Document ID: EPA-HQ-OAR-2009-0491-3871
Agency: epa
Document Type: Notice
Title: Notice of Data Availability for Federal Implementation Plans To Reduce Interstate Transport of Fine Particulate Matter and Ozone: Request for Comment on Alternative Allocations, Calculation of Assurance Provision Allowance Surrender Requirements, New-Unit Allocations in Indian Country, and Allocations by States
Posted Date: 2011-01-07T05:00Z

[Federal Register Volume 76, Number 5 (Friday, January 7, 2011)]
[Proposed Rules]
[Pages 1109-1121]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-109]

[[Page 1109]]

=======================================================================
-----------------------------------------------------------------------

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 51, 52, 72, 78, and 97

[EPA-HQ-OAR-2009-0491; FRL-9249-6]
RIN 2060-AP50

Notice of Data Availability for Federal Implementation Plans To 
Reduce Interstate Transport of Fine Particulate Matter and Ozone: 
Request for Comment on Alternative Allocations, Calculation of 
Assurance Provision Allowance Surrender Requirements, New-Unit 
Allocations in Indian Country, and Allocations by States

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of data availability (NODA) for the proposed Transport 
Rule and request for comment.

-----------------------------------------------------------------------

SUMMARY: EPA has supplemented the Transport Rule docket with additional 
information relevant to the rulemaking, including unit-level 
SO2 Group 1 and Group 2, NOX annual, and 
NOX ozone season allowances for existing units calculated 
using two alternative methodologies and data supporting those 
calculations. This NODA requests public comment on these two 
alternative allocation methodologies for existing units, on the unit-
level allocations calculated using those alternative methodologies, on 
the data supporting the calculations, and on any resulting implications 
for the proposed assurance provisions. This NODA also requests comment 
on information about: An alternative approach to calculation of 
assurance provision allowance surrender requirements; allocations for 
new units locating in Indian country in the proposed Transport Rule 
region in the future; and provisions for states to submit State 
Implementation Plans providing for State allocation of allowances in 
the proposed Transport Rule trading programs.

DATES: Comments on this NODA must be received on or before February 7, 
2011.
    Please refer to SUPPLEMENTARY INFORMATION for additional 
information on submitting comments.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-
OAR-2009-0491, by one of the following methods:
     http://www.regulations.gov. Follow the online instructions 
for submitting comments. Attention Docket ID No. EPA-HQ-OAR-2009-0491.
     Fax: (202) 566-9744. Attention Docket ID No. EPA-HQ-OAR-
2009-0491.
     Mail: EPA Docket Center, EPA West (Air Docket), Attention 
Docket ID No. EPA-HQ-OAR-2009-0491, U.S. Environmental Protection 
Agency, Mailcode: 2822T, 1200 Pennsylvania Avenue, NW., Washington, DC 
20460. Please include 2 copies. In addition, please mail a copy of your 
comments on the information collection provisions to the Office of 
Information and Regulatory Affairs, Office of Management and Budget 
(OMB), Attn: Desk Officer for EPA, 725 17th Street, NW., Washington, DC 
20503.
     Hand Delivery: U.S. Environmental Protection Agency, EPA 
West (Air Docket), 1301 Constitution Avenue, NW., Room 3334, 
Washington, DC 20004, Attention Docket ID No. EPA-HQ-OAR-2009-0491. 
Such deliveries are only accepted during the Docket's normal hours of 
operation, and special arrangements should be made for deliveries of 
boxed information.
    Instructions: Direct your comments to Docket ID No. EPA-HQ-OAR-
2009-0491. EPA's policy is that all comments received will be included 
in the public docket without change and may be made available online at 
http://www.regulations.gov, including any personal information 
provided, unless the comment includes information claimed to be 
Confidential Business Information (CBI) or other information whose 
disclosure is restricted by statute. Do not submit information that you 
consider to be CBI or otherwise protected through http://www.regulations.gov or e-mail. The http://www.regulations.gov Web site 
is an ``anonymous access'' system, which means EPA will not know your 
identity or contact information unless you provide it in the body of 
your comment. If you send an e-mail comment directly to EPA without 
going through http://www.regulations.gov, your e-mail address will be 
automatically captured and included as part of the comment that is 
placed in the public docket and made available on the Internet. If you 
submit an electronic comment, EPA recommends that you include your name 
and other contact information in the body of your comment and with any 
disk or CD-ROM you submit. If EPA cannot read your comment due to 
technical difficulties and cannot contact you for clarification, EPA 
may not be able to consider your comment. Electronic files should avoid 
the use of special characters, avoid any form of encryption, and be 
free of any defects or viruses. For additional information about EPA's 
public docket, visit the EPA Docket Center homepage at http://www.epa.gov/epahome/dockets.htm.
    Docket: All documents in the docket are listed in the http://www.regulations.gov index. Although listed in the index, some 
information is not publicly available, e.g., CBI or other information 
whose disclosure is restricted by statute. Certain other material, such 
as copyrighted material, will be publicly available only in hard copy. 
Publicly available docket materials are available either electronically 
in http://www.regulations.gov or in hard copy at the Air and Radiation 
Docket and Information Center, EPA/DC, EPA East Building, Room 3334, 
1301 Constitution Ave., NW., Washington, DC. The Public Reading Room is 
open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding 
legal holidays. The telephone number for the Public Reading Room is 
(202) 566-1744, and the telephone number for the Air Docket is (202) 
566-1742.

FOR FURTHER INFORMATION CONTACT: For questions regarding this Notice of 
Data Availability and the additional allocations information placed in 
the docket contact Brian Fisher, Clean Air Markets Division, USEPA 
Headquarters, Ariel Rios Building, 1200 Pennsylvania Avenue, NW., Mail 
Code: 6204J, Washington, DC 20460; telephone number: (202) 343-9633; 
fax number: (202) 343-2359; e-mail fisher.brian@epa.gov.

SUPPLEMENTARY INFORMATION: Detailed background information describing 
the proposed rulemaking may be found in a previously published notice: 
Federal Implementation Plans to Reduce Interstate Transport of Fine 
Particulate Matter and Ozone (proposed Transport Rule); Proposed Rule, 
75 FR 45210; August 2, 2010.
    The information placed in the docket is also available for public 
review on the Web site for this rulemaking at http://www.epa.gov/airtransport/. If additional relevant supporting information becomes 
available in the future, EPA will place this information in the docket 
and make it available for public review on this Web site. This NODA 
does not extend the comment period for the proposed Transport Rule, 
which ended on October 1, 2010. This NODA also does not extend the 
comment period for the two NODAs supporting the proposed Transport Rule 
that were previously published in the Federal Register. The comment 
period for the NODA published September 1, 2010 closed on October 15, 
2010. The comment period for the NODA published October 27, 2010 closed 
on November 26, 2010.

[[Page 1110]]

I. Additional Information on Submitting Comments

A. How can I help EPA ensure that my comments are reviewed quickly?

    To expedite review of your comments by Agency staff, you are 
encouraged to send a separate copy of your comments, in addition to the 
copy you submit to the official docket, to Brian Fisher, Clean Air 
Markets Division, USEPA Headquarters, Ariel Rios Building, 1200 
Pennsylvania Avenue, NW., Mail Code: 6204J, Washington, DC 20460; 
telephone number: (202) 343-9633; fax number: (202) 343 2359; e-mail 
address fisher.brian@epa.gov.

B. What should I consider as I prepare my comments for EPA?

    1. Submitting CBI. Do not submit this information to EPA through 
EDOCKET, regulations.gov or e-mail. Clearly mark the part or all of the 
information that you claim to be CBI. For CBI information in a disk or 
CD ROM that you mail to EPA, mark the outside of the disk or CD ROM as 
CBI and then identify electronically within the disk or CD ROM the 
specific information that is claimed as CBI. In addition to one 
complete version of the comment that includes information claimed as 
CBI, a copy of the comment that does not contain the information 
claimed as CBI must be submitted for inclusion in the public docket. 
Information so marked will not be disclosed except in accordance with 
procedures set forth in 40 CFR part 2. Send or deliver information 
identified as CBI only to the following address: Gene Sun, Clean Air 
Markets Division, USEPA Headquarters, Ariel Rios Building, 1200 
Pennsylvania Avenue, NW., Mail Code: 6204J, Washington, DC 20460; 
telephone number: (202) 343-9119; fax number: (202) 343-2359.
    2. Tips for Preparing Your Comments. When submitting comments, 
remember to: i. Identify the NODA by docket number and other 
identifying information (subject heading, Federal Register date and 
page number).
    ii. Follow directions--The Agency may ask you to respond to 
specific questions or organize comments by referencing a Code of 
Federal Regulations (CFR) part or section number.
    iii. Explain your comments, why you agree or disagree; suggest 
alternatives and substitute language for your requested changes.
    iv. Describe any assumptions and provide any technical information 
and/or data that you used.
    v. If you estimate potential costs or burdens, explain how you 
arrived at your estimate in sufficient detail to allow for it to be 
reproduced.
    vi. Provide specific examples to illustrate your concerns, and 
suggest alternatives.
    vii. Explain your views as clearly as possible, avoiding the use of 
profanity or personal threats.
    viii. Make sure to submit your comments by the comment period 
deadline identified.

II. Web Site for Rulemaking Information

    The EPA has previously established a Web site for the proposed 
rulemaking at http://www.epa.gov/airtransport. The Web site includes 
the proposed rulemaking actions and other related information that the 
public may find useful in addition to a link to this NODA.

III. What is this Notice of Data Availability?

    In the Transport Rule Notice of Proposed Rulemaking (NPR), EPA 
proposed that, until states submit and the Administrator approves State 
Implementation Plans (SIPs), Transport Rule Federal Implementation 
Plans (FIPs) would provide backstops to prohibit emissions in upwind 
states that significantly contribute to nonattainment or interfere with 
maintenance of certain National Ambient Air Quality Standards (NAAQS) 
in downwind states in compliance with section 110(a)(2)(D)(i)(I) of the 
Clean Air Act (CAA). This Notice of Data Availability (NODA) provides 
an opportunity for public comment on five issues related to the 
proposed Transport Rule and on data relevant to those issues. The 
relevant data has been placed in the rulemaking docket (Docket ID No. 
EPA-HQ-OAR-2009-0491) and on the Web at http://www.epa.gov/airtransport. Specifically, EPA is providing an opportunity for 
additional public comment on two methodologies for allocating 
allowances under the remedy proposed by EPA in the proposed Transport 
Rule and on supplemental data and information concerning the two 
allocation methodologies. EPA is also providing an opportunity for 
comment on: The implications of the alternative allocation 
methodologies for the proposed assurance provisions; an alternative 
approach to calculation of assurance provision allowance surrender 
requirements at the designated representative (DR) level; a methodology 
for allocating allowances to new units that choose to locate in Indian 
country in the Transport Rule region; and possible options for states 
wishing to submit State Implementation Plans (SIPs) providing for State 
allocation of allowances in the proposed Transport Rule trading 
programs.
    The first issue on which EPA is soliciting comment relates to 
allowance allocations under the proposed limited interstate trading 
remedy. In the Transport Rule NPR, EPA proposed FIPs with a limited 
interstate trading remedy and requested comment on alternative remedies 
including intrastate trading and direct control. To implement the 
proposed limited interstate trading remedy, EPA would, among other 
things, require sources to hold emissions allowances equal to their 
emissions of certain air pollutants during each compliance period. 
Because EPA proposed FIPs in the Transport Rule, EPA also proposed a 
methodology for distributing (allocating) the allowances to individual 
existing units based on a combination of adjusted historic and 
projected emissions data and requested comment on possible alternative 
allocation methodologies.
    This NODA describes two specific alternative allocation 
methodologies that would potentially be used to allocate allowances 
under FIPs in the final Transport Rule. These alternatives rely largely 
on historic heat input data to determine unit-level allocations. The 
NODA provides the underlying data, calculations, and resulting unit-
level allocations obtained when each alternative is applied to the 
State budgets in the proposed Transport Rule. These alternative 
allocation methodologies could be used to implement the proposed 
interstate trading remedy or the intrastate trading remedy set forth in 
the proposed Transport Rule. In developing the final Transport Rule, 
EPA will consider these alternative allocation methodologies, as well 
as the allocation methodologies presented in the proposed Transport 
Rule. Further, issuance of this NODA does not preclude EPA from 
finalizing any of the remedies in the Transport Rule proposal, 
including limited interstate trading, intrastate trading, or direct 
control.
    EPA received numerous public comments on the methodology in the 
proposed Transport Rule for allocating SO2 Group 1, 
SO2 Group 2, NOX annual, and NOX ozone 
season allowances to existing units. Many commenters suggested 
alternative allocation approaches. A number of commenters requested 
that EPA publish allocations and underlying data for any potential 
alternative allocation methodologies before issuing a final Transport 
Rule. The public comments received are available in the docket for the 
Transport

[[Page 1111]]

Rule (Docket ID No. EPA-HQ-OAR-2009-0491).
    This NODA describes the two alternative allocation methodologies 
for existing units. Classification of units as existing units is 
discussed in section IV in this NODA. Units that are not classified as 
existing units would receive allocations of allowances based on the 
provisions for new unit allocations in the proposed Transport Rule. 
Note that the proposed Transport Rule does not discuss allocations to 
new units in Indian country; see section VII in this NODA for 
information on a potential allocation methodology for such units.
    The alternative methodologies for existing unit allocations 
described in this NODA emerge from comments that EPA received during 
the comment period on the proposed Transport Rule. This NODA explains 
the two alternative allocation methodologies and identifies the unit-
level data that serve as inputs for these alternative methodologies and 
the resulting existing-unit-level allocations obtained when the 
methodologies are applied to the State budgets provided in the 
proposal. Section V in this NODA lays out key issues that EPA 
encourages commenters to consider when submitting comments on the 
alternative allocation methodologies.
    The unit-level allocations in this NODA are based on State 
emissions budgets in the proposed Transport Rule. It is important to 
note that final State budgets may differ from the proposed budgets 
because EPA is still in the process of updating its emissions 
inventories and modeling in response to public comments, including 
comments on the Integrated Planning Model (IPM). The final budgets will 
be based on the updated inventories and modeling. Thus, unit-level 
allocations in this NODA provide an indication of the proportional 
share of a State's budget that would be allocated to individual 
existing units if the alternative methodologies would be used. Any 
final allocations in the final Transport Rule would be based on the 
final State budgets and allocation methodology employed in the final 
rule. Because the unit-level allocations in the proposed Transport Rule 
and the unit-level allocations in this NODA are based on the same State 
budgets (i.e., the budgets in the proposed Transport Rule), this 
approach allows commenters to compare how the allocation methodologies 
impact the distribution of allowances within a state.
    This NODA only provides illustrative allocations to potential 
existing Transport Rule units. For purposes of this NODA, potential 
existing Transport Rule units are units that potentially meet the 
applicability criteria in the Transport Rule NPR (proposed Sec. Sec.  
97.404, 97.504, 97.604, and 97.704) and began commercial operation 
prior to January 1, 2009. Any unit that meets the proposed 
applicability criteria and began commercial operation on or after 
January 1, 2009 would be considered a new unit and receive allocations 
through the new unit set-aside described in the Transport Rule NPR 
because the unit would not have a full year of baseline data available 
at the time the Agency anticipates determining allocations to existing 
units. Such a new unit would not be reflected in the list of potential 
existing units for which illustrative allocations are presented in this 
NODA.
    This NODA presents allocations based on the existing-unit portions 
of the state budgets under the proposed Transport Rule. In the 
proposal, the existing-unit portion of a state budget would be 
calculated as 97% of the total state budget in order to allot 3% to the 
new unit set-aside. EPA recognizes that the revised classification of 
units as existing units presented with these alternative allocation 
methodologies might affect the methodology used in the proposal that 
would establish the size of the new unit set-aside. EPA will consider 
comments submitted during this NODA's comment period when finalizing 
FIP allocations in the final Transport Rule and will address the issue 
of any effect of the finalized allocation methodology on the size of 
the new unit set-aside.
    This NODA also requests public comment on four other issues. 
Specifically, the NODA requests comment on: an alternative approach to 
the calculation of assurance provision allowance surrender requirements 
(calculation at the DR level); the implications that the alternative 
allocation methods might have for the proposed assurance provisions; 
allocations to any new units that choose to locate in Indian country in 
a proposed Transport Rule state; and provisions for a state to 
participate in the Transport Rule trading programs through submission 
of a SIP (referred to as a full SIP) or to determine unit-level 
allocations under a FIP through submission of a SIP revision addressing 
only allocations (referred to as an abbreviated SIP).
    EPA has placed in the docket for the proposed Transport Rule 
(Docket ID No. EPA-HQ-OAR-2009-0491) additional information relevant to 
the rulemaking, including illustrative unit-level allocations based on 
the state budgets provided in the Transport Rule proposal and 
supporting data discussed in this NODA. The information placed in the 
docket is also available for public review on the Web site for this 
rulemaking at http://www.epa.gov/airtransport.
    It is also important to note that EPA is neither proposing any 
changes to nor accepting comment on the approach that will be used to 
identify each state's significant contribution and interference with 
maintenance and each state's emissions budget. EPA took comment on this 
approach and the resulting state budgets in the proposed Transport 
Rule. EPA also took comment on related modeling and emissions 
inventories in two subsequent NODAs (75 FR 53613; September 1, 2010, 
and 75 FR 66055; October 27, 2010).
    For example, EPA is accepting comment on the alternative allowance 
allocation methodologies presented in this NODA, but not on whether EPA 
should use a remedy that requires the allocation of allowances. The 
allowances that are allocated to individual units are a tool that would 
be used to implement two of the remedies discussed in the proposed 
Transport Rule--the proposed limited interstate trading remedy and the 
alternative intrastate trading remedy; the allocation methodologies 
detailed in this NODA are simply variations on approaches for 
distributing those allowances to individual units.
    Similarly, while EPA is accepting comment on discrete issues 
relating to implementation of the assurance provisions, EPA is not 
accepting comments on the need to have assurance provisions. The EPA 
took comment on this in the proposed Transport Rule and is now only 
requesting comment on discrete implementation issues concerning the 
assurance provisions. In particular, EPA is requesting comment on the 
implications that the alternative allocations methods might have for 
the assurance provisions and on the alternative of calculating 
assurance provision surrender on a DR-by-DR, rather than an owner-by-
owner basis. This latter alternative of implementing the assurance 
provisions on a DR-by-DR basis is simply a variation in implementation 
of the proposed assurance provisions.
    In summary, this NODA provides the public with the opportunity to 
comment on:
    a. The two alternative allocation methodologies (described in 
section V in this NODA), including the major components of each 
alternative (e.g., the

[[Page 1112]]

baseline period and formulas to be used in calculating allocations);
    b. The underlying unit-level data and resulting allowance 
allocations for the alternative allocation methodologies based on the 
proposal's state budgets; and
    c. The list of units used in applying the alternative allocation 
methodologies, including the classification of ``existing'' units.
    This NODA also provides the public with the opportunity to comment 
on:
     The alternative of implementing the proposed assurance 
provisions on a DR-by-DR, rather than owner-by-owner basis (section VI 
in this NODA);
     The implications that the alternative allocation 
methodologies might have concerning the proposed assurance provisions 
of the Transport Rule and the reasonableness of using the proposed 
assurance provisions with these alternative allocation methodologies;
     Information regarding unit-level allowance allocations for 
any new units that choose to locate in Indian country in the proposed 
Transport Rule region in the future (section VII in this NODA); and
     Information regarding provisions for a state in the 
proposed Transport Rule region to participate in the Transport Rule 
trading programs through submission of a full SIP or to determine the 
unit-level allocations under a FIP through submission of an abbreviated 
SIP addressing only allocations (section VIII in this NODA).
    During the comment period for this NODA, EPA will accept comments 
only on the issues explicitly addressed in this NODA. EPA is not 
requesting, and will not consider, comments on other aspects of the 
proposed Transport Rule (such as determinations concerning states' 
significant contribution and interference with maintenance and state 
budgets). EPA is not extending the comment period of the proposed 
Transport Rule, which closed on October 1, 2010. EPA also is not 
extending the comment period of the NODA published September 1, 2010, 
which closed on October 15, 2010, or the comment period of the NODA 
published on October 27, 2010, which closed on November 26, 2010.

IV. What are the sources of data in this NODA?

A. List of Potential Existing Transport Rule Units

    Under the proposed Transport Rule, a covered Transport Rule unit is 
generally any stationary, fossil-fuel-fired boiler or stationary, 
fossil-fuel-fired combustion turbine located in a proposed Transport 
Rule state and serving at any time, since the later of November 15, 
1990 or the start-up of the unit's combustion device, a generator with 
a nameplate capacity greater than 25 MWe producing electricity for 
sale. The proposed Transport Rule would exclude certain cogeneration 
units and solid waste incineration units from being covered Transport 
Rule units.
    This NODA provides for comment on unit-level allocations (based on 
the budgets in the proposed Transport Rule) to potential existing 
covered units. For purposes of this NODA, a potential existing unit is 
assumed to be a unit that would potentially meet the proposed 
applicability criteria (i.e., the criteria in proposed Sec. Sec.  
97.404, 97.504, 97.604, and 97.704 in the proposed Transport Rule) for 
covered units and that commenced commercial operation prior to January 
1, 2009. This cutoff date was chosen for existing units because it 
assured that at least 1 full year of historic data would be available 
to determine each existing unit's allocation. This NODA contains a list 
of, and sets forth allocations under the two alternative methodologies 
to, units that potentially meet the covered and existing unit criteria 
discussed above based on EPA's best available data.
    To identify the potential existing Transport Rule units, EPA relied 
largely on data reported to EPA. To develop the list of potential 
existing Transport Rule units, EPA first included any fossil-fuel-fired 
unit serving a generator greater than 25 MWe producing electricity for 
sale that is in a proposed Transport Rule state and on line prior to 
January 1, 2009 and that reported emissions data in 2010 under at least 
one of the following ongoing EPA trading programs: Clean Air Interstate 
Rule (CAIR) NOX or CAIR SO2 annual trading 
program, Acid Rain Program (ARP), and CAIR NOX ozone Season 
in Massachusetts, Connecticut, or Arkansas. Data reported to EPA under 
the CAIR and ARP programs meets the requirements of part 75 and has 
been certified as to its accuracy and completeness by the source's 
designated representative.
    Next, EPA supplemented the list of units by using data from the 
Integrated Planning Model (IPM) v.4.10 to identify potential existing 
Transport Rule units that were not included in emissions data reported 
to EPA. Specifically, IPM's National Electric Energy Data System 
(NEEDS) was used to identify and obtain data for a subset of fossil-
fuel-fired units serving generators greater than 25 MWe producing 
electricity for sale that are in a proposed Transport Rule state and 
were not reporting under one of the aforementioned ongoing EPA trading 
programs. NEEDS is a representation of all units capable of supplying 
electricity to the U.S. electric grid. This subset of units identified 
through NEEDS was then screened to remove units that were not potential 
existing Transport Rule units and thus not eligible to obtain 
allocations under one of the two alterative allocation methodologies 
discussed in this NODA.
    In particular, if the unit was retired or in cold storage in 2010 
or is a steam turbine at a combined cycle (CC) plant, then it was not 
included as a unit in the list of potential existing Transport Rule 
units.\1\ The remaining units in this subset of units were added to the 
list. For instance, there were units in Nebraska, Kansas, and Oklahoma 
that were identified through NEEDS as being potential existing 
Transport Rule units that were not currently reporting under one or 
more of the aforementioned ongoing EPA trading programs because the 
units were not ARP units and were not in a CAIR state. Finally, a small 
number of units were added to or removed from the list based on comment 
and supporting data previously submitted to the EPA during the comment 
period on the proposed Transport Rule by the unit owner or operator.
---------------------------------------------------------------------------

    \1\ In NEEDS, the combustion turbine and steam turbine 
associated with a single CC plant are generally represented as two 
separate generating units. The steam turbine at a CC does not 
combust fuel, though, and should not be included in the list of 
potential existing Transport Rule units.
---------------------------------------------------------------------------

    As described above, the list of potential existing Transport Rule 
units is based on EPA and NEEDS data. Units identified using the EPA 
and NEEDS databases were included in the list of potential existing 
Transport Rule units if they were in one of the following states 
covered by the proposed Transport Rule: Arkansas, Alabama, Connecticut, 
Delaware, District of Columbia, Florida, Georgia, Illinois, Iowa, 
Indiana, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, 
Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Jersey, New 
York, North Carolina, Oklahoma, Ohio, Pennsylvania, South Carolina, 
Tennessee, Texas, Virginia, West Virginia, and Wisconsin.
    EPA notes that inclusion of a unit in, or exclusion of a unit from, 
the list of potential existing Transport Rule units presented in this 
NODA reflects only a preliminary assessment of the applicability of the 
proposed Transport Rule and in no way suggests that EPA has made a 
determination about the

[[Page 1113]]

applicability of the proposed Transport Rule to any unit. As discussed 
above, the list of units developed for this NODA enables EPA to 
calculate illustrative allowance allocations for potential existing 
units based on the alternative methodologies presented. Moreover, this 
list may be used by EPA to calculate unit-level allocations in the 
final Transport Rule. While allocations calculated for the final 
Transport Rule would be based on the best available data provided to 
EPA by the time of the calculation, the applicability of the final 
Transport Rule to an individual unit would be determined based on all 
relevant data, whether or not EPA would have such data at the time that 
allocations would be calculated. In fact, because any list of units 
developed for purposes of allowance allocation may not be entirely 
consistent with applicability determinations made in the future, the 
proposed Transport Rule (proposed Sec. Sec.  97.411(c), 97.511(c), 
97.611(c), and 97.711(c)) would establish procedures to be applied when 
the Administrator would determine that a unit allocated allowances 
would turn out not to actually be a proposed Transport Rule unit. For 
example, under these proposed procedures, if such a determination would 
be made after EPA's recordation of the allowance allocation but before 
EPA's deduction of allowances for compliance with the requirement to 
hold allowances covering emissions, the Administrator would deduct the 
recorded allowances and transfer them to a new unit set-aside for the 
appropriate state.
    If owners and operators believe that their units that are included 
in the list of potential existing units should not be included, these 
owners and operators should submit comments on this NODA informing EPA 
why the units should not be in the list. If owners and operators 
believe that their units should be, but are not, treated as potential 
existing Transport Rule units and included in the list of such units 
provided by this NODA, these owners and operators should submit 
comments on this NODA, informing EPA that the units should be added to 
the list and allocated allowances and providing support for this 
addition to the list. The data necessary for calculating allowance 
allocations under the two alternative allocation methodologies should 
also be provided. A unit that would not be allocated allowances as an 
existing unit because of the unit's exclusion from the list of 
potential existing Transport Rule units could ultimately be determined 
to be a Transport Rule unit. Under the proposed Transport rule, each 
Transport Rule unit would be subject to the allowance-holding 
requirements of the Transport Rule regardless of whether the unit would 
be allocated any allowances as an existing unit.

B. Historic Heat Input and Emissions Data Used in the Allowance 
Allocation

    The alternative allocation methodologies presented in this NODA 
draw on historic heat input and historic emissions for potential 
existing Transport Rule units. For units subject to one of the 
aforementioned ongoing EPA trading programs and included in the list of 
potential existing Transport Rule units, EPA used reported heat-input 
data from the EPA database for the years 2005 through 2009. For these 
same units, EPA used reported emissions from the EPA database for the 
years 2003 to 2009. These data are publicly available through EPA's 
data and maps at http://camddataandmaps.epa.gov/gdm/.
    For units included in the list of potential existing Transport Rule 
units that were not reporting under one of the aforementioned ongoing 
EPA trading programs, EPA used historic heat input and emissions data 
from Energy Information Administration (EIA) forms 767, 860, 906, 920, 
and 923. These data are publicly available at http://www.eia.doe.gov/cneaf/electricity/page/data.html.

V. What are the alternative allocation methodologies and on what is EPA 
requesting comment?

(a) Why is EPA considering heat input-based allocation methodologies?

    In the proposed Transport Rule, EPA proposed a methodology for 
allocating allowances to potential existing Transport Rule units. That 
methodology is based on a combination of adjusted historic and adjusted 
projected emissions data. EPA received a large number of public 
comments from a variety of commenters suggesting alternative allocation 
methodologies. One of the most frequently suggested metrics for 
allocation was historic heat input. Commenters stated that using 
historic heat input as the basis for allocations has the following 
advantages:
    (i) Historic heat input data are more likely to be accurate at a 
unit level than projected unit-level emissions and are generally based 
on quality-assured data reported by sources from continuous monitoring 
systems.
    (ii) Historic heat input data are fuel-neutral.
    (iii) Historic heat input data are emissions-control-neutral and 
thus do not yield reduced allocations for units that installed or are 
projected to install pollution control technology.

    EPA is considering the above-listed points made by commenters 
regarding heat-input based allocations.
    Numerous commenters also noted that EPA has broad authority to 
implement alternative allocation methodologies under sections 
110(a)(2)(D)(i)(I) and 302(y) of the Clean Air Act (CAA).\2\ EPA agrees 
with commenters that the Agency has significant discretion in this 
area. Neither the CAA nor the D.C. Circuit Court's opinion in North 
Carolina v. EPA (531 F.3d 896 (D.C. Cir. 2008), specifies a particular 
methodology that EPA must use to allocate allowances to individual 
units. The statute focuses on prohibiting emissions within the state 
that significantly contribute to or interfere with maintenance. Under 
CAA section 110(a)(2)(D)(i)(I), states have significant discretion to 
develop a control program in a SIP that achieves this objective and EPA 
has similarly wide latitude when issuing a FIP. Moreover, the 
definition of FIP in section 302(y) of the Act clarifies that a FIP may 
include ``enforceable emission limitations or other control measures, 
means or techniques (including economic incentives, such as marketable 
permits or auctions of emissions allowances)'' but does not require EPA 
to use any particular methodology to allocate allowances under a FIP 
trading program. In light of this lack of direction concerning 
allowance allocation, EPA has significant discretion to select an 
allocation methodology that is reasonable and consistent with the goals 
of CAA section 110(a)(2)(D)(i)(I) of the Act, including improving long-
term air quality and encouraging cost-effective emissions reductions.
---------------------------------------------------------------------------

    \2\ CAA section 302(y) defines the term ``Federal implementation 
plan'' as follows:
    Federal implementation plan.--The term ``Federal implementation 
plan'' means a plan (or portion thereof) promulgated by the 
Administrator to fill all or a portion of a gap or otherwise correct 
all or a portion of an inadequacy in a State implementation plan, 
and which includes enforceable emission limitations or other control 
measures, means or techniques (including economic incentives, such 
as marketable permits or auctions of emissions allowances), and 
provides for attainment of the relevant national ambient air quality 
standard.
---------------------------------------------------------------------------

    EPA believes the allocation methodologies presented in the proposed 
Transport Rule as well as those presented in this NODA all meet that 
test. Section 110(a)(2)(D)(i)(I) of the CAA requires that emissions 
``within a state'' that significantly contribute to nonattainment or 
interfere with maintenance in another state be

[[Page 1114]]

prohibited. In the proposed Transport Rule, EPA analyzed each 
individual state's significant contribution and interference with 
maintenance and calculated budgets that represent each state's 
emissions after the elimination of those prohibited emissions. The 
methodology used to allocate allowances to individual units in a 
particular state has no impact on that state's budget or on the 
requirement that the state's emissions not exceed that budget plus 
variability. Regardless of the allocation methodology used, all 
emissions in each covered state that significantly contribute to 
nonattainment or interfere with maintenance in another state will be 
prohibited. In sum, the allocation methodology has no impact on the 
rule's ability to satisfy the statutory mandate of CAA section 
110(a)(2)(D)(i)(I) to eliminate significant contribution and 
interference with maintenance in downwind states.
    EPA believes that a historic-heat-input-based allocation 
methodology is consistent with the goals of CAA section 
110(a)(2)(D)(i)(I). The proposed Transport Rule would set state budgets 
reflecting the overall emission reductions necessary for each 
respective state to eliminate significant contribution and interference 
with maintenance in downwind states. The initial allocation of 
allowances under each state budget to existing units on the basis of 
the units' historic heat input would yield a distribution of allowances 
putting relatively greater burden on the higher-emission-rate units to 
reduce emissions or purchase additional allowances in order for the 
units to be in compliance with the proposed Transport Rule trading 
programs. This pattern would result because heat-input-based 
allocations would provide the same share of allowances to units with 
the same heat input even though the higher-emission-rate units would 
require more allowances in order to cover their emissions than would 
lower-emission-rate units. EPA believes that, because higher-emission-
rate units generally are responsible for a greater share of a state's 
total emissions and thus bear greater responsibility for a states' 
significant contribution and interference with maintenance, this 
distribution of burden is consistent with the goals of CAA section 
110(a)(2)(D)(i)(I).
    The proposed Transport Rule includes four trading programs 
(SO2 Group 1, SO2 Group 2, NOX annual, 
and NOX ozone season). EPA requests comment on whether the 
allocation methodology chosen for each of the four trading programs 
must be the same or whether it would be reasonable to allocate using 
different methodologies for the different programs. EPA also requests 
comment on rationales for using different methodologies for the 
different trading programs.

(b) What are the alternative heat input allocation methodologies and 
how would they be applied?

    This NODA provides an opportunity for public comment on the two 
alternative allocation methodologies described below. To make it easier 
for commenters to compare the methodologies presented in this NODA with 
the methodology proposed in the proposed Transport Rule, EPA is 
providing in the rulemaking docket for the Transport Rule (and on the 
EPA Web site) data showing the unit-level allocations that would result 
if the methodologies were applied to allocate allowances from the state 
budgets in the proposed Transport Rule. As noted above, these budgets 
may be revised in the final Transport Rule and thus the unit-level 
allocations (based on 97% of the respective state budgets) in this NODA 
would not necessarily be the unit-level allocations in the final rule.
    The alternative allocation methodologies described in this NODA 
represent two variations of historic-heat-input-based allocations. For 
each alternative allocation methodology, the underlying data and 
resulting allocations are set forth in allocation tables located at 
http://www.epa.gov/airquality/transport/actions.html and in the public 
docket for the Transport Rule. The calculations used to derive the 
unit-by-unit allocations for each alternative option are described 
below.
    Option 1 described below would allocate a state's existing unit 
budget (i.e., 97% of its budget) based on each unit's proportionate 
share of the state's total historic heat input.
    Option 2 would yield the same initial allocation pattern as Option 
1 (based on historic heat input) but would then add a constraint (i.e., 
a limit on allocations) premised on a unit's reasonably foreseeable 
maximum emissions under the proposed Transport Rule trading programs.
Option 1--Historic Heat Input Approach
    This option would establish a baseline historic heat input value 
for each potential existing Transport Rule unit and allocate to that 
unit a share of available allowances under each proposed Transport Rule 
program equal to the unit's percentage share of the total baseline 
historic heat input for all potential existing Transport Rule units in 
the state. As with all allocation approaches under consideration by 
EPA, this option would be applied to each state separately using the 
portion of that state's budget available for potential existing 
Transport Rule units in that state. Allocations under this approach for 
each existing unit would be determined by applying the following steps.
    1. For each unit in the list of potential existing Transport Rule 
units, annual heat input values for the baseline period of 2005 through 
2009 would be identified using data reported to EPA or, where EPA data 
is unavailable, EIA. As discussed above, for purposes of this NODA, 
potential existing Transport Rule units are units that potentially meet 
the applicability criteria in the proposed Transport Rule and began 
commercial operation prior to January 1, 2009. A number of units would 
not have non-zero data for one or more of the baseline years (e.g., a 
unit that came on line after 2005 but before 2009) and would be 
assigned a zero value for each of those years in the baseline. (Step 2 
explains how such zero values would be treated in the calculations.) 
This option would use a five-year baseline in order to improve 
representation of a unit's normal operating conditions over time. EPA 
requests comment on the existing-unit cut-off date of January 1, 2009 
for purposes of this NODA.
    2. For each unit, the three highest, non-zero annual heat input 
values within the 5 year baseline would be selected and averaged. 
Selecting the three highest, non-zero annual heat input values within 
the five-year baseline would reduce the likelihood that any particular 
single year's operations (which might be negatively affected by outages 
or other unusual events) would determine a unit's allocation. If a unit 
would not have three non-zero heat input values during the 5 year 
baseline period, EPA would average only those years for which a unit 
does have non-zero heat input values. For example, if a unit has only 
reported data for 2008 and 2009 among the baseline years and the 
reported heat input values are 2 and 4 mmbtus respectively, then the 
unit's average heat input used to determine its pro-rata share of the 
state budget would be (2+4)/2 = 3.
    3. Each unit would be assigned a baseline heat input value 
calculated as described in step 2 above. This baseline heat input value 
is referred to in the data tables in the rulemaking docket and on the 
Web site referenced previously, and in the remainder of this NODA, as 
the ``three-year average heat input''.

[[Page 1115]]

    4. The three-year average heat inputs of all potential existing 
Transport Rule units in a state would be summed to obtain that state's 
total ``three-year average heat input''.
    5. Each unit's three-year average heat input would be divided by 
the state's total three-year average heat input to determine that 
unit's share of the state's total three-year average heat input.
    6. Each unit's share of the state's total three-year average heat 
input would be multiplied by the state's existing-unit portion of the 
state budget (i.e., 97% of the state budget) to determine that unit's 
allocation.
Option 2--Emissions-Rate-Informed Historic Heat Input Approach
    This option retains the historic-heat-input-based approach but adds 
a constraint premised on a unit's reasonably foreseeable maximum 
emissions under the proposed Transport Rule trading programs. For the 
majority of units, the historic heat input-based allocation will not be 
sufficient to cover historic emission levels; this reflects the shared 
burden on units to reduce emissions in order to eliminate the state's 
significant contribution and interference with maintenance. Heat input-
based allocations only exceed historic emissions for units at the lower 
end of the range of historic emission rates for the pollutant involved. 
For these lower-emission rate units, this option would establish, based 
on historic data, a reasonably foreseeable maximum emissions level 
reflecting a reasonable upper-bound capacity utilization factor and a 
well-controlled emission rate that all units (regardless of the type of 
fuel they combust) can meet for the pollutant. For those units whose 
heat-input-based allocations would exceed historic emissions, this 
option would limit the historic-heat-input-based allocations to this 
maximum emissions level so that the units would not be allocated 
allowances in excess of their reasonably foreseeable maximum emissions. 
EPA believes that this approach would result in a reasonable initial 
distribution of allowances that is consistent with the goals of CAA 
section 110(a)(2)(D)(i)(I).
    1. The same 6 steps outlined above in Option 1 would be applied to 
each unit.
    2. A seven-year (2003 through 2009) historic emissions baseline 
would be established for SO2, NOX, and ozone 
season NOX based on data reported to EPA or, where EPA data 
is unavailable, EIA data. This approach would use this seven-year 
historic emissions baseline in order to reflect unit-level emissions 
before and after the promulgation of the CAIR.
    3. For each unit, the maximum annual historic SO2 and 
NOX emissions would be identified within the seven-year 
baseline. Similarly, the maximum ozone season NOX emissions 
from the seven-year baseline for each unit would be identified. These 
values are referred to as the ``maximum historic baseline emissions'' 
for each unit.
    4. For each unit whose historic-heat-input-based allocation exceeds 
its maximum historic baseline emissions, EPA would determine an 
emission level (referred to as the ``well-controlled-rate maximum'' for 
each unit) calculated as:
    a. For a unit reporting maximum hourly heat input to EPA, the 
reported figure multiplied by a well-controlled emission rate of 0.06 
lbs/mmBtu for SO2 and 0.06 lbs/mmBtu for NOX. For 
a unit that does not report maximum hourly heat input to EPA, EPA would 
estimate the unit's maximum hourly heat input by multiplying the unit's 
heat rate and capacity values (from NEEDS in IPM version 4.10). These 
well-controlled emission rates of 0.06 lbs/mmBtu for SO2 and 
NOX represent the lowest annual emission rates assumed 
achievable when state-of-the-art pollution control technologies are 
installed at coal units in the IPM modeling.\3\
---------------------------------------------------------------------------

    \3\ As identified in EPA's documentation of EPA Base Case v.4.10 
model available at http://www.epa.gov/airmarkets/progsregs/epa-ipm/docs/v410/Chapter5.pdf. These emission rates are based on the floor 
rates used in IPM modeling and are intended to reflect the lower 
bound of emission rates that suppliers are willing to guarantee when 
installing state-of-the-art pollution control equipment (selective 
catalytic reduction (SCR) and flue-gas desulfurization (FGD)).
---------------------------------------------------------------------------

    b. The unit's maximum hourly heat input determined in 
step 4.a above would be multiplied by 8,760 hours (annual) or 3,672 
hours (ozone season) to get an annual or ozone season emissions level 
at 100% utilization.
    c. The unit's emissions level at 100% utilization determined in 
step 4.b above would be multiplied by the reasonable upper-bound 
capacity factor for each technology type. These upper-bounds would be 
calculated as the utilization values at the 95th percentile in each 
technology class.\4\ These 95th percentile values are set forth in the 
table below.
---------------------------------------------------------------------------

    \4\ Capacity factors were determined as follows. (1) Using data 
reported to EPA by source owners and operators under the 
aforementioned ongoing EPA trading programs, EPA determined, for 
units reporting electrical output, the capacity factor for each unit 
for each year of operation during 2000-2009 by dividing gross 
electrical output by maximum hourly load times 8,760 hours/year and, 
for units reporting steam output (KLBsteam), dividing total mass of 
steam produced by the maximum rate times 8,760 hours; (2) EPA then 
identified each unit's plant type based on how the unit was listed 
in NEEDS in IPM version 4.10 (e.g., coal steam, combined cycle, 
combustion turbine, oil/gas steam, and ``other''). ``Other'' 
comprised fossil waste, biomass, tires, and landfill gas. (3) Using 
the units' calculated annual capacity factors, EPA identified the 
95th percentile value of capacity factor for each plant type. 
Resulting values are in Table 1 above. This analysis is based 
largely on the same data and methodology used in the Capacity Factor 
Analysis Technical Support Document located at http://www.epa.gov/airquality/transport/pdfs/TSD_capacity_factors_analysis_for_new_units_7-6-10.pdf. However, in this analysis EPA expanded the 
data set to include all units, whereas the previous analysis had 
examined solely CAIR units online after 1999 because its focus had 
been on new units.

         Table I--Summary of Capacity Factors at 95th Percentile
              [``Reasonable Upper-Bound Capacity Factor'']
------------------------------------------------------------------------
                                                                  Ozone
                   Technology class                      Annual   season
------------------------------------------------------------------------
Coal-fired boiler.....................................     0.87     0.89
Combined cycle........................................     0.70     0.73
Combustion turbine....................................     0.14     0.22
Oil or gas fired boiler...............................     0.46     0.55
Other.................................................     0.71     0.75
------------------------------------------------------------------------

    5. If a unit identified in step 4 has an historic-heat-input-based 
allocation greater than both its maximum historic baseline emissions 
(as determined in step 3) and its well-controlled-rate maximum (as 
determined in step 4), then its allocation (referred to as the unit's 
``reasonable foreseeable maximum emissions level'') would equal the 
higher of these two values.
    6. The difference (if positive) under step 5 between a unit's 
historic-heat-input-based allocation and its ``reasonable foreseeable 
maximum emissions level'' would be reapportioned on the same basis as 
described in step 1 to units whose historic-heat-input-based 
allocations are not revised under step 5. Steps 4, 5, and 6 would be 
repeated with each revised allocation distribution until the entire 
existing-unit portion of the state budget (i.e., 97% of the state 
budget) would be allocated.
    The table below provides an example of application of the steps in 
Option 2.

[[Page 1116]]

      Table II--Demonstration of Allocations Using Option 2 in a Two-Unit State With a 30-Ton State Budget
----------------------------------------------------------------------------------------------------------------
                                    Step 1        Step 2 & 3        Step 4      Step 5  (greater      Step 6
                               ------------------------------------------------    of step  3    ---------------
                                                                                result or step 4
                                                                                     result)
                                  Heat-input-      Historic          Well-     ------------------
                                     based          maximum       controlled-      Reasonable          Final
                                  allocation       baseline      rate  maximum     foreseeable      allocation
                                                   emissions                         maximum
                                                                                emissions  level
----------------------------------------------------------------------------------------------------------------
Unit A........................              10               4               6                 6               6
Unit B........................              20              40             N/A               N/A              24
----------------------------------------------------------------------------------------------------------------

(c) What allocations-related data and information are the EPA making 
available for review and comment?

    EPA has used the best available data to develop a list of potential 
existing Transport Rule units and to calculate illustrative allowance 
allocations for each such unit under the two alternative allocation 
methodologies discussed in this NODA. However, through the NODA, EPA is 
giving unit owners and operators and the public in general the 
opportunity to offer comments on individual units' inclusion in or 
exclusion from such list and--for units that EPA included on the list 
or that commenters believe should be included on the list--on the data 
needed for allocation calculations (including any necessary data that 
EPA has not provided in this NODA) under the two alternative allocation 
methodologies and the allocations that result or should result from 
such calculations.
    For units on the list of potential existing Transport Rule units, 
EPA is providing for the years 2003 through 2009 the relevant EPA-
reported heat input and emissions data under the aforementioned ongoing 
EPA trading programs and, for those units not reporting under these 
programs, heat input and fuel data in EIA databases. EPA is also 
providing the Agency's calculations using these data in the two 
alternative allocation methodologies described in this NODA.
    In addition to comments on the list of potential existing Transport 
Rule units, allocation-related data, and calculations of allocations, 
EPA requests comments on the appropriateness of the alternative 
allocation methodologies and their implications for rule 
implementation. In particular, EPA encourages commenters to address the 
following:
     Are the alternative allocation methodologies clear and 
easy to understand?
     Do these alternative methodologies raise any 
implementation concerns, such as concerns about feasibility of 
implementing the methodology?
     How are these methodologies consistent with the goals of 
CAA section 110(a)(2)(D)(i)(I)?
     Do these alternative methodologies yield a reasonable 
distribution of allowances?
     Should the same methodology be used for each of the 
proposed Transport Rule trading programs, or should a different 
methodology be used for one or more such trading programs?

(d) Why is the EPA providing opportunity to comment on these 
allocation-related data and information?

    Through this NODA, EPA is providing owners and operators, states 
and the public in general the opportunity to comment on the 
allocations-related data and information described above in order to 
ensure that we use the best available data in the Transport Rule FIP 
allocation process. For example, the heat input and emissions data used 
to calculate allocations came from data reported to EPA and EIA, and a 
unit owner or operator (or other member of the public) should comment 
if he or she sees any discrepancy between the data reported for the 
unit and the heat input and emissions data used in calculating the 
allocations in this NODA. Such comment should include the data that the 
commenter believes EPA should use and the source of that data and where 
else the data may be reported to the Federal government. EPA is also 
providing an opportunity to comment on the calculations using the 
alternative allocation methodologies and the data in order to ensure 
the accuracy of the calculations.
    The allocations presented in this NODA are also based on the list 
of potential existing Transport Rule units developed using data 
currently available to EPA. As discussed above, a unit's inclusion on 
or exclusion from this list does not constitute a determination of the 
applicability of the proposed Transport Rule to the unit, but rather 
reflects EPA's preliminary application of the applicability provisions 
in the proposed Transport Rule. In order to ensure the accuracy of the 
allocation calculations, the EPA is providing this opportunity for 
source owners and operators, and the public in general, to (1) comment 
on units' inclusion in, or exclusion from, the allocation tables in the 
NODA and the data on which the inclusion or exclusion is or should be 
based, (2) comment on the heat input and other data used or that should 
be used to calculate the allocations and the resulting allocations, and 
(3) submit corrections of the data or supplementary data. While EPA 
requests that owners and operators, states, and other members of the 
public who believe that a unit has been incorrectly included in or 
excluded from the allocation tables submit a comment (including any 
supporting data). EPA is not requesting, and will not consider, any 
comments on the proposed applicability provisions themselves (proposed 
Sec. Sec.  97.404, 97.504, 97.604, and 97.704).
    The addition or removal of existing units to or from a state's list 
of potential existing Transport Rule units will not impact the size of 
the state budget. EPA's responses to comments on this NODA concerning 
the list of potential existing Transport Rule units and the data to be 
used to allocate to specific units and EPA's updated modeling and 
responses to comments on the proposed Transport Rule concerning the 
proposed state budgets may result in the individual units receiving 
different shares of the applicable state budget than reflected in the 
allocation tables.

(e) What supporting documentation do I need to provide with my 
comments?

    While we will consider all comments on issues that are within the 
scope of this NODA, these comments should be supported with appropriate 
documentation. Supporting documentation can include, but is not limited 
to, spreadsheets, explanations of why you believe the data on such 
spreadsheets are accurate (e.g., the

[[Page 1117]]

quality assurance of the data), and information on the data source.
    In general, we do not anticipate revisions to unit heat input and 
emissions data reported to EPA under the ARP and CAIR programs since, 
in submitting the data under these programs, a source's DR has already 
certified the accuracy and completeness of the data. However, we will 
consider any comments. For example, a source's DR may provide evidence 
that we improperly calculated heat input at the unit-level if the heat 
input was actually measured at another location (such as a common 
stack). As a further example, a source's DR may demonstrate that the 
data provided in this NODA are not consistent with the data reported to 
EPA for compliance with the ARP or CAIR programs. In that case, the 
commenter should explain why the data values in EPA's data files are 
incorrect and should document and explain the new data values.
    Similarly, in general, we do not anticipate revisions to data 
reported to EIA since such data were submitted to meet regulatory 
reporting requirements. However, we will consider any comments on the 
data as reported, as well as on any calculation in which we used the 
data for purposes of this NODA.

VI. On what aspects of the proposed assurance provisions is EPA 
requesting comment?

(a) Whether the Assurance Provision Allowance Surrender Requirement 
Should be Calculated on a Designated Representative Basis

    Under the proposed Transport Rule, the assurance provisions would 
be triggered for a state for a given year if total emissions for 
covered units in the state for the year exceed the state assurance 
level (i.e., the state budget plus the state's variability limit). As 
proposed, if this level were exceeded, the assurance provision 
allowance surrender requirement would be imposed on certain owners of 
covered units in the state and calculated on an owner-by-owner basis. 
Specifically, each owner whose share of the state's total covered-unit 
emissions exceeded the owner's share of the state assurance level would 
have to surrender a proportionate share of the state's exceedance. In 
this NODA, EPA is requesting comment on whether the surrender 
requirement should be imposed on certain owners and operators of 
covered units in the state but calculated on a DR-by-DR basis, rather 
than on an owner-by-owner basis.
    Under this alternative approach, the calculation of shares of 
covered-unit emissions and of the state budget plus variability would 
be performed for each group of covered units having a common DR. EPA 
would use the DR as of the allowance transfer deadline for a given 
control period (generally March 1 following the control period for the 
proposed Transport Rule NOX and SO2 annual 
trading programs and December 1 following the control period for the 
proposed Transport Rule NOX ozone season trading program) 
for determining assurance provision surrender requirements. In order to 
be treated as a group of covered units for this purpose, the units 
would have to be located at sources in the state with the same 
individual as their DR (not alternate designated representative).\5\
---------------------------------------------------------------------------

    \5\ Under proposed Sec. Sec.  97.413, 97.513, 97.613, and 
97.713, the owners and operators of a source could designate one 
individual as the DR, who would represent and legally bind them in 
all matters concerning the proposed Transport Rule trading programs. 
Under these provisions, these owners and operators also could 
designate another individual as the alternate designated 
representative, who could act on behalf of the DR and would legally 
bind the DR and thus the owners and operators. EPA notes that the 
concept of requiring representation of source owners and operators 
by a DR has been used in prior EPA trading programs, including the 
ARP and CAIR trading programs.
---------------------------------------------------------------------------

    For each such group of covered units in the state, the DR's share 
of the state's covered-unit emissions (i.e., the total emissions of the 
covered units at the group of covered sources having that DR) for the 
year and the DR's share of the state assurance level (i.e., the total 
allocations for the covered units at such sources plus the units' 
proportionate share of the state variability limit) would be 
calculated. The owners and operators represented by a common DR whose 
share of state covered-unit emissions exceeded his or her share of the 
state assurance level would all be subject to the DR's proportionate 
share of the proposed assurance provision allowance surrender 
requirement (i.e., the requirement that one allowance be surrendered 
for each ton by which the state's total covered-unit emissions would 
exceed the state assurance level). The DR's share of the surrender 
requirement would equal the amount by which the DR's share of the 
state's total covered-unit emissions exceeded the DR's share of the 
state assurance level, divided by the sum of all such exceedances for 
all DRs for covered units in the state. The owners and operators would 
be collectively and individually liable for making this allowance 
surrender and would determine themselves how to divide up the actual 
surrender. This would be similar to the way that all owners and 
operators of a covered source that fails to hold allowances covering 
the source's emissions are collectively and individually liable for an 
excess emissions penalty. The owners and operators subject to the 
allowance surrender requirement would be required to transfer the 
necessary amount of allowances by the specified deadline to an 
assurance account created by EPA for these owners and operators.
    EPA believes that imposing the proposed assurance provision 
allowance surrender requirement at the DR level, rather than owner 
level, is more straightforward and consistent with information already 
provided to EPA and potentially provides owners and operators with more 
flexibility than under the approach in the proposed Transport Rule. 
Other requirements under the proposed Transport Rule trading programs 
(e.g., the requirement to monitor and report emissions and to hold 
allowances covering emissions) would be imposed on a unit-by-unit or 
source-by-source basis. Consequently, EPA would not generally obtain 
detailed ownership information (such as percentage ownership in 
individual units) and would have to collect such information only in 
order to implement the owner-by-owner approach in the assurance 
provisions in the proposed Transport Rule. The DR approach for 
calculating the assurance provision surrender requirements would 
eliminate the need to collect detailed ownership information and would 
also avoid the complications arising from having to divide up units' 
emissions and allocations among partial owners of the units. In 
addition, the DR approach would apply to units with a common DR even in 
the case where the units involved did not have a common owner or 
operator. This would allow owners and operators to designate a common 
DR for all of the sources at which their units are located and thereby 
obtain the increased flexibility of having the assurance provisions 
apply to the entire group. Like the proposed approach of calculating 
the assurance provision surrender requirements on an owner-by-owner 
basis, the alternative approach of calculating such requirements on a 
DR-by-DR basis could be applied under any of the allocation methods 
under consideration. In developing the final Transport Rule, EPA will 
consider both approaches.

[[Page 1118]]

(b) Whether the Overall Assurance Provision Approach Should Be 
Maintained if One of the Alternative Allocation Methodologies Is Used 
in the Final Transport Rule

    EPA received several comments on the proposed Transport Rule 
concerning whether the proposed assurance provisions should be changed 
if the proposed allocation methodology were changed. For the reason 
discussed below, EPA does not believe that a change in allocation 
methodology would necessitate any changes in the assurance provisions 
set forth in the proposed Transport Rule. In the unlikely event that a 
state exceeds its state assurance level, only the owners and operators 
whose shares (or the owners and operators whose common DR's share) of 
the state's emissions exceed the owners' and operators' (or the common 
DR's) share of the state assurance level would be subject to the 
allowance surrender requirement.
    While EPA believes the likelihood of triggering assurance 
provisions would be low for the reasons provided in the proposed 
Transport Rule (75 FR 45314), the assurance provisions must have an 
enforcement mechanism to be effective. The assurance provision 
allowance surrender requirements exist to ensure that the state budgets 
plus variability limits (the state assurance levels) would not be 
exceeded in any state. These surrender requirements identify what 
penalties would apply if the assurance level were to be exceeded.
    EPA believes that a change to the allocation methodology would not 
necessitate any changes to the assurance provisions in the proposed 
Transport Rule for the following reason. The proposed Transport Rule 
explained that, in the event that a state's total emissions would 
exceed the state budget plus variability, those groups of units 
(whether grouped by owner as in the proposal or by common DR as 
discussed in this NODA) with an analogous exceedance (i.e., those 
groups of units with total emissions exceeding their total allowance 
allocations plus their shares of state variability) would reasonably be 
viewed as accounting for the state's exceedance and thus should be 
subject to proportionate shares of the allowance surrender penalty 
calculated as one allowance to be surrendered for each ton of the 
state's exceedance. Even under a different allowance allocation 
methodology than the allocation methodology proposed in the Transport 
Rule, it would continue to be the case that groups of units with 
greater emissions than their allocations plus share of state 
variability would reasonably be held responsible for the state's excess 
of emissions over the state assurance level. EPA believes that any 
state that would exceed its state assurance level would likely do so 
because not all units would have made the reductions necessary to 
eliminate the state's contribution to nonattainment or interference 
with maintenance. Moreover, the groups of units with emissions 
exceeding their allocations plus share of variability would be the 
units that were most likely to have contributed to the state's 
exceedance of its state assurance level and thus to the state's 
triggering of the assurance provisions. Consequently, it would be 
reasonable to penalize those groups of units (whether grouped by owner 
or by common DR)--through application of the assurance provision 
allowance surrender requirement--for the state's exceedance.
    EPA received comments that proposed assurance provision penalties 
should be delinked from allocations and that a different method of 
imposing such penalties should be applied. However, as discussed above, 
the Agency still believes that the proposed assurance provisions 
provide a reasonable way of identifying those sources within a state 
that most likely contributed to, and share responsibility for, any 
triggering of the assurance provisions. EPA also believes that the 
proposed assurance provisions, with calculation of the allowance 
surrender requirements made on an owner-by-owner basis (as proposed) or 
on a DR-by-DR basis (under the alternative discussed in this NODA) 
provide a reasonable way of distributing proportionate shares of the 
responsibility for eliminating a state's significant contribution and 
interference with maintenance. However, EPA is requesting comment in 
this NODA on the implications of retaining the proposed assurance 
provisions (with the surrender requirements calculated on an owner-by-
owner or DR-by-DR basis) in conjunction with the alternative allocation 
methodologies presented. While EPA believes that the overall approach 
for the assurance provisions would still be appropriate with an 
alternative allocation methodology, the Agency may reevaluate some of 
the details of those provisions, for example, the proposed variability 
limits for each state, the treatment of new units that have not yet 
been allocated allowances, and the allowance surrender levels when it 
promulgates the final Transport Rule.

VII. Allocations to New Covered Units in Indian Country in the Future

    EPA received comments that it did not adequately consider 
opportunities for Indian tribes to enter into any of the trading 
programs in the Transport Rule proposal. This section explains and 
provides an opportunity to comment on some options for allocating 
allowances to covered units that might in the future be constructed in 
Indian country. In addition, EPA has initiated a process to consult 
with any interested tribes on issues related to the proposed Transport 
Rule and will conclude this consultation before making any final 
decisions on this issue. EPA will take into consideration additional 
input it receives as part of the tribal consultation process.
    In the Tribal Authority Rule, EPA determined that it was 
appropriate to treat eligible Indian tribes in the same manner as 
states for purposes of the prohibitions and authority contained in CAA 
section 110(a)(2)(D). See 63 FR 7254, 7260; February 12, 1998. Tribes 
are not, however, required to submit implementation plans. As explained 
in EPA's regulations outlining Tribal Clean Air Act authority, EPA is 
authorized to promulgate FIPs for Indian country as necessary or 
appropriate to protect air quality if a tribe does not submit and get 
EPA approval of an implementation plan. See 40 CFR 49.11(a). Presently, 
there are no covered sources located in Indian country in the region 
covered by the proposed Transport Rule. In the event of the planned 
construction of such a source in Indian country in the proposed 
Transport Rule region, EPA intends to work with the relevant Tribal 
government to ensure that Tribal concerns regarding allocations are 
addressed and, at the same time, that emissions from the source do not 
violate CAA section 110(a)(2)(D)(i)(I). In the case of a covered source 
locating in the future in Indian country in the proposed Transport Rule 
region, the EPA anticipates that the Transport Rule FIPs would require 
the covered source to meet the requirements of the proposed EPA 
administered Transport Rule trading programs if those programs are 
finalized.
    EPA also anticipates that any covered units at a covered source 
locating in Indian country in the proposed Transport Rule region would 
be eligible to receive allowances from the EPA-administered new unit 
set-aside under the FIPs for the proposed Transport Rule state in which 
the area of Indian country is located. Identical to the approach 
proposed in the Transport Rule for other new covered units, the

[[Page 1119]]

owner or operator of units in Indian country in the proposed Transport 
Rule region could request allocations from the EPA-administered new 
unit set-aside by a specified deadline each year. The allocations 
distributed by EPA under the FIPs would equal that unit's emissions for 
the control period in the preceding year (75 FR 45322). EPA has not 
currently identified a basis for treating new units locating in Indian 
country without initial SO2 or NOX allowance 
allocations differently from new units locating elsewhere in the 
Transport Rule region without initial allowance allocations.
    As part of this NODA, EPA is requesting comment on all aspects of 
how allowances for covered units locating on tribal lands should be 
allocated. Specifically, EPA requests comment on how, in the final 
Transport Rule FIPs, EPA should allocate allowances to any covered 
units that are constructed in Indian country in the proposed Transport 
Rule region in the future. EPA is also requesting comment on how any 
such allowance allocation methodology should, if at all, affect state 
budgets or allowance allocations to existing units and what further 
action, if any, EPA should take to work with Tribes and affected states 
to resolve this issue in the event any covered units are constructed in 
Indian Country in the proposed Transport Rule region. Finally, EPA 
requests comment on how such allocations should be addressed in a state 
that has submitted a SIP providing for state allocation of allowances 
in the proposed Transport Rule trading programs.

VIII. Provisions for States To Submit Transport Rule SIPs or 
Abbreviated SIPs Providing for State Allocation of Allowances in 
Proposed Transport Rule Trading Programs

    The proposed Transport Rule explains that ``by promulgating these 
Transport Rule FIPs, EPA would in no way affect the right of states to 
submit, for review and approval, a SIP that replaces the Federal 
requirements of the FIP with state requirements. In order to replace 
the FIP in a state, the state's SIP must provide adequate provisions to 
prohibit NOX and SO2 emissions that contribute 
significantly to nonattainment or interfere with maintenance [of the 
1997 ozone and 1997 and 2006 PM2.5 NAAQS] in another state 
or states * * * EPA is taking comment on all aspects of how a state 
could replace the Transport Rule FIP with a SIP and on what the SIP 
approval criteria should be.'' 75 FR 45342.
    EPA received comments suggesting that EPA allow states to replace 
EPA's allowance allocation provisions in the proposed Transport Rule 
trading programs by state-developed allocation provisions. Commenters 
referenced the two alternatives provided to states by EPA in the CAIR 
trading programs where: (1) EPA adopted a rule and model trading 
regulations under which states that adopted, as state SIP trading 
programs, the model regulations (with only certain limited changes 
allowed, e.g., in the allocation provisions) could participate in the 
EPA-administered CAIR trading programs; and (2) EPA adopted a rule 
allowing states to adopt in SIPs provisions replacing only certain 
provisions in the CAIR FIPs (e.g., the allocation provisions) and to 
remain in the CAIR trading programs under the CAIR FIPs. Under both 
approaches, the covered units in the state participated in the CAIR 
trading programs, albeit with state-, rather than EPA-, determined 
allocations.
    In the comment period on the proposed Transport Rule FIP, EPA 
received comments supporting these two types of approaches for allowing 
states to replace EPA allocations under the proposed Transport Rule 
trading programs by state allocations. EPA is therefore requesting 
comment--in conjunction with comment on the alternative allocation 
methodologies--on both of the following two approaches, which are 
analogous to the approaches adopted under the CAIR trading programs. 
These approaches would allow states to--and would provide the only ways 
that states could--allocate allowances and participate in the proposed 
Transport Rule trading programs.
    Under the first approach, EPA would adopt new provisions, as part 
of the proposed Transport Rule FIP that would allow a state to submit a 
SIP (referred as an abbreviated SIP) that would modify specified 
provisions of the proposed Transport Rule FIP trading programs. 
Specifically, the abbreviated SIP would substitute state allocation 
provisions (for entities other than opt-in units)-- for control periods 
in years after 2012 and applicable to a proposed Transport Rule FIP 
trading program--in lieu of the current allocation provisions (except 
those for opt-in units) under those proposed Transport Rule FIP 
program. The Transport Rule FIP provisions that could be replaced would 
be proposed Sec. Sec.  97.411(a) and (b) and 97.412 (in the proposed TR 
NOX Annual Trading Program), proposed Sec. Sec.  97.511(a) 
and (b) and 97.512 (in the TR NOX Ozone Season Trading 
Program), proposed Sec. Sec.  97.611(a) and (b) and 97.612 (in the TR 
SO2 Group 1 Trading Program), and proposed Sec. Sec.  
97.711(a) and (b) and 97.712 (in the TR SO2 Group 2 Trading 
Program). The abbreviated SIP could provide for this substitution of 
state allocations in one or more of the proposed Transport Rule FIP 
trading programs applicable to the state.
    If the state allocation provisions met certain requirements and the 
abbreviated SIP did not change any other provisions in the respective 
proposed Transport Rule FIP trading program, then EPA would approve the 
abbreviated SIP. In the substitute state allocation provisions, the 
state could allocate allowances to Transport Rule units (whether 
existing or new units) or other entities (such as renewable energy 
facilities) or could auction some or all of the allowances. For EPA 
approval, the state allocation provisions would have to meet the 
following requirements. First, the provisions would have to provide 
that, for each year for which the state allocation provisions would 
apply, the total amount of control period (annual or ozone season) 
allowances allocated and, where applicable, auctioned could not exceed 
the applicable state budget for that year under the relevant proposed 
Transport Rule FIP trading program.
    Second, to the extent the state provisions would provide for 
allocations for, or auctions open to, existing units (i.e., units 
covered by proposed Sec.  97.411(a), Sec.  97.511(a), 97.611(a), or 
97.711(a), as applicable), the provisions would have to provide that 
the permitting authority under title V of the CAA for the state would 
issue final allocations and, if applicable, auction results by May 1 
(or January 1 with regard to the NOX ozone season program) 
of the year two years before the year of the control period for which 
the allowances would be distributed. To the extent the provisions would 
provide for allocations for or auctions open to new units (i.e., units 
covered by proposed Sec.  97.411(b) and 97.412, Sec.  97.511(b) and 
97.512, 97.611(b) and 97.612, or 97.711(b) and 97.712, as applicable) 
or any other entities, the provisions would also have to provide that 
the permitting authority would issue final allocations and, if 
applicable, auction results by August 1 (or May 1 with regard to the 
NOX ozone season program) of the year of the control period 
for which the allowances would be distributed. The allocation (or 
auction) of allowances would be final and could not be subject to 
modification

[[Page 1120]]

(e.g., through an allowance surrender adjusting the allocation).\6\
---------------------------------------------------------------------------

    \6\ If any auctions were to be conducted, the provisions would 
have to specify the auction procedures that the permitting authority 
would use.
---------------------------------------------------------------------------

    Third, the state provisions could not change any other provisions 
of the proposed Transport Rule FIP trading programs with regard to the 
allowances (e.g., the deadlines for allocation recordation, 
requirements for transfer or use of allowances, and allocation and 
recordation of allowances for opt-in units) or any other aspect of such 
trading programs.\7\
---------------------------------------------------------------------------

    \7\ However, if auctions were to be conducted, the abbreviated 
SIP would have to provide that any allowance auctioned to a covered 
unit or source would be treated as an allocated allowance, solely 
for purposes of applying the assurance provisions in the proposed 
Transport Rule FIP.
---------------------------------------------------------------------------

    Under the second approach, EPA would adopt a new rule that would 
provide that, if a state submitted a SIP (referred to as a full SIP) 
that adopted trading program regulations meeting certain requirements 
for control period in years after 2012, then EPA would approve the full 
SIP as correcting the deficiency under CAA section 110(a)(2)(D)(i)(I) 
in the state's SIP that was the basis for issuance of the comparable 
proposed Transport Rule FIP. In the state allocation provisions, the 
state could allocate allowances to Transport Rule units (whether 
existing or new units, except for opt-in units) or other entities (such 
as renewable energy facilities) or could auction allowances.
    As a result of EPA approval of the state's full SIP under this 
second approach, the state's trading program set forth in the SIP would 
be integrated with the comparable proposed Transport Rule FIP trading 
program (whether or not modified by an abbreviated SIP) covering other 
states. Moreover, covered sources in the state could participate in the 
integrated trading program, and the allowances issued under the state 
trading program would be interchangeable with the allowances issued in 
the comparable proposed Transport Rule trading program.
    Like the abbreviated SIP discussed above, a full SIP providing for 
state participation in the integrated trading program could include 
only limited differences from the provisions of the proposed Transport 
Rule FIP trading program. First, the only differences that the full SIP 
could adopt would be in the allocation provisions (other than those for 
opt-in units). Second, the revised state allocation provisions in the 
full SIP would have to meet the same requirements as state allocation 
provisions in an abbreviated SIP. For example, the full SIP would have 
to provide that, for each year, the total amount of control period 
(annual or ozone season) allocations would not exceed the applicable 
state budget for that year. Further, to the extent the full SIP would 
provide for allocations for existing units, the SIP would have to 
provide that the permitting authority would issue final allocations by 
May 1 (or January 1 with regard to the NOX ozone season 
program) of the year two years before the year of the control period 
for which the allowances would be distributed. To the extent the full 
SIP would provide for allocations for new units or any other entities, 
the SIP would also have to provide that the permitting authority would 
issue final allocations by August 1 (or May 1 with regard to the 
NOX ozone season program) of the year of the control period 
for which the allowances would be distributed. The allocation of 
allowances would be final and could not be subject to modification.\8\
---------------------------------------------------------------------------

    \8\ In addition, the requirements for state allocation 
provisions in full SIPs would apply to any auctioned allowances in 
the same way that is described above with regard to any allowances 
to be auctioned under abbreviated SIPs.
---------------------------------------------------------------------------

    It is important to note that, of course, each state would still 
have the ability to submit other types of SIPs using emissions 
reduction approaches other than the proposed Transport Rule trading 
programs to correct the deficiency under CAA section 110(a)(2)(D)(i)(I) 
in the state's SIP that was the basis for the proposed Transport Rule 
FIPs. The EPA would review such SIP submissions on a case-by-case basis 
and intends to provide guidance to states that want to develop and 
submit such SIPs. However, in order for the state to use the proposed 
Transport Rule trading programs to correct that deficiency in the SIP, 
the state would have to submit a full SIP in accordance with this 
second approach.
    In order for a state's allocation provisions in an abbreviated SIP 
or a full SIP to replace EPA's allocation provisions for a control 
period in a given year under these two approaches, a state would have 
to submit the abbreviated SIP or full SIP meeting the requirements of 
these approaches by a deadline that would provide EPA sufficient time 
to review and approve the SIP provisions and to record the unit-by-unit 
allocations or auction results. EPA would need about 6 months--starting 
from the date of receipt of an abbreviated or full SIP--to complete its 
review and approval process, which would have to provide an opportunity 
for public comment on the approval (or disapproval) action. The 
following tables show, for the allocations or auction results for the 
control periods in 2012 through 2018, the deadlines that would apply 
for submission of an abbreviated or full SIP, for submission of the 
unit-by-unit allocations or auction results for recordation by EPA, and 
for recordation. These tables assume: Allocation (or auction) and 
recordation of allowances for existing units under the Transport Rule 
trading programs one year at a time and about one and one-half years 
ahead of the year for which the allocations (or auctions) apply; and 
allocation (or auction) and recordation of allowances for new units and 
other entities one year at a time and six months after the commencement 
of the control period for which the allocations (or auction) apply. 
Because EPA anticipates issuing the final Transport Rule around mid-
2011, there would not be sufficient time for states to develop and 
submit abbreviated or full SIPs with allowance allocation provisions, 
and for EPA to review and approve such SIP submissions, before 
September 2011 when EPA would record allocations to existing units for 
2012 and 2013. Consequently, the tables assume that the first year for 
which state allocations might be used, in lieu of EPA allocation, would 
be 2014.

   Table III--Deadlines for Submission of Abbreviated or Full SIPs and Unit-by-Unit Allocations or Auction Results and for Recordation; Annual Trading
                                                                        Programs
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                       Deadline for State                             Deadline for EPA
 First TR control period for which     Deadline for State      Deadline for State          submitting          Deadline for EPA    recording allocations
  allowances would be allocated or   submitting abbreviated  submitting allocations      allocations or     recording allocations    or auction results
             auctioned                     or full SIP       or auction results for   auction results for     or auction results     for new units and
                                                                 existing units       new units and others    for existing units           others
--------------------------------------------------------------------------------------------------------------------------------------------------------
2012...............................  NA....................  NA....................  NA...................  September 1, 2011....  September 1, 2012.
2013...............................  NA....................  NA....................  NA...................  September 1, 2011....  September 1, 2013.

[[Page 1121]]

 
2014...............................  November 1, 2011......  May 1, 2012...........  August 1, 2014.......  June 1, 2012.........  September 1, 2014.
2015...............................  November 1, 2012......  May 1, 2013...........  August 1, 2015.......  June 1, 2013.........  September 1, 2015.
2016...............................  November 1, 2012......  May 1, 2014...........  August 1, 2016.......  June 1, 2014.........  September 1, 2016.
2017...............................  November 1, 2014......  May 1, 2015...........  August 1, 2017.......  June 1, 2015.........  September 1, 2017.
2018...............................  November 1, 2015......  May 1, 2016...........  August 1, 2018.......  June 1, 2016.........  September 1, 2018.
--------------------------------------------------------------------------------------------------------------------------------------------------------

Table IV--Deadlines for Submission of Abbreviated or Full SIPs and Unit-by-Unit Allocations or Auction Results and for Recordation; Ozone Season Trading
                                                                        Programs
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                       Deadline for State                             Deadline for EPA
 First TR control period for which     Deadline for State      Deadline for State          submitting          Deadline for EPA    recording allocations
  allowances would be allocated or   submitting abbreviated  submitting allocations      allocations or     recording allocations    or auction results
             auctioned                     or full SIP       or auction results for   auction results for     or auction results     for new units and
                                                                 existing units       new units and others    for existing units           others
--------------------------------------------------------------------------------------------------------------------------------------------------------
2012...............................  NA....................  NA....................  NA...................  September 1, 2011....  June 1, 2012.
2013...............................  NA....................  NA....................  NA...................  September 1, 2011....  June 1, 2013.
2014...............................  November 1, 2011......  May 1, 2012...........  May 1, 2014..........  June 1, 2012.........  June 1, 2014.
2015...............................  November 1, 2012......  May 1, 2013...........  May 1, 2015..........  June 1, 2013.........  June 1, 2015.
2016...............................  November 1, 2013......  May 1, 2014...........  May 1, 2016..........  June 1, 2014.........  June 1, 2016.
2017...............................  November 1, 2014......  May 1, 2015...........  May 1, 2017..........  June 1, 2015.........  June 1, 2017.
2018...............................  November 1, 2015......  May 1, 2016...........  May 1, 2018..........  June 1, 2016.........  June 1, 2018.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    As discussed above, a trading program adopted by a state in a full 
SIP and approved by EPA under the second approach would be fully 
integrated with any comparable proposed Transport Rule FIP trading 
program (i.e., the proposed TR NOX Annual, TR NOX 
Ozone Season, TR SO2 Group 1, or TR SO2 Group 2 
Trading Program respectively) for other states. This would apply 
whether the comparable proposed Transport Rule FIP program for other 
states was modified by an abbreviated SIP approved by EPA under the 
first approach or was not modified by an abbreviated SIP. The 
integration of these three types of trading programs would be 
accomplished primarily through the definitions of the terms, ``TR 
NOX Annual allowance'', ``TR NOX Ozone Season 
allowancerdquo;, ``TR SO2 Group 1 allowance'', and ``TR 
SO2 Group 2 allowance'' in the full SIPs approved by EPA and 
the proposed TR FIP trading programs (whether or not the programs were 
modified by abbreviated SIPs). ``TR NOX Annual allowance'' 
would be defined in the state and proposed Transport Rule FIP trading 
programs as including allowances issued under any of the following 
trading programs: The comparable EPA-approved state trading programs; 
the comparable proposed Transport Rule FIP trading program with EPA-
approved state allocation provisions; and the proposed Transport Rule 
FIP trading program with EPA allocation provisions. Similarly, the 
definitions in the state and Transport Rule FIP trading programs of 
``TR NOX Ozone Season allowance'', ``TR SO2 Group 
1 allowance'', and ``TR SO2 Group 2 allowance'' respectively 
would include allowances issued under all three types of trading 
programs. As a result, allowances issued in one approved state trading 
program would be interchangeable with allowances issued in the 
comparable Transport Rule FIP trading program (whether or not modified 
by an abbreviated SIP), and all these allowances could be used for 
compliance with the allowance-holding requirements (to cover emissions 
and to meet assurance provision requirements) in all three types of 
trading programs.
    The integration of state and the proposed Transport Rule FIP 
trading programs would also be reflected in the definitions of ``TR 
NOX Annual Trading Program,'' ``TR NOX Ozone 
Season Trading Program'', ``TR SO2 Group 1 Trading 
Program'', and ``TR SO2 Group 2 Trading Program''. Each of 
these definitions in the state and Transport Rule FIP trading programs 
would expressly encompass the comparable proposed Transport Rule FIP 
trading programs (whether or not modified by an abbreviated SIP) and 
the comparable EPA-approved state full SIP trading program.

    Dated: December 30, 2010.
Brian McLean,
Director, Office of Atmospheric Programs.
[FR Doc. 2011-109 Filed 1-6-11; 8:45 am]
BILLING CODE 6560-50-P