the states, tr ibes, and local govern ments on incorporating energy efficiency and renewable energy measures into SIPs and TIPs. The effort is not sufficient to provide many governments with the necessary assurances that EPA will approve their proposals for inclusion of energy efficiency and renewable energy measures into SIPs when they are submitted to the Agency. For example, some interpretations of the applicable guidance are more restrictive than EPA intended. For example, the extent of documentation necessa ry to obtain SIP credit for renewable energy and energy efficiency measures undertaken as part of a Renewable Portfolio Standard or

Alternative Portfolio Standard is unclear.

• Some states, tribes, and local governments do not realize the extent of the opportunities they have for incorporating energy efficiency and renewable energy measures into SIPs/TIPs, and do not realize they can wo rk with EPA and its regional offices on proposals during early SI P planning discussions.

• When a Best Available Control Technology (BAC T) determination in the context of New Source Review (NSR) involves the use of an add-on control device, it appears that some EPA regional offices and some states believ e that the determination requires that the permittee must always use that control device to achieve the related emission limit. This should not always be the case. If, after th e permit is issued, the permittee is able to achieve the required emission limit without using the control device (e.g., through pollution prevention by replacing a solvent-bor ne coating with a water-borne coating containing much less VOCs), the permittee should be allowed to discontinue using that

control device and thus eliminate the associ ated energy use, assuming the reformulation of the coating is consistent with the air toxi c requirements of the state. For example, a permittee with a coating line is initially subject to a BACT determination based on the

use of an oxidizer to meet a volatile organic compound (VOC) emission limit. The

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permittee subsequently reformulates its coa ting material to use a water-borne coating with an inherently lower VOC content and can now meet the VOC limit without using the oxidizer. Assuming the reformulation of th e coating is consistent with the air toxic requirements of the state, the permittee should be allowed to turn off the oxidizer thereby saving energy and eliminating the emissions associated with the oxidizer while at the same time continuing to ensure compliance with the VOC emissions and/or performance

limit.

• In addition, new permit applicants should not be required to install control devices if they are able to comply with a comparable or equivalent BACT limit using other means. For example, if a permittee is able to use a more advanced low NOx burner that has emissions that are comparable to or better than BACT limits, the permittee should not be required to install an add-on control devi ce, such as Selective Catalytic Reduction.

• Incorporation of energy efficiency and renewa ble energy measures into SIPs/TIPs raises significant national policy issues that require time to resolve. For example, in some locations, due to the nature of the electric grid, it can be challenging to determine how the

emissions benefits will occur in locations that are relevant to the nonattainment area in question. Some states are uncertain how to interpret EPA guidance on determining where

net emissions reductions need to occur for clean energy measures with respect to a

nonattainment area for that area to be able to take credit. There are also unrealized opportunities for regional cooperation to cred it the dispersed emi ssions reductions.

• The relationship between cap and trade progr ams and SIP credits for energy efficiency and renewable energy actions can be comple x. Some state, trib al, and regional air agencies may not realize that they need to re tire allowances to rece ive SIP credit for NOx emission reductions if the state is subject to CAIR. Some state air agencies may not realize that they must creat e energy efficiency and renewa ble energy set-aside or other allocation mechanism under their CAIR implementation rules to obtain SIP credits for energy efficiency and renewable energy m easures for the period from 2009 forward.

• State, tribal and local governments are often unaware of existing resources, including the timing, and amount of DOE, EPA, and DOT funding of clean energy/air quality integration measures. Interest by government and tribal entities in energy efficiency and renewable energy measures will be greatly e nhanced if they are provided with readily accessible information on funding sources.

• State, tribal, and local governments are faci ng budgetary constraints that may limit their ability to adopt energy efficiency and renewa ble energy measures. Increased provision of information on creative financing approach es (e.g., performance contracting for solar/efficiency in schools) that overcome the financial barriers posed by high upfront capital costs can greatly spur the adoption of energy efficiency and renewable energy

measures.

Problems/Challenges Addressed :

• Meeting the NAAQS for ozone and PM2.5 and reducing regional haze.

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• Coordinating air quality a nd energy planning strategies.

Recommended Actions: EPA should expedite actions to overcome th e barriers to clean energy/air quality integration. All relevant EPA regional and headquarters offices should work with state, tribal, and local air perm itting authorities and air planning organizations to:

A. Communicate with state air agencies, tribal governments, local planning organizations, and related non-profit organizations (ECOS, NACAA, NASEO, NARUC) using different formats such as conference calls and webcasts to determine actual and perceived barriers to clean energy/air quality integration and to resolve policy issues on including energy efficiency and renewable energy measures in SIPs/TIPs.

B. Serve as a facilitator and medi ator to ensure a consistent approach encouraging use and incorporation of clean energy measures and to help resolve policy issues and encourage the inclusion of energy efficiency and re newable energy measures into SIPs/TIPs.

C. Engage with state, tribal, and local air planning organizations in early discussions regarding energy efficiency and renewable energy measures being considered for inclusion in SIP/TIP submittals. This will help resolve any issues of interpretation or other technical concerns, includ ing reconciliation of the anticipated locations of the clean energy measure emissions reductions with any SIP requirements in EPA guidance and

rules.

D. Issue guidance confirming that energy-consum ing control devices may be shut down if, through pollution prevention, a permittee is able to meet the associated emission limits without using controls.

E. Clarify that, a permit applicant is not requi red to the add-on BACT control if they demonstrate a pollution prevention measure is a substitute to BACT through a “topdown” BACT analysis.

F. Clarify that, a permit applicant is not require d to install an additional add-on control devices if they use pollution pr evention approaches to meet an emission limit as long as it is comparable/equivalent to the limit that would be achieved by the add-on control

device.

G. Provide outreach to EPA regional officials, st ate officials, and state, tribal, and local governments on the interface between the CAIR regulations and energy efficiency and renewable energy measures in SIPs/TIPs.

H. Define a sample of energy efficiency and renewable energy contro l measures currently under consideration by state, tribal, and loca l governments to meet the ozone and PM standards and anticipate and proactively work through the issu es that will arise during the SIP/TIP review process. For example, the Control Measures Work Group of the Technical Advisory Committ ee of the Metropolitan Washington Air Quality Committee

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would be one good candidate for such a proac tive review since this Work group already has developed a number of potential energy e fficiency and renewable energy measures.

I. Increase awareness among state, tribal , and local governments of existing funding opportunities made available by DOE, EPA, and DOT relating to clean energy/air quality, including eligibility, funding levels , and amount of awards. This includes making these governments aware of such information sources as the Clean Energy Environment State Partnership online funding guide provided by EPA. EPA should also make funding information available on the EPA Air Innovations web site and other high visibility EPA websites. This suggesti on was presented to EPA at the 2005 Air Innovations Conference and EPA implemen tation would help overcome a major

information barrier.

J. Identify innovative financing strategies (e.g., st ate performance contract ing laws) to assist state, tribal, and loca l governments in implementing clea n energy/air qual ity integration measures. For example, EPA should make in formation available on the development of financing strategies, such as performance contracting and effective use of tax incentives provided in the Energy Policy Act of 2005, to sp ur cash-strapped municipalities to adopt energy efficiency and renewable energy measures.

Implementation:

• For recommended actions A, B, C, and F, EPA should convene an implementation group to convene on a regular basis. This gr oup should discuss the interface between cap and trade programs, such as the CAIR regulat ions, and energy effici ency and renewable energy measures, identify actual and perceived barriers to clean ener gy/air integration and develop recommendations for addressing su ch perceived barriers. The group should focus on facilitating the implementation of energy efficiency/renewable energy measures across the country and incorporating such meas ures in SIPs/TIPs, including set-asides under CAIR. Membership on the group shoul d include EPA headquarters and regional offices, DOE/NREL, NACAA, NASEO, ACEEE, tribal governments, environmental advocacy groups, industry, and others.

• For recommended actions D and E, EPA should issue clarifying guidance.

• For recommended actions F, G, H, and I, EPA should consult NASEO, DOT, DOE/NREL, ACEEE, states and others to obta in information, consolidate it, and then

make it available on an EPA website dedica ted to energy efficiency and renewable

energy.

Benefits:

• Reducing demand for energy reduces emissions associated with energy production and combustion, which benefits air quality. Rene wable energy projects can help improve air quality today by offsetting fossil fuel-fired gene ration, especially during peak demand.

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### Recommendation 10: Provide incentives for voluntary and innovative land use, energy, and transp ortation approaches - The AQM process should include incentives (including, but not limited to, more flexible forms of credit, regulatory incentives and economic incentives) for i nnovative and voluntary land use, energy, and transportation technologies or approaches that provide air quality benefits.

Background/Explanation:

The AQM process should include incentives for voluntary and innovative land use, energy, and transportation technologies or approaches that benefit air quality in nonattainment and other areas. Encouragement should particularly be given to low emi ssion technologies, smart growth, energy efficiency measures, cogeneration, demand-side management and renewable resources. The AQM process should better integrate incentives that incorporate these technologies and approaches in to the NAAQS implementation pr ocess. Incentives could include, but are not limited to:



### • More flexible forms of SIP and TIP credit;



### • Regulatory incentives (such as streamlined or expedited permitting opportunities) and economic incentives (such as tax incentives, public benefits programs);



### • State and utility funding programs for energy efficiency proj ects, where appropriate and properly structured; and,



### • Recognition programs or forms of alternative “credit” for communities that implement voluntary and/or innovative land use, energy or transportation policies, programs or practices that benefit air quality.

While EPA has already developed incentives for voluntary and innovative measures that address the above objectives (e.g., 2001 Improving Air Quality w ith Economic Incentive Programs 12 ), many stakeholders are unaw are of these programs.

Problems/Challenges Addressed:

• Meeting the NAAQS for ozone and PM2.5, and reducing regional haze;

• Addressing air quality on the appropriate geographic scale (locally, regionally, and globally);

• Addressing remaining pollution problems, in cluding unregulated and smaller “area” sources; and,

• Coordinating air quality, energy, trans portation, and urban planning strategies.

12 United States Environm ental Protection Agency, Improving Air Quality with Economic Incentive Programs,

available at http://epa.gov/ttn/caaa/t1 /memoranda/eipfin.pdf

.

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Recommended Actions:

A. EPA should develop a communication strategy to inform interested stakeholders about land use, energy and transportation-rela ted programs that already exist.

B. EPA should continue to develop new pr ograms that motivate the implementation of voluntary and innovative meas ures. Appropriate and pr operly structured incentive programs such as expedited and stream lined permitting opport unities, the Texas Emissions Reduction Plan (TERP) program , EPA’s Performance Track Program, and innovative measures such as voluntary m obile emissions reduction programs (VMEP) and projects funded by Congestion Mitigation and Air Quality (CMAQ) funds can, in the aggregate, make greater overall contributions to future SIPs and TIPs than they have in the past.

C. Current SIP/TIP approval requirements have recently been made more flexible in crediting such measures, but they still re quire a ton-denominated precursor reduction applied to each such measure. The AQM pr ocess should allow for additional alternative

forms of credit for such measures. EPA s hould assist in determining and allowing SIP and TIP credits for energy efficien cy and renewable energy programs.

D. With respect to community recognition pr ograms, EPA should compile a list of existing recognition programs (e.g., Indi ana CLEAN Community Challe nge), their st rengths and weaknesses, and what the rec ognizing entity offers as an incentive to areas that implement environmentally beneficial m easures (e.g., technical assistance, public recognition, and cash awards). Drawing from this research, in partnership with other organizations that work with local gove rnments, EPA should develop a community recognition or other alternativ e “credit” program for nonattainment and other areas that adopt voluntary and/or innovative land use, en ergy or transportation policies, programs or practices that benefit air qua lity. EPA should develop clear criteria for how an area would qualify for this recognition or alternative “credit.”

Implementation:

• For recommended action C, EPA should consider the predicted effects of a package of measures presented in a SIP or TIP, potenti ally over a longer time horizon than the SIP/TIP review period. Speci fically, EPA should identify or develop model land use, transportation and energy planning docume nts that address SIP/TIP credit issues applicable to each voluntary and innova tive measure that is identified under recommended action B. Among other things, the documents should demonstrate how to quantify emission reductions expected from each identified measure in a manner where they can be considered for SIP/TIP credit.

• EPA should also encourage adaptive plan re visions as indirect effects of innovative measures become better understood, which is co nsistent with current SIP requirements for reasonable emission reduction progress checks. The implementation challenge for this recommendation will be identifying appropriate targets for emission reduction initiatives and quantifying the air quality benefits expected or actually achieved as a result of any

47Air Quality Management Subc ommittee Final Report

one initiative.

Benefits:

• This recommendation shifts the focus for new programs away from traditional command and control strategies to stra tegies that are more likely to be effective in achieving additional air pollution gains in the areas of land use, transportation and energy planning.



### Recommendation 11: Develop pr ograms to reduce public demand for polluting activities - Develop programs that focus on reducing public demand for polluting activities. Such programs c ould include incentive programs for encouraging use of lower-polluting activ ities, reduction programs, and tax and use

restrictions.

Background/Explanation:

Much of air quality management has been direct ed at large scale sour ces of pollution, from all sectors of the inventory. While additional reductions from such sources are possible, further reductions may also be achieved by en couraging the public to reduce activities that produce pollution or to pursue less polluting alternatives.

Problems/Challenges Addressed:

• Meeting the NAAQS for ozone, PM 2.5, and reducing regional haze.

• Addressing air quality on the appropriate geographic scale (locally, regionally, and globally).

• Addressing remaining pollution problems, including unregulated and smaller “area”

sources.

• Coordinating air quality, energy, trans portation and urban planning strategies.

Recommended Actions

A. EPA should develop a social marketing and outreach strategy that includes, but is not limited to, helping the public make environm entally beneficial choices and understand the impact their decisions have on air qualit y. This marketing and outreach strategy should include approaches such as Californi a’s 3-star recreational watercraft labeling program and DOT/EPA’s “Best Workplaces fo r Commuters” and “It All Adds Up to Cleaner Air” programs. EPA efforts should discourage activities th at create more air pollution and encourage alternative activities that minimize environmental harm. As appropriate, EPA should consult with other federal agencies and stakeholders in developing the strategies.

B. EPA should evaluate options for discourag ing higher polluting activities (e.g., education, taxes, fees imposed on federal lands, and us e restrictions) and en couraging less polluting activities (e.g., economic incentives, educati on, and expedited or streamlined permitting

48Air Quality Management Subc ommittee Final Report

opportunities). For example, energy dema nd might be reduced through programs that educate the public about energy efficient practices or provide funding for energy efficiency and renewable energy projects.

Implementation:

• One implementation challenge will be possible resistance from industries that serve the demand for polluting activities. This resist ance may be reduced by shaping programs to create opportunities for such industries to serve demand for activities with less air pollution impact.

Benefits:

• This recommendation would reduc e air pollution at its source , which is the demand for

activities that cause it. It also would involve the public directly in the decisions

individuals make that affect air pollution.

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### Recommendation 12: Establish an int er-agency liaison group to coordinate land use, energy, transportation, c limate change, and air quality goals - An inter-agency liaison group should be es tablished with EPA and other federal agencies (e.g., FAA, HUD , DOE, NRC, FERC, USDA , CDC, DOI, and DOT) to explore issues and opportunities for coordinating land use, energy, transportation, climate change, and air quality goals

.

Background/Explanation:

Land use, transportation, energy, and c limate-related policies and programs are inextricably intertwined with air quality. Such policies and progr ams can conflict with attaining national air quality goals. Convers ely, air quality policies and programs can

conflict with or frustrate national transportation and energy goals.

Federal agencies already coordi nate their activities to some extent. For example, when EPA undertakes a major rulemaking, the O ffice of Management and Budget’s (OMB) Office of Information and Regulatory Affairs (O IRA) facilitates an inter-agency review process to ensure other federal agencies have an opportunity to review and provide comment on EPA rulemakings. Moreover, Executive Orders 13211 (May 18, 2001) and 12866 (September 30, 1993) require federal agen cies to prepare a Statement of Energy Effects when undertaking certain rulemaking acti ons that are likely to have a significant adverse effect on the supply, distribution or use of energy. A Statement of Energy Effects must include, among ot her things, detailed informa tion regarding any adverse effects the agency action will have on ener gy supply, distribution, or use (including a shortfall in supply, price increa ses and increased use of forei gn supplies). OIRA uses the Statements of Energy Effects to ensure that one federal agency’s proposed actions do not conflict with another agency’s policies or ac tions. Federal agencies must also publish their Statements of Energy Effects, or a summary in each notice of proposed rulemaking and in any resulting final rule.

With the objective of enhancing the above efforts and facilitati ng earlier and more meaningful coordination between federal agen cies and national pr ograms and objectives, an Inter-agency Liaison Group should be established based on the guiding principle that our nation's land use, transportation, energy, climate change, and air quality programs and objectives must be aligned to serve c onsistent goals. The Liaison Group should include EPA and several other federal agen cies such as FAA, HUD, DOE, NRC, FERC, USDA, CDC, DOI, and DOT.

The creation of a federal coordination group has precedent. In the late 1970s EPA participated in the Interagency Regulatory Liaison Group or “IRLG.” This group brought together high-level officials from EPA and other federal agen cies to discuss policies and

issues of common concern. At least two current AQM Subcommittee members recall participating in the effort and be lieve it was highly effective.

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Problems/Challenges Addressed:

• Coordination of air quality, energy, trans portation and urban planning strategies.

• Maintenance of AQM efficiency in the face of changing climate.

Recommended Actions:

A. EPA should proactively work with its fede ral partners (e.g., FAA, HUD, DOE, NRC, FERC, USDA, CDC, DOI, and DOT) to esta blish an Inter-agency Liaison Group to explore issues and opportunities for coordinating and aligning federal agency goals and objectives on energy, land use, transportation, climate change, and air quality. The purpose of the group would be to help ensure fe deral agencies work together in achieving coordinated and integrated solu tions to these issues.

B. In addition to periodically meeting, shari ng information and working to align national programs and objectives, the group should work with OMB, CEQ and other interested stakeholders to develop a protocol under which federal agencies would (a) formally analyze major proposed federal rulemakings that are likely to have significant impacts on national land use, energy, transportation, c limate change, and/or air quality programs or objectives; (b) for those proposed major regul ations that are likely to have such significant impacts, prepare a Statements of E ffects similar in content to the Statements of Energy Effects that Executive Orders 13211 (May 18, 2001) and 12866 (September 30, 1993) currently require; and (c ) subject such Statements of Effects to public review

and comment.

Implementation:

• The Inter-agency Liaison Group should be establ ished at the political or senior career

level. It should include re presentatives from EPA’s air o ffice and from other federal agencies. EPA should also create a lower-l evel working group to implement future recommendations of the group. The liaison group should use a Memorandum of Understanding (MOU) or other vehicle to establish a common unde rstanding of its purpose and activities. The group should meet at least quarterly to share information and coordinate policies and programs.

• In exploring and developing a protocol fo r analyzing and disseminating information regarding major proposed federal rulemakings , the liaison group (working with OMB, CEQ and other interested stakeholders) shou ld consider and address several issues, including what proposed federal regulations are covered and the a ppropriate scope and extent of analysis and public participation. In addition, to avoid duplicative analyses, to the extent that a federal agency is required to prepare an impacts analysis pursuant to another statutory or regulatory requirement (e.g., the National Environmental Policy Act) that is substantially similar to the analysis th at the protocol requires, the protocol should allow the federal agency to use that analys is in lieu of preparing a new duplicative impacts analysis.

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Benefits:

• This recommendation encourages policy makers to better coordinate national air quality, energy, transportation and greenhouse gas pr ograms and objectives. The rulemaking protocol would provide information on si gnificant impacts proposed major federal rulemakings may have. It would allow polic y makers and interest ed stakeholders to understand the degree to which proposed majo r federal rulemakings would further or undermine national air quality, energy, tran sportation, and greenhouse gas programs and objectives, including identifying opportunities to reduce the potential for adverse air quality impacts.

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VIII. Need for Tools to Improve Air Quality

Today’s air quality problems pose difficult and in many ways different challenges to EPA, states, and tribes than the challenges of the past. While traditional air quality management has focused on reducing emissions from large sta tionary sources, fuels, and new car and truck engines, such strategies alone may no longer ensu re attainment and maintenance of the nation’s air quality and public hea lth goals. To meet the air quality challenges, EPA, states, and tribes must utilize and enhance existing tools, wh ile simultaneously deve loping new and innovative tools to address emissions from a variety of s ources such as existing car s and trucks (so-called “legacy fleets”), a wider range of engine and ve hicle types (e.g., marine vessels), and many types

of small and mid-size emission sources. Furthe rmore, although new engine emission standards promise to reduce dramatically (sometimes to ne ar zero) the emissions from new cars, trucks, and from off-road vehicles and products such as lawn mowers, boats, and all-terrain vehicles, the continued growth in travel and the delivery of goods spurred by increasing population and personal income will likely make it necessary to go beyond technology-focused air pollution control strategies to address tr ansportation, land use and energy efficiency concerns in major metropolitan areas. Although the nation now boasts some of the world’s cleanest products, fuels and vehicles, much can still be done to accelerate the turnover of existing fleets and to increase penetration of the cleanest products by implementi ng demand-side strategies to a greater extent than in the past.

The Subcommittee focused on several types of sources whose relatively uncontrolled or

undercontrolled emissions contribut e significantly to ozone or fi ne particle nonattainment in several areas of the country. The specific categories identified are legacy vehicle and engine fleets, ports and goods movement-related sources (e.g., trucks, ships and rail), airports, agricultural emissions, small s ources (e.g., bakeries, restaurant s, dry cleaners), consumer products, and indus trial boilers.

The AQM Subcommittee also discussed a ra nge of measurement-re lated tools needed. For criteria pollutants, these include the need fo r improved baseline emissi ons inventory data and ambient air quality data (e.g., due to existing gaps in monitoring). Measurement tool needs for toxic air pollutants are consider ed even more pressing. There is a need for data in many areas, including ambient concentrations, better risk assessment and speciation data improvements, significance levels, and potential impacts of air toxics on sensi tive populations. The

Subcommittee identified other measurement chal lenges, including consideration of the cobenefits and impacts of various control strategi es, and potential local impacts associated with emissions trading.

The AQM Subcommittee discussed a number of other air quality planning challenges related to tools, including how to ensure SIP or TIP credit for non-traditio nal strategies, such as diesel reduction programs or innovative and vol untary incentive programs. The Subcommittee recognized resource limitations faced by many stat e, tribal, and local agencies. The AQM Subcommittee also recogni zed the lack of incentives availabl e for attainment and nonattainment areas to encourage air quality problems from developing or worsening. For example, the Subcommittee discussed the need to encourage c onservation on both the user and supplier side in several priority areas, including energy efficiency and consumer travel and purchasing choices.

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Potential Tools to Address Air Qual ity Challenges and Planning Needs

The AQM Subcommittee evaluated a variety of tools that could be used to address these challenges. Current tools, such as emissions limits, add-on contro ls, and emissions cap and trade programs, have been and will continue to be su ccessful in improving air quality. The purpose of this evaluation was to identify and characterize additional tools that air pollution control officials could use in their efforts to manage air qualit y. The Subcommittee believes that a few of these tools are likely to prove valuable in areas of th e country where, for example, there is a shared need to address older, higher-emitting vehicles or to address relatively uncontrolled or undercontrolled large stationary sources. Other tools may be appropriate for use in areas that face unique difficulties, such as ports and large ai rports. At large regional ports, for example, the existing and anticipated high densit y of engines requires that engine turnover or retrofits be accelerated. In these cases, strategies are needed to promote rapid and large-scale investment in clean fuels and technologies to help attain a nd maintain the ozone or PM 2.5 standards and thereby, protect public health. The use of tools such as emissions trad ing, pricing, or other financial strategies may raise novel or signi ficant public policy ques tions (e.g., the use of acceptable risk benchmarks, inter-pollutant trad ing, emissions banking and borrowing, “in lieu” compliance strategies) that would need to be care fully considered at local, regional, and national

levels.

The AQM Subcommittee selected four areas to be given additional priority and review for developing tools for improving air qualit y. Examples of these programs include: (1) Financial tools for fleet turnover and dies el retrofits; (2) Financial tools for land use and transportation planning; (3) Information programs for land us e and transportati on planning; and, (4) Emission limits for industrial, commercial, residential boilers and heaters, and legacy equipment and sources.

The AQM Subcommittee has prepared a matrix of potential tools which is presented in the appendix B to this report. The matrix focuses on specific newe r tools that could be effective at reducing emissions for various so urces or sectors. An outline of the needs and tools that have been identified can also be found in appendix B.

(1) Financial Tools for Fleet Turnover and Diesel Retrofits

Financial tools and financial demand-side strate gies that encourage fl eet turnover and diesel retrofits include tax strategi es, loans, equity strategi es, and targeted rebates.

Carl Moyer Program

California’s Carl Moyer Memorial Air Quality Standards Attainment Program is a state and local partnership that provide s incentive grants to cover the incremental costs of cleaning up heavy-duty engines more than is required by ai r pollution regulations. The program, established in 1998, was recently expanded and given a 2015 suns et date. Heavy-duty on-road and off-road equipment may qualify for grants, including farm and construction equipment, marine vessels,

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locomotives, and airport ground support equipment. Projects are divers e and range from the purchase of new alternative-fuel heavy-duty ve hicles, such as transit buses, to engine replacements for construction equipment and marine vessels.

Grants are issued and monitored locally by ai r pollution control dist ricts and air quality management districts, following guidelines de veloped by the California Air Resources Board. The program achieves near-term re ductions in emissions of NOx, PM, and reactive organic gas.

The California Air Resources Board and loca l air districts fund the program jointly. Sources of revenue include smog check fees and ti re fees. Local district s can also use vehicle registration fees. Districts match $1 in local funds for every $2 in Moyer funds. In recent years, about $140 million of incentive funding has been available annually through the Carl Moyer Program. Demand for the program is expected to remain high, given that the cost of cleaning up the state’s existing diesel engine fleet is estimat ed to be at least ten times the available Carl Moyer Program funds.

Each California district is eligible to receive a minimum funding allocation. More populous districts in nonattainment areas are eligible for additiona l funding. In districts with populations over one million, at least 50 percent of Carl Moyer Program funds must benefit low

income communities.

In its first six years, the Carl Moyer Program provided over $140 million to clean up more than 6,300 heavy-duty engines, reducing NO x emissions by over 18 tons per day at a cost of about $2,600 per ton of NOx reduced. It is estimated that the program reduced lost workdays by about 17,000, prevented 2,800 asthma attacks and 100 premature deaths.

TERP

Another example of the use of incentive gran ts to encourage fleet turnover and diesel

retrofits is the Texas Emissions Reduction Plan (TERP), established in 2001 and administered primarily by the Texas Commission on Environmental Quality (TCEQ). TERP includes a number of financial incentive and other assistance programs to help improve air quality. The main financial incentive programs are the Emi ssions Reduction Incentive Grants Program and the New Technology Research and Development Program.

The Emissions Reduction Incentive Grants Progra m provides funds to eligible projects in

nonattainment and near-nonattainment areas to offs et incremental costs a ssociated with reducing NOx emissions from high-emitting internal combustion engines. The Rebate Grants Program is a simplified application process av ailable only for diesel on-road and off-road replacement and repower projects. Funds are also set aside for sma ll business.

The New Technology Research and Developmen t Program offers grants to encourage research, development, and commercializ ation of pollution-reducing technologies.

Other TERP programs include the Clean Sc hool Bus Program, whic h funds projects including diesel oxidation catal ysts, diesel particulate filters , and add-on equipment to reduce

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exposure to diesel exhaust from school buses; the Small Busine ss Grants Program, which helps small businesses participate in TCEQ incenti ve programs; the Heavy-Duty Motor Vehicle Purchase or Lease Incentive Program, which can reimburse the purchaser or lessee of a new onroad heavy-duty vehicle for incremental costs of purchasing or leasing th e vehicle in lieu of a higher-emitting diesel powered vehicle; and the Light-Duty Motor Vehicle Purchase or Lease Incentive Program, which provides rebates for the purchase or lease of an eligible new car or light truck.

TERP grants are allocated through an annual or bi-annual application process. Sources of funding for TERP include a surcharge on some regist ration fees, a surcharge on the sale, lease or rental of off-road heavy-duty equipment, a surc harge on the sale or lease of diesel on-road vehicles, and a fee on commercial vehicle inspecti ons. Revenues have been predicted to average about $150 million per year. About $130 million is allocated to the Emissions Reduction Incentive Grants Program, including about $2 milli on for small business incentive grants. About $14 million is allocated for the New Technol ogy Research and Development Program.

More information on financial incentives and other strategies to encourage fleet turnover and diesel retrofits may be found in the Apr il 2006 report to the CAAAC from the Mobile Sources Technical Review Subcommittee, Recommendations for Reducing Emissions from the Legacy Diesel Fleet , at http://www.epa.gov/cleandiese l/publications.htm#caaac-apr06

.

(2) Financial Tools for Land Use and Transportation Planning

Financial tools and financial dema nd-side strategies used as incen tives to encourage land use and transportation planning include different ial pricing and tax strategies.

Differential Pricing

One innovative example of the use of differen tial pricing to reduce sprawl and emissions as part of a land use and tran sportation plan is occurring in Madison, Wisconsin. Beginning in 2001, Dane County and the University of Wiscons in encouraged public transit through more accurate price signals. Th e introduction of marginal cost pric ing for parking at the University was linked to the expansion of fixed price univ ersal transit passes. According to initial estimates, participation by 500 employees who cu rtail driving by one day per week can reduce vehicle miles traveled by 350,000 per year, resulting in hydrocarbon reductions of four tons.

Another example of differential pricing that has controlled sprawl and reduced emissions is occurring in Portland, Oregon. A plan was designed in the mid 1970s to increase transit use by eliminating free parking, reducing the number of parking spaces, encouraging dense development around transit stations , and providing free transit se rvice for workers and shoppers within the central business district, called the Fa reless Square. In the last ten years, the economically depressed Lloyd distri ct on the edge of downtown ha s become Portland’s fastest growing economic district. That growth prompt ed transportation planners to focus on reducing use of cars for trips between downtown and the Lloyd district, to increase shopping and recreational opportunities through an extended downtown, and to increase the potential for new development downtown and in the Lloyd district. To meet these goals, the Fareless Square was

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extended to include the Lloyd district, and new parking meters and regulations were implemented to decrease car use. Development and zoning codes have been put in place to encourage high density, mixed use development al ong transit corridors. Ride sharing programs, guaranteed rides home, and reserved parking places for carpools and vanpools in the Lloyd

district have contributed to Portland’s commitment to smart growth through innovative transportation and planning tools.

Tax Strategies

In 2007, the federal tax code allows tax-free transportation fringe benefits of up to $110 per month per employee for transit or vanpool ex penses. Unlike ordinary wage payments, employers do not have to pay their share of fede ral payroll taxes on tax-fr ee transit benefits, and the cost of providing tax-free tr ansit benefits can be deducted as a normal business expense. These benefits can be deducted from corporate gr oss income for purposes of taxation when paid by an employer. Employees pay no federal inco me tax on commuter benefits. This benefit encourages transit ridership and van or carpoolin g, both of which reduce vehicle miles traveled

and thus reduce emissions that form ozone. Seve ral states have also implemented tax incentive programs to encourage commuter benefits, incl uding Connecticut, Delaware, Georgia, Maryland, Minnesota, New Jersey, and Oregon.

An example of the innovative use of tax stra tegies is the Eco Pass, an annual photo ID transit pass developed by the Denve r Area Regional Transportation Dist rict that is distributed to participating employers at significant discounts. The Eco Pass is tax deductible to employers and is a tax-free benefit for employees. If an employee has an unexpected change of schedule or emergency, the Eco Pass will guarantee a free taxi ride home. Pass holders can use all regular transit services seven days per week. The mayor has offered Eco Passes to all City of Denver employees, and expects over 35 percent of th em to take advantage of the program.

More information on these examples of financ ial tools used as incentives to encourage land use and transportation planning, and additi onal examples, may be found in the 2005 report

of the National Association of Local G overnment Environmental Professionals, “ Clean

Communities on the Move” . See http://www.nalgep.org

.

(3) Information Programs for Land Use and Transportation Planning

Information programs, reward programs, and non-f inancial demand-side st rategies (collectively referred to in this section as “information pr ograms) for land use and transportation planning include clearinghouses, labeling, performance be nchmarking, community “Green Action” lists, surveys, frequent flyer-type programs, and we b tools that educate and influence decisions. Information programs can be targeted to a specific audience or designed for general consumption. Here are some examples of successful information programs.

Clearinghouses and Web Tools

The Smart Growth Network operates a web- based clearinghouse aimed at land use and transportation planning. The cl earinghouse promotes economic development that simultaneously

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fosters healthy communities, strong neighborhoo ds, and transportation choices by providing tools, resources, and information sharing. For more information, visit http://www.smartgrowth.org

.

Web-based tools to assist in land use and tran sportation planning are also available. For example, the Smart Growth INDEX model simulates alternative land use and transportation scenarios using GIS sketch models to incorpor ate smart growth principles into planning processes. See http://www.epa.gov/smartgrowth/topics/sg_index.htm

.

Similarly, EPA Region 3’s Green Communitie s Program has a web-based clearinghouse that provides access to tools, tec hnical assistance, and training to integrate environmental goals applicable to urban, suburban, and rural communities. For more information, see http://www.epa.gov/greenkit

.

Information and Reward Programs

As part of a program to address air polluti on and congestion challe nges in Tulsa, the Indian Nations Council of Governments sponsored an innovative information program called Driving Toward Clean Air. The program target ed high school students, providing teen drivers with information about “green” vehicles, carpooling, air pollution, and alternative transportation methods. The Tulsa Air Quality Enhancement and Education Project sponsored a competition where students pledged to carpool, ride the bus, or walk to school during a six-week period. The high school with the most partic ipation received a new Toyota Prius hybrid as a reward. This program was recognized by EPA with a 2004 Clean Air Excellence Award. See http://www.epa.gov/air/caaac/2004awar.html

.

(4) Emission Limits for Industrial, Comm ercial, Residential Boilers and Heaters and Legacy Equipment and Sources

Several examples of efforts addressing this source category are worth highlighting, some of which have been completed and some of which are underway. The examples range from traditional emission limits to voluntary-based approaches and a hybrid of the two.

Hazardous Air Pollutants In September 2004, EPA promulgated a na tional emission standards specifying application of MACT to address HAPs from industr ial, commercial, and institutional boilers and process heaters. EPA identifie d this source category as a major source of HAP emissions Implementation of the standard is expected to reduce HAP emissions by 50,600 to 58,000 tons per year. The air toxics emitted by facilities in the boiler and process heater source category include arsenic, cadmium, chromium, hydrogen ch loride, hydrogen fluoride, lead, manganese, mercury, nickel, and various organic air toxics. For more information, visit: http://www.epa.gov/ttn/atw/boiler/boilerpg.html.

Criteria Air Pollutants As part of Phase I, the AQM Work Group r ecommended to EPA that it complete as soon as possible a review of the contributions from the industrial, commercial, and institutional boiler

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category and the technical and economic feasibility of further controls, given the high priority assigned to this sector (Recommendation 2.1). It indicated that EPA should then initiate development of a regional or national emissions control regulation for the category, or take

alternative action consistent with the results of its analysis. To respond, in coordination with EPA, the Regional Planning Organizations will co llect and analyze data concerning industrial, commercial, and institutional boilers to eff ectively characterize th ese sources and their environmental impacts. EPA plans to include the National Association of Clean Air Agencies (NACAA) and other organizations in this comprehensive approach.

In March 2006, NACAA released a report, “Cont rolling Fine Particulate Matter under the Clean Air Act: A Menu of Options.” Chapter 6 presents control options for industrial and commercial boilers. The report is available at: http://www.4cleanair .org/PM25Menu-Final.pdf

.

Residential Units

Voluntary Approaches

In January 2007, EPA launched a voluntary pa rtnership program to reduce emissions from outdoor wood-fired hydronic he aters (OWHH), also called outdoor wood boilers or outdoor wood-fired furnaces. The voluntary program will bring significantly cl eaner outdoor wood-fired hydronic heaters (OWHH) to market beginning in 2007. OWHH burn wood to heat water, which is generally piped underg round to provide heat for hom es. A typical OWHH looks like a small shed with a smokestack, and is usually lo cated next to the build ing to be heated.

Sixteen OWHH manufacturers have signed a memorandum of understanding with EPA

that commits them to use their best efforts to develop, manufacture, and market one or more cleaner models. Under this agreement, the ne w models must emit no more than 0.6 pounds of particle pollution per million BTUs of heat input (i.e., wood burned) . The models must be tested by an accredited third-party laboratory to verify th at they meet these levels. The cleaner heaters made available through the voluntary program wi ll be about 70 percent less polluting than

current models. Consumers interested in the new, cleaner models should look for an orange hangtag that will show how a specific model compares to EPA’s performance specifications. A list of program partners can be found at http://www.epa.gov/woodheaters/partners.htm

In addition to the effort for OWHHs, EPA a nd many states, tribal and local agencies are continuing the effort begun as far back as the 1980s to change out ol d and dirty residential

woodstoves with EPA certified wood -burning appliances that burn mo re cleanly and efficiently. EPA has developed a how-to guide for areas to use to determine whether it is feasible for a jurisdiction to develop and im plement a Woodstove Changeout program. The how-to guide can be found on EPA’s Clean Wood Burning Stoves and Fireplaces website at http://www.epa.gov/woodstoves/

.

Regulatory Approaches

In addition to the voluntary OWHH and woods tove programs, EPA has provided technical

assistance to the Northeast States for Coor dinated Air Use Management (NESCAUM), an

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association of eight northeastern states, to develop a model rule that states, tribes and local governments may use if they choose to regulate OWHH. The rule can be tailored to address specific local situations. The model rule esta blishes emission limits and labeling requirements

for new units. It also contains the followi ng components for both new and existing OWHH:

• Setback requirements from property lines, structures and residences,

• Stack height requirements, and,

• Distributor and buyer notif ication requirements.

The model rule can be found at: http://www.nescaum.org/topics/outdoor-hydronic-heaters

The State of Vermont recently promulgated regulations for OWHH based on the NESCAUM model rule. Under the new regulation, all new boilers sold/installed in Vermont must certify a particulate emissions limit of 0.44 lb/mmBTU by March 2008. Other states are also developing regulations to address OWHH emissions.

In addition, EPA is assessing other non -regulatory options in cluding labeling to differentiate between regulated and non -regulated units and emission limits.

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IX. Unresolved Areas of Discussion The AQM Subcommittee was unable to reach subs tantial consensus with regard to a few proposed recommendations. This section summarizes the key areas where this occurred and the

nature of the differences of opinion that arose.

Unresolved Recommendation 1: Implement the use of “regional airsheds” to approximate the boundaries of emission source areas most likel y to contribute to nonattainment areas.

Background

Historically, nonattainment area boundaries have been established to focus primarily on local scale (i.e., state- or area-specific) control measur es, though some also included control measures for which agreement on region al application was reached outside of the SIP process. The more tradi tional local-problem a nd local-control appr oach that proved successful in the past for many of the criter ia pollutants, has more recently had limited success in remedying ozone and fine particle NAAQS nonattainment issues, as well as regional haze problems.

For two important reasons, the current approach to boundaries with respect to nonattainment area designations warrants review . First, the designation process has been based on geo-political boundaries, which cause s some difficulties in dealing with problems that transcend such boundaries. Second, many states feel that there is a stigma

associated with the label of “nonattainment .” This is largely due to the mandatory requirements that take effect in nonattainment areas. As a result, in some areas, there has been a tendency to define nonattai nment boundaries as small as possible.

Goals

The AQM Subcommittee discussions regard ing boundaries were in itiated with the following desired endpoints on the need to:

• Address situations where emissions in upwind ar eas contribute signific antly to violations elsewhere;

• Provide a mechanism that can address in terstate transport during the SIP/TIP development process and ensure s that areas with contributing sources are involved in the initial SIP/TIP planning process;

• Minimize disincentives for monitoring;

• Reduce the desire/incentive to define areas of violation as small as possible;

• Not punish areas where air quality is poor if they have taken all reasonable steps to reduce local emissions;

• Better define sources that actu ally contribute to NAAQS vi olations and have a system that naturally includes thos e sources in the area subject to control requirements;

• Set boundaries based more on science and less on geo-political boundaries;

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• Recognize the increasing necessity for regional programs within which states must work cooperatively and ensure accountability;

• Respect state/tribal rights and balance local and regional cont rol programs with complimentary national control programs; and,

• Recognize the increasing need for national control programs in which the federal government takes the lead and ensures accountability.

Recommendations

The AQM Subcommittee was in substantial ag reement on two important concepts related to setting boundaries, and achie ved consensus on a set of prin ciples that should guide the development of a new approach to establ ishing boundaries. The Subcommittee could not, however, reach agreement on the details of how the concept should be implemented. Instead, the Subcommittee substantially agreed on the need for an airshed approach to boundaries (regional, as appropria te) and the following concepts:

A. The current approach to establishing nona ttainment area boundaries that define both the area that violates a NAAQS as we ll as the area within which emissions must be reduced to achieve attainment should be replaced. The new approach should include areas that violate NAAQS a nd areas where controls are needed and should be defined independently based on scientific assessments.

B. Control areas should encompass all si gnificant contributo rs to the NAAQS violation, without regard to state/tribal or other ge o-political boundaries. By controlling emissions from the sources in cluded within the control area boundary, timely attainment of the NAAQS will be assured.

Consensus was also reached on the following guiding principles:

C. Revisions to the current nonattainment area boundary approach should improve upon the current system, resulting in one or more of the following:

• More timely emissions reductions;

• More effective emissions reductions;

• Less dispute;

• More flexibility to choose appropriate controls; and,

• Facilitation of an airs hed-based approach to managing air quality.

D. When a NAAQS is violated, people exposed to unhealthful air quality must be

informed.

E. When a NAAQS is violated, prompt step s must be taken to restrict emission growth that might aggravate the problem.

F. Defining the area within which air qualit y is unhealthful, and the area within

which emission sources need to be cont rolled, should be based on scientific

factors.

62Air Quality Management Subc ommittee Final Report

G. Any new boundary-setting approach should facilitate, or at least not further complicate, efforts to address air quality on a multipollutant basis, as recommended in the NRC report.

The AQM Subcommittee agreed that significan tly more in-depth discussion would be needed before a specific recommendation co uld achieve substantial consensus. Because such a recommendation would need to discuss trade-offs between currently mandated CAA requirements and other (presumably more effective) emission control requirements,

further discussions would need to include a broad array of stakeholders potentially affected by the changes.

Summary of Boundaries Discussion

The AQM Subcommittee formed a work group to advise it on recommendations related

to boundaries. Based on consensus of the a bove concepts and prin ciples, and building from the Federal Advisory Committee (FAC A) work in the early 1990s on Areas of Violation and Influence (AOV and AOI), the boundaries work group recommended to the AQM Subcommittee that EPA expand its conv entional application of nonattainment area boundaries through a concept of “control regions.” The work group thought that broader application could maximize effectiveness a nd establish equity in implementing air pollution controls needed to bring areas that violate the NAAQS into attainment. The concept of “airsheds” was accepted by consen sus of the AQM Subcommittee. However, questions regarding the details of its implementation arose during subsequent

conversations of the Subcommittee.

The boundaries work group recommended separa ting areas with NAAQS violations from

areas that contribute emissi ons to those areas. For purposes of the discussion, the boundaries work group referred to areas wher e air quality does not meet the NAAQS as

“areas of violation” and areas where emissions contribute to those violations as “control regions.” As envisioned, the area of viola tion would usually be contained within the control region, though there would be situations in which there is partial or even no overlap.

The basic components of the proposal made by the boundaries work group to the AQM Subcommittee on implementation include:

• An area of violation defined by air qualit y monitoring data where public education and health advisories are emphasized;

• A control region based on existing scientific information (from the states and EPA) about which types of sources in which geographic areas are contributing to the violations of NAAQS (which in most cases, but not always, will encompass the area of violation);

• A stationary source program for th e control region that involves:

• state of the art controls for entirely new significant sour ces and significant modifications at existing sources;

63Air Quality Management Subc ommittee Final Report

• reasonable retrofit controls (and conti nuation of existing requirements) for significant existing sources; and,

• reasonable retrofit controls for small sources once their actual emissions exceed a significance threshold;

• An emissions offset requirement that target s the emissions reductions needed to offset growth (with a default to the stationary source offset program);

• Local mobile sources programs in the control region to complement the basic federal programs as the state/tribe deems appropria te as part of its SIP/TIP (programs currently required by the Ac t would remain); and,

• Mechanisms to assure multi-state control programs are implemented when the pollution problems are re gional (interstate).

Under this proposal, EPA and regional and stat e modeling centers would work together to understand meteorology and transport of all NAAQS pollutants, and once an air quality violation was found, they would work to es tablish preliminary control regions. These preliminary control regions could be refined into more scientifi cally defined regions through an exercise conducted in a state, multi- state, and tribal collaboration that could be moderated by multi-state organizations with the assistance of EPA. Once such geographic regions are finalized, regional control strategies (through Air Quality Management Plans) could be developed a nd incorporated in in dividual enforceable SIPs/TIPs. The value of using SIP calls by EPA under the CAA section 110 at the time of designation was also discussed. The SIP calls would provide the needed forcing function for each state identified in the preliminary analysis to develop enforceable plans that contain all appropriate measures needed for at tainment in the affected areas of violation,

both in state and out of state. The appropriateness of area of violation and control region boundaries should be periodically reviewed with a techni cal analysis to ensure appropriate coverage and pr ogress toward attainment.

Reactions to Boundaries Proposal

The Subcommittee focused its discussion on the specifics of mandated levels of controls

and the details of how to a pply the control region boundaries . Some believed that the control regions should be very large to be hi ghly inclusive of all contributing sources, while others wanted to limit their size to minimize impacts on more remote businesses. One member was concerned about the ability of states to be able to transcend political issues and geo-political consid eration, and base boundaries sole ly on scientific evidence. There was concern that, as a result, boundaries would be smaller, not larger. After considerable discussion, the AQM Subcommitt ee asked the work group to provide further clarifications on levels of specified cont rols and their applicability. One member requested that the work group develop a boundary proposal based on existing political

boundaries.

After considerable deliberations, the bounda ries work group developed a two-option recommendation. The first option built upon and clarified the previously proposed airshed-control region proposal, which would be multi-state, as appropriate. The second option presented a “no-boundary” approach that allows states/tribes to remedy their own

64Air Quality Management Subc ommittee Final Report

problems without defining boundaries. It would a llow states and tribes to use appropriate flexibility in pollution control requirements to meet attainment while being clearly required to comply with CAA transport pr ovisions. Under this two-option proposal, states/tribes capable of remedying their ow n attainment problems would be granted greater flexibility in control levels and thos e controls would be sp ecified without needing to formally define a control region, while st ates/tribes dealing w ith regionalized air pollution would be required to work together to develop an acceptable area to control assuming a certain base-level of mandated controls and supplemented by other, more flexible control measures. Both types of nonattainment areas would need to demonstrate that their plan could meet attainment as e xpeditiously as possible, as required under the CAA. Some members believed that multiple st ates/tribes needed a formal mechanism to require them to work together upfront in some areas of the country where interstate transport is a factor. Some Subcommittee members also believed that some prescribed

control measures are needed to supplement more flexible measures to meet attainment. Others supported a full no boundary approach for all states/tribes where they would be free to use approaches they deemed appropriate and necessary to fix their own problems. Some members were optimistic that revi sing the boundary setting process would be sufficient to address interstate transport so th at all states could atta in the NAAQS. Others thought that another mechanism, not yet deli berated or developed, would be needed to address interstate transport.

Following much discussion, the Subcommittee agreed that the boundaries issues could not be resolved within the AQM Subcomm ittee. For this reason, the Subcommittee agreed to describe the proposed boundaries approaches in this report and provide a summary of views made by Subc ommittee participants in hopes that it be useful to any future forum on the boundaries topic.

65Air Quality Management Subc ommittee Final Report

Unresolved Recommendation 2: Over a period of time, all sources of air pollution should be required to demonstrate that they are ac hieving reasonable performance levels (RPLs)

to control emissions. The form and substan ce of this concept should be developed with consideration of applicable emission control re gulations, technical fe asibility, and costs as well as all fuel, operational, and emission control options.

Background The Subcommittee considered a concept calle d “reasonable performance levels” (RPL). It is based on the idea of treating airsheds as a finite and essentia l resource, and sources are not entitled to pollute that no source would be left uncontrolled. The RPL approach would require all categories of air pollution to take steps to limit their emissions. RPLs would be established and periodically upda ted for all air pollution sources and all pollutants, beginning with the sources and pollu tants that pose the greatest risk to public health and ecosystems. New and expanding so urces not otherwise subject to emission control mandates would be required to demons trate that reasonable performance levels have been achieved at start-up. The RP L approach would provide a foundation for additional controls that might be needed to address existing or potential area-specific problems. For example, due to transport is sues from upwind sources implementing RPLs, an area may still violate a NAAQS. Under thes e circumstances, attainment SIPs with specific deadlines may still be needed to protect public health. An RPL program would likely require amendments to the CAA.

Discussion

Reasonable performance levels could address many of the challenges defined in the NRC report, such as taking an integrated multi- pollutant approach and utilizing performancebased control strategies for under-regulated sources. Criticisms of the recommendation

focused on:

• How to define “reasonable control.” Th e discussion centered on two aspects, i.e.

would reasonable controls be decided on a case-by-case basis, and what nature

and level of cost-effectiven ess criteria would apply?

• Whether a regulatory review and control action would be imposed on all sources (without regard to location, age, size or existing regulatory stat us) or whether the review should be imposed on a subset with the greatest potential for cost-effective and significant emissions reductions. Th e concern was for the trade 6off between

the administrative and control cost and the air quality benefit.

• Whether this would be a one-time review to address “grandfathered” uncontrolled

sources or whether this would be a meas ure imposed at certain time intervals.

66Air Quality Management Subc ommittee Final Report

A few alternative approaches were offere d to improve the recommendation, such as applying it only to sources that emit 100 tons per year but that have never undergone a Prevention of Significant Deterioration (PSD) permit review. Some Subcommittee

members also felt that the recommendation di d not do enough to control emissions from under-regulated sources. Based on the vary ing viewpoints, the Subcommittee decided that substantial consensus on this issue was not possible.

67Air Quality Management Subc ommittee Final Report

Unresolved Recommendation 3: “Continuous improvement” should be achieved via a

combination of mechanisms to achieve conti nuous emission improvements nationwide. Mechanisms discussed included voluntary progra ms at the local level, continuing a national program of command and control emis sion standards, and several options for strengthening and enhancing various market-based programs to encourage continuous improvements.

Background

The AQM Subcommittee considered mechan isms to achieve continuous emission reductions from all stationary, mobile and area sources that would le ad to continuous air quality improvement in all geographic regi ons of the nation with the improvements going beyond attainment of the NAAQS. Continuous improvement could occur via a flexible system that would accommodate changes in sc ience and air quality planning needs. A work group was convened by the Subcommittee to inform it on the subject of continuous improvement. The work group realized th at to be successful , a combination of continuous improvement approach es would be needed to addr ess all appropriate source sectors and provide options to reduc e emissions at reasonable cost.

Several options were considered such that , when used in combination, they could provide a new approach to managing air qualit y. Different geographi c or political areas would utilize different combinations of options to custom design an air quality approach

that would work best for that area. Two forms of continuous improvement were

considered:

The first concept focused on maintaining existing air quality by offsetting emissions increases associated with growth in demand for goods and services. The goal was to improve operational efficiencies to generate more electricity, produce more products, provide more services, and accommodate more vehicles on the road without increasing air pollution emissions. This con cept currently exists in components of many SIPs (e.g., reasonable further progress require ments, requirements to maintain the NAAQS), conformity regulations, cap and trade programs (e.g., where industries must accommodate increased production under a fixed cap), and in prescribed offset ratio requirements for certain nonattainment areas. While market-based programs have helped address improvements for large point sources, improvements in certain mobile and area

source sectors have been more difficult to achieve.

The second concept focused on health and environmental improvements that would be achieved by gradually reduce ambi ent air pollution levels over time to lower levels than currently foreseen under the curr ent NAAQS. The concept was intended to realize public health and envi ronmental benefits through a program that would result in continuous improvement in emission rates a nd ambient air pollution concentrations.

68Air Quality Management Subc ommittee Final Report

Recommendations and Options

The continuous improvement work group recommended that a combination of options be considered and implemented to achieve continuous emission improvements across multiple source sectors (i.e., mobile , stationary, and area). Recommendations included voluntary and incentive-based programs at the national, state, tribal, and local levels. This included options for strengt hening and enhancing various market-based programs to encourage continuous improvement s. The work group agreed that a onesize-fits-all requirement could not be jus tified and that multiple programs should be pursued simultaneously. It agreed that th ere should be an emphasis placed on demandside or end-use efficiencies, as well as on mobile and less regulated emission sources.

Based on historical successes with ma rket-based systems and the general preference of businesses and individuals to control their own decisions, the work group supported, where appropriate, the use of market-based incentive programs as a component of continuous improvement. Examples of such programs include:

• Public emissions reportin g/product use emission information (all source types) similar to the Toxic Release Inventory (T RI) program to apply public pressure for “cleaner” products;

• Emission fees (all source types) with revenues used to pay for other environmental initiatives; and,

• Emission fee system based on an industry average performance.

The work group also acknowledged that there might be advantages to greater use of cap and trade approaches to continuous im provement where SIP/TIP strategies require specific source sector emissions re ductions. These might include:

• Traditional emissions cap and trade, esp ecially for high growth industries; and,

• Emissions cap and trade with a continuously declining cap or allowance

retirement.

The work group first reviewed a wide ra nge of continuous improvement options ranging from doing nothing to mandated cont rols to achieve ongoing improvements. Many options were eliminated quickly because they were unattractive to industry in that the concept of continually improving emission c ontrols introduces uncertainty that could hamper long-term investments, and that coul d possibly cause them to be outdated before being paid off.

Reactions to the Continuous Improvement Proposal

There was a wide range of reaction within the AQM Subcommittee to the continuous improvement concept that ultimately led to the conclusion that substantial consensus would not be possible. Some Subcommittee members supported the concept. Other members stated that the proposed options lacked certainty, and would constrain the

business activities at affected facilities. Some believed cost -effectiveness criteria would

69Air Quality Management Subc ommittee Final Report

be needed to limit such a program and t hose criteria would be redundant with the

emissions reductions achieve d through the NAAQS and natio nal emission standards. Some members advocated a voluntary program and suggested that a voluntary emission reporting program similar to mandatory Toxi cs Release Inventory (TRI) reporting would produce the needed improvements. Others st ated that mandatory programs would be necessary to drive needed improvements and push technology development.

General concerns expressed:

• Proposal was targeted at st ationary sources and did not focus enough on emissions from other sources;

• Proposal could be costly a nd the role of cost effec tiveness was not defined;

• Programs incorporating a fixed glide sl ope forces technology development that may be beyond source’s ability to pr oduce and/or may be too expensive;

• Voluntary programs will not work without a mandatory backstop and a reasonable amount of time to produce results; and,

• Continuous improvements set unreasonable e xpectations, left open the question of “when is enough continuous improvem ent enough?” and creates too much uncertainty for the business and industry constituents.

Again, following much debate on this i ssue, the AQM Subcommittee decided to include continuous improvement as an area wort hy of future discussions. The intent here is to document the discussions and viewpoints to help inform those future discussions.

70Air Quality Management Subc ommittee Final Report

X. Conclusions

The Clean Air Act continues to deliver signifi cant benefits both in te rms of protection of public health and the environment. As described in the report for the fi rst phase of this AQM review (January 200 Phase I Repor t) and in the 2004 NRC report that spawned this process, the

nation has made enormous strides since 1970 at improving air quality during a period of economic prosperity and population growth.

The future of air quality management offe rs tremendous opportunities to continue the Clean Air Act’s record of progress toward prot ecting public health and the environment. With these opportunities come unique challenges. New scientific informati on indicates an ongoing need to address significant th reats to public health and the environment from air pollution. Climate change and improved understanding of the risk posed by hazardous air pollutants will also challenge air quality management planners by highlighting the need for new approaches and strategies.

The AQM Subcommittee strongly believes th at moving from the pollutant by pollutant approach of the current air quality management system to the comprehensive multipollutant approach outlined in this report will substantiall y help meet the air quality challenges of the 21 st
century. This more holistic approach calls for collective efforts of gove rnmental organizations, including states, tribes, local communities, EPA, DOE, DOT, and others to develop and implement this comprehensive planning approach. The AQM Subcommittee recommends that the concept for a comprehensive air quality manage ment system be implemented in its entirety.

The Subcommittee also believes that the 12 reco mmendations contained in this report stand on their own merits and can, therefore, be implemen ted separately to improve the current approach to air quality management in th is country. Continuing to protect and preserve clean air is a duty and responsibility that this Subcommittee has taken seriously and these recommendations have been considered with the goa ls of protecting public hea lth and the environment.

71Air Quality Management Subc ommittee Final Report

XI. Appendices

Additional documentation of the work completed by the Air Quality Management

Subcommittee can be found at the Cl ean Air Act Advisory website at http://www.epa.gov/air/caaac.html . The additional documentation includes meeting summaries, draft ideas considered by the wo rk groups not adopted by the Subcommittee, and presentations from the Subcommittee meetings.

72Air Quality Management Subc ommittee Final Report



## Appendix A: Membership and Orga nizational Structure of the Air Quality Management Subcommittee

73Air Quality Management Subc ommittee Final Report

74 

## AQM Subcommittee Chairs

Gregory A. Green

US EPA

Patrick Cummins

Western Governors’ Association



## AQM Subcommittee Members

Michael Bradley (CAAAC) M.J. Bradley Associates Inc.

Don Clay (CAAAC) Koch Industries, Inc.

Gregg Cooke (CAAAC) Guida, Slavich, and Flores, PLLC

Greg Dana (CAAAC)

Alliance of Automobile Manufacturers

Anna Garcia Ozone Transport Commission

Carolyn Green (CAAAC)

Sunoco Inc.

Lisa Gomez (CAAAC) Sempra Energy

Stephen Hartsfield

National Tribal Air Association

Jim Hendricks (CAAAC) Duke Energy

Christopher Hessler (CAAAC) AJW, Inc.

John Hornback SESARM/Metro 4, Inc.

Sharon Kneiss (CAAAC) American Chemistry CouncilAir Quality Management Subc ommittee Final Report

Mark MacLeod

Environmental Defense

J. Mark Morford

Stoel Rives LLP

Janet McCabe (CAAAC) Improving Kids Environment

Brock Nicholson

State of North Carolina

Janice Nolen (CAAAC) American Lung Association

Margie Perkins

State of Colorado

David Shaw

State of New York

John Seitz ES&P, LLC

Lynn Terry

State of California

Leah Weiss

Northeast States for Coordinate d Air Use Management (NESCAUM)

Robert Wyman, Esq. (CAAAC)

Latham and Watkins LLP



## Significant Contributors to the AQM Subcommittee

Tom Chapple

State of Alaska

Pamela Giblin (CAAAC) Baker Botts, LLP

Tim Hunt American Forest and Paper Association

Dan Johnson Western States Air Resources Council (WESTAR)

75Air Quality Management Subc ommittee Final Report

Chuck Mueller State of Georgia

Michael Sheehan

State of New York

Patty Strabbing DaimlerChrysler

Jeff Underhill State of New Hampshire

Larry Greene Sacramento Air Quality

Jerry Kotas US Dept of Energy

Steve Winkelman Center for Clean Air Policy

Camille Mittleholz US Dept of Transportation

76Air Quality Management Subc ommittee Final Report

77 

## Air Quality Management

Subcommittee

Co-Chairs Gregory Green, EPA Patrick Cummins, Western

Governors’ Association



## Air Quality

Planning Workgroup

Co-Chairs Don Clay

Janet McCabe Lydia Wegman 

## Air Quality Management Tool Workgroup

Co-Chairs

Anna Garcia

Deborah Wood Robert Wyman



## Defining and Setting

Priorities

Lead: Janet McCabe 

## AQM Planning

Process

Lead: Brock Nicholson 

## Coordination with Land Use,

Energy, and Transportation

Lead: Lisa Gomez 

### Boundaries Workgroup

Reasonable

Performance Levels

Work g rou p Continuous Improvement WorkgroupAir Quality Management Subc ommittee Final Report



## Appendix B: Matrix of Tools to Improve Air Quality

78Air Quality Management Subc ommittee Final Report

Matrix of Potential Tools to Address Air Quality Challenges and Planning Needs

Sources or Sectors (not in priority order) Recommended Tool Type Specific Tool Options Pollutant Targeted

(1) Fleet

turnover & diesel retrofits A. Financial tools

and financial

demand-side strategies

B. Emissions Trading

C. Information programs, rewardprograms and nonfinancial demandside strategies

D. Planning tools

E. Retrofit strategies

F. Enforcement

enhancements

I. Emission limits A. Tax strategies, loans, equity strategies, and targeted rebates are financing strategies that may encour age fleet turnover (e.g., TERP, DERA, Moyer).

B. Emissions trading may offer an appropriate private sector source of financing to accelerate turnover. Ap proaches that might work best for fleet turnover purposes include inter-s ector trading strategies as well as fleet averaging programs.

C. Clearinghouses can disseminate information on technology and incentives to educate and promote the use of technologies that have a positive impact on air quality. Labeling can be used to inform the general public of the relative benefits of choices they are making and to promote

the use of new and innovative techno logies and resources. Performance benchmarking can be used to highlight the positive characteristics of new and innovative technologies through comparison of these technologies against standard market practices an d/or the continued use of existing products. Surveys can be used to ga uge the effectivene ss of the programs and to inform federal, state, tribal and local entities of program results and market changes. Frequent flyer-type programs can be used to provide incentives for entities that make frequent purchases by offering discounts, rebates, credits or other offerings to promote repeated use of the product(s) being promoted. Web tools can be used to move product information. This information can be targeted to a specific audience or for general consumption to inform, promote, educate and influence decisions.

D. Modeling to estimate the emission reduction benefits of fleet turnover and retrofit is recommended. An inventory of the number of diesel engines that could benefit from retrofit is recommended.

E. Retrofit strategies include converting existing engines to an alternative fuel, engine recalibration, addi ng additional emission controls, replacement with a new, cleaner engine , anti-idling, and other changes in operating strategies that reduce emissions.

F. Use Supplemental Environmental Projects (SEP) funding to encourage fleet turnover and retrofits. Use remote sensing to measure reductions.

I. Require mandatory diesel retrofit. Require scrapage programs. Use green contract conditions in government contracts. Use state and federal leadership programs. PM, NOx, VOCs, CO

79Air Quality Management Subc ommittee Final Report

80 Sources or Sectors (not in priority order) Recommended Tool Type Specific Tool Options Pollutant Targeted

(2) Land use

& transportation planning (including

road exposures) A. Financial tools

and financial

demand-side strategies

C. Information programs, rewardprograms and nonfinancial demandside strategies

D. Planning tools

H. Targeted strategies A. Financial demand-side strategies like differential pricing and tax strategies can be used as an incentive.

C. Clearinghouses can disseminate information on technology and incentives to educate and promote the use of technologies that have a positive impact on air quality. Labeling can be used to inform the general public of the choices they are making and to promote the use of new and innovative technologies and resources. Performance benchmarking can be used to highlight the positive characteristics of new and innovative technologies through comp arison of these technologies against standard market practices and/or the continued use of existing products. Community “Green Action” lists can be utilized to provide access to tools and information that will help promote the use of more sustainable “Green Community” concepts, including on line tutorials in the use of modeling software, model codes and ordinances, sample plans, community involvement practices and funding opportunities. Surveys can be used to gauge effectiveness of the programs and to inform federal, state, tribal, and local entities of program results and market changes. Frequent flyer-type programs can be used to provide incentives for entities that make frequent purchases by offering discounts, rebates, credits or other offerings to promote repeated use of the product(s) being promoted. Web tools can be used to move product information. This information can be targeted to a specific audience or for general consum ption to inform, promote, educate,

and influence decisions.

D. Provide modeling software for scenario envisioning and to quantify emission reductions. Modeling to project VMT for transportation planning is recommended.

H

. Non-measured VOC sources can be detected by thermal IR camera (e.g., floating roof storage tanks, VOC loading racks, pipeline operations, marine vessels, and marine loading operations). PM, NOx, VOCs, COAir Quality Management Subc ommittee Final Report

(3) Ships and ports, airports,

and rail

systems A. Financial tools

and financial

demand-side strategies

B. Emission trading

C. Information programs, rewardprograms and nonfinancial demandside strategies

D. Planning tools

E. Retrofit strategies

F. Enforcement

enhancements

H. Targeted strategies

I. Emission limits

J. Work practice

standards A. Tax strategies, loans, equity strategies, and targeted rebates are strategies that provide financial incentives to reduce emissions. FAA grants through the VALE program are available.

B. Emissions trading can work to gether with appropriate emissions performance standards to provide private sector financing and to accelerate engine turnover. Depe nding upon the overall compliance program, the emissions trading element could consist of one or some combination of a performance averag ing program (e.g., by a terminal operator or among fleets), inter-sector trading, banking, and a cap and trade program.

C. Clearinghouses can disseminate information on technology and incentives to educate and promote the use of technologies that have a positive impact on air quality. Performance benchmarking can be used to highlight the positive characteristics of new and innovative technologies through comparison of these technologies against standard market practices and/or the continued use of existing products. Web tools can be used to move product information. This information can be targeted to a specific audience or for general consum ption to inform, promote, educate,

and influence decisions.

D. Modeling to estimate emission reduction benefits of various strategies

is recommended.

E. Retrofit strategies include converting existing engines to an alternative fuel, engine recalibration, addi ng additional emission controls, replacement with a new and cleaner engine, and anti-idling and other changes in operating strategies that reduce emissions.

F. Use SEP funding to accelerate emission reductions through

electrification.

H. Non-measured VOC sources can be detected by thermal IR camera (e.g., floating roof storage tanks, VOC loading racks, pipeline operations, marine vessels and marine loading operations).

I. Use green contract conditions when facilities are enlarged or rebuilt, or when leases are up. Emission limits would be effective for any source with discrete, measurable points of emissions.

J. Imposing work practice restrictions on intermittent sources can be effective to address high ozone leve ls (like taxiing on one engine). PM, NOx, VOCs, SO2, air

toxics

81Air Quality Management Subc ommittee Final Report

(4) Rural Sources (a) Agriculture (including potential

effect on PM

formation and acid deposition) A. Financial tools

and financial

demand-side strategies

C. Information programs, rewardprograms and nonfinancial demandside strategies

D. Planning tools

E. Retrofit strategies

J. Work practice

standards A. Predicate approval of loans on agreement to implement best management practices (BMPs).

C. Clearinghouses can disseminate information on technology and incentives to e ducate and promote the use of technologies that have a positive impact on air quality. Performance benchmarking can be used to highlight the positive characteristics of new and innovative technologies through comparison of these t echnologies against standard market practices and/or the continued use of existing products. Web tools can be used to move product information. This information can be targeted to a specific audience or for general consumption to inform, promote, educate, and influence decisions.

D. Permit streamlining repla ces redundant and unnecessary requirements in favor of practically enforceable limits that can reduce administrative costs, reduce timing, and improve enforcement. Modeling to estimate emission reduction benefits of various strategies is recommended.

E. Retrofit strategies include converting existing engines to an alternative fuel, engine recalibration, adding additional emission controls, replacement with a new and cleaner engine, anti-idling, and other changes in operating strategies

that reduce emissions.

J. Work practice standards (referred to as BMPs) are currently in use and effectively controlling emissions from many agricultural sources. PM, VOCs,

ammonia

(b) Dust A. Financial tools

and financial

demand-side strategies

C. Information programs, rewardprograms and nonfinancial demandside strategies

J. Work practice

standards A. Predicate approval of loans on green clauses in development contracts.

C. Clearinghouses can disseminate information on technology and incentives to e ducate and promote the use of technologies that have a positive impact on air quality. Web tools can be used to move product information. This information can be targeted to a specific audience or for general consumption to inform, promote, educate and

Influence decisions.

J. Work practice standards are effective tools for dealing with “area” type sources such as dust. PM

82Air Quality Management Subc ommittee Final Report

83 (5) Small Emitters (e.g., dry cleaners, bakeries, restaurants) C. Information programs, rewardprograms, and nonfinancial demandside strategies

D. Planning tools

H. Targeted strategies

I. Emission limits

J. Work practice

standards C. Clearinghouses can disseminate information on technology and incentives to e ducate and promote the use of technologies that have a positive impact on air quality. Labeling can be used to inform the general public of the choices they are making and to promote the use of new and innovative technologies and resources. Performance benchmarking can be used to highlight the positive characteristics of new and innovative technologies through comparison of these technologi es against standard market practices and/or the continued use of existing products. Community “Green Action” lists can be utilized to provide access to tools and information that will help promote the use of more sustainable “Green Community” concepts. Surveys can be used to gauge effectiv eness of the programs and to inform federal, state, tribal and local entities of program results and market changes. Frequent flyer-type programs can be used to provide incentives for entities that make frequent purchases by offering discounts, rebates, credits or other offerings to promote repeated use of the product(s) being promoted. Web tools can be used to move product information. This information can be targeted to a specific audience or for general consumption to inform, promote, educate, and influence decisions.

D. Permit streamlining repla ces redundant and unnecessary requirements in favor of practically enforceable limits that can reduce administrative costs, reduce timing, and improve enforcement. Assessing inventory and population density is

recommended.

H. Non-measured VOC sources can be detected by thermal IR camera (e.g., floating roof storage tanks, VOC loading racks, pipeline operations, marine vessels, and marine loading operations).

I. Emission limits would be effective for a ny source with discrete, measurable points of emissions. With very small sources, it may not be cost effective to conduct routine or continuous source sampling.

J. Work practice standards woul d be an effective alternative

to emission limits for most of these sources. PM, NOx, VOCs, air

toxicsAir Quality Management Subc ommittee Final Report

(6) Consumer

Products (e.g., VOC-containing consumer products) A. Financial tools

and financial

demand-side strategies

B. Emissions trading

C. Information programs, rewardprograms, and nonfinancial demandside strategies

I. Emission limits A. Financial strategies such as targeted rebates have proven

successful.

B. One or more emissions trading tools may be effective in this area, including averaging and banking.

C. Clearinghouses can disseminate information on technology and incentives to e ducate and promote the use of technologies that have a positive impact on air quality. Labeling can be used to inform the general public of the choices they are making and to promote the use of new and innovative technologies and resources. Performance benchmarking can be used to highlight the positive characteristics of new and innovative technologies through comparison of these technologi es against standard market practices and/or the continued use of existing products. Community “Green Action” lists can be utilized to provide access to tools and information that will help promote the use of more sustainable “Green Community” concepts. Surveys can be used to gauge effectiv eness of the programs and to inform federal, state, tribal and local entities of program results and market changes. Frequent flyer-type programs can be used to provide incentives for entities that make frequent purchases by offering discounts, rebates, credits, or other offerings to promote repeated use of the product(s) being promoted. Web tools can be used to move product information. This information can be targeted to a specific audience or for general consumption to inform, promote, educate, and influence decisions.

I. Emission limits would be effective for a ny source with discrete, measurable points of emissions. With certain types of sources, it will not be cost effective to conduct routine or continuous source sampling. PM, NOx, VOCs, SO2,

air toxics

84Air Quality Management Subc ommittee Final Report

(7) Industrial,

Commercial and

Residential Boilers and Heaters, and Legacy Equipment

and Sources B. Emissions trading

C. Information programs, rewardprograms, and nonfinancial demandside strategies

D. Planning tools

I. Emission limits

J. Work practice

standards B. Emissions trading tools such as plant-wide applicability limits may be effective.

C. Clearinghouses can disseminate information on technology and incentives to e ducate and promote the use of technologies that have a positive impact on air quality. Labeling can be used to inform the general public of the choices they are making and to promote the use of new and innovative technologies and resources. Performance benchmarking can be used to highlight the positive characteristics of new and innovative technologies through comparison of these technologi es against standard market practices and/or the continued use of existing products. Surveys can be used to gauge effectiveness of the programs and to inform federal, state, tribal and local entities of program results and market changes. Web tools can be used to move product information. This information can be targeted to a specific audience or for general consumption to inform, promote, educate, and influence decisions.

D. Permit streamlining repla ces redundant and unnecessary requirements in favor of practically enforceable limits that can reduce administrative costs, reduce timing, and improve enforcement. Modeling to estimate emission reduction benefits of various strategies is recommended. Inventory

assessment is recommended.

I. Emission limits can be an e ffective tool to address these types of sources.

J. Work practice standards might be an effective alternative

to emission limits for some of these sources. PM, NOx, VOCs, SO2

85Air Quality Management Subc ommittee Final Report

Needs, Tools, and Attributes

1. List of “Needs” or Problems:

A. Priority Emission Reduction Areas

(1) Vehicles and Engines:

(a) Issues related to ve hicle and engine emissions:

i. Insufficient turnover of existing fleets ii. Need to encourage higher mark et penetration of clean engines

and fuels iii. Need for greater implementation of retrofits (b) Issues related to vehicle and engi ne use (i.e., vehicle miles traveled (VMT)):

i. lack of land use planning to reduce VMT ii. lack of transpor tation planning to reduce VMT

(2) Special Under-Managed Problem Areas:

(a) ports and goods movement (including some related on-road engines, e.g., trucks) (b) airports (c) other federally preempted sources (e.g., railroads, ships, etc.) (d) agricultural emission s (including both their po tential effect on PM formation and on acid deposition; in cludes, e.g., ammonia, dust from tillage, land clearing burning) (e) dust emissions

(3) Small Emitters (e.g., dry cleaners, bakeries, restaurants)

(4) Consumer Products (e.g., VOC-containing consumer products)

(5) Industrial Boilers and Other Under-Regulated Stationary Sources

B. Problems and Needs Related to Measu rements (of Problem or Actions Taken) and Performance Tracking

(1) Baseline Air Quality Data

(a) Current Disincentives - Current pr ogram discourages data development and other efforts to update the t echnical underpinning of attainment

86Air Quality Management Subc ommittee Final Report

SIPs. Currently, areas are penalized for discovering that their problem is worse than previously understood.

(b) Need for More Refined Data – we need more information regarding speciation of fine particulates if we are to identify the most appropriate sources to target for controls.

(c) Inventory Gaps – we have not yet adequately estimated emissions from many source categories, including:

- marine emissions

- locomotive emissions

- off-road diesel emissions

(d) Insufficient ambient air quality m onitoring networks- lack of ambient

data

(2) Hazardous Air Pollutants

(a) Limited or non-existent monitoring data. (b) Need better risk assessment methodology that incorporates both scientific and traditional knowledge. (c) Lack of understanding rega rding levels of significance (d) Lack of ambient thresholds. (e) Need more understanding of potential impact of hazardous air pollutants on sensitive populations.

(3) Planning Challenges

(a) Co-benefit evaluations – we lack the tools or metrics to account properly for co-benefits of various strategies. (b) Difficulty of evaluating local impacts of trading programs.

C. Problems or Needs Related to Authority or Jurisdiction

(1) Preemption – states and tribes are preem pted from regulating many source Categories.

(2) Limitations – e.g., many states and tr ibes can’t go beyond federal measures or can’t regulate minor sources.

(3) International and Border Emissions.

(4) Authority and jurisdictional regulatory “patchwork” of state/local regulations versus national regulations.

D. Other SIP Challenges

87Air Quality Management Subc ommittee Final Report

(1) SIP Credit – how should credit for non-traditional strategies be allocated, including: - Mobile source strategies (e.g., diesel reduction programs). - Voluntary/incentive programs.

E. Resources – many state, tribal and local ag encies lack sufficient resources

F. Other Needs

(1) Lack of incentives to prevent air quality problem s (e.g., in attainment areas)

(2) Conservation, both user and supplier side, including: - Energy efficiency.

- User side behavior/choices. - Purchasing/consumption.

- Mass transit.

2. List of Potential “Tools:”

A. Financial Tools and Fina ncial Demand-Side Strategies

Tax strategies (e.g., deductions, cr edits, accelerated depreciation, etc.)

Loans Equity strategies

Clean air investment funds

Emission fees

Fees in lieu of offsets Targeted rebates Differential pricing

B. Emissions Trading Tools

Cap and trade Open market strategies Bubbles (e.g., by category of equipment, facility, industry, port or airport) Plant-wide applicability limits Mobile to stationary trading Interpollutant trading Risk-based trading Reactivity-based trading

C. Information Programs, Reward Pr ograms and Non-Financial Demand-Side Strategies

Clearinghouses for Technology, Regulations, Incentives

88Air Quality Management Subc ommittee Final Report

Labeling (e.g., star programs, nutrition label model) Performance Benchmarking Community “green” action lists Surveys (e.g., impacts of personal choices) Frequent flyer-type programs (e.g., points for personal clean air actions) Web tools (e.g., info availability, personal clean air web account)

D. Planning Tools

Permit streamlining Model local ordinances and guidance Quantification models to projec t impacts of land use choices Federal agency ombudsman for assisting lo cal governments to identify available funds, good land use models, etc. Memoranda of understanding Remote sensing Monitoring tools for dealing with inventory uncertainties

E. Retrofit Strategies (other than financ ial incentives, which are listed separately above)

Useful life limits on equipment Retrofit requirements (Super RACT) Minimum technology standards based on pollutant focus Fuel type and usage Operational protocol Compliance flexibility Direct regulations requiring retrofits

F. Enforcement Enhancements

Incentives for self certification Source specific emission limit agreements Privatization Strategies

G. Targeted Strategies

Sensitive zones Sensitive receptors Time of day restrictions

Seasonal restrictions

H. Emission Limits

89Air Quality Management Subc ommittee Final Report

3. Attributes – for evaluating and comparing tools:

DIRECT:

A. Environmental benefits and dis-benef its (e.g., emission reductions, air quality benefits, public health benefits, cultural benefits, eco logical benefits, aesthetic benefits), including a statement of which “need” is being addressed.

B. Economic impacts (e.g., cost and cost effectiveness).

C. Time (e.g., lead time, duration in years, continuity of benefit during day and week).

D. Ease of monitoring and accountability.

AUTHORITY, JURISDICTION AND MECHANISMS:

E. Jurisdictional attributes (e.g., do states and tribes have necessary authority, are there limits, who would implement – business, local, state, tribe, federal, international).

F. Would the strategy require CAA amendment?

G. Replicability.

INDIRECT:

H. Impact on personal choice and quality of life.

I. Benefits and dis-benefits of energy efficiency and greenhouse gas reductions.

90Air Quality Management Subc ommittee Final Report



## Appendix C: Proposed Framework for an Air Quality Management

Plan

91Air Quality Management Subc ommittee Final Report



### Proposed Framework for an Air Quality Management Plan
The following framework for an AQMP is based, in part, on the South Coast Air Quality Management District (AQMD) 2003 air quality management plan ( http://www.aqmd.gov/aqmp/AQMD03AQMP.htm ).

Elements of an AQMP and a Proposed Framework

1) Executive Summary a) Presents philosophy and direction b) Summarizes key components and discusses how they will be implemented 2) Overview a) Explains concept of AQMP and provides co ntext for current plan versus the past b) Discusses how the plan developed, who is involved in the process c) Discusses benefits and impacts of an AQMP 3) Air Quality Requirements and Goals a) Purpose – why are we doing an AQMP? b) Challenges c) Current requirements and goals addressed by the AQMP (both federal and state, tribal, or local) 4) Air Quality, Health, and Ecosystem Effects a) Explains current air quality issues in the area covered by the plan – what are the problems in the area? b) Includes both criteria and non-criteria pollutants c) Discusses health effects and other issues for all pollutants covered by the plan 5) Air Emissions Assessment a) Provides a picture of where the area is and may be in terms of its current and future

emissions inventories from all sources – what does it look like now and in the future ? b) Discusses how emissions will be monitored, what modeling has been done, and what/how information is being provid ed to stakeholders and the public 6) Strategy for Managing Emissions from New and Existing Sources a) Outlines the various control strategies a nd other measures the planning agency is undertaking in the stationar y, area and mobile sectors – what are we doing about it ? b) Covers all pollutants addressed by the AQMP 7) Future Air Quality a) Provides the future air quality picture base d on implementation of the strategies and measures in the AQMP – where do these actions get us ? 8) Implementation a) Explains how the organizations involved in the AQMP will execute the programs and strategies outlined in the AQMP – how would we get this done? 9) Looking Beyond Current Requirements a) Provides a forward look at air quality pr oblems and requirements on the horizon and how the area is approaching those issues 10) Glossary and Appendices a) Provides detailed technical support documents and information

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## Appendix D: Letter Transmitting Final Report to EPA

93Air Quality Management Subc ommittee Final Report

Honorable Stephen L. Johnson

Administrator U.S. Environmental Protection Agency 1200 Pennsylvania Avenue, N.W. Washington, DC 20460

Dear Administrator Johnson:

On behalf of the Clean Air Act Advisory Committee (CAAAC), we are pleased to present to you a report and recommendations fr om the Committee for your consideration. The CAAAC is a senior-level policy committee cons isting of managers and experts representing State and local government, environmental and public interest groups, academic institutions, unions, trade associations, utilit ies, industry, and others. Th e Committee provides advice and counsel to EPA on a variety of impor tant air quality policy issues.

In 2004, the National Research Council (NRC) of the Natio nal Academies released a report entitled, “Air Quality Management in the Un ited States.” In this report, the NRC outlined the many substantial achievements of the U.S. Air Quality Management (AQM) system over the past 30 years. The NRC also identified areas where additional changes in the AQM system would provide further benefits to human hea lth and the environment. The NRC advanced recommendations for change in the AQM system on a number of levels. Some of the NRC’s recommendations involve short-term changes of limited scope and immediate impact. Other

NRC recommendations involve sw eeping changes to the Nation’s approach to AQM over the mid- to long-term.

For the past 2 years, a CAAAC Subcommitt ee has examined the la tter category of the

NRC recommendations and has deve loped this report detailing options for long-term, systemic ways to improve the AQM system in this countr y. The Subcommittee’s findings support a shift from the current pollutant-by-pollutant AQM system to a fully integrated multipollutant, comprehensive AQM system that functions in coordination with energy, land use, and transportation plans. The AQM Subcommittee in cluded representatives from State and local organizations, Tribes, regional organizations, environmental a nd public health organizations, industry, and the EPA.

94Air Quality Management Subc ommittee Final Report

On behalf of the Committee, we than k you for the opportunity to provide advice on developing air quality management strategies for the future.

Sincerely,

Gregory A. Green, Co-Chair Air Quality Management Subcommittee

Patrick Cummins, Co-Chair Air Quality Management Subcommittee

Robert J. Meyers, Chair Clean Air Act Advisory Committee

Enclosure

95Air Quality Management Subc ommittee Final Report



## Appendix E: Commentary from Stakeholders

96June 8, 2007

Patrick Cummins and Gregory Green, Co-Chairs Air Quality Management Subcommittee of the Clean Ai r Act Advisory Committee U.S. Environmental Protection Agency

Mail Code C304-01 Research Triangle Park, NC 27711

Dear Mr. Cummins and Mr. Green:

As participants in the Clean Air Act Advisory Commi ttee’s Air Quality Management (AQM) Subcommittee’s deliberations over the past few year s and on behalf of the NESCAUM states, we submit these comments to you in response to the May 2, 2007 draft report of the AQM Subcommittee, entitled Recommendations to the Clean Air Act Committee; Air Quality Management Subcommittee Recommendations, Phase II, June 2007 . The NESCAUM states are Connecticut, Maine, Massachusetts, New Hampshire, N ew Jersey, New York, Rhode Island, and

Vermont.

With regard to the statement in the report that the recommendations in the report are “the AQM Subcommittee’s vision of a comprehensive AQM system that can assist in meeting future air quality challenges in this country” (see page 15), we can only agree in part. Without opportunity for in-depth discussion of climate change, it prove d impossible to develop what constitutes, in our minds, a truly comprehensive AQM system. As su ch, the recommendations represent some good initial steps toward a more comprehensive para digm of integrated multi-pollutant planning and management that is yet to be achieved.

Contextualizing the Phase II Recommendations - Proc ess Observations

Phase II of the AQM deliberations proved to be more challenging than Phase I for several reasons, including process dynamics. We feel it im portant to describe some of these process dynamics in order to place the report in context fo r readers who may wish to pursue future discussions on new approaches to air quality manage ment with this report in hand.

First, the group was charged to look broadly at lon ger term, possibly more large-scale changes to the air quality management system. While brainstor ming on new ideas sounds like a stimulating and uncomplicated task, the policy context in which the Subcommittee was operating compelled many participants to consider the potential and sub stantial regulatory impacts of such innovative ideas, particularly with respect to impacts on thei r constituencies. As mentioned in the AQM Subcommittee report, coming to consensus on more gr oundbreaking proposals such as the ones

listed in the Unresolved Areas of Discussion section (i.e., airshed-based boundaries, reasonable performance levels, and continuous improvements) wo uld have required deliberating on and conceding to regulatory and policy tradeoffs. Many Subcommittee members found that this forum did not allow -- and may not have been the pl ace -- for such specific considerations. As aAir Quality Management Subcommittee Report June 8, 2007

NESCAUM Page 2

result, there was discomfort among participants, pa rticularly in engaging in conversations on how an innovative concept might be envisioned or im plemented.

Second, in the context of brainstorming new approac hes, we observed a concern on the part of many Subcommittee members that formally endorsing a new concept could be erroneously interpreted to imply that the corresponding concept currently in place was no longer supported or deemed adequate. This further affected the Subcomm ittee’s ability to explore new approaches as a group with rigor.

Third, early on in the deliberations, it became cle ar that the Subcommittee could not reach

consensus as to whether or not to discuss climate c hange as part of the AQM process. Participants on both sides of the issue felt strong ly about their positions. Rather than expending time and resources further debating the issue, a co mpromise position was reached that climate change would only be discussed within a very narrow ly defined context, i.e., as presented in the

three action items contained in Recommendation #4: Take climate change into account in air quality management strategies. We believe that such a narrow bounding of the topic of climate change significantly disadvantaged the deliberation s. Our specific thoughts on this are

elucidated below.

Fourth, while Subcommittee and workgroup deliberati ons were at times engaging and truly exploratory, the open-ended nature of the Subcommit tee’s charge, coupled with the process concerns, ultimately resulted in constrained dialog ue. We suggest that, for future CAAAC subcommittee deliberations, specified goals or endp oints accompany the charge so that ideas and draft recommendations can be more easily compared t o and assessed with respect to those goals. Such an approach could greatly enhance that group’s overall deliberative process.

Multi-Pollutant Planning without Climate Change - S cratching the Surface

From the NESCAUM states’ perspective, the Subcommit tee’s inability to discuss climate change in the context of criteria pollutant planning and m anagement was disappointing. During the time period coinciding with the AQM Subcommittee’s delib erations, the NESCAUM states were actively working together and with states across th e nation on several key climate initiatives, including the Regional Greenhouse Gas Initiative (R GGI) and The Climate Registry, as well as developing State Implementation Plans for ozone, pa rticulate matter, and regional haze. The

NESCAUM states have started to confront some critic al policy challenges concerning climate, criteria pollutant, and air toxics integration, and would have welcomed an opportunity to discuss them with a larger constituency. Some of the key i ssues specifically involve climate-criteria pollutant tradeoffs, and include: (1) science and a nalytical assessment needs for assessing multipollutant interactions and tradeoffs; (2) policy ch allenges and needs for addressing multipollutant interactions and tradeoffs; (3) instituti onal barriers that need to be addressed in order to move to more integrated multi-pollutant planning an d management; (4) local, state, tribal, and federal roles in integrating climate change into mu lti-pollutant planning; and (5) buildingAir Quality Management Subcommittee Report June 8, 2007

NESCAUM Page 3

capacity at the state, tribal, and federal levels t o successfully implement multi-pollutant planning and management.

Moving Forward

We are pleased that the U.S. Environmental Protecti on Agency (EPA) has initiated steps to launch a pilot program, in response to the Subcommi ttee’s recommendation, for developing statewide Air Quality Management Plans over the nex t few years. We agree that federally sponsored pilots aimed at building capacity at the state level to conduct multi-pollutant analyses, as well as identifying policy, regulatory, and inst itutional challenges and ways to address them during the integration process, will prove benefici al. We recommend that a series of pilots be launched and subsequently documented, evaluated, an d made publicly available so that we can learn from those experiences. We hope to work with EPA in the near future on such efforts.

We greatly appreciated the work of the EPA staff in convening the AQM Subcommittee meetings and writing and producing the final report . We thank you for your efforts in shepherding this process to its conclusion. If you have any questions on our comments, do not

hesitate to contact us.

Sincerely,

David Shaw, Director Jeffrey Underhill, Chief Scientist

Division of Air Resources Air Resources Divisio n NY DEC NH DES

Michael Sheehan, Chief Leah Weiss, Senior Polic y Advisor Mobile Source Planning Section NESCAUM Division of Air Resources, NY DEC

cc: NESCAUM Directors Arthur Marin, NESCAUM