Document ID: EPA-HQ-OAR-2009-0430-0003
Agency: epa
Document Type: Supporting & Related Material
Title: 
Posted Date: 2009-08-06T04:00Z

ENVIRONMENTAL PROTECTION AGENCY

[EPA-HQ-OAR-2009-0430; FRL     ]

  SEQ CHAPTER \h \r 1 Notice of Data Availability Concerning Compliance
Supplement Pool Allowance Allocations under the Clean Air Interstate
Rule Federal Implementation Plan.

AGENCY:	Environmental Protection Agency (EPA)

ACTION:	Notice of data availability (NODA)

SUMMARY:   EPA is administering -- under the Clean Air Interstate Rule
(CAIR) Federal Implementation Plans (FIPs) -- the CAIR NOX Annual
Trading Program Compliance Supplement Pool (CAIR CSP) for the States of
Delaware, Louisiana, Maryland, Pennsylvania, and Wisconsin.  The CAIR
FIPs require the Administrator to determine by order the CAIR CSP
allowance allocations for units in these States that requested and
qualify for these allocations and to provide the public with the
opportunity to object to the allocation determinations.  In this Notice
of Data Availability (NODA), EPA is making available, to the public,
data and other information relating to the CAIR CSP allowance
allocations and denial of allocations to individual units whose owners
and operators requested such an allocation from EPA.  The allocations
and denial of allocations are based on each unit’s emissions data
reported to EPA in quarterly emissions reports submitted by the unit’s
owners and operators under the CAIR trading program and other programs
and on EPA’s interpretations of the regulation governing the
allocation of CAIR CSP allowances.  The NODA presents the emissions data
and other information, including the CAIR CSP allowance allocation
calculations for each individual unit and the resulting allocation for
each unit.

DATES:	Objections must be received by [INSERT DATE 30 DAYS AFTER DATE OF
PUBLICATION IN FEDERAL REGISTER].

ADDRESSES: Submit your objections, identified by Docket Number
OAR-2009-0430 by one of the following methods:

Federal Rulemaking Portal:    HYPERLINK "http://www.regulations.gov" 
http://www.regulations.gov .  This NODA is not a rulemaking, but you may
use the Federal Rulemaking Portal to submit objections to the NODA.  To
submit objections, follow the on-line instructions for submitting
comments.

Mail:  Air Docket, ATTN:  Docket Number OAR–2009-0430, Environmental
Protection Agency, Mail Code: 6102T, 1200 Pennsylvania Ave., NW,
Washington, DC 20460

Email:	  HYPERLINK "mailto:A-AND-R-Docket@epa.gov" 
A-AND-R-Docket@epa.gov 

D.	Hand Delivery:   EPA Docket Center, 1301 Constitution Avenue, NW,
Room B102, Washington, DC.  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 objections to Docket ID No. OAR-2009-0430. 
EPA’s policy is that all objections received will be included in the
public docket without change and may be made available online at  
HYPERLINK "http://www.epa.gov/edocket"  http://www.epa.gov/edocket ,
including any personal information provided, unless the objection
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 www.regulations.gov or email.  The www.regulations.gov
website 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 objection.  If you send an email objection directly to EPA
without going through www.regulations.gov, your email address will be
automatically captured and included as part of the objection that is
placed in the public docket and made available on the Internet.  If you
submit an electronic objection, EPA recommends that you include your
name and other contact information in the body of your objection and
with any disk or CD-ROM you submit.  If EPA is unable to read your
objection and contact you for clarification due to technical
difficulties, EPA may not be able to consider your objection. 
Electronic files should avoid the use of special characters and any form
of encryption and should be free of any defects or viruses.  

DOCKET:  All documents in the docket are listed in the   HYPERLINK
"http://www.regulations.gov"  www.regulations.gov  index.  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 www.regulations.gov or in hard copy at the EPA Docket Center, EPA
West, Room B102, 1301 Constitution Avenue, 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:	Questions concerning this action should
be addressed to Robert L. Miller, EPA Headquarters, CAMD (6204J), 1200
Pennsylvania Ave., NW, Washington, DC 20460, telephone (202) 343-9077,
and email   HYPERLINK "mailto:miller.robertl@epa.gov" 
miller.robertl@epa.gov .  If mailing by courier, address package to
Robert L. Miller, 1310 L St., NW, Room 254B, Washington, DC 20005.

SUPPLEMENTARY INFORMATION:

Outline:

General Information.

What is the Purpose of this NODA?

What are the Requirements for Requesting and Receiving     CAIR CSP
Allowances and the Procedures for Allocating Such Allowances? 

How is EPA Applying to Individual CAIR Units the Requirements for
Requesting and Receiving CAIR CSP Allowance Allocations?

How do I Interpret the Data Made Available by this NODA?

General Information

EPA published the Clean Air Interstate Rule (CAIR) on May 12, 2005 (70
Fed. Reg. 25162 (May 12, 2005)), in which EPA determined that 28 States
and the District of Columbia contribute significantly to nonattainment
and interfere with maintenance of the national ambient air quality
standards (NAAQS) for fine particles (PM2.5) and/or 8-hour ozone in
downwind States in the eastern half of the country.  As a result, EPA
required those upwind States to revise their state implementation plans
(SIPs) to include control measures that reduce emissions of sulfur
dioxide (SO2), which is a precursor to PM2.5, and/or nitrogen oxides
(NOX), which is a precursor to both ozone and PM2.5.  Under CAIR, States
may implement these reduction requirements by participating in
EPA-administered CAIR SO2, NOX annual, and NOX ozone season trading
programs or by adopting any other control measures. 

On April 28, 2006, EPA promulgated FIPs for all States covered by CAIR
in order to ensure the emissions reductions required by CAIR are
achieved on schedule (71 Fed. Reg. 25328 (Apr. 28, 2006)).  The CAIR
FIPs require electric generating units (EGUs) to participate in
EPA-administered CAIR SO2, NOX annual, and NOX ozone season trading
programs, as appropriate.  These trading programs impose essentially the
same requirements as, and are integrated with, the respective CAIR SIP
trading programs.    Further, as provided in a rule published by EPA on
November 2, 2007, a State’s CAIR FIPs are automatically withdrawn when
EPA approves a SIP revision, in its entirety and without any conditions,
as fully meeting the requirements of CAIR.  Where only portions of the
SIP revision are approved, the corresponding portions of the FIPs are
automatically withdrawn and the remaining portions of the FIP stay in
place.  Finally, the CAIR FIPs also allow States to submit abbreviated
SIP revisions that, if approved by EPA, will automatically replace or
supplement certain CAIR FIP provisions (e.g., the methodology for
allocating NOX allowances to sources in the State), while the CAIR FIP
remains in place for all other provisions. As a result of EPA’s
approval of some States’ CAIR-related SIP or abbreviated SIP
provisions, EPA is administering the CAIR CSP provisions in the CAIR NOX
annual trading program only for the States of Delaware, Louisiana,
Maryland, Pennsylvania, and Wisconsin, and the remaining States are
responsible for administering the CAIR CSP for their respective CAIR
units. 

EPA was sued by a number of parties on various aspects of CAIR, and on
July 11, 2008, the U.S. Court of Appeals for the District of Columbia
Circuit issued its decision to vacate and remand both CAIR and the
associated CAIR FIPs in their entirety.  North Carolina v. EPA, 531 F.3d
836 (D.C. Cir. Jul. 11, 2008).  However, in response to EPA's petition
for rehearing, the Court issued an order remanding CAIR to EPA without
vacating either CAIR or the CAIR FIPs.   North Carolina v. EPA, 550 F.3d
1176 (D.C. Cir. Dec. 23, 2008).  The Court thereby left CAIR in place in
order to “temporarily preserve the environmental values covered by
CAIR” until EPA replaces it with a rule consistent with the Court’s
opinion.  Id. at 1178.  The Court directed EPA to "remedy CAIR’s
flaws" consistent with its July 11, 2008 opinion, but declined to impose
a schedule on EPA for completing that action.  Id.  

This NODA provides data and other information concerning the allocation
of CAIR CSP allowances under (97.143 of the CAIR FIPs for CAIR units in
Delaware, Louisiana, Maryland, Pennsylvania, and Wisconsin.  That rule
requires that the Administrator determine by order the CAIR CSP
allowance allocations and provide an opportunity for the public to
submit objections. 

Does this Action Apply to Me?

This NODA applies to CAIR units in the States of Delaware, Louisiana,
Maryland, Pennsylvania, and Wisconsin whose owners and operators
requested on or before May 1, 2009 a CAIR CSP allowance allocation.  If
you have any questions regarding the applicability of this NODA to a
particular entity, consult the person listed in the preceding section
under “for further information contact.”

What Should I Consider as I Prepare and Submit any Objections for EPA?

When preparing and submitting objections, remember to:

(1) Identify the NODA by docket number and other identifying information
(subject heading, Federal Register date and page number).

(2) Follow directions.  EPA may ask you to respond to specific questions
or organize objections in a specific manner.

(3) Make sure to submit your objections by the deadline identified.

To expedite EPA’s review, you are encouraged to send a separate copy
of your objections, in addition to the copy you submit to the official
docket, to Robert L. Miller, EPA Headquarters, CAMD (6204J), 1200
Pennsylvania Ave., NW, Washington, DC 20460 and email   HYPERLINK
"mailto:miller.robertl@epa.gov"  miller.robertl@epa.gov .  If you email
the copy of your objections to Mr. Miller, put “objection for Docket
Number OAR-2009-0430” in the subject line to alert Mr. Miller that an
objection is included.  If mailing by courier, address package to Robert
L. Miller, 1310 L St., NW, Room 254B, Washington, DC 20005.

Do not submit CBI to EPA through www.regulations.gov or email.  Clearly
mark any portion of the information that you claim to be CBI.  For CBI
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 objection that includes information claimed as
CBI, a copy of the objection 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:  Robert L. Miller, EPA
Headquarters, CAMD (6204J), 1200 Pennsylvania Avenue, NW, Washington DC
20460.

2	What the Purpose of This NODA?

In this NODA, EPA is making available under the CAIR FIPs for Delaware,
Louisiana, Maryland, Pennsylvania, and Wisconsin the following data and
other information: (1) the list of each CAIR unit in these States  for
which the owners and operators requested, and that qualifies or does not
quality for, allocation of CAIR CSP allowances, (2) the data for each
such unit from quarterly emission reports submitted under EPA’s
monitoring, reporting, and recordkeeping rules applicable to trading
programs (i.e., 40 CFR part 75) by the owners and operators, and EPA’s
interpretations of (97.143, on which are based the determination of each
unit’s qualification or failure to qualify for a CAIR CSP allowance
allocation and the calculation of the amount of CAIR CSP allowances that
each qualifying unit receives, (3) the calculation, and resulting
amount, of the CAIR CSP allowance allocations for each qualifying unit;
and (4) the basis for each allocation or denial, in whole or in part, of
an allocation for each unit.  

The purpose of making the data available for objection is to ensure that
the data on which the applicable determinations for each unit are based
are correct.  EPA is providing unit owners, unit operators, and the
public an opportunity to make objections to any of the data made
available in this NODA.  Any person objecting to any of the data should
explain the basis for his or her objection, should provide alternative
data and supporting documentation, and explain why the alternative data
are the best available data.  Supporting documentation can include, but
is not limited to, spreadsheets, explanations of why the data on such
spreadsheets are more accurate, and information on the data source.  In
general, EPA does not anticipate revising a unit’s NOX emission rate
and heat input data reported to EPA in quarterly emissions reports in
accordance with part 75 because, in submitting the reports, the
designated representative of the unit’s owners and operators certified
the data’s correctness, completeness, and consistency with part 75
requirements.  However, EPA will consider any objections to the data.

The provisions of (97.143 -- which govern the submission of requests for
CAIR CSP allowance allocations and set forth the criteria for
qualification for, and the methodologies for calculating, such
allocations for each individual unit -- are final and are not being
reopened in this NODA.  These provisions are described in this NODA
solely for informational purposes and are not open for objection. 
However, EPA’s interpretation of these rule provisions in applying
them to each unit requesting a CAIR CSP allowance allocation, and
EPA’s reasons for allocating such allowances or denying such
allocations are open for objection, subject to the above-described
limitation that  the provisions of (97.143 themselves are not a proper
subject of objection.  See 40 CFR 97.143(d)(4) (explaining that
objections must be limited to whether EPA’s determination of each
unit’s CAIR CSP allowance allocations are in accordance with
(97.143(b), (c), and (d)(2) and (3)). 

3	What are the Requirements for Requesting and Receiving CAIR CSP
Allowances and the Procedures for Allocating Such Allowances?

In the final CAIR FIPs, EPA adopted the CAIR NOX Annual Trading Program
as part of the federal remedy for CAIR.  The CAIR FIPs established, for
each State subject to CAIR with respect to annual NOX emissions, an
amount of CAIR NOX allowances -- comprising the amounts in the State NOX
annual budget and the State’s share of the CAIR CSP -- that EPA
allocates to CAIR units in the State.  As explained in the preamble of
the CAIR FIPs (71 Fed. Reg. at 25361-62), the CAIR CSP was established
to provide allowances to units subject to the CAIR NOX Annual Trading
Program to incentivize early, annual NOX emissions reductions and to
prevent undue risk to the reliability of electricity supply due to
compliance with 2009 CAIR NOX annual emissions limitation.  The CAIR CSP
comprises 200,000 vintage 2009 CAIR NOX allowances for the entire CAIR
region, apportioned to each State.  EPA is administering the allocation
of the portions of the CAIR CSP for Delaware, Louisiana, Maryland,
Pennsylvania, and Wisconsin, which are 843 allowances for Delaware,
2,251 allowances for Louisiana, 4,670 allowances for Maryland, 16,009
allowances for Pennsylvania, and 4,898 allowances for Wisconsin.  Under
(97.143(b) and (c), the owners and operators of any unit for which CAIR
CSP allowances were sought had to submit to EPA a request for CAIR CSP
allowance allocations by May 1, 2009.  The owners and operators of a
CAIR unit in these States could request a CAIR CSP allowance allocation
if (1) the unit made early NOX reductions in 2007 or 2008 ((97.143(b))
or (2) if the owners and operators demonstrated that compliance with the
CAIR NOX emissions limitation for 2009 would create an undue risk to the
reliability of the electricity supply during 2009 ((97.143(c)).    

In (97.143(b), the CAIR FIPs provide both the specific criteria for
determining whether a CAIR unit qualifies to receive a CAIR CSP
allowance allocation for early NOX reductions and the methodology for
determining the amount of early NOX reductions and calculating the CAIR
CSP allowance allocation based on such reductions.  To qualify for a
CAIR CSP allowance allocation under (97.143(b), a unit must meet three
criteria.  First, the unit must have for each year (i.e., 2007 and/or
2008) for which the allocation is sought, a NOX annual emission rate
below 0.25 lb/mmBtu.  In addition, for any unit included in an Acid Rain
Program NOX averaging plan under (76.11, the weighted average annual NOX
emission rate for the group of units under such averaging plan for the
year for which the allocation is sought must be at or below the weighted
average annual group NOX emission rate for the year preceding that year.
 Lastly, the unit must demonstrate that it achieved a NOX emission
reduction in each year for which the allocation is sought.

As EPA explained in the preamble of the CAIR FIPs (71 Fed. Reg. 25361),
the CSP under the CAIR FIP is modeled on the CSP in (96.143 of the CAIR
model trading rules.  The preamble of the CAIR model trading rules in
turn explained that the CSP in the CAIR model trading rules was: 

patterned after the NOX SIP Call’s CSP . . . Similarities include:
Limiting the total number of allowances that can be distributed;
limiting the years in which CSP allowances can be earned; populating the
CSP with allowances vintaged the first compliance year; and using
distribution criteria of early reductions and need.  70 Fed. Reg. 25162,
25286 (May 12, 2005).

Under the NOX SIP Call, as originally promulgated by EPA, May 1, 2003
was the commencement date, and 2003 was the first compliance year, of
the NOX Budget Trading Program, which covered ozone season (i.e., May
1-September 30) NOX emissions, rather than annual NOX emissions.  The
NOX SIP Call CSP was a pool of 200,000 allowances available for each
unit that “reduce[d] its NOX emission rate in the 2001 or 2002 control
period [i.e., ozone season]”.  40 CFR 96.55(c); see also 40 CFR
51.123(e)(4)(iii)(A)(2) (requiring verification of emissions reduction
“having occurred during an ozone season between September 30, 1999 and
May 1, 2003”).  The unit was required to monitor NOX emissions in
accordance with the NOX Budget Trading Program (generally involving the
use of continuous emissions monitoring systems in accordance with part
75) starting in the 2000 control period and thereafter.  In order to
qualify for NOX SIP Call CSP allowances for 2001 or 2002 early
reductions, the unit had to have a NOX emission rate in the respective
year of less than 0.25 lb/mmbtu and less than 80% of the NOX emission
rate in 2000. 40 CFR 96.55(c)(1) and (3).  In short, the requirement
that early reductions occurred in 2001 or 2002 meant that the unit had
to have an emission rate in 2001 or 2002 respectively that was less than
that unit’s emission rate in the year preceding the required period
(2001-2002) for the early reductions, i.e., 2000.  See 63 Fed. Reg.
57414 (explaining that monitored emissions data “from the 2000 ozone
season shall be used to establish a baseline emission rate” that the
unit’s emission rate in 2001 or 2002 must be at least 20% below).  The
NOX SIP Call CSP was also available for sources for which compliance in
2003 would create “undue risk for the reliability of the electricity
supply” (40 CFR 51.121(e)(4)(iii)(B)(2)(i)) or comparable undue risk
for a non-electric generating source or its associated industry (40 CFR
51.121(e)(4)(iii)(B)(2)(ii).   

The requirements for qualifying for the CAIR CSP -- which, as discussed
above, was patterned after the NOX SIP Call CSP -- are structured in a
similar way to the NOX SIP Call CSP qualification requirements.  In
particular, the first year for compliance under the CAIR NOX Annual
Trading Program is 2009, and, in order to qualify for the CAIR CSP for
early reductions, a unit must “achieve[ ] emissions reductions in 2007
and 2008“.  40 CFR 97.143(b); see also 40 CFR 51.123(e)(4)(iii)(A)(2)
(stating that emission reductions must “have occurred during 2007 and
2008”) and 40 CFR 96.143(b) (CAIR model trading rule provision
requiring emission reductions “achieve[d] in 2007 and 2008”).
Consistent with the approach adopted for determining qualification for
the NOX SIP Call CSP, EPA interprets the CAIR CSP qualification
requirement for early reductions to mean that the unit must have an
emission rate in 2007 or 2008 that is less than the unit’s emission
rate in the year before 2007-2008, i.e., 2006.  In short, the unit’s
emission rate in 2006 is used to establish the baseline emission rate
for determining whether the unit reduced its emission rate in 2007 or
2008.  Thus, in order to qualify for allocations from the CSP under the
CAIR FIPs, a unit must -– in addition to meeting in 2007 or 2008 the
above-described requirements concerning the 0.25 lb/mmBtu ceiling on the
annual NOX emission rate and the weighted average group NOX emission
rate in any NOX averaging plan covering the unit -- have an annual NOX
emission rate in 2007 or 2008 below the unit’s 2006 annual NOX
emission rate.

Once EPA determines which individual units in a given State meet these
qualification requirements for receiving a CAIR CSP allowance allocation
under (97.143(b) for 2007 and/or 2008, EPA then determines the amount of
such allocation for each qualifying unit for each of the applicable
years.  EPA calculates such allocation by: multiplying the difference
between 0.25 lb/mmBtu and the unit’s annual NOX emission rate (rounded
to the nearest hundredth) for such year by the annual heat input (in
mmBtu) of the unit for such year; dividing the results by 2,000 lb/ton;
and rounding to the nearest whole number of tons as appropriate.

The CAIR FIPs, like the NOX SIP Call, provide a second means of
qualifying for CSP allowance allocations.  Specifically, in (97.143(c),
the CAIR FIPs set forth specific criteria that a CAIR unit must meet in
order to qualify for a CAIR CSP allowance allocation in order to prevent
the unit’s compliance for 2009 with CAIR NOX emission limitation under
the CAIR NOX Annual Trading Program (i.e., the requirement to hold CAIR
NOX allowances covering annual NOX emissions) from creating undue risk
to the reliability of the electricity supply.  A request for CAIR CSP
allowances under that provision must demonstrate that, without the
requested allowances, compliance for 2009 will result in such undue
risk.  That demonstration must include a showing that it would not be
feasible for the unit’s owners and operators to obtain sufficient
electricity from other electricity generators during the installation of
emission control technology at the unit for compliance, or to obtain
sufficient allowances, to avoid undue risk.  If EPA determines that any
individual units qualify for CAIR CSP allowances under the electric
reliability criterion, EPA then determines the minimum amount of CAIR
CSP allowance that each such unit needs to prevent undue risk.  See 40
CFR 97.143(c)(1) (requiring request be for “minimum amount” of
allowances necessary to remove undue risk) and 97.143(d)(1) (requiring
EPA to adjust requests as necessary to make the requested amounts comply
with the requirements of (97.143(b) and (c)).    

Finally, EPA makes any necessary adjustments under (97.143(d)(2) and (3)
to the CAIR CSP allocations calculated under (97.143(b) and (c) in order
to ensure that the total amount of CAIR CSP allowances allocated to
units in a given State does not exceed that State’s share of the CAIR
CSP.  If the sum of all of the calculated allocations for units in a
given State is less than that State’s portion of the CAIR CSP, then
such units are allocated the full calculated amount.  If the sum of all
of the calculated allocations for units in a given State is greater than
that State’s portion of the CAIR CSP, then each unit is allocated its
proportionate share, i.e., the calculated amount multiplied by the
State’s CAIR CSP portion divided by the sum of the calculated amounts
for all units in that State.

Under (97.143(d)(4), by July 31, 2009, EPA must determine by order the
CAIR CSP allowance allocations in accordance with (97.143(d)(1) through
(3) and:

make available to the public each determination of. . . [CAIR CSP
allowance allocations] and will provide an opportunity of submission of
objections to the determination.  Objections shall be limited to
addressing whether the determination is in accordance with [(97.143(b),
(c), and (d)(2)and (3)], as appropriate. Based on any such objections
[EPA] will adjust each determination to the extent necessary to ensure
that it is in accordance with such [rule provisions].  40 CFR
97.143(d)(4). 

In this NODA, EPA is carrying out its responsibilities under
(97.143(d)(4). 

4	How is EPA Applying to Individual CAIR Units the Requirements for
Requesting and Receiving CAIR CSP Allowance Allocations?

On March 18, 2009, EPA sent an email -- to the designated
representatives, alternate designated representatives, and their
respective agents under the CAIR NOX allowance tracking system for CAIR
units in Delaware, Louisiana, Pennsylvania, and Wisconsin -- that
provided instructions on the proper submission of a CAIR CSP allowance
allocation request. The March 18, 2009 email explained what data should
be submitted with the request, depending on whether the request was made
pursuant to (97.143(b) or (c) and reminded addressees of the May 1, 2009
deadline for such requests.  Among the data elements for a request under
(97.143(b) were: the annual NOX rate of the unit for years 2006, 2007,
and 2008; the annual heat input for years 2007 and 2008; data
demonstrating that the unit made NOX reductions in 2007 or 2008; and the
calculations showing the number of allowances that the unit was entitled
to receive under (97.143(b)(2).  Among the data elements for a request
under (97.143(c) were: the calculation of the minimum amount of
allowances necessary to remove undue risk to electricity supply
reliability and a demonstration that the owners and operators of the
unit involved could not obtain sufficient electricity from other
electricity generators, or sufficient allowances, to prevent such undue
risk.  Because most CAIR units have also been affected units under the
Acid Rain Program since at least 2000, EPA already had access, through
quarterly emissions reports submitted by the unit’s owners and
operators in accordance with part 75 for 2006 through 2008, to the
emissions and other data needed to determine whether most of the units
qualified for CAIR CSP allowance allocations based on early reductions
and, if so, for how many allowances.  Nevertheless, EPA requested from
owners and operators the data elements set forth in the March 18, 2009
email in order to ensure that there were no data errors and that the
owners and operators would know the maximum number of CAIR CSP
allowances the unit could expect to receive.  In contrast to the
information necessary to allocate CAIR CSP allowances for early
reductions, the information necessary to allocate such allowances to
prevent undue risk to electricity supply reliability had not previously
been collected by EPA and, on its face, would reflect a unit owners’
and operators’ unique circumstances concerning the electricity supply
available to them and their customers and the owners’ and operators’
access to allowances.  EPA therefore required that the owners and
operators provide this information as part of any request for CAIR CSP
allowances to prevent undue risk to electricity supply reliability. 

EPA received timely requests for CAIR CSP allowance allocations for 2007
and 2008 for about 60 CAIR units in Delaware, Louisiana, Maryland,
Pennsylvania, and Wisconsin.  Many of the CAIR CSP allowance allocation
requests expressly stated that the owners and operators were seeking
allowances pursuant to (97.143(b).  However, some requests did not
identify the provision under which CAIR CSP allowances were being
sought, but provided data that were only relevant to qualification for
such allowances under (97.143(b).  Moreover, while many of the requests
provided all of the data needed, and referenced in the March 18, 2009
e-mail, for determining qualification for allowances under (97.143(b),
some provided only a portion of such data or provided incorrect data. 
Some requests either overstated or understated the amount of allowances
the unit involved was qualified to receive.  In many cases, those
requests were based on emissions data that differed from the
EPA-accepted emissions values in the quarterly emission reports
submitted and certified by the designated representatives of the owners
and operators of the units in under part 75, and no explanation or
justification supporting the use of the values not certified under part
75 was provided.  Consistent with the requirements of (97.143(b) to use
data provided in accordance with part 75 and because the quarterly
emissions report values had previously been certified as correct,
complete, and consistent with the requirements (such as those for
quality assurance) of part 75, EPA maintains that the such data are the
correct data to use for purposes of allocating CAIR CSP allowances.  See
40 CFR 97.143(b)(1) (requiring a unit to monitor and report NOX
emissions during 2007-2008 in accordance with subpart HH of the CAIR FIP
NOX annual trading program rules, which is based on, and references, 40
CFR part 75); and 40 CFR 75.64(c) (requiring certification statement in
quarterly emissions reports).  In other cases, the requests reflected a
misunderstanding, or misapplication, of the CAIR CSP allocation
methodology (which is summarized above) in (97.143(b).   None of the
requests specifically referenced (97.143(c) or provided the information
needed, and referenced in the March 18, 2009 e-mail, for determining
qualification for allowances under that provision.  Finally, in the case
of one company’s units, the request did not reference either
(97.143(b) or (97.143(c) as the basis for receiving CAIR CSP allowances
and instead requested such allowances on other grounds. 

Rather than denying any request that did not provide all the necessary
data, provided incorrect data, miscalculated the amount of allowances
for which the unit qualified, or failed to state expressly that the
request was being make under (97.143(b) or (97.143(c), EPA has decided
to evaluate each unit for which a timely request for CAIR CSP allowances
on any grounds was submitted, determine if that unit qualifies for
allowances for early reductions under (97.143(b), and, if so, determine
the maximum amount of allowances that the unit can receive under that
provision.  EPA is taking this approach because, for the reasons
discussed above, EPA already has the necessary data to make such
determinations for every unit for which a timely request was submitted
and therefore requesting owners and operators to amend or correct their
requests would unnecessarily delay completion of the CAIR CSP allowance
allocations. 

  However, with regard to CAIR CSP allowance allocations to prevent
undue risk to electricity supply reliability under (97.143(c), EPA does
not have the information necessary to support a request for allowances
under that provision.  As discussed above, this information is not
already available to EPA and involves circumstances unique to the
particular owners and operators involved.  Consequently, EPA is taking
the approach of considering a unit’s qualification for CAIR CSP
allowances under (97.143(c) only if the owners and operators of the unit
expressly request allowances under that provision.  Because none of the
requests received by EPA referenced (97.143(c) as a basis for the unit
involved obtaining CAIR CSP allowances, much less provided the necessary
information to demonstrate qualification for such allowances under that
provision, EPA has determined that no CAIR CSP allowances are being
allocated under the provision.  

Applying the approaches discussed above, EPA evaluated each individual
unit for which the owners and operators submitted a request for a CAIR
CSP allowance allocation and determined whether the unit qualified under
(97.143(b) for such allowances and, if so, calculated the maximum amount
for which the unit qualified, reflecting any adjustment necessary to
ensure that the total amount of such allowances allocated to the units
in a given State would not exceed that State’s portion of the CAIR
CSP.  The detailed unit-by-unit data, determinations, and calculations
are set forth in a technical support document, which is a a single Excel
spreadsheet titled “CAIR FIP CSP Allocations Data” and is available
on EPA’s CAMD website at http://www.epa.gov/airmarkets/cair/csp and in
the CAIR CSP Docket (Docket ID No. OAR-2009-0430).   The unit-by-unit
allocations and denials of allocations that are shown in the technical
support document are summarized below:

For 2007:

1.  Each individual unit whose 2007 annual NOX  emission rate reported
in accordance with part 75 was less than 0.25 lb/mmBtu and less than the
unit’s 2006 annual NOX emission rate reported in accordance with part
75 and whose NOX averaging plan (if any) had a weighted average group
NOX emission rate for 2007 determined in accordance with part 75 that
did not exceed the plan’s weighted average group NOX emission rate for
2006 reported in accordance with part 75 is allocated CAIR CSP
allowances calculated in accordance with (97.143(b) and (d).  To the
extent the amount allocated is less than the amount requested for the
unit, EPA is denying, in part, the request, as well as providing an
allocation.  In virtually all cases, the basis for such denials is that
the request was based on data not certified under part 75 for which no
supporting explanation or justification was provided or an
interpretation of (97.143(b) and (d) that was inconsistent with the rule
text or EPA’s interpretation (set forth in this NODA) of the rule
text.  

2.  Each individual unit whose 2007 annual NOX emission rate reported in
accordance with part 75 exceeded 0.25 lb/mmBtu or exceeded the unit’s
2006 annual NOX emission rate reported in accordance with part 75 or
whose NOX averaging plan (if any) had a weighted average group NOX
emission rate for 2007 determined in accordance with part 75 exceeded
the plan’s weighted average group NOX emission rate for 2006
determined in accordance with part 75 is not allocated any CAIR CSP
allowances.  For each of these units, EPA is denying in full the
requested allocation.

For 2008: 

3.  Each individual unit whose 2008 annual NOX  emission rate reported
in accordance with part 75 was less than 0.25 lb/mmBtu and less than the
unit’s 2006 annual  NOX emission rate reported in accordance with part
75 and whose NOX averaging plan (if any) had a weighted average group
NOX emission rate for 2008 determined in accordance with part 75 that
did not exceed the plan’s weighted average group NOX emission rate for
2007 reported in accordance with part 75 is allocated CAIR CSP
allowances calculated in accordance with (97.143(b) and (d).  To the
extent the amount allocated is less than the amount requested for the
unit, EPA is denying, in part, the request, as well as providing an
allocation.  In virtually all cases, the basis for such denials is that
the request was based on data not certified under part 75 for which no
supporting explanation or justification was provided or an
interpretation of (97.143(b) and (d) that was inconsistent with the rule
text or EPA’s interpretation (set forth in this NODA) of the rule
text.  

4. Each individual unit whose 2008 annual NOX emission rate reported in
accordance with part 75 exceeded 0.25 lb/mmBtu or exceeded the unit’s
2006 annual NOX emission rate reported in accordance with part 75 or
whose NOX averaging plan (if any) had a weighted average group NOX
emission rate for 2008 determined in accordance with part 75 exceeded
the plan’s weighted average group NOX emission rate for 2007
determined in accordance with part 75 is not allocated any CAIR CSP
allowances.  For each of these units, EPA is denying in full the
requested allocation.

For 2007 and 2008:

5. In addition to the basis stated in paragraphs 1 through 4 above, for
allocating and for denying in full or in part a request for CAIR CSP
allowance allocations, there is an additional basis for denying in full
or in part the allocations for individual units covered by one request
for such allocations.  In that request, a company requested that each of
its units in Louisiana be given a certain amount of CAIR CSP allowances
(exceeding the amount allocated for the unit by EPA in this NODA) on the
ground that these units were underallocated CAIR NOX allowances and CAIR
NOX ozone season allowances.  As noted by the company, EPA took the
approach in CAIR of establishing State NOX annual and NOX ozone season
budgets using, inter alia, the heat input for units in the State and
fuel factors that gave the greatest weight to heat input from coal, less
weight to heat input from oil, and the least weight to heat input from
natural gas.  On appeal the U.S. Court of Appeals for the District of
Columbia determined that “EPA’s approach contravenes section
110(a)(2)(D)(i)(I)” (North Carolina, 531 F.3d at 921 and that “the
resulting state budgets were arbitrary and capricious” (id.). 
Subsequently, the Court remanded CAIR, without vacatur, on this and
several other issues “so that EPA may remedy CAIR’s flaws.”  North
Carolina, 550 F.3d at 1178.  According to the company, revising the
State budgets and State allowance allocation methodologies to eliminate
the use of the fuel factors would result in the company’s units in
Louisiana being allocated a total of 10,764 more CAIR NOX annual
allowances and 4,913 more CAIR NOX ozone season allowances in 2009 under
the CAIR trading programs.  Entergy’s April 30, 2009 Compliance
Supplement Pool CAIR NOx Allowance Request at 1.  In its April 30, 2009
request for CAIR CSP allowance allocations, the company requested that
its units in Louisiana therefore be allocated “from the Compliance
Supplement Pool” 10,764 CAIR NOX annual allowances and 4,913 CAIR NOX
ozone season allowances.  Entergy’s April 30, 2009 Compliance
Supplement Pool CAIR NOx Allowance Request at 1.  

In this request, the company did not reference (97.143(b) or (c) or
claim that its units should be given CAIR CSP allowances under those
provisions and provided only some of the information necessary to apply
(97.143(b) and none of the information necessary to apply (97.143(c). 
In essence, the company requested that EPA allocate CAIR CSP allowances
on grounds that (97.143 does not allow to be used for making such
allocations.  Nevertheless, for reasons discussed above, EPA evaluated
whether the company’s units in Louisiana qualify for CAIR CSP
allowance allocations under grounds provided for in (97.143. 
Specifically, for the reasons discussed above, EPA is determining in
this NODA that the units can be allocated CAIR CSP allowances to the
extent the units qualify for allocations for early reductions under
(97.143(b).  However, the amounts determined by EPA for the company’s
individual units are less than the amounts requested by the company,
and, to the extent of the differences between these amounts for each
individual unit, EPA is denying in whole (with regard to units for which
EPA is allocating no CAIR CSP allowances) or in part (with regard to
units for which EPA is allocating some CAIR CSP allowances) the
company’s request.  In order to allocate the full, requested amount of
CAIR CSP allowances for any of the individual units covered by the
company’s request, EPA would have to ignore, and contravene, the
requirements of the rule ((97.143)  governing the qualification of a
unit for CAIR CSP allowance allocations and the calculation of the
amount of such allocations.  For these reasons, EPA denies in whole or
in part (as applicable) the company’s request for CAIR CSP allowance
allocations for each of the company’s units in Louisiana. 

5	How do I Interpret the Data Made Available by this NODA?

As discussed above, the detailed unit-by-unit data, determinations, and
calculations with respect to CAIR CSP allowance allocations and denials
of allocations are contained in a technical support document, which is a
single Excel spreadsheet titled “CAIR FIP CSP Allocations Data”.   

The Excel spreadsheet is divided into 4 worksheets.  For each year 2007
and 2008, there are two worksheets: one addressing “allocations” of
CAIR CSP allowances, i.e., the allocations for all individual units
receiving some allowances, whether the amount is less than, equals, or
exceeds the amount requested; and the other addressing “denials of
allocations” of CAIR CSP allowances, i.e., the denials for all
individual units receiving no allowances and so whose request is denied
in full.  The CAIR CSP allocation and denial worksheets include: the
relevant data from units’ quarterly emissions reports; column notes
providing the basis for allocations and denials of allocations under
(97.143(b) and (d); and notes at the bottom explaining any adjustment,
under (97.143(d), of each individual unit’s CAIR CSP allowance
allocation to ensure that the total amount of CAIR CSP allowance
allocations do not exceed the relevant State’s portion of the CAIR
CSP.  The basis, provided in the technical support document, for each
allocation and each denial (in full or in part) of allocations is
summarized and supplemented in section 4 of this NODA. 

_______________

Dated

________________

Brian McLean

Director

Office of Atmospheric Programs

 As noted above, the remaining States covered by CAIR or the CAIR FIPs
are administering the allocation of their respective portions of the
CAIR CSP under their SIPs or abbreviated SIPs. 

 On April 28, 2009, Maryland sent essentially the same email to the
designated representatives, alternate designated representatives, and
their respective agents under the CAIR NOX allowance tracking system for
CAIR units in Maryland.

  EPA also received requests for units in Minnesota.  Because EPA
recently proposed to stay the effectiveness of CAIR and the CAIR FIPs to
Minnesota and sources in that State, EPA is not addressing here any
requests concerning Minnesota.  

 The company subsequently revised its calculations of additional amounts
of CAIR allowances its units would be allocated as a result of
eliminating the use of the fuel factors.  These revisions resulted in
turn in revisions of the amount of CAIR CSP allowances the company
requested.  See Entergy’s July 13, 2009 Compliance Supplement Pool
CAIR NOx Allowance Request by Entergy companies (supplementing the
company’s April 30, 2009 request).  The company also noted that the
CAIR CSP does not include any CAIR NOX ozone season allowances.  The
company indicated that EPA should allocate additional CAIR NOX
allowances (apparently from the CAIR CSP) equal to the amount or the
value of the CAIR NOX ozone season allowances requested by the company. 
See Entergy’s July 13, 2009 Compliance Supplement Pool CAIR NOx
Allowance Request by Entergy companies (supplementing the company’s
April 30, 2009 request).  None of these changes in the amounts of CAIR
CSP allowances requested by the company change the amounts of the CAIR
CSP allowances allocated by EPA for the company’s individual units in
Louisiana or affect the basis for EPA’s allocations and denials of
allocations discussed in this NODA.  

  The company’s vague statement that it “believes that allowances
may be in short supply at the end of 2009”  and so the company should
receive CAIR CSP allowances to “help ensure there is no disruption of
service” (Entergy’s July 7, 2009 Compliance Supplement Pool CAIR NOx
Allowance Request by Entergy Companies at 1 (supplementing the
company’s April 30, 2009 request)) does not provide any of the
detailed information required in (97.143(c)(1) and (2) and is entirely
unsupported.  

  The requests of these units are being denied in part. 

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