Document ID: EPA-HQ-OAR-2003-0053-2217
Agency: epa
Document Type: Supporting & Related Material
Title: 
Posted Date: 2005-12-02T05:00Z

11­
10­
05
DRAFT
DO
NOT
QUOTE
OR
CITE
1
ENVIRONMENTAL
PROTECTION
AGENCY
40
CFR
Part
51
and
96
[
OAR
2003­
0053;
FRL
B
]

RIN
2060
­

Rule
to
Reduce
Interstate
Transport
of
Fine
Particulate
Matter
and
Ozone
(
Clean
Air
Interstate
Rule):
Reconsideration
AGENCY:
Environmental
Protection
Agency
(
EPA).

ACTION:
Notice
of
reconsideration;
request
for
comment;

notice
of
public
hearing.

SUMMARY:
On
May
12,
2005,
EPA
published
in
the
Federal
Register
the
final
"
Rule
to
Reduce
Interstate
Transport
of
Fine
Particulate
Matter
and
Ozone"
(
Clean
Air
Interstate
Rule
or
CAIR).
The
CAIR
requires
certain
upwind
States
to
reduce
emissions
of
nitrogen
oxides
(
NOx)
and/
or
sulfur
dioxide
(
SO2)
that
significantly
contribute
to
nonattainment
of,
or
interfere
with
maintenance
by,
downwind
States
with
respect
to
the
fine
particle
and/
or
8­
hour
ozone
national
ambient
air
quality
standards.
Subsequently,
EPA
received
11
petitions
for
reconsideration
of
the
final
rule.
In
this
notice,
EPA
is
announcing
its
decision
to
reconsider
4
specific
issues
in
the
CAIR
and
is
requesting
comment
on
those
issues.

The
EPA
is
seeking
comment
only
on
the
aspects
of
the
11­
10­
05
DRAFT
DO
NOT
QUOTE
OR
CITE
2
CAIR
specifically
identified
in
this
notice.
We
will
not
respond
to
comments
addressing
other
provisions
of
the
CAIR
or
any
related
rulemakings.

DATES:
Comments
must
be
received
on
or
before
January
13,

2006.
Because
of
the
need
to
resolve
the
issues
in
this
document
in
a
timely
manner,
EPA
will
not
grant
requests
for
extensions
of
the
public
comment
period.
A
public
hearing
will
be
held
on
December
14,
2005
in
Washington,
D.
C.
For
additional
information
on
the
public
hearing,
see
the
SUPPLEMENTARY
INFORMATION
section
of
this
preamble.

ADDRESSES:

Submit
your
comments,
identified
by
Docket
ID
No.
OAR­
2003­

0053,
by
one
of
the
following
methods:

Federal
Rulemaking
Portal:
http://
www.
regulations.
gov.

Follow
the
on­
line
instructions
for
submitting
comments.
Attention
E­
Docket
No.
OAR­
2003­
0053.

Agency
Website:
http://
www.
epa.
gov/
edocket.
EDOCKET,

EPA=
s
electronic
public
docket
and
comment
system,
is
EPA=
s
preferred
method
for
receiving
comments.
Follow
the
on­
line
instructions
for
submitting
comments.

Attention
E­
Docket
No.
OAR­
2003­
0053.

E­
mail:
A­
and­
R­
Docket@
epa.
gov.
Attention
E­
Docket
No.

OAR­
2003­
0053.
11­
10­
05
DRAFT
DO
NOT
QUOTE
OR
CITE
3

Fax:
The
fax
number
of
the
Air
Docket
is
(
202)
566­

1741.
Attention
E­
Docket
No.
OAR­
2003­
0053.

Mail:
EPA
Docket
Center,
EPA
West
(
Air
Docket),

Attention
E­
Docket
No.
OAR­
2003­
0053,
Environmental
Protection
Agency,
Mail
Code:
6102T,
1200
Pennsylvania
Ave.,
NW.,
Washington,
D.
C.
20460.

Hand
Delivery:
EPA
Docket
Center
(
Air
Docket),

Attention
E­
Docket
No.
OAR­
2003­
0053,
Environmental
Protection
Agency,
1301
Constitution
Avenue,
N.
W.,
Room
B108;
Mail
Code
6102T,
Washington,
D.
C.
20460.
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.
OAR­

2003­
0053.
The
EPA's
policy
is
that
all
comments
received
will
be
included
in
the
public
docket
without
change
and
may
be
made
available
on­
line
at
http://
www.
epa.
gov/
edocket,

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
EDOCKET,
regulations.
gov,
or
e­
mail.
(
For
11­
10­
05
DRAFT
DO
NOT
QUOTE
OR
CITE
4
instructions
on
submitting
CBI,
see
below
under
SUPPLEMENTARY
INFORMATION.)

The
EPA
EDOCKET
and
the
federal
regulations.
gov
websites
are
A
anonymous
access@
systems,
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
EDOCKET
or
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,
any
form
of
encryption,
and
be
free
of
any
defects
or
viruses.
For
additional
information
about
EPA=
s
public
docket
visit
EDOCKET
on­
line
or
see
the
Federal
Register
of
May
31,
2002
(
67
FR
38102).
For
additional
information
on
submitting
comments,
go
to
the
SUPPLEMENTARY
INFORMATION
section
of
this
document.

Docket:
All
documents
in
the
docket
are
listed
in
the
11­
10­
05
DRAFT
DO
NOT
QUOTE
OR
CITE
5
EDOCKET
index
at
http://
www.
epa.
gov/
edocket.
Although
listed
in
the
index,
some
information
is
not
publicly
available,
i.
e.,
CBI
or
other
information
whose
disclosure
is
restricted
by
statute.
Certain
other
material,
such
as
copyrighted
material,
is
not
placed
on
the
Internet
and
will
be
publicly
available
only
in
hard
copy
form.
Publicly
available
docket
materials
are
available
either
electronically
in
EDOCKET
or
in
hard
copy
at
the
EPA
Docket
Center
(
Air
Docket),
EPA/
DC,
EPA
West,
Room
B102,
1301
Constitution
Ave.,
N.
W.,
Washington,
D.
C.
20460.
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

1742
and
the
fax
number
is
(
202)
566­
1741.

FOR
FURTHER
INFORMATION
CONTACT:
For
general
questions
concerning
today's
action,
please
contact
Carla
Oldham,
U.
S.

EPA,
Office
of
Air
Quality
Planning
and
Standards,
Air
Quality
Strategies
and
Standards
Division,
Mail
Code
C539­

02,
Research
Triangle
Park,
NC
27711,
phone
number
(
919)

54l­
3347,
e­
mail
address
oldham.
carla@
epa.
gov.
For
questions
concerning
the
analyses
described
in
section
III
of
this
notice,
please
contact
Chitra
Kumar,
U.
S.
EPA,

Office
of
Atmospheric
Programs,
Clean
Air
Markets
Division,

Mail
Code
6204J,
1200
Pennsylvania
Avenue,
NW.,
Washington,
11­
10­
05
DRAFT
DO
NOT
QUOTE
OR
CITE
6
DC,
20460,
telephone
(
202)
343­
9128,
e­
mail
address
kumar.
chitra@
epa.
gov.
For
legal
questions,
please
contact
Sonja
Rodman,
U.
S.
EPA,
Office
of
General
Counsel,
Mail
Code
2344A,
1200
Pennsylvania
Avenue,
NW.,
Washington,
DC,
20460,

telephone
202­
564­
4079,
e­
mail
address
rodman.
sonja@
epa.
gov.

For
information
concerning
the
public
hearing,
please
contact
Jo
Ann
Allman,
U.
S.
EPA,
Office
of
Air
Quality
Planning
and
Standards,
Air
Quality
Strategies
and
Standards
Division,
Mail
Code
C539­
02,
Research
Triangle
Park,
NC
27711,
phone
number
(
919)
54l­
1815,
e­
mail
address
allman.
joann@
epa.
gov.

SUPPLEMENTARY
INFORMATION:

Does
this
Action
Apply
to
Me?
The
CAIR
does
not
directly
regulate
emissions
sources.
Instead,
it
requires
States
to
develop,
adopt,
and
submit
SIP
revisions
that
would
achieve
the
necessary
SO2
and
NOx
emissions
reductions,
and
leaves
to
the
States
the
task
of
determining
how
to
obtain
those
reductions,
including
which
entities
to
regulate.

Public
Hearing.
On
December
14,
2005,
EPA
will
hold
a
public
hearing
on
today's
notice
at
EPA
Headquarters,
1310
L
Street
(
closest
cross
street
is
13th
Street),
1st
floor
conference
rooms
152
and
154,
Washington,
D.
C.
The
closest
Metro
stop
is
McPherson
Square
(
Orange
and
Blue
lines)
­­

take
14th
Street/
Franklin
Square
Exit.
Because
the
hearing
11­
10­
05
DRAFT
DO
NOT
QUOTE
OR
CITE
7
will
be
held
at
a
U.
S.
government
facility,
everyone
planning
to
attend
should
be
prepared
to
show
valid
picture
identification
to
the
security
staff
in
order
to
gain
access
to
the
meeting
room.

The
hearing
will
begin
at
9:
00
a.
m.
and
end
at
12:
00
noon.
Persons
wishing
to
speak
at
the
public
hearing
should
contact:
Jo
Ann
Allman
at
telephone
number
(
919)
541­
1815
or
by
e­
mail
at
allman.
joann@
epa.
gov.
The
hearing
will
be
limited
to
the
subject
matter
of
this
document.
Oral
testimony
will
limited
to
5
minutes.
The
EPA
encourages
commenters
to
provide
written
versions
of
their
oral
testimonies
either
electronically
(
on
computer
disk
or
CDROM
or
in
paper
copy.
The
public
hearing
schedule,

including
the
list
of
speakers,
will
be
posted
on
EPA's
website
at:
www.
epa.
gov/
cair.
Verbatim
transcripts
and
written
statements
will
be
included
in
the
rulemaking
docket.

The
public
hearings
will
provide
interested
parties
the
opportunity
to
present
data,
views,
or
arguments
concerning
the
proposed
rules.
The
EPA
may
ask
clarifying
questions
during
the
oral
presentations,
but
will
not
respond
to
the
presentations
or
comments
at
that
time.
Written
statements
and
supporting
information
submitted
during
the
comment
period
will
be
considered
with
the
same
weight
as
any
oral
11­
10­
05
DRAFT
DO
NOT
QUOTE
OR
CITE
8
comments
and
supporting
information
presented
at
a
public
hearing.

What
Should
I
Consider
as
I
Prepare
My
Comments
for
EPA?

Note
that
general
instructions
for
submitting
comments
are
provided
above
under
the
ADDRESSES
section.

Submitting
CBI.
Do
not
submit
comments
that
include
CBI
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:
Roberto
Morales,
U.
S.
EPA,
Office
of
Air
Quality
Planning
and
Standards,
Mail
Code
C404­
02,
Research
Triangle
Park,
NC
27711,
telephone
(
919)
541­
0880,
e­
mail
at
morales.
roberto@
epa.
gov,
Attention
Docket
ID
No.
OAR­
2003­

0053.
11­
10­
05
DRAFT
DO
NOT
QUOTE
OR
CITE
9
Tips
for
Preparing
Your
Comments.
When
submitting
comments,

remember
to:

i.
Identify
the
rulemaking
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
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.

Availability
of
Related
Information
Documents
related
to
the
CAIR
are
available
for
11­
10­
05
DRAFT
DO
NOT
QUOTE
OR
CITE
10
inspection
in
docket
OAR­
2003­
0053
at
the
address
and
times
given
above.
The
EPA
has
established
a
website
for
the
CAIR
at
http://
www.
epa.
gov/
cleanairinterstaterule
or
more
simply
http://
www.
epa.
gov/
cair/.

Outline
I.
Background
II.
Today's
Action
A.
Grant
of
Reconsideration
B.
Schedule
of
Reconsideration
III.
Discussion
of
Issues
A.
SO2
Allocation
Methodology
in
the
CAIR
Model
Trading
Rules
B.
Fuel
Adjustment
Factors
Used
to
set
State
NOx
Budgets
C.
PM2.5
Modeling
for
Minnesota
D.
Inclusion
of
Florida
in
CAIR
Region
for
Ozone
IV.
Statutory
and
Executive
Order
Reviews
A.
Executive
Order
12866:
Regulatory
Planning
and
Review
B.
Paperwork
Reduction
Act
C.
Regulatory
Flexibility
Act
D.
Unfunded
Mandates
Reform
Act
E.
Executive
Order
13132:
Federalism
F.
Executive
Order
13175:
Consultation
and
Coordination
with
Indian
Tribal
Governments
G.
Executive
Order
13045:
Protection
of
Children
from
Environmental
Health
and
Safety
Risks
H.
Executive
Order
13211:
Actions
That
Significantly
Affect
Energy
Supply,
Distribution
or
Use
I.
National
Technology
Transfer
Advancement
Act
J.
Executive
Order
12898:
Federal
Actions
to
Address
Environmental
Justice
in
Minority
Populations
and
Low
Income
Populations
I.
Background
On
May
12,
2005,
the
EPA
(
Agency
or
we)
promulgated
the
final
"
Rule
to
Reduce
Interstate
Transport
of
Fine
11­
10­
05
DRAFT
DO
NOT
QUOTE
OR
CITE
11
Particulate
Matter
and
Ozone"
(
Clean
Air
Interstate
Rule
or
CAIR)(
70
FR
25162).
In
this
action,
EPA
found
that
28
States
and
the
District
of
Columbia
contribute
significantly
to
nonattainment
of,
or
interfere
with
maintenance
by,

downwind
States
with
respect
to
the
national
ambient
air
quality
standards
(
NAAQS)
for
fine
particles
(
PM2.5)
and/
or
8­
hour
ozone.
The
CAIR
requires
these
upwind
States
to
revise
their
State
implementation
plans
(
SIPs)
to
include
control
measures
to
reduce
emissions
of
sulfur
dioxide
(
SO2)

and/
or
nitrogen
oxides
(
NOx).
Sulfur
dioxide
is
a
precursor
to
PM2.5
formation
and
NOx
is
a
precursor
to
PM2.5
and
ozone
formation.
By
reducing
upwind
emissions
of
SO2
and
NOx,

CAIR
will
assist
downwind
PM2.5
and
8­
hour
ozone
nonattainment
areas
in
achieving
the
NAAQS.

The
EPA
promulgated
the
CAIR
based
on
the
"
good
neighbor"
provision
of
the
Clean
Air
Act
(
CAA),
section
110(
a)(
2)(
D),
which
establishes
State
obligations
to
address
interstate
transport
of
pollution.
The
EPA
conducted
extensive
air
modeling
to
determine
the
extent
to
which
emissions
from
certain
upwind
States
were
impacting
downwind
nonattainment
areas.
All
States
found
to
contribute
significantly
to
downwind
PM2.5
nonattainment
or
maintenance
problems
are
included
in
the
CAIR
region
for
PM2.5
and
are
required
to
reduce
annual
emissions
of
SO2
and
NOx.
All
11­
10­
05
DRAFT
DO
NOT
QUOTE
OR
CITE
12
States
found
to
contribute
significantly
to
downwind
8­
hour
ozone
nonattainment
are
included
in
the
CAIR
region
for
ozone
and
required
to
reduce
NOx
emissions
during
the
5­

month
ozone
season
(
May­
September).
The
CAIR
establishes
regional
emission
reduction
requirements
for
annual
SO2
and
NOx
emissions
and
seasonal
NOx
emissions.
The
reduction
requirements
are
based
on
control
technologies
known
to
be
highly
cost
effective
for
electric
generating
units
(
EGUs).

The
first
phase
of
NOx
reductions
starts
in
2009
(
covering
2009­
2014)
and
the
first
phase
of
SO2
reductions
starts
in
2010
(
covering
2010­
2014).
The
second
phase
of
both
SO2
and
NOx
reductions
starts
in
2015
(
covering
2015
and
thereafter).

Each
State
covered
by
CAIR
may
independently
determine
which
emission
sources
to
control,
and
which
control
measures
to
adopt.
States
that
choose
to
base
their
programs
on
emissions
reductions
from
EGUs
may
allow
their
EGUs
to
participate
in
an
EPA­
administered
cap
and
trade
program.
The
CAIR
includes
model
rules
for
multi­
State
cap
and
trade
programs
for
annual
SO2
and
NOx
emissions,
and
seasonal
NOx
emissions.
States
may
choose
to
adopt
these
rules
to
meet
the
required
emissions
reductions
in
a
flexible
and
highly
cost­
effective
manner.
To
learn
more
about
the
CAIR
and
its
impacts,
the
reader
is
encouraged
to
11­
10­
05
DRAFT
DO
NOT
QUOTE
OR
CITE
13
read
the
preamble
to
the
CAIR
(
70
FR
25162;
May
10,
2005).

The
CAIR
was
promulgated
through
a
process
that
involved
significant
public
participation.
The
EPA
published
a
notice
of
proposed
rulemaking
on
January
30,

2004
(
69
FR
4566)
and
a
notice
of
supplemental
rulemaking
on
June
10,
2004
(
69
FR
32684).
The
EPA
also
published
a
notice
of
data
availability
on
August
6,
2004
(
69
FR
47828).

The
Agency
held
public
hearings
on
the
January
2004
proposed
rule
on
February
25
and
26,
2004,
and
an
additional
hearing
on
the
supplemental
proposal
on
June
3,
2004.
In
addition,
the
EPA
received
thousands
of
comments
on
the
proposals.
We
responded
to
all
significant
public
comments
in
the
preamble
to
the
final
rule
and
the
final
response
to
comments
document
available
in
the
CAIR
docket
(
Docket
No.

OAR­
2003­
0053­
2172).

Following
publication
of
the
final
rule
on
May
12,

2005,
the
Administrator
received
eleven
petitions
requesting
reconsideration
of
certain
aspects
of
the
final
CAIR.
These
petitions
were
filed
pursuant
to
section
307(
d)(
7)(
B)
of
the
CAA.
Under
this
provision,
the
Administrator
is
to
initiate
reconsideration
proceedings
if
the
petitioner
can
show
that
an
objection
is
of
central
relevance
to
the
rule
and
that
it
was
impracticable
to
raise
the
objection
to
the
rule
within
the
public
comment
period
or
that
the
grounds
for
the
11­
10­
05
DRAFT
DO
NOT
QUOTE
OR
CITE
14
objection
arose
after
the
public
comment
period
but
before
the
time
for
judicial
review
had
run.
The
petitions
for
reconsideration
of
the
CAIR
ask
EPA
to
reconsider
several
specific
aspects
of
the
final
rule,
and
many
of
the
petitions
make
similar
requests.
This
notice
addresses
four
of
the
issues
raised
in
those
petitions.
The
EPA
expects
to
issue
decisions
on
all
remaining
issues
raised
in
the
petitions
for
reconsideration
by
March
15,
2006.
The
complete
petitions
are
available
in
the
docket
for
the
CAIR.
1
In
addition,
fourteen
petitions
for
judicial
review
of
the
final
rule
were
filed
with
the
U.
S.
Court
of
Appeals
for
the
District
of
Columbia.
2
The
fourteen
cases
have
been
1
Petitions
for
reconsideration
were
filed
by:
State
of
North
Carolina
(
OAR­
2003­
0053­
2192);
FPL
Group
(
OAR­
2003­
0053­
2201);
Florida
Association
of
Electric
Utilities
(
OAR­
2003­
0053­
2200);
Entergy
Corporation
(
OAR­
2003­
0053­
2195
and
2198
(
attachment
1));
Massachusetts
Department
of
Environmental
Protection
(
OAR­
2003­
0053­
2199);
Integrated
Waste
Services
Association
(
OAR­
2003­
0053­
2193);
Texas
Commission
on
Environmental
Quality
(
OAR­
2003­
0053­
2212);
Northern
Indiana
Public
Service
Corporation
(
OAR­
2003­
0053­
2194
and
2213
(
supplemental
petition));
City
of
Amarillo,
Texas,
El
Paso
Electric
Company,
Occidental
Permian
Ltd,
and
Southwestern
Public
Service
Company
d/
b/
a/
Xcel
Energy
(
OAR­
2003­
0053­
2196
and
2197
(
attachment
1)
and
2205­
2207
(
attachments
2­
4));
Connecticut
Business
and
Industry
Ass'n
(
OAR­
2003­
0053­
2203);
and
Minnesota
Power,
a
division
of
ALLETE.
Inc.
(
OAR­
2003­
0053­
2212).

2
State
of
North
Carolina
v.
EPA
(
No.
05­
1244);
Minnesota
Power
v.
EPA
(
No.
05­
1246);
ARIPPA
v.
EPA
(
No.
05­
1249);
South
Carolina
Public
Service
Authority
et
al.
v.
EPA
(
No.
11­
10­
05
DRAFT
DO
NOT
QUOTE
OR
CITE
15
consolidated
into
a
single
case,
State
of
North
Carolina
v.

EPA
(
No.
05­
1244)
(
D.
C.
Cir).
Many
of
the
parties
who
petitioned
EPA
for
reconsideration
of
the
CAIR
also
petitioned
for
judicial
review
of
the
rule.

By
letters
dated
August
1,
2005,
EPA
granted
reconsideration
of
the
definition
of
"
electric
generating
unit"
or
"
EGU"
as
it
relates
to
solid
waste
incinerators
(
and
particularly
municipal
waste
incinerators).
3
The
EPA
explained
that
the
issue
would
be
addressed
in
the
proposed
rule
signed
the
same
day.
That
proposed
rule,
entitled
"
Rulemaking
on
Section
126
Petition
from
North
Carolina
to
Reduce
Interstate
Transport
of
Fine
Particulate
Matter
and
Ozone;
Federal
Implementation
Plans
to
Reduce
Interstate
Transport
of
Fine
Particulate
Matter
and
Ozone;
Revisions
to
the
Clean
Air
Interstate
Rule;
Revisions
to
the
Acid
Rain
Program;
Proposed
Rule,"
was
published
on
August
24,
2005
(
70
FR
49708).
In
that
proposed
rule,
EPA
reconsidered
the
definition
of
"
EGU"
in
the
final
CAIR
is
it
relates
to
solid
05­
1250);
Entergy
Corp.
v.
EPA
(
No.
05­
1251);
Florida
Ass'n
of
Electric
Utilities
(
No.
05­
1252);
FPL
Group
v.
EPA
(
No.
05­
1253);
Northern
Indiana
Public
Service
Co.
v.
EPA
(
No.
05­
1254);
South
Carolina
Electric
&
Gas
Co.
v.
EPA
(
No.
05­
1256);
Integrated
Waste
Services
Ass'n
v.
EPA
(
No.
05­
1257);
AES
Corp
v.
EPA
(
No.
05­
1259);
City
of
Amarillo,
Texas
et
al.
v.
EPA
(
No.
05­
1260);
Appalachian
Mountain
Club
et
al.
v.
EPA
(
No.
05­
1246
);
Duke
Energy
v.
EPA
(
No.
05­
1246).
11­
10­
05
DRAFT
DO
NOT
QUOTE
OR
CITE
16
waste
incinerators
(
70
FR
at
49738).
We
proposed
revisions
to
the
definition
of
"
EGU"
and
requested
comment
on
this
issue.
In
that
action,
we
did
not
address
any
other
issues
raised
in
the
petitions
for
reconsideration
of
the
CAIR.

Today's
action
does
not
reopen
for
comment
any
aspect
of
the
August
24,
2005
proposed
rule.

The
EPA
also
received
two
requests
to
stay
the
implementation
of
the
CAIR
in
limited
geographic
areas
pending
resolution
of
this
reconsideration
process.
One
petitioner
requested
a
stay
of
implementation
of
the
CAIR
in
the
State
of
Florida,
and
one
petitioner
requested
a
stay
of
implementation
of
the
CAIR
in
the
State
of
Minnesota.
By
letter
dated
August
1,
2005,
EPA
declined
to
stay
implementation
of
the
CAIR
in
Florida.
4
EPA
has
not
yet
acted
on
the
request
to
stay
implementation
of
the
CAIR
in
Minnesota.

By
letters
dated
[
INSERT
SIGNATURE
DATE],
we
informed
several
petitioners
of
our
intent
to
grant
reconsideration
on
one
or
more
issues
addressed
in
their
petitions
for
reconsideration.
We
indicated
in
those
letters
that
we
would
initiate
the
reconsideration
process
by
publishing
3
These
letters
are
available
in
the
CAIR
Docket.
(
OAR­
2003­
0053­
2209
and
2210).
4
This
letter
is
also
available
in
the
CAIR
Docket
(
OAR­
2003­
0053­
2208).
11­
10­
05
DRAFT
DO
NOT
QUOTE
OR
CITE
17
this
notice.

II.
Today's
Action
A.
Grant
of
Reconsideration
In
this
notice,
EPA
is
announcing
its
decision
to
grant
reconsideration
on
four
issues
raised
in
the
petitions
for
reconsideration.
This
notice
initiates
that
reconsideration
process
and
requests
comment
on
the
issues
to
be
addressed.

Given
the
intense
public
interest
in
this
rule,
EPA
has
decided
to
provide
this
additional
opportunity
for
public
comment.
At
this
time,
however,
EPA
does
not
believe
that
any
of
the
information
submitted
to
date
demonstrates
that
EPA's
final
decisions
were
erroneous
or
inappropriate.

Therefore,
we
are
not
proposing
any
modifications
to
the
final
CAIR.

The
first
issue
on
which
EPA
is
requesting
comment
relates
to
an
element
of
the
model
rules
for
the
CAIR
SO2
trading
program,
specifically
the
SO2
allocation
methodology
that
States'
choosing
to
participate
in
the
trading
program
would
use
to
allocate
SO2
allowances
to
sources.
The
second
issue
relates
to
EPA's
use
of
specific
fuel
adjustment
factors
to
establish
NOx
budgets
for
each
State.
The
third
issue
relates
to
modeling
inputs
used
by
EPA
to
determine
whether
emissions
from
Minnesota
should
be
included
in
the
CAIR
region
for
PM2.5.
And
the
fourth
issue
relates
to
11­
10­
05
DRAFT
DO
NOT
QUOTE
OR
CITE
18
EPA's
determination
that
the
State
of
Florida
should
be
included
in
the
CAIR
region
for
ozone.
Each
issue
is
described
in
greater
detail
in
Section
III
of
this
notice.

The
EPA
is
requesting
comment
only
on
the
issues
specifically
described
in
Section
III.
We
are
not
taking
comment
on
any
other
provisions
in
the
CAIR
or
otherwise
reopening
any
other
issues
decided
in
the
CAIR
for
reconsideration
or
comment.

B.
Schedule
for
Reconsideration
For
the
four
issues
addressed
in
this
notice,
EPA
expects
to
take
final
action
on
reconsideration
by
March
15,

2006.
By
that
date,
EPA
will
finalize
the
process
of
reconsideration
by
issuing
a
final
rule
or
proposing
a
new
approach.
EPA
also
expects,
by
March
15,
2006,
to
issue
decisions
on
all
remaining
issues
raised
in
the
petitions
for
reconsideration.

III.
Discussion
of
Issues
A.
SO2
Allocation
Methodology
in
the
CAIR
Model
Trading
Rules
One
petitioner
argues
that
the
SO2
allowance
allocation
methodology
in
the
CAIR
model
trading
rules
is
unreasonable
and
inequitable,
and
asks
EPA
to
establish
a
different
approach.
According
to
the
Petitioner,
the
methodology
is
inequitable
because
it
results
in
owners
of
units
that
have
11­
10­
05
DRAFT
DO
NOT
QUOTE
OR
CITE
19
lower
emission
rates,
historically,
buying
allowances
from
historically
higher
emitting
units
that
install
new
emission
controls.
The
Petitioner
requests
that
EPA
reconsider
using
an
allocation
methodology
for
SO2
allowances
analogous
to
the
sample
allocation
methodologies
finalized
for
NOx
under
CAIR
and
for
mercury
under
CAMR.
EPA
does
not
accept
the
petitioner's
characterization
of
this
issue.
EPA
continues
to
believe
that
the
methodology
selected
is
reasonable
for
the
reasons
explained
below.
Furthermore,
numerous
opportunities
for
public
comment
on
this
issue
were
provided,
and
a
full
discussion
of
the
allowance
allocation
options
occurred
during
the
rule
development
process.

Nonetheless,
given
the
intense
public
interest
in
this
issue,
EPA
has
decided
to
reconsider
whether
changes
to
the
SO2
allowance
allocation
methodology
are
warranted.

As
explained
below,
EPA
has
conducted
additional
analyses
concerning
the
impact
of
the
SO2
allowance
allocation
approach
adopted
in
the
model
rules,
comparing
this
approach
to
various
other
alternatives
considered
during
the
rulemaking
process.
These
analyses
further
illustrate
that
the
approach
selected
produces
a
reasonable
result,
and
therefore
EPA
is
not
proposing
any
changes
to
the
CAIR
at
this
time.
We
are
taking
comment
on
the
analyses
conducted
and
our
discussion
of
the
petitioner's
11­
10­
05
DRAFT
DO
NOT
QUOTE
OR
CITE
20
concerns.

Title
IV
and
CAIR
The
CAIR
model
SO2
trading
program
relies
on
the
use
of
title
IV
SO2
allowances
for
compliance
with
the
allowanceholding
requirements
of
CAIR.
Title
IV
SO2
allowances
have
already
been
allocated
on
a
unit­
by­
unit
basis
in
perpetuity,
based
on
formulas
set
forth
in
section
405
and
406
of
title
IV,
which
where
implemented
through
final
regulations
issued
in
1998
(
Sec
42
U.
S.
C.
7651d
and
7651e;

and
18
CFR
73.10(
b)).
The
statutory
formula
for
SO2
allocations
was
generally
based
on
unit
data
for
1985­
1987
and,
for
some
units,
data
for
years
up
to
1995.
For
the
title
IV
SO2
trading
program,
each
allowance
authorizes
one
ton
of
SO2
emissions.

For
the
CAIR
SO2
trading
program,
SO2
reductions
would
be
achieved
by
generally
requiring
CAIR
sources
to
retire
more
than
one
title
IV
allowance
for
each
ton
of
their
SO2
emissions
for
2010
and
thereafter.
Specifically,
each
title
IV
SO2
allowance
issued
for
2009
or
earlier
would
be
used
for
compliance
by
CAIR
sources
at
a
ratio
of
one
allowance
per
ton
of
SO2
emissions
and
would
authorize
one
ton
of
SO2
emissions.
Each
title
IV
allowance
of
vintage
2010
through
2014
would
be
used
for
compliance
under
CAIR
at
a
two­
to­
one
ratio
and
authorize
0.5
tons
of
SO2
emissions.
Each
title
11­
10­
05
DRAFT
DO
NOT
QUOTE
OR
CITE
21
IV
allowance
of
vintage
2015
and
later
would
be
used
at
a
2.86­
to­
1
ratio
and
authorize
0.35
tons
of
SO2
emissions.

See
discussion
in
the
preamble
to
the
final
CAIR
in
section
VII
(
70
FR
25255­
25273)
and
section
IX
(
70
FR
25290­
25291).

SO2
Allocation
Options
in
CAIR
A
variety
of
SO2
allowance
allocation
methodologies
were
raised
and
analyzed
during
the
rulemaking
process,

including
the
one
EPA
selected.
Alternative
methodologies
analyzed
included
allocating
on
the
basis
of
historic
tonnage
emissions,
heat
input
(
with
alternatives
based
on
heat
input
from
all
fossil
generation,
and
heat
input
from
coal­
and
oil­
fired
generation
only)
and
output
(
with
alternatives
based
on
all
generation
and
all
fossil­
fired
generation).
While
every
allocation
methodology
suggested
by
commenters
during
the
rulemaking
process
has
its
advantages
and
disadvantages
for
different
companies
and
States,
EPA
explained
in
the
final
rule
that
its
chosen
methodology
is
reasonable
on
several
grounds.
First,
EPA
believes
that
"
achieving
SO2
reductions
for
EGUs
using
the
title
IV
allowances
is
necessary
in
order
to
ensure
the
preservation
of
a
viable
title
IV
program"
(
Response
to
Comments
(
RTC)
at
511,
section
X.
A.
26,
2005).
See
also
discussion
in
preamble
to
the
final
CAIR
in
section
IX
(
70
FR
25290­
25291).
Second,
in
using
the
title
IV
allowances,
11­
10­
05
DRAFT
DO
NOT
QUOTE
OR
CITE
22
EPA
relied
on
the
selection
by
Congress
of
the
permanent
allocation
methodology
established
in
title
IV
for
purposes
of
reducing
SO2
emissions.
As
stated
in
the
RTC
(
p.
512),

"
Congress
clearly
did
not
choose
a
policy
to
regularly
revisit
and
revise
these
allocations,
believing
that
its
allocations
methodology
for
title
IV
allowances
would
be
appropriate
for
future
time
periods."

Third,
title
IV
allowance
allocations
provide
a
logical
and
well
understood
starting
point
from
which
additional
EGU
SO2
emission
reductions
can
be
achieved
for
Acid
Rain
units,

which
are
the
vast
majority
of
affected
CAIR
EGUs.
Finally,

EPA's
State­
by­
State
analysis
of
several
methods
for
SO2
allocations
shows
that
the
use
of
title
IV
allowances
to
develop
state
budgets
creates
a
reasonable
result
(
See
RTC,

section
X.
A.
26).
The
policy
decision
to
base
the
CAIR
SO2
budgets
on
the
existing
title
IV
allowance
system,
and
EPA's
demonstration
that
the
result
of
using
the
system
is
reasonable
fully
support
the
use
of
an
allocation
system
based
on
title
IV
allowances.

Analysis
of
SO2
Allocation
Options
As
a
part
of
this
reconsideration,
EPA
performed
additional
analyses,
explained
below,
to
evaluate
the
SO2
allocation
methodology
in
the
final
CAIR
rule
in
light
of
the
petitioner's
concerns.
In
these
analyses,
EPA
compared
11­
10­
05
DRAFT
DO
NOT
QUOTE
OR
CITE
23
three
alternative
SO2
allowance
allocation
methodologies
to
the
methodology
in
the
final
CAIR
to
see
how
companies
fared
in
terms
of
the
amount
of
allowances
allocated
relative
to
their
projected
SO2
emissions.
EPA
believes
that,
for
purposes
of
evaluating
the
various
allocation
methodologies,

computing
allocations
on
a
company­
by­
company
basis
is
more
appropriate
than
comparing
allocations
on
a
unit­
by­
unit
basis.
This
is
because,
while
one
unit
could
be
allocated
fewer
allowances
under
one
methodology,
another
unit
owned
by
the
same
company
could
be
allocated
more
allowances,

which
may
offset
the
smaller
allocation
of
the
first
unit.

The
three
alternative
allowance
allocation
methodologies
EPA
analyzed
were
suggested
by
various
commenters
during
the
rulemaking
process.
Also
note
that
methodologies
2
and
3
were
suggested
by
the
petitioner.

These
methodologies
are:

1.
Allocating
allowances
based
on
more
recent
heat
input
data;

2.
Allocating
allowances
based
on
more
recent
heat
input
data
adjusted
for
fuel
type
(
e.
g.

coal,
oil
and
gas);

3.
Allocating
allowances
based
on
more
recent
heat
input
data
adjusted
both
for
fuel
type
11­
10­
05
DRAFT
DO
NOT
QUOTE
OR
CITE
24
(
e.
g.
coal,
oil
and
gas)
and
for
coal
type
(
e.
g.
bituminous,
sub­
bituminous
and
lignite).

In
comparing
the
CAIR
final
SO2
allocation
methodology
and
the
three
alternative
methodologies,
EPA
took
into
account
certain
factors
that
are
applicable
to
the
CAIR
final
allocation
methodology
but
not
to
the
three
alternative
methodologies.
For
all
four
methodologies,
EPA
analyzed
the
resulting
total
allowance
allocations,
and
the
total
projected
emissions,
for
companies'
sources
located
in
the
States
subject
to
CAIR.
In
addition,
for
all
the
methodologies,
EPA
analyzed
the
relationship
between
allowances
and
emissions
in
two
ways.
In
the
first,
EPA
calculated
the
ratio
of
allowances
to
total
projected
emissions
before
CAIR
controls
(
base
case).
This
measures
how
much
each
company
falls
short
of
allowance
needs.
Then,

in
the
second
approach,
EPA
calculated
the
ratio
of
allowances
to
total
projected
emissions
with
CAIR
controls
installed
(
control
case).
This
way
measures
how
many
allowances
a
company
would
need
to
purchase
after
controls
are
installed.

For
the
CAIR
final
methodology,
EPA
also
considered
both
the
allowance
allocations
and
emissions
for
companies'

sources
both
in
the
CAIR
region
and
outside
the
CAIR
region.

EPA
believes
that
this
is
appropriate
because,
under
the
11­
10­
05
DRAFT
DO
NOT
QUOTE
OR
CITE
25
CAIR
final
methodology,
if
a
company's
sources
outside
the
CAIR
region
have
more
title
IV
allowances
than
needed
to
cover
their
emissions
under
the
Acid
Rain
Program,
the
company
could
transfer,
at
little
or
no
net
cost,
excess
allowances
to
the
company's
sources
in
the
CAIR
region
for
use
to
cover
emissions
under
the
CAIR
trading
program.

Under
the
three
alternative
methodologies,
which
would
require
creating
new
CAIR
SO2
allowances
independent
of
the
existing
title
IV
allocations,
CAIR
sources
could
not
use
title
IV
for
compliance
with
the
CAIR
SO2
allowance
holding
requirements.

Further,
in
the
analysis
of
the
CAIR
final
methodology,

EPA
considered
the
allocation
of
title
IV
allowances
to
CAIR
region
units
that
are
not
currently
in
the
Acid
Rain
Program
but
that
could
opt
into
the
Acid
Rain
Program
and
receive
title
IV
allowances
(
see
42
U.
S.
C.
7651i
and
18
CFR
part
74).
This
analysis
assumed
that
companies
owning
non­
Acid
Rain
units
affected
by
CAIR
would
opt
into
the
Acid
Rain
Program
because
they
would
receive
title
IV
allowances
to
cover
a
portion
of
the
units'
emissions
under
CAIR.
EPA
believes
this
assumption
is
reasonable
because
there
is
very
little
cost
associated
with
opting
into
the
Acid
Rain
11­
10­
05
DRAFT
DO
NOT
QUOTE
OR
CITE
26
Program.
5
In
contrast,
the
analysis
of
the
three
alternative
methodologies
did
not
consider
Acid
Rain
Program
opt­
in
allowances
because
these
approaches
do
not
use
title
IV
allowances
for
CAIR
compliance.

EPA's
analyses,
of
which
a
detailed
description
is
available
in
the
docket,
encompassed
112
(
control
case)
to
114(
base
case)
parent/
holding
companies
with
sources
covered
by
the
CAIR.
These
112
to
114
companies
represent
about
twothirds
of
the
total
number
of
CAIR
plants,
over
95
percent
of
total
annual
allocations
for
all
methodologies
during
2015,
and
about
97
percent
of
the
total
projected
emissions
in
the
CAIR
region
in
2015.6
While
allocations
vary
from
company
to
company
under
the
four
methodologies,
overall,
the
distributions
of
allowances
that
companies
received
relative
to
their
projected
emissions
for
both
the
base
case
and
control
case
are
very
similar.
In
other
words,
no
methodology
stands
out
as
providing
a
more
reasonable
method
of
allocation
across
all
companies
when
examining
allowance
needs
under
either
5
The
greatest
cost
associating
with
opting
in
to
the
Title
IV
program
is
the
cost
of
monitoring.
Since
these
sources
are
already
required
to
monitor
using
the
same
monitoring
methodologies
that
would
be
required
if
they
were
to
opt
in,
their
costs
for
opting
in
are
significantly
reduced.
6
According
to
EPA
inventory
data,
there
are
a
total
of
921
CAIR
affected
plants.
EPA
did
not
have
complete
owner,
parent
company
information
for
all
of
these
plants.
11­
10­
05
DRAFT
DO
NOT
QUOTE
OR
CITE
27
the
base
case
or
control
case.
Figures
1
and
2,
below,
show
the
distribution
of
values
for
each
methodology
under
the
two
cases,
and
support
this
conclusion.
EPA
repeated
these
analyses
for
2010,
which
show
similar
results.
Separate
analyses
of
owner/
operating
company
allowances
compared
to
emissions
in
2010
and
2015,
show
similar
results,
as
well.

See
TSD
Memo,
"
Technical
Support
Document
for
Clean
Air
Interstate
Rule
Response
to
Petition
for
Reconsideration."

Figure
1.
Note:
A
small
number
of
the
companies
in
the
analysis
are
not
shown
because
they
are
outliers
­­
receiving
allocations
greater
than
four
times
their
projected
2015
emissions
 
and
if
included,
render
the
figure
extremely
difficult
to
understand.
See
table
in
the
TSD
for
details.

Ratio
of
SO2
Allowance
Allocations
to
CAIR
Base
Case
Emissions
(
without
Controls)
in
2015
for
114
Companies
under
CAIR
Method
and
Alternatives
0.00
1.00
2.00
3.00
4.00
1
10
19
28
37
46
55
64
73
82
91
100
109
Cumulative
Number
of
Parent/
Holding
Companies
Ratio
of
SO2
Allowance
Allocations
to
CAIR
Base
Case
in
2015
Pure
Heat
Input
HI
w/
Fuel
Factors
HI
w/
FF
&
Coal
Type
EPA
Method
(
w/
non­
CAIR
+
opt­
ins
11­
10­
05
DRAFT
DO
NOT
QUOTE
OR
CITE
28
Figure
2.

EPA
also
notes
that,
while
the
Petitioner
states
that
the
CAIR
final
allocation
methodology
is
"
inequitable"

because
lower
emitting
units
would
buy
allowances
from
higher
emitting
units
that
install
emission
controls,
it
is
unclear
why
such
a
result
would
actually
be
inequitable.
On
the
contrary,
the
owner
of
each
of
the
units
involved
would
be
choosing
to
adopt
the
most
economic
compliance
strategy
in
light
of
the
unit's
emission
control
costs
and
the
market
value
of
allowances.
The
ability
of
the
owners
to
make
such
choices
reflects
the
flexibility
provided
by
a
cap
and
trade
Ratio
of
Allowance
Allocations
to
Projected
Emissions
in
2015
for
112
Companies
under
EPA
CAIR
Method
and
Alternatives
0.00
1.00
2.00
3.00
4.00
1
10
19
28
37
46
55
64
73
82
91
100
109
Cumulative
number
of
parent/
holding
companies
Ratio
of
Allowance
Allocation
to
Projected
Emissions
in
2015
Pure
Heat
Input
HI
w/
Fuel
Factors
HI
w/
FF
+
Coal
Type
EPA
Method
(
w/
non­
CAIR
+
opt­
ins)
11­
10­
05
DRAFT
DO
NOT
QUOTE
OR
CITE
29
program.

EPA
requests
comment
on
its
analyses
of
the
four
allocation
methodologies
and
on
the
above
discussion
of
the
Petitioner's
concerns.

B.
Fuel
Adjustment
Factors
Used
to
Set
State
NOx
Budgets
Several
petitioners
argue
the
Agency
did
not
provide
adequate
notice
regarding
the
use
of
specific
fuel
adjustment
factors
to
establish
NOx
budgets
for
States
in
the
CAIR
region.
As
explained
below,
EPA
believes
that
it
provided
adequate
notice
both
that
the
fuel
adjustment
factors
might
be
used
and
for
the
calculation
procedures
that
it
would
use
to
determine
the
specific
factors.

Nevertheless,
given
the
significant
public
interest
in
this
issue,
EPA
has
decided
to
grant
reconsideration
of
and
to
take
comment
on
EPA's
use,
in
setting
State
NOx
budgets,
of
fuel
adjustment
factors
of
1.0
for
coal,
0.4
for
gas,
and
0.6
for
fuel
oil.
EPA
also
conducted
additional
analysis
to
further
explain
the
impact
of
these
factors
on
State
annual
NOx
budgets.
This
analysis
demonstrates
that
the
factors
selected
are
reasonable
and
decrease
the
disparity
between
most
States'
actual
electric
generation
unit
(
EGU)
emissions
and
their
State
NOx
budgets.
For
that
reason,
EPA
is
not
proposing
any
changes
to
the
final
CAIR
at
this
time.
The
CAIR
establishes
regional
emission
budgets
for
SO2,
annual
11­
10­
05
DRAFT
DO
NOT
QUOTE
OR
CITE
30
NOx,
and
seasonal
NOx
emissions.
These
regional
budgets
are
then
further
divided
into
State
budgets,
with
a
share
of
each
total
regional
budget
allocated
to
each
State
in
the
corresponding
CAIR
region.
States
choosing
to
participate
in
the
trading
programs
will
be
able
to
allocate
to
sources
in
their
State,
the
number
of
allowances
in
their
budgets.

Petitioners
challenge
the
methodology
EPA
used
to
establish
these
State
budgets
for
annual
and
seasonal
NOx.

In
the
CAIR
notice
of
proposed
rulemaking
(
NPR),
EPA
described
two
methods
for
developing
State
NOx
budgets:
a
heat
input
method
and
an
adjusted
heat
input
(
or
fuel
factor)
method.
(
69
FR
4566)
EPA
proposed
to
use
the
heat
input
approach
and
to
set
budgets
based
on
heat
input
data
from
the
years
1999
through
2002.
EPA
proposed
to
give
each
State
a
pro
rata
share
of
the
regional
NOx
budget
based
on
the
ratio
of
its
average
annual
heat
input
to
the
regional
total
average
annual
heat
input
In
the
Supplemental
Notice
of
Proposed
Rulemaking
(
SNPR),
EPA
proposed
to
supplement
and
update
the
data
used
to
calculate
the
State
annual
NOx
budgets
(
69
FR
32684).

EPA
also
described
an
alternative
method
that
could
be
used
to
calculate
the
budgets
­­
the
adjusted
heat
input
(
fuel
factor)
method.
This
approach,
EPA
explained,
would
"
.
.
.

reflect
the
inherently
higher
emissions
rate
of
coal­
fired
11­
10­
05
DRAFT
DO
NOT
QUOTE
OR
CITE
31
plants,
and
consequently
the
greater
burden
on
coal
plants
to
control
emissions."
(
See
69
FR
32689.)
The
SNPR
continued
by
explaining
that
the
use
of
fuel
factors
is
more
equitable
to
these
"
coal­
fired
plants
that
have
already
installed
pollution
controls"
(
69
FR
32689).
In
the
SNPR,

EPA
also
described
the
method
that
it
would
use
to
derive
specific
fuel
factors
if
this
adjusted
heat
input
method
was
selected.
EPA
explained,
"
States'
shares
would
be
determined
by
the
amount
of
the
State
heat
input,
as
adjusted,
in
proportion
to
the
total
regional
heat
input.

The
factors
could
be
based
on
average
historic
emissions
rates
(
in
lbs/
mmBtu)
by
fuel
type
(
coal,
gas,
and
oil)
for
the
years
1999­
2002"
(
69
FR
32689).
The
SNPR
did
not
identify
the
specific
numeric
factors
that
would
be
used.

EPA
received
and
responded
to
numerous
comments
addressing
this
alternative
fuel
factor
approach.
(
See
"
Corrected
Response
to
Significant
Public
Comments
on
the
Proposed
Clean
Air
Interstate
Rule,"
pp.
520­
576.)

EPA
established
State
NOx
budgets
for
the
final
CAIR
using
the
adjusted
heat
input
method.
The
specific
fuel
factors
used
to
adjust
heat
input
data
were
1.0
for
coal,

0.4
for
gas
and
0.6
for
oil.
These
factors
are
based
on
the
average
historic
NOx
emissions
rate
for
each
fuel.
They
reflect
for
each
fuel,
the
1999­
2002
average
emissions
by
11­
10­
05
DRAFT
DO
NOT
QUOTE
OR
CITE
32
State
summed
for
the
CAIR
region,
divided
by
average
heat
input
by
fuel
by
State,
summed
for
the
CAIR
region
(
70
FR
25230­
31).

EPA
Analyses
of
Potential
Impacts
EPA
conducted
the
two
analyses
described
below
to
compare
the
impact
on
State
annual
NOx
budgets
of
using
the
adjusted
heat
input
method
versus
the
heat
input
method.

For
States
choosing
to
participate
in
the
trading
program,

these
budgets
determine
the
number
of
allowances
that
could
be
allocated
to
sources
in
that
State.
In
a
cap
and
trade
system,
however,
the
methodology
used
to
allocate
allowances
in
any
given
year
would
not
affect
where
control
technologies
are
installed.
7
Rather,
the
determinant
would
be
the
cost
of
adding
controls
compared
to
the
cost
of
buying,
or
the
profit
from
selling,
allowances.
Controls
are
expected
to
be
installed
where
it
is
relatively
less
expensive,
without
regard
to
which
units
received
the
initial
allocation
of
allowances.
Further,
the
total
cost
to
industry
of
controlling
emissions
and
the
total
amount
of
reductions
achieved
would
not
be
affected
by
the
allocation
7
A
permanent
allocation
approach,
such
as
the
CAIR
example
allocation
methodology,
should
not
affect
where
controls
are
installed.
This
is
independent
of
the
type
of
approach
(
e.
g.,
heat
input,
adjusted
heat
input,
or
output).
The
use
of
an
updating
allocation
system
can
impact
future
generation
behavior.
11­
10­
05
DRAFT
DO
NOT
QUOTE
OR
CITE
33
methodology
in
a
given
year
(
for
a
permanent
system).
The
allocation
method,
however,
could
have
financial
impacts
on
individual
units
and
companies.
A
unit
that
receives
more
allocations
than
it
has
emissions
would
get
a
benefit
at
the
expense
of
a
unit
that
does
not
receive
enough
allocations
to
cover
its
emissions.
While
States
choosing
to
participate
in
the
cap
and
trade
program
can
determine
how
to
allocate
allowances
among
their
units,
companies
in
States
whose
budgets
exceed
projected
EGU
emissions
would
likely
receive
a
financial
benefit
while
companies
in
States
whose
budgets
are
lower
than
their
EGU
emissions
would
likely
incur
additional
costs.
EPA
believes
that
a
system
that
minimizes
the
disparity
between
the
number
of
allowances
in
a
State
budget
and
total
projected
State
EGU
emissions
is
the
most
equitable,
and
that
it
is
in
the
public
interest
to
promote
equity
among
the
States.

EPA's
first
analysis
took
place
in
two
steps:
EPA
first
conducted
a
State­
by­
State
comparison
of
projected
allowances
to
projected
emissions
under
the
two
approaches
and
then
examined
four
States
that
were
exceptions
to
the
general
rule
that
the
fuel
factor
approach
decreased
disparities
between
allowances
and
emissions.
The
analysis
was
done
by
calculating
State
budgets
using
both
the
heat
input
and
adjusted
heat
input
(
fuel
factor)
approaches.
11­
10­
05
DRAFT
DO
NOT
QUOTE
OR
CITE
34
These
budgets
were
compared
to
the
projected
EGU
emissions
for
each
State.
The
tables
below
show
the
results
of
the
analysis
in
four
tables
representing
different
potential
impacts:
less
excess
allowances;
smaller
allowance
deficit;

allowances
comparable
under
both
approaches;
and,

exceptions.
For
purposes
of
this
analysis,
differences
of
less
than
10
percent
were
not
considered
significant.
8
(
See
the
"
CAIR
Statewide
NOx
Budget
Calculations
Technical
Support
Document,
EPA
2005,
for
additional
discussion
of
the
analysis.)
For
these
States,
the
tables
show:
annual
NOx
budgets
for
each
State
calculated
using
straight
heat
input
and
fuel
factor
methods;
IPM
projected
emissions
by
coal
and
gas
plants
for
2015;
the
percentage
of
each
State's
projected
emissions
that
are
"
covered"
by
their
budgets;
and
the
relative
difference
between
the
percentage
of
emissions
covered
by
the
two
methods.

Table
1
shows
the
results
for
the
States
that
have
fewer
excess
allowances
under
the
fuel
factor
approach.

These
six
States
would
receive
a
more
moderate
share
of
the
excess
allowances
using
the
fuel
factor
methodology.
While
8
Changes
of
less
than
10
percent
were
considered
insignificant
because
of
factors
that
could
impact
the
analysis
results
(
e.
g.,
States
may
choose
to
allocate
allowances
to
sources
using
methods
that
do
not
exactly
mirror
the
fuel
factor
State
budget,
and
uncertainty
in
the
model
projections.)
11­
10­
05
DRAFT
DO
NOT
QUOTE
OR
CITE
35
Texas
is
projected
to
shift
from
an
excess
of
allowances
to
a
slight
deficit,
the
fuel
factor
budget
deficit
(
i.
e.,
5
percent
of
the
State's
projected
emissions)
is
small
enough
to
be
considered
roughly
equivalent
to
projected
emissions.

Table
1:
CAIR
Annual
NOx
Budgets
Analysis
­­
States
with
Less
Excess
Allowances
under
Fuel
Factor
Approach
Annual
Budgets
in
2015
(
tons)
Projected
Emissions
In
2015
(
tons)
Percent
of
Emissions
"
Covered"
by
Allowances
State
Heat
Input
Fuel
Factor
Coal
Other
(
1)
Total
Heat
Input
Fuel
Factor
Difference
btw
HI
and
FF
Allocation
DC
178
120
19
19
836.8%
531.6%
­
305.3%
LA
41,693
29,593
27,390
2,171
29,561
141.0%
100.1%
­
40.9%
NY
50,591
38,014
27,829
6,330
34,159
148.1%
111.3%
­
36.8%
TX
192,467
150,845
128,104
31,223
159,327
120.8%
94.7%
­
26.1%
MS
17,626
14,839
10,195
1,767
11,962
147.3%
124.1%
­
23.3%
FL
96,703
82,871
43,628
17,745
61,373
157.6%
135.0%
­
22.5%
(
1)
"
Other
includes
gas­
and
oil­
fired
units.
Source
is
"
CAIR
Statewide
NOx
Budget
Calculation
Technical
Support
Document"
EPA,
2005
Table
2
shows
the
results
for
those
States
that
have
a
smaller
projected
allowance
deficit
 
and
possibly
have
to
purchase
fewer
allowances
 
under
the
fuel
factor
approach.

Table
2:
CAIR
Annual
NOx
Budgets
Analysis
­­
States
with
Smaller
Allowance
Deficit
under
Fuel
Factor
Approach
Annual
Budgets
in
2015
(
tons)
Projected
Emissions
In
2015
(
tons)
Percent
of
Emissions
"
Covered"
by
allowances
State
Heat
Input
Fuel
Factor
Coal
Other
(
1)
Total
Heat
Input
Fuel
Factor
Difference
btw
HI
and
FF
Allocation
MI
53,025
54,420
83,573
996
84,569
62.7%
64.3%
1.6%
VA
28,758
30,062
34,756
3,700
38,456
74.8%
78.2%
3.4%
11­
10­
05
DRAFT
DO
NOT
QUOTE
OR
CITE
36
GA
50,920
55,268
62,650
3,623
66,273
76.8%
83.4%
6.6%
IL
58,418
63,525
59,724
4,985
64,709
90.3%
98.2%
7.9%
SC
24,815
27,219
34,487
1,371
35,858
69.2%
75.9%
6.7%
MO
45,240
49,892
57,134
605
57,739
78.4%
86.4%
8.1%
MN
23,708
26,203
36,495
199
36,694
64.6%
71.4%
6.8%
KY
61,847
69,337
76,702
351
77,053
80.3%
90.0%
9.7%
IA
24,262
27,243
38,736
248
38,984
62.2%
69.9%
7.6%
(
1)
"
Other
includes
gas­
and
oil­
fired
units.
Source
is
"
CAIR
Statewide
NOx
Budget
Calculation
Technical
Support
Document"
EPA,
2005.

Table
3
shows
the
results
for
those
States
that
have
relatively
small
increases
in
their
budgets
but
would
receive
allowances
comparable
to
their
projected
emissions.

Table
3:
CAIR
Annual
NOx
Budgets
Analysis­­
States
with
Small
Shifts
that
Generally
Have
Enough
Allowances
Annual
Budgets
in
2015
(
tons)
Projected
Emissions
in
2015
(
tons)
Percent
of
Emissions
"
Covered"
by
Allowances
State
Heat
Input
Fuel
Factor
Coal
Other
(
1)
Total
Heat
Input
Fuel
Factor
Difference
btw
HI
and
FF
Allocation
WI
31,046
33,966
31,123
885
32,008
97.0%
106.1%
9.1%
PA
75,319
82,541
74,931
2,351
77,282
97.5%
106.8%
9.3%
NC
46,654
51,819
48,041
725
48,766
95.7%
106.3%
10.6%
IN
81,467
90,779
82,864
965
83,829
97.2%
108.3%
11.1%
OH
80,876
90,556
81,432
1,298
82,730
97.8%
109.5%
11.7%

(
1)
"
Other
includes
gas­
and
oil­
fired
units.
Source
is
"
CAIR
Statewide
NOx
Budget
Calculation
Technical
Support
Document"
EPA,
2005.

Table
4
shows
those
States
which
receive
an
excess
of
allowances
under
the
heat
input
approach
and
a
greater
excess
using
the
fuel
factor
methodology.
While
Alabama
and
Maryland
are
projected
to
have
a
slightly
greater
excess
of
allowances
under
the
fuel
factor
approach
(
an
additional
8
11­
10­
05
DRAFT
DO
NOT
QUOTE
OR
CITE
37
in
both
cases),
these
increases
are
less
than
10
percent
of
their
projected
emissions
and
considered
not
significant
in
this
analysis.
The
increase
in
excess
allowances
projected
for
Tennessee
and
West
Virginia
under
the
fuel
factor
method
are
examined
in
the
second
step
of
this
analysis.

Table
4:
CAIR
Annual
NOx
Budgets
Analysis­­
States
that
are
Exceptions
Annual
Budgets
(
tons)
Projected
Emissions
in
2015
(
tons)
Percent
of
Emissions
"
Covered"
by
Allowances
State
Heat
Input
Fuel
Factor
Coal
Other
(
1)
Total
Heat
Input
Fuel
Factor
Difference
btw
HI
and
FF
Allocation
AL
53,461
57,517
45,029
4,027
49,056
109.0%
117.2%
8.3%
MD
22,123
23,104
11,465
895
12,360
179.0%
186.9%
7.9%
TN
37,920
42,478
27,068
36
27,104
139.9%
156.7%
16.8%
WV
54,944
61,850
44,128
37
44,165
124.4%
140.0%
15.6%
(
1)
"
Other"
includes
gas­
and
oil­
fired
units.
Source
is
"
CAIR
Statewide
NOx
Budget
Calculation
Technical
Support
Document"
EPA,
2005.

In
general,
this
analysis
demonstrates
that
the
fuelfactor
method
tempers
the
disparity
between
allowances
and
emissions
for
almost
all
of
the
States.
The
adjusted
heat
input
method
recognizes
that
States
that
have
gas­
and
oilfired
units,
whose
inherently
lower
emissions
allow
them
to
operate
without
installing
control
technologies,
will
be
receiving
more
than
enough
allowances
to
cover
their
share
of
the
budget.
In
addition,
if
States
allocate
allowances
to
coal­
fired
units
in
relatively
the
same
proportions
as
11­
10­
05
DRAFT
DO
NOT
QUOTE
OR
CITE
38
the
Statewide
budgets,
then
coal­
fired
unit
will
make
large
investments
in
controls
to
meet
CAIR
caps
while,
in
many
cases,
still
having
to
purchase
allowances.
Thus,
under
a
pure
heat
input
approach
with
States
allocating
allowances
in
proportion
to
the
composition
of
the
Statewide
budgets,

gas­
and
oil­
fired
unit
would
be
selling
their
excess
allowances
to
coal­
fired
units
 
which
are
controlling
emissions
to
a
cost­
effective
level
 
and
financially
benefiting
without
taking
action
to
lower
sectorwide
emissions.
Using
the
adjusted
heat
input
approach
mitigates
this
potential
affect
by
beginning
with
State­
level
budgets
that
better
reflect
the
distribution
of
control
costs
among
the
units,
and
therefore,
the
States.

The
second
step
of
the
first
analysis
examined
the
two
exceptions,
Tennessee
and
West
Virginia,
that
have
an
excess
in
their
budgets
under
the
heat
input
approach
which
increases
when
using
the
adjusted
heat
input
method.
To
understand
this,
EPA
compared
the
average
NOx
emission
rates
for
these
States
to
the
average
State
NOx
emission
rates
in
the
CAIR
region.
Both
Tennessee
and
West
Virginia
were
projected
to
have
significantly
lower
NOx
emission
rates
(
i.
e.,
0.093
lbs/
mmBTU
and
0.073
lbs/
mmBTU,
respectively)

than
the
Statewide
average
for
the
CAIR
region
(
about
0.11
lbs/
mmBTU).
This
indicates
that
Tennessee
and
West
Virginia
11­
10­
05
DRAFT
DO
NOT
QUOTE
OR
CITE
39
are
projected
to
over­
control
NOx
emissions,
independent
of
the
method
used
to
develop
the
Statewide
budgets.
This
creates
an
excess
of
allowances
under
both
approaches.

Tennessee
and
West
Virginia
have
an
additional
excess
of
allowances
under
the
adjusted
heat
input
approach
largely
because
they
have
controlled
NOx
emissions
well
below
levels
of
other
coal
oriented
States:
thereby,
creating
a
scenario
where
the
fuel
factor
method
is
providing
an
additional
excess
that
appears
reasonable
since
generation
units
in
these
States
are
likely
to
install
additional
NOx
controls
to
lower
NOx
emissions.

The
second
analysis
performed
by
EPA
to
demonstrate
the
impact
of
using
the
adjusted
heat
input
method
to
set
State
NOx
budgets,
compares
each
fuel's
"
contribution"
to
the
regional
budget
to
the
regional
projected
emissions
of
units
fired
with
that
fuel.
9
Regional
budgets
and
emissions,
by
fuel
type,
are
summarized
in
the
Table
5
below.

Table
5:
Comparison
of
Regionwide
Budget
and
Emission
by
Fuel
Type
for
the
CAIR
Region
Fuel
Factors
Budgets
(
tons)
Heat
Input
Budgets
(
tons)
CAIR
Projected
Emissions
Coal
Gas
Oil
(
other)
Coal
Gas
Oil
(
other)
Coal
All
9
It
should
be
noted
that
heat
input
or
adjusted
heat
input
are
used
to
set
State
budgets
and
do
not
imply
that
States
would
allocate
allowances
in
that
manner.
In
the
proposal,
EPA
gives
States
flexibility
in
the
distribution
of
allowances.
11­
10­
05
DRAFT
DO
NOT
QUOTE
OR
CITE
40
Else
2009/
2010
1,348,608
102,813
53,453
1,197,373
228,209
79,291
1,422,574
82,493
2015
1,123,840
85,678
44,543
997,811
190,174
66,076
1,167,482
86,550
Source
is
"
CAIR
Statewide
NOx
Budget
Calculation
Technical
Support
Document"
EPA,
2005.

If
allowances
are
generally
passed
through
to
generation
units
in
the
same
way
as
they
are
apportioned
to
the
States,
allowances
allocated
to
State
budgets
based
on
heat
input
data
for
coal­
fired
units
are
998
thousand
tons
using
the
heat
input
method
and
just
under
1.12
million
tons
using
the
fuel
factor
method,
while
emissions
from
coalfired
units
are
projected
to
be
1.17
million
tons
in
2015.

As
a
result,
regionwide,
coal­
fired
units
would
be
projected
to
receive
fewer
allowances
than
their
projected
emissions:

170
thousand
allowances
fewer
under
the
heat
input
method
and
44
thousand
fewer
under
the
fuel
factor
method.

Therefore,
using
the
adjusted
heat
input
method
moderates
(
decreases)
the
deficit
in
allowances
for
coal­
fired
units.

Similarly,
gas­
and
oil­
fired
units
would
experience
an
excess
170
thousand
allowances
under
the
heat
input
method
and
44
thousand
allowances
using
the
adjusted
heat
input,

thereby,
providing
fewer
excess
allowances
to
gas­
and
oilfired
units
under
the
fuel
factor
approach
than
the
heat
input
method.
Under
either
approach,
the
allocations
based
on
gas­
and
oil­
fired
units
exceed
projected
emissions
from
11­
10­
05
DRAFT
DO
NOT
QUOTE
OR
CITE
41
those
units.

The
analyses
described
above
were
conducted
for
the
States
in
the
CAIR
PM2.5
region
only.
EPA
has
proposed
to
add
Delaware
and
New
Jersey
to
the
CAIR
region
for
PM2.5
("
Inclusion
of
Delaware
and
New
Jersey
in
the
Clean
Air
Interstate
Rule",
EPA,
May
10,
2005),
but
has
not
yet
taken
final
action
on
this
proposal.
EPA
proposed
a
separate
2­

State
"
regional"
budget
for
Delaware
and
New
Jersey
of
just
over
14,000
tons.
EPA's
analysis
shows
that
dividing
this
budget
between
the
two
States
based
on
an
adjusted
heat
input
method
instead
of
a
pure
heat
input
method,
would
significantly
reduce
the
disparity
between
the
budget
and
projected
emissions
for
each
State.
("
Inclusion
of
Delaware
and
New
Jersey
in
the
Clean
Air
Interstate
Rule",
EPA,
May
10,
2005)

EPA
notes
that
the
analyses
above
were
conducted
for
State
annual
NOx
budgets
established
in
the
CAIR.
CAIR
also
establishes
seasonal
NOx
budgets
using
the
adjusted
heat
input
(
fuel
factor)
method.
EPA
did
not
conduct
a
similar
analysis
of
the
seasonal
NOx
budgets.
EPA
modeling
indicates
that
the
ozone
season
program
is
likely
to
function
as
a
backstop
to
the
annual
NOx
program,
and
that
the
annual
NOx
program
is
likely
to
impose
the
binding
constraint
on
NOx
emissions.
11­
10­
05
DRAFT
DO
NOT
QUOTE
OR
CITE
42
Finally,
to
ensure
that
our
estimates
appropriately
reflect
the
distribution
of
emissions
in
the
case
of
higher
electricity
demand
and
increased
gas
and
oil
prices,
EPA
conducted
a
sensitivity
run
using
EIA's
forecast
of
higher
electricity
demand
and
gas
and
oil
prices.
This
run
produced
very
similar
emissions
results
to
the
original
NOx
analysis,
showing
that
EPA's
original
analysis
is
robust
enough
to
support
the
fuel
adjusted
heat
input
approach
finalized
in
CAIR.
(
See
the
"
CAIR
Statewide
NOx
Budget
Calculations
Technical
Support
Document,
EPA
2005,
for
additional
discussion
of
the
analysis.)

C.
PM2.5
Modeling
for
Minnesota
One
petitioner
asserts
that
EPA's
modeling
to
determine
whether
emissions
from
Minnesota
significantly
contribute
to
downwind
nonattainment
of
the
PM2.5
NAAQS
failed
to
take
into
account
certain
emission
reductions
required
by
State
programs.
Petitioner
asserts
that
if
these
reductions
had
been
properly
included
in
the
modeling
done
for
CAIR,
the
modeling
might
show
that
the
state
of
Minnesota
does
not
significantly
contribute
to
downwind
nonattainment
of
the
PM2.5
NAAQS.
The
petitioner
also
asked
EPA
to
stay
implementation
of
the
CAIR
in
Minnesota.
The
Agency
is
not
taking
action
on
the
request
for
a
stay
at
this
time.

The
Agency
agrees
that
EPA's
modeling
of
the
11­
10­
05
DRAFT
DO
NOT
QUOTE
OR
CITE
43
contribution
of
emissions
from
Minnesota
to
downwind
PM2.5
nonattainment
did
not
fully
account
for
the
effects
on
future
year
emissions
of
certain
State
control
programs.
In
order
to
ensure
that
all
parties
have
ample
opportunity
to
comment
on
all
aspects
of
this
issue,
EPA
is
reconsidering
the
air
quality
modeling
inputs
for
Minnesota.
Using
the
corrected
inputs
described
below,
EPA
will
redo
the
PM2.5
contribution
modeling
for
Minnesota.
In
this
analysis,
EPA
will
use
the
same
PM2.5
modeling
platform
that
was
used
for
the
final
CAIR
modeling.
This
modeling
platform
is
described
in
the
CAIR
Air
Quality
Modeling
Technical
Support
Document
("
Technical
Support
Document
for
the
Final
Clean
Air
Interstate
Rule,
Air
Quality
Modeling,"
March
2005,
OAR­

2003­
0053­
2123.
The
EPA
is
not
taking
comment
on
the
modeling
platform
itself,
only
on
the
corrected
2010
emissions
inputs
for
Minnesota,
as
described
below.
The
results
of
the
Minnesota
PM2.5
contribution
modeling
using
the
revised
emissions
inputs
will
be
noticed
for
public
comment
at
a
future
date.

The
emissions
for
the
electric
power
sector
used
in
EPA's
contribution
modeling
for
the
final
CAIR
were
derived
from
the
Integrated
Planning
Model
(
IPM).
The
IPM
is
designed
to
forecast
the
projected
impact
of
environmental
polices
on
the
electric
power
sector.
The
Agency
updated
11­
10­
05
DRAFT
DO
NOT
QUOTE
OR
CITE
44
its
IPM
modeling
for
the
final
CAIR.
As
part
of
a
routine
model
update
to
the
IPM
and
in
response
to
comments
from
various
parties,
EPA
updated
the
inventory
of
EGUs,
made
revisions
to
several
model
assumptions,
and
added
various
State
rules,
regulations,
and
New
Source
Review
settlements
to
best
reflect
available
data
and
information.

In
that
IPM
update,
the
Agency
included
emission
reduction
actions
that
are
required
by
Minnesota
for
certain
units,
based
on
the
data
available.
However,
as
discussed
in
the
Response
to
Comments
document
(
RTC)
for
the
final
CAIR
("
Corrected
Response
to
Significant
Public
Comments
on
the
Proposed
Clean
Air
Interstate
Rule,"
March
2005,

corrected
April
2005,
OAR­
2003­
0053­
2172)
as
well
as
in
a
memorandum
to
the
CAIR
docket
entitled
"
Emissions
in
Minnesota:
Additional
Analysis"
(
OAR­
2003­
0053­

2091)("
Minnesota
memorandum"),
the
Agency
discovered
that
there
may
be
some
discrepancies
between
how
the
Agency
represented
the
Minnesota
emission
reductions
in
the
IPM
update
and
how
the
reductions
would
be
implemented.
The
Agency
revised
its
IPM
model
to
better
reflect
the
emission
reductions
from
those
Minnesota
units
and
conducted
revised
emissions
modeling
using
the
IPM
(
in
the
memorandum
mentioned
above
the
revised
emissions
modeling
is
described
as
a
sensitivity
analysis.)
The
revised
emissions
modeling
11­
10­
05
DRAFT
DO
NOT
QUOTE
OR
CITE
45
(
sensitivity
analysis)
resulted
in
somewhat
lower
NOx
and
SO2
emission
projections
for
Minnesota
in
the
base
case,

compared
to
the
emissions
modeling
done
for
the
final
CAIR.

Specifically,
the
revised
IPM
modeling
projects
statewide
utility
NOx
emissions
roughly
16,500
tons
lower
and
SO2
emissions
about
5,800
tons
lower
than
the
emissions
modeling
used
in
the
final
CAIR.
These
revised
NOx
and
SO2
emission
projections
result
in
lower
total
NOx
and
SO2
emissions
of
4.6
percent
and
4.3
percent,
respectively,
than
the
emission
projections
used
in
the
final
CAIR
modeling.

In
order
to
account
for
these
revised
emission
projections,
the
Agency
performed
two
analyses
to
estimate
whether
air
quality
modeling
based
on
the
lower
emission
projections
would
show
that
Minnesota's
downwind
contribution
was
below
the
PM2.5
significance
threshold
of
0.2
µ
g/
m3.
The
EPA's
modeling
of
Minnesota
for
the
final
CAIR
showed
that
Minnesota's
maximum
downwind
contribution
is
0.21
µ
g/
m3
to
Cook
County,
Illinois.
Our
analyses
of
the
effects
of
the
revised
emission
projections
on
this
maximum
contribution
are
as
follows:

 
Analysis
1:
We
reduced
the
maximum
PM2.5
contribution
by
the
larger
of
the
percent
reduction
in
NOx
and
SO2
emissions
(
i.
e.,
the
4.6
percent
reduction
in
NOx).
The
11­
10­
05
DRAFT
DO
NOT
QUOTE
OR
CITE
46
maximum
PM2.5
contribution
after
making
this
adjustment
is
0.2
µ
g/
m3.

 
Analysis
2:
We
reduced
the
sulfate
and
nitrate
portions
of
the
maximum
PM2.5
contribution
by
the
corresponding
reductions
in
SO2
and
NOx
emissions.
Specifically,
the
sulfate
portion
(
including
sulfate,
ammonium,
and
particle­
bound
water)
was
reduced
by
the
4.3
percent
reduction
in
SO2
emissions
and
the
nitrate
portion
was
reduced
by
the
4.6
percent
reduction
in
NOx
emissions.

We
then
recalculated
the
maximum
contribution
using
these
lower
components.
The
result
is
that
the
adjusted
maximum
PM2.5
contribution
is
0.2
µ
g/
m3.

Thus,
the
analyses
presented
in
the
RTC
and
the
Minnesota
memorandum
indicate
that
Minnesota
makes
a
significant
contribution
to
PM2.5
nonattainment,
even
after
considering
the
lower
emissions
levels
in
the
revised
emissions
modeling.
10
10
Although
the
petition
acknowledges
that
the
Agency
revised
its
IPM
emissions
analysis
to
reflect
emission
reductions
at
certain
Minnesota
units,
it
states
incorrectly
that
"
EPA
subsequently
learned
that
emission
levels
in
the
IPM
sensitivity
analysis
were
overstated
by
an
additional
16,500
tons
of
annual
NOx
emissions
and
5,800
tons
of
annual
SO2
emissions"
(
petition,
p.
7).
As
discussed
above,
the
emission
projections
in
EPA's
revised
IPM
modeling
(
the
11­
10­
05
DRAFT
DO
NOT
QUOTE
OR
CITE
47
Although
the
Agency's
analyses
of
downwind
impacts
from
Minnesota
(
which
were
based
on
the
revised
emissions
modeling)
indicate
that
the
State
makes
a
significant
contribution
to
downwind
PM2.5
nonattainment,
the
Agency
acknowledges
that
it
did
not
conduct
air
quality
modeling
based
on
the
revised
emissions.
The
Agency
intends
to
conduct
revised
modeling
examining
Minnesota's
contribution
to
downwind
PM2.5
nonattainment.
This
modeling
will
use
the
modeling
platform
used
for
the
CAIR
with
the
revised
inputs
for
Minnesota
discussed
above.
This
modeling
will
also
include
revised
inputs
for
the
State
of
Delaware,
based
on
comments
received
in
response
to
our
proposal
to
add
New
Jersey
and
Delaware
to
the
CAIR
region
for
PM2.5
(
70
FR
25408,
May
12,
2005,
docket
ID
OAR­
2003­
0053).
The
Agency
intends
to
provide
notice
of
the
results
of
the
revised
PM2.5
contribution
modeling
in
a
Notice
of
Data
Availability
(
NODA).
EPA
is
taking
comment
only
on
the
revised
inputs
for
Minnesota
discussed
above.

D.
Inclusion
of
Florida
in
the
CAIR
region
for
Ozone
Florida
petitioners
(
the
Florida
Association
of
sensitivity
analysis)
were
in
fact
lower
by
16,500
tons
of
annual
NOx
emissions
and
5,800
tons
of
SO2
emissions
than
the
emission
projections
in
EPA's
modeling
for
the
final
CAIR.
For
the
same
reason,
the
petition
is
incorrect
in
stating
(
p.
7)
that
EPA
failed
to
consider
these
emission
reductions
in
its
analysis.
11­
10­
05
DRAFT
DO
NOT
QUOTE
OR
CITE
48
Electric
Utilities
and
FPL
Group)
maintain
that
neither
the
proposed
rule
nor
the
supplemental
proposal
or
notice
of
additional
data
availability
gave
adequate
notice
that
Florida
might
be
included
within
the
CAIR
region
as
a
significant
contributor
for
ozone.
They
further
maintain
that
EPA's
ultimate
determination
to
include
Florida
within
the
ozone
CAIR
region
was
based
on
modeling
inputs
not
readily
available
for
comment.
The
petitioners
state
that
they
therefore
lacked
adequate
opportunity
to
comment
on
this
issue.

The
EPA
does
not
fully
accept
the
Florida
petitioners'

characterization.
Clearly,
for
example,
EPA
gave
notice
that
it
would
utilize
a
different
modeling
platform
for
the
final
rule,
with
the
necessary
implication
that
this
could
change
the
makeup
of
the
CAIR
ozone
(
and
PM
2.5)
regions.

69
FR
47828
(
August
6,
2004).
The
EPA
also
provided
access
to
the
data
inputs
for
the
modeling
runs,
including
emissions
data
and
the
information
necessary
to
process
that
emissions
data
into
model­
ready
files.
Nonetheless,

considering
all
the
factors
here
(
notably
the
absence
of
Florida
from
the
CAIR
region
for
ozone
in
the
notice
of
proposed
rulemaking
and
the
supplemental
notice)
EPA
has
decided
to
provide
an
opportunity
for
additional
public
comment
on
the
inclusion
of
Florida
within
the
CAIR
region
11­
10­
05
DRAFT
DO
NOT
QUOTE
OR
CITE
49
for
ozone.

IV.
Statutory
and
Executive
Order
Reviews
A.
Executive
Order
12866:
Regulatory
Planning
and
Review
Under
Executive
Order
12866
(
58
FR
51735,
October
4,

1993),
the
Agency
must
determine
whether
the
regulatory
action
is
A
significant@
and,
therefore,
subject
to
Office
of
Management
and
Budget
(
OMB)
review
and
the
requirements
of
the
Executive
Order.
The
Order
defines
A
significant
regulatory
action@
as
one
that
is
likely
to
result
in
a
rule
that
may:

(
1)
have
an
annual
effect
on
the
economy
of
$
100
million
or
more
or
adversely
affect
in
a
material
way
the
economy,
a
sector
of
the
economy,
productivity,
competition,

jobs,
the
environment,
public
health
or
safety,
or
State,

local,
or
Tribal
governments
or
communities;

(
2)
create
a
serious
inconsistency
or
otherwise
interfere
with
an
action
taken
or
planned
by
another
agency;

(
3)
materially
alter
the
budgetary
impact
of
entitlements,
grants,
user
fees,
or
loan
programs
or
the
rights
and
obligations
of
recipients
thereof;
or
(
4)
raise
novel
legal
or
policy
issues
arising
out
of
legal
mandates,
the
President=
s
priorities,
or
the
principles
set
forth
in
the
Executive
Order.

Pursuant
to
the
terms
of
Executive
Order
12866,
OMB
has
11­
10­
05
DRAFT
DO
NOT
QUOTE
OR
CITE
50
determined
that
this
is
not
a
significant
regulatory
action.

This
notice
takes
comment
on
several
aspects
of
CAIR,
but
does
not
propose
any
modifications.

B.
Paperwork
Reduction
Act
This
action
does
not
propose
information
collection
request
requirements
under
the
provisions
of
the
Paperwork
Reduction
Act,
44
U.
S.
C.
3501
et
seq.
Therefore,
an
information
collection
request
document
is
not
required.

C.
Regulatory
Flexibility
Act
The
Regulatory
Flexibility
Act
generally
requires
an
Agency
to
prepare
a
regulatory
flexibility
analysis
of
any
rule
subject
to
notice
and
comment
rulemaking
requirements
under
the
Administrative
Procedures
Act
or
any
other
statute
unless
the
Agency
certifies
the
rule
will
not
have
a
significant
economic
impact
on
a
substantial
number
of
small
entities.
Small
entities
include
small
businesses,
small
organizations,
and
small
governmental
jurisdictions.

For
purposes
of
assessing
the
impacts
of
today=
s
proposed
rule
on
small
entities,
small
entity
is
defined
as:

(
1)
a
small
business
that
is
a
small
industrial
entity
as
defined
in
the
U.
S.
Small
Business
Administration
(
SBA)
size
standards.
(
See
13
CFR
part
121.);
(
2)
a
governmental
jurisdiction
that
is
a
government
of
a
city,
county,
town,

school
district
or
special
district
with
a
population
of
11­
10­
05
DRAFT
DO
NOT
QUOTE
OR
CITE
51
less
than
50,000;
and
(
3)
a
small
organization
that
is
any
not­
for­
profit
enterprise
which
is
independently
owned
and
operated
and
is
not
dominant
in
its
field.

After
considering
the
economic
impacts
of
today=
s
proposed
rule
on
small
entities,
I
certify
that
this
action
will
not
have
a
significant
economic
impact
on
a
substantial
number
of
small
entities.
The
CAIR
does
not
establish
requirements
applicable
to
small
entities.
Instead,
it
requires
States
to
develop,
adopt,
and
submit
SIP
revisions
that
would
achieve
the
necessary
SO2
and
NOx
emissions
reductions,
and
leaves
to
the
States
the
task
of
determining
how
to
obtain
those
reductions,
including
which
entities
to
regulate.
Therefore,
today's
action
to
reconsider
certain
aspects
of
CAIR
also
would
not
impose
requirements
on
small
entities.
Although
not
required
by
the
RFA,
EPA
conducted
a
small
business
analysis
for
the
CAIR.

D.
Unfunded
Mandates
Reform
Act
Title
II
of
the
Unfunded
Mandates
Reform
Act
of
1995
(
UMRA),
Public
Law
104­
4,
establishes
requirements
for
Federal
agencies
to
assess
the
effects
of
their
regulatory
actions
on
State,
local,
and
tribal
governments
and
the
private
sector.
Under
section
202
of
the
UMRA,
EPA
generally
must
prepare
a
written
statement,
including
a
cost­
benefit
analysis,
for
proposed
and
final
rules
with
11­
10­
05
DRAFT
DO
NOT
QUOTE
OR
CITE
52
"
Federal
mandates"
that
may
result
in
expenditures
by
State,

local,
and
tribal
governments,
in
the
aggregate,
or
by
the
private
sector,
of
$
100
million
or
more
in
any
1
year.

Before
promulgating
an
EPA
rule
for
which
a
written
statement
is
needed,
UMRA
section
205
generally
requires
EPA
to
identify
and
consider
a
reasonable
number
of
regulatory
alternatives
and
adopt
the
least
costly,
most
costeffective
or
least­
burdensome
alternative
that
achieves
the
objectives
of
the
rule.
The
provisions
of
section
205
do
not
apply
when
they
are
inconsistent
with
applicable
law.

Moreover,
section
205
allows
EPA
to
adopt
an
alternative
other
than
the
least­
costly,
most
cost­
effective,
or
leastburdensome
alternative
if
the
Administrator
publishes
with
the
final
rule
an
explanation
why
that
alternative
was
not
adopted.
Before
EPA
establishes
any
regulatory
requirements
that
may
significantly
or
uniquely
affect
small
governments,

including
tribal
governments,
it
must
have
developed,
under
section
203
of
the
UMRA,
a
small
government
agency
plan.

The
plan
must
provide
for
notifying
potentially
affected
small
governments,
enabling
officials
of
affected
small
governments
to
have
meaningful
and
timely
input
in
the
development
of
EPA's
regulatory
proposals
with
significant
Federal
intergovernmental
mandates,
and
informing,

educating,
and
advising
small
governments
on
compliance
with
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the
regulatory
requirements.

The
EPA
has
determined
that
today's
notice
of
reconsideration
does
not
contain
a
Federal
mandate
that
may
result
in
expenditures
of
$
100
million
or
more
for
State,

local,
and
tribal
governments,
in
the
aggregate,
or
the
private
sector
in
any
1
year.
Today's
notice
of
reconsideration
of
CAIR
does
not
add
new
requirements
that
would
increase
the
cost
of
CAIR.
Thus,
today's
notice
of
reconsideration
is
not
subject
to
the
requirements
of
sections
202
and
205
of
the
UMRA.
In
addition,
EPA
has
determined
that
today's
notice
of
reconsideration
does
not
significantly
or
uniquely
affect
small
governments
because
it
contains
no
requirements
that
apply
to
such
governments
or
impose
obligations
upon
them.
Therefore,
today's
notice
of
reconsideration
is
not
subject
to
section
203
of
the
UMRA.

E.
Executive
Order
13132:
Federalism
Executive
Order
13132,
entitled
A
Federalism@
(
64
FR
43255,
August
10,
1999),
requires
EPA
to
develop
an
accountable
process
to
ensure
A
meaningful
and
timely
input
by
State
and
local
officials
in
the
development
of
regulatory
policies
that
have
federalism
implications.@

A
Policies
that
have
federalism
implications@
is
defined
in
the
Executive
Order
to
include
regulations
that
have
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A
substantial
direct
effects
on
the
States,
on
the
relationship
between
the
national
government
and
the
States,

or
on
the
distribution
of
power
and
responsibilities
among
the
various
levels
of
government.@

This
action
does
not
have
federalism
implications.
It
would
not
have
substantial
direct
effects
on
the
States,
on
the
relationship
between
the
national
government
and
the
States,
or
on
the
distribution
of
power
and
responsibilities
among
the
various
levels
of
government,
as
specified
in
Executive
Order
13132.
The
CAA
establishes
the
relationship
between
the
Federal
Government
and
the
States,
and
this
action
would
not
impact
that
relationship.
Thus,
Executive
Order
13132
does
not
apply
to
this
action.

F.
Executive
Order
13175:
Consultation
and
Coordination
with
Indian
Tribal
Governments
Executive
Order
13175,
entitled
A
Consultation
and
Coordination
with
Indian
Tribal
Governments@
(
65
FR
67249,

November
9,
2000),
requires
EPA
to
develop
an
accountable
process
to
ensure
A
meaningful
and
timely
input
by
Tribal
officials
in
the
development
of
regulatory
policies
that
have
Tribal
implications.@

For
the
same
reasons
stated
in
the
final
CAIR,
today's
notice
does
not
have
Tribal
implications
as
defined
by
Executive
Order
13175.
It
does
not
have
a
substantial
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direct
effect
on
one
or
more
Indian
Tribes,
since
no
Tribe
has
implemented
a
federally­
enforceable
air
quality
management
program
under
the
CAA
at
this
time.
Furthermore,

this
action
does
not
affect
the
relationship
or
distribution
of
power
and
responsibilities
between
the
Federal
government
and
Indian
Tribes.
The
CAA
and
the
TAR
establish
the
relationship
of
the
Federal
government
and
Tribes
in
developing
plans
to
attain
the
NAAQS,
and
today's
notice
does
nothing
to
modify
that
relationship.
Because
this
notice
does
not
have
Tribal
implications,
Executive
Order
13175
does
not
apply.

If
one
assumes
a
Tribe
is
implementing
a
Tribal
implementation
plan,
the
CAIR
could
have
implications
for
that
Tribe,
but
it
would
not
impose
substantial
direct
costs
upon
the
Tribe,
nor
would
it
preempt
Tribal
Law.

Although
Executive
Order
13175
does
not
apply
to
CAIR
or
this
notice
of
reconsideration
of
CAIR,
EPA
consulted
with
Tribal
officials
in
developing
the
CAIR.

G.
Executive
Order
13045:
Protection
of
Children
from
Environmental
Health
and
Safety
Risks
Executive
Order
13045:
A
Protection
of
Children
From
Environmental
Health
and
Safety
Risks@
(
62
FR
19885,
April
23,
1997)
applies
to
any
rule
that
(
1)
is
determined
to
be
A
economically
significant@
as
defined
under
Executive
Order
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12866,
and
(
2)
concerns
an
environmental
health
or
safety
risk
that
EPA
has
reason
to
believe
may
have
disproportionate
effect
on
children.
If
the
regulatory
action
meets
both
criteria,
the
Agency
must
evaluate
the
environmental
health
or
safety
effects
of
the
planned
rule
on
children,
and
explain
why
the
planned
regulation
is
preferable
to
other
potentially
effective
and
reasonably
feasible
alternatives
considered
by
the
Agency.

This
notice
is
not
subject
to
Executive
Order
13045
because
it
does
not
involve
decisions
on
environmental
health
risks
or
safety
risks
that
may
disproportionately
affect
children.
The
EPA
believes
that
the
emissions
reductions
from
the
CAIR
will
further
improve
air
quality
and
children's
health.

H.
Executive
Order
13211:
Actions
That
Significantly
Affect
Energy
Supply,
Distribution,
or
Use
Executive
Order
13211
(
66
FR
28355,
May
22,
2001)

provides
that
agencies
shall
prepare
and
submit
to
the
Administrator
of
the
Office
of
Regulatory
Affairs,
OMB,
a
Statement
of
Energy
Effects
for
certain
actions
identified
as
"
significant
energy
actions."
Section
4(
b)
of
Executive
Order
13211
defines
"
significant
energy
actions"
as
"
any
action
by
an
agency
(
normally
published
in
the
Federal
Register)
that
promulgates
or
is
expected
to
lead
to
the
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promulgation
of
a
final
rule
or
regulation,
including
notices
of
inquiry,
advance
notices
of
final
rulemaking,
and
notices
of
final
rulemaking
(
1)
(
i)
a
significant
regulatory
action
under
Executive
Order
12866
or
any
successor
order,
and
(
ii)
likely
to
have
a
significant
adverse
effect
on
the
supply,
distribution,
or
use
of
energy;
or
(
2)
designated
by
the
Administrator
of
the
Office
of
Information
and
Regulatory
Affairs
as
a
"
significant
energy
action."
The
final
CAIR
is
a
significant
regulatory
action
under
Executive
Order
12866,
and
EPA
concluded
that
the
final
CAIR
rule
may
have
a
significant
adverse
effect
on
the
supply,
distribution,
or
use
of
energy.
The
impacts
are
detailed
in
the
final
CAIR
(
70
FR
25315).
Today's
notice
of
reconsideration
of
CAIR
is
not
a
significant
action
under
Executive
Order
12866
and
does
not
change
EPA's
previous
conclusions.

I.
National
Technology
Transfer
Advancement
Act
Section
12(
d)
of
the
National
Technology
Transfer
Advancement
Act
of
1995,
Public
Law
No.
104­
113,
section
12(
d)
(
15
U.
S.
C.
272
note)
directs
EPA
to
use
voluntary
consensus
standards
in
its
regulatory
activities
unless
to
do
so
would
be
inconsistent
with
applicable
law
or
otherwise
impractical.
Voluntary
consensus
standards
are
technical
standards
(
e.
g.,
materials
specifications,
test
methods,
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sampling
procedures,
and
business
practices)
that
are
developed
or
adopted
by
voluntary
consensus
standards
bodies.
The
National
Technology
Transfer
Advancement
Act
of
1995
directs
EPA
to
provide
Congress,
through
OMB,

explanations
when
the
Agency
decides
not
to
use
available
and
applicable
voluntary
consensus
standards.

Today's
notice
does
not
involve
technical
standards.

Therefore,
the
National
Technology
Transfer
and
Advancement
Act
of
1995
does
not
apply.

J.
Executive
Order
12898:
Federal
Actions
to
Address
Environmental
Justice
in
Minority
Populations
and
Low­
Income
Populations
Executive
Order
12898,
"
Federal
Actions
to
Address
Environmental
Justice
in
Minority
Populations
and
Low­
Income
Populations,"
requires
Federal
agencies
to
consider
the
impact
of
programs,
policies,
and
activities
on
minority
populations
and
low­
income
populations.
According
to
EPA
guidance,
11
agencies
are
to
assess
whether
minority
or
lowincome
populations
face
risks
or
a
rate
of
exposure
to
hazards
that
are
significant
and
that
"
appreciably
exceed
or
is
likely
to
appreciably
exceed
the
risk
or
rate
to
the
11
U.
S.
Environmental
Protection
Agency,
1998.
Guidance
for
Incorporating
Environmental
Justice
Concerns
in
EPA's
NEPA
Compliance
Analyses.
Office
of
Federal
Activities,
Washington,
D.
C.,
April,
1998.
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general
population
or
to
the
appropriate
comparison
group."

(
EPA,
1998).

In
accordance
with
Executive
Order
12898,
the
Agency
has
considered
whether
the
CAIR
may
have
disproportionate
negative
impacts
on
minority
or
low
income
populations.
The
EPA
expects
the
CAIR
to
lead
to
reductions
in
air
pollution
and
exposures
generally.
Therefore,
EPA
concluded
that
negative
impacts
to
these
sub­
populations
that
appreciably
exceed
similar
impacts
to
the
general
population
are
not
expected.
For
the
same
reasons,
EPA
drawing
the
same
conclusion
for
today's
notice
to
reconsider
certain
aspects
of
the
CAIR.

List
of
Subjects
40
CFR
Part
51
Administrative
practice
and
procedure,
Air
pollution
control,
Intergovernmental
relations,
Nitrogen
oxides,

Ozone,
Particulate
matter,
Regional
haze,
Reporting
and
recordkeeping
requirements,
Sulfur
dioxide.

40
CFR
Part
96
Administrative
practice
and
procedure,
Air
pollution
control,
Electric
utilities,
Nitrogen
oxides,
Reporting
and
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recordkeeping
requirements,
Sulfur
dioxide.

_______________________________

Dated
________________________________

Stephen
L.
Johnson
Administrator