Environmental Protection Agency · AGENCY: Environmental Protection Agency (EPA). ACTION: ......

Monday,

Augpist 1, 2005

Part II

EnvironmentalProtection Agency40 CFR Part 51

Regional Haze Regulations; Revisions to

Provisions Governing Alternative toSource-Specific Best Available RetrofitTechnology (BART) Determinations;Proposed Rule

Federal Register/Vol. 70, No. 146/Monday, August 1, 2005/Proposed Rules

ENVIRONMENTAL PROTECTIONAGENCY

40 CFR Part 51

[FRL-7944-6]

RIN 2060-AN22

Regional Haze Regulations; Revisionsto Provisions Governing Alternative toSource-Specific Best Available RetrofitTechnology (BART) Determinations

AGENCY: Environmental ProtectionAgency (EPA).ACTION: Proposed rule.

SUMMARY: On July 1, 1999, EPApromulgated regulations to addressregional haze (64 FR 35714). Theseregulations were challenged twice.-OnMay 24, 2002, the U.S. Court of Appealsfor the District of Columbia Circuitissued a ruling vacating the regionalhaze rule in part and sustaining it inpart. American Corn Growers Ass'n v.EPA, 291 F.3d 1 (D.C. Cir. 2002). OnJune 15, 2005, we finalized a ruleaddressing the court's ruling in thatcase. On February 18, 2005, the U.S.Court of Appeals for the District ofColumbia Circuit issued another rulingvacating the regional haze rule in partand sustaining it in part. Center forEnergy and Economic Development v.EPA, No. 03-1222, (D.C. Cir. Feb. 18,2005) ("CEED v. EPA"). In this case, thecourt granted a petition challengingprovisions of the regional haze rulegoverning the optional emissionstrading program for certain westernStates and Tribes (the "WRAP AnnexRule"). Today's proposed rule wouldrevise the provisions of the regionalhaze rule governing alternative tradingprograms, and would provide additionalguidance that is needed.DATES: Comments must be received onor before September 17, 2005. A publichearing will be held on August 17, 2005,in Denver, Colorado. Please refer to thesection on SUPPLEMENTARY INFORMATIONfor more information on the commentperiod and the public hearing.ADDRESSES: Submit your comments,identified by Docket ID No. OAR-2002-0076 by one of the following methods:

Federal eRulemaking Portal: http://www.regulations.gov. Follow the on-lineinstructions for submitting comments.Agency Web site: http://www.epa.govledocket. EDOCKET, EPA's electronicpublic docket and comment system, isEPA's preferred method for receivingcomments. Follow the on-lineinstructions for submitting comments.

E-mail: http://www.epa.gov/edocket.Fax: 202-566-1741.

Mail: OAR Docket, EnvironmentalProtection Agency, Mailcode: B102,1200 Pennsylvania Ave., NW.,Washington, DC 20460. Please include atotal of 2 copies.

Hand Delivery: EPA/DC, EPA West,Room B102, 1301 Constitution Ave.,NW., Washington, DC. Such deliveriesare only accepted during the Docket'snormal hours of operation, and specialarrangements should be made fordeliveries of boxed information.

Instructions: Direct your comments toDocket ID No. OAR-2002-0076. EPA'spolicy is that all comments receivedwill be included in the public docketwithout change and may be madeavailable online at http://www.epa.govedocket, including any personalinformation provided, unless thecomment includes information claimedto be Confidential Business Information(CBI) or other information whosedisclosure is restricted by statute. Donot submit information that youconsider to be CBI or otherwiseprotected through EDOCKET,regulations.gov, or e-mail. The EPAEDOCKET and the federalregulations.gov Web sites are"anonymous access" systems, whichmeans EPA will not know your identityor contact information unless youprovide it in the body of your comment.If you send an e-mail comment directlyto EPA without going throughEDOCKET or regulations.gov, your e-mail address will be automaticallycaptured and included as pait of thecomment that is placed in the publicdocket and made available on theInternet. If you submit an electroniccomment, EPA recommends that youinclude your name and other contactinformation in the body of yourcomment and with any disk or CD-ROMyou submit. If EPA cannot read yourcomment due to technical difficultiesand cannot contact you for clarification,EPA may not be able to consider yourcomment. Electronic files should avoidthe use of special characters, any formof encryption, and be free of any defectsor viruses. For additional informationabout EPA's public docket visitEDOCKET on-line or see the FederalRegister of May 31, 2002 (67 FR 38102).

For additional instructions onsubmitting comments, go to unit II ofthe SUPPLEMENTARY INFORMATION sectionof this document.

Docket: All documents in the docketare listed in the EDOCKET index athttp://www.epa.gov/edocket. Althoughlisted in the index, some information isnot publicly available, i.e., CBI or otherinformation whose disclosure is-restricted by statute. Certain othermaterial, such as copyrighted material,

is not placed on the Internet and will bepublicly available only in hard copyform. Publicly available docketmaterials are available eitherelectronically in EDOCKET or in hardcopy at the OAR Docket, EPA/DC, EPAWest, Room B102, 1301 ConstitutionAve., NW., Washington, DC. The PublicReading Room is open from 8:30 a.m. to4:30 p.m., Monday through Friday,excluding legal holidays. The telephonenumber for tle Public Reading Room is(202) 566-1744, and the telephonenumber for the OAR Docket is (202)566-1742.

FOR FURTHER INFORMATION CONTACT:Kathy Kaufman at 919-541-0102 or bye-mail at [email protected] orTodd Hawes at 919-541-5591 or by e-mail at [email protected].

SUPPLEMENTARY INFORMATION: RegulatedEntities. This proposed rule will affectthe following: State and local permittingauthorities and Indian Tribes containingmajor stationary sources of pollutionaffecting visibility in federally protectedscenic areas.

This list is not intended to beexhaustive, but rather provides a guidefor readers regarding entities likely to beregulated by this action. This list givesexamples of the types of entities EPA isnow aware could potentially beregulated by this action. Other types ofentities not listed could also be affected.To determine whether your facility,company, business, organization, etc., isregulated by this action, you shouldexamine the applicability criteria in PartII of this preamble. If you have anyquestions regarding the applicability ofthis action.to a particular entity, consultthe people listed in the precedingsection.

What Should I Consider as I PrepareMy Comments for EPA?

1. Submitting CBI. Do not submit thisinformation to EPA through EDOCKET,regulations.gov or e-mail. Clearly markthe part or all of the information thatyou claim to be CBI. For CBIinformation in a disk or CD-ROM thatyou mail to EPA, mark the outside of thedisk or CD-ROM as CBI and thenidentify electronically within the disk orCD-ROM the specific information thatis claimed as CBI). In addition to onecomplete version of the comment thatincludes information claimed as CBI, acopy of the comment that does notcontain the information claimed as CBImust be submitted for inclusion in thepublic docket. Information so markedwill not be disclosed except inaccordance with procedures set forth in40 CFR part 2.

44154

Federal Register / Vol. 70, No. 146 / Monday, August 1, 2005 / Proposed Rules

2. Tips for Preparing Your Comments.When submitting comments, rememberto:

A. Identify the rulemaking by docketnumber and other identifyinginformation (subject heading, FederalRegister date and page number).

B. Follow directions-The agencymay ask you to respond to specificquestions or organize comments byreferencing a Code of FederalRegulations (CFR) part or sectionnumber.

C. Explain why you agree or disagree;suggest alternatives and substitutelanguage for your requested changes.

D. Describe any assumptions andprovide any technical information and/or data that you used.

E. If you estimate potential costs orburdens, explain how you arrived atyour estimate in sufficient detail toallow for it to be reproduced.

F. Provide specific examples toillustrate your concerns, and suggestalternatives.

G. Explain your views as clearly aspossible, avoiding the use of profanityor personal threats.

H. Make sure to submit yourcomments by the comment perioddeadline identified.

Public HearingThe EPA will hold one public hearing

on today's proposal. The hearing will beon August 17, 2005, at the EPA Region8 Office Conference Center (secondfloor), 999-18th St. Suite 300, Denver,CO 80202-2466. Because the hearing isbeing held at U.S. government facilities,everyone planning to attend the hearingshould be prepared to show validpicture identification to the securitystaff in order to gain access to themeeting room. The public hearings willbegin at 8 a.m. and continue until 12p.m. Oral testimony will be limited to5 minutes per commenter. The EPAencourages commenters to providewritten versions of their oral testimonieseither electronically (on computer diskor CD-ROM) or in paper copy. Verbatimtranscripts and written statements willbe included in the rulemaking docket. If.you would like to present oral testimonyat the hearing, please notify KathyKaufman at 919-541-0102 or by e-mailat kaufman.kathy .epa.gov or ToddHawes at 919-541-5591 or by e-mail [email protected] by August 7.Persons wishing to present oraltestimony that have not madearrangements in advance should registerby 9 a.m. the day of the hearing. Thepublic hearing will provide interestedparties the opportunity to present data,views, or arguments concerning theproposed rules. The EPA may ask

clarifying questions during the oralpresentations, but will not respond tothe presentations or comments at thattime. Written statements and supportinginformation submitted during thecomment period will be consideredwith the same weight as any oralcomments and supporting informationpresented at a public hearing.

Outline. The contents of today'spreamble are listed in the followingoutline.

I. Overview and BackgroundII. Revisions to Regional Haze Rule

§ 51.308(e)(2)A. Revisions Related to the Demonstration

That an Alternative Program MakesGreater Reasonable Piogress than BART

B. State Options for Complying with§ 51.308(e)(2)[i) as Proposed

C. Analysis under § 51.308(e)(2) when anindependent requirement determines thelevel of emission reductions needed

D. Revisions to § 51.308(e)(2) tostandardize and clarify the minimumelements of emissions trading programsin lieu of BART

Ill. Revisions to Regional Haze Rule § 51.309A. BackgroundB. Proposed Regulatory Framework for

States choosing to implement theGCVTC/WRAP Strategies

IV. Statutory and Executive Order ReviewsA. Executive Order 12866: Regulatory

Planning and ReviewB. Paperwork Reduction ActC. Regulatory Flexibility ActD. Unfunded Mandates Reform ActE. Executive Order 13132: FederalismF. Executive Order 13175: Consultation

and Coordination with Indian TribalGovernments

G. Executive Order 13045: Protection ofChildren from Environmental HealthRisks and Safety Risks

H. Executive Order 13211: Actions ThatSignificantly Affect Energy Supply,Distribution, or Use.

I. National Technology TransferAdvancement Act

J. Executive Order 12898: Federal Actionsto Address Environmental Justice inMinority Populations and Low-IncomePopulations

I. Overview and Background

Today's rulemaking provides thefollowing changes to the regional hazeregulations:

(1) revised regulatory text in§ 51.308(e)(2)(i) in response to the CEEDcourt's remand, to remove therequirement that the determination ofthe BART "benchmark" be based oncumulative visibility analyses, and toclarify the process for making suchdeterminations, including theapplication of BART presumptions forEGUs as contained in Appendix Y to 40CFR 51.

(2) new regulatory text in§ 51.308(e)(2)(vi), to provide minimum

elements for cap and trade programs inlieu of BART,

(3) revised regulatory text in § 51.309,to reconcile the optional framework forcertain western States and Tribes toimplement the recommendations of theGrand Canyon Visibili'y TransportCommission (GCVTC) with the CEEDdecision.

How This Preamble Is Structured.Section I provides background on theClean Air Act (CAA) BARTrequirements as codified in the regionalhaze rule, on the DC Circuit Courtdecision which remanded parts of therule, and on the June 2005 BART rule.Section II discusses specific issuesrelating to the proposed revisions to§ 51.308(e)(2) of the Regional Haze Rulegoverning alternatives to source-by-source BART. Section III discussesspecific issues relating to the proposedrevisions to § 51.309 of the RegionalHaze Rule pertaining to the optionalemissions trading program for certainwestern States and Tribes. Section IVprovides a discussion of how thisrulemaking complies with therequirements of Statulory and ExecutiveOrder Reviews.

The Regional Haze RLIe and BARTGuidelines

In 1999, we published a final rule toaddress a type of visibility impairmentknown as regional haze (64 FR 35714,July 1, 1999). The regional haze rulerequires States to submitimplementation plans (SIPs) to addressregional haze visibility impairment in156 Federally-protected parks andwilderness areas. These 156 scenic areasare called "mandatory Class I Federalareas" in the Clean Air Act (CAA),' butare referred to simply as "Class I areas"in today's rulemaking. The 1999 rulewas issued to fulfill a long-standing EPAcommitment to address regional hazeunder the authority and requirements ofsections 169A and 169B of the CAA.

As required by the CAA, we includedin the final regional haze rule arequirement for BART for certain largestationary sources that were put in placebetween 1962 and 1977. We discussedthese requirements in detail in thepreamble to the final rule (64 FR 35737-35743). The regulatory requirements forBART were codified at 40 CFR51.308(e), and in definitions that appearin 40 CFR 51.301.

In the preamble to the regional hazerule, we committed to issuing furtherguidelines to clarify the requirements ofthe BART provision. We announced

ISee, e.g. CAA Section 169(a)(1).

44155


these final guidelines on June 15, 2005.2The purpose of the BART guidelines isto assist States as they identify which oftheir BART-eligible sources shouldundergo a BART analysis (i.e., whichare "sources subject to BART"), andselect controls in light of the statutoryfactors listed above ("the BARTdetermination").

We explained in the preamble to the1999 regional haze rule that the BARTrequirements in section 169A(b)(2)(A) ofthe CAA demonstrate Congress' intentto focus attention directly on theproblem of pollution from a specific setof existing sources (64 FR 35737). TheCAA requires that any of these existing.sources "which, as determined by theState, emits any air pollutant which mayreasonably be anticipated to cause orcontribute to any impairment ofvisibility [in a Class I area]," shallinstall the best available retrofittechnology for controlling emissions.3

In determining BART, the CAA requiresthe State to consider several factors thatare set forth in section 169A(g)(2) of theCAA, including the degree ofimprovement in visibility which mayreasonably result from the use of suchtechnology.

The regional haze rule addressesvisibility impairment resulting fromemissions from a multitude of sourceslocated across a wide geographic area.Because the problem of regional haze iscaused in large part by the long-rangetransport of emissions from multiplesources, and for certain technical andother reasons explained in thatrulemaking, we adopted an approachthat required States to look at thecontribution of all BARlCI sources to theproblem of regional haze in determiningboth applicability and the appropriatelevel of control. Specifically, we hadconcluded that if a source potentially *

subject to BART is located in an areafrom which pollutants may betransported to a Class I area, that source"may reasonably bq anticipated to causeor contribute" to visibility impairmentin the Class I area. Similarly, we alsoconcluded that in weighing the factorsset forth in the statute for determiningBART, the States should consider thecollective impact of BART sources onvisibility. In particular, in consideringthe degree of visibility improvementthat could reasonably be anticipated toresult from the use of such technology,we stated that the State should considerthe degree of improvement in visibilitythat would result from the cumulativeimpact of applying controls to all

2 See http://www.epa.gov/visibilitylactions.htm#bart1.

3CAA Sections 169A(b}(2) and (g)(7).

sources subject to BART. We concludedthat the States should use this analysisto determine the appropriate BARTemission limitations for specificsources.

4

The 1999 regional haze rule alsoincluded § 51.309, containing thestrategies developed by the GrandCanyon Visibility TransportCommission (GCVTC). Certain westernStates and Tribes were eligible to submitimplementation plans under § 51.309 asan alternative method of achievingreasonable progress for Class I areaswhich were covered by the GCVTC'sanalysis-i.e., the 16 Class I areas or theColorado Plateau. In order for States andTribes to be able to utilize this section,however, the rule provided that EPAmust receive an "Annex" to theGCVTC's final recommendations. Thepurpose of the Annex was to providethe specific provisions needed totranslate the GCVTC's generalrecommendations for stationary sourceSO 2 reductions into an enforceableregulatory program. The rule providedthat such an Annex, meeting certainrequirements, be submitted to EPA nolater than October 1, 2000. See§§ 51.309(d)(4) and 51.309(f).

American Corn Growers v. EPA

In American Corn Growers v. EPA,291 F.3d 1 (DC Cir. 2002), industrypetitioners challenged EPA'sinterpretation of the BARTdetermination process and raised otherchallenges to the rule. The court inAmerican Corn Growers concluded thatthe BART provisions in the 1999regional haze rule were inconsistentwith the provisions in the CAA "givingthe states broad authority over BARTdeterminations." 291 F.3d at 8.Specifically, with respect to the test fordetermining whether a source-is subjectto BART, the court held that the methodEPA had prescribed for determiningwhich eligible sources are subject toBART illegally constrained the authorityCongress had conferred on the States.Id. The court did not decide whether thegeneral collective contributipn approachto determining BART applicability wasnecessarily inconsistent with the CAA.Id. at 9. Rather, the court stated that "[i]fthe [regional haze rule] contained somekind of a mechanism by which a state-could exempt a BART-eligible source onthe basis of an individualizedcontribution determination, thenperhaps the plain meaning of the Actwould not be violated. But the [regional

4 See 66 FR 35737-35743 for a discussion of therationale for the- ART requirements in the 1999regional haze rule.

haze rule] contains no suchmechanism." Id. at 12.

The court in American Corn Growersalso found that our interpretation of theCAA requiring the States to consider thedegree of improvement in visibility thatwould result from the cumulativeimpact of applying controls indetermining BART was inconsistentwith the language of the Act. 291 F.3dat 8. Based on its review of the statute,the court concluded that the fivestatutory factors in section 169A(g)(2)"were meant to be considered togetherby the states." Id. at 6. The final rulesigned on June 15, 2005 responded tothe American Corn Growers court'sdecision on the BART provisions byamending the regional haze rule at 40CFR 51.308 and by finalizing changes tothe BART guidelines'at 40 CFR part 51,.appendix Y. 5 These changes eliminatethe previous constraint on Statediscretion and provide States withappropriate techniques and methods fordetermining which BART-eligiblesources "may reasonably be anticipatedto cause or contribute to anyimpairment of visibility in anymandatory Class I Federal area." Inaddition, the revised regulations list thevisibility improvement factor with theother statutory BART determinationfactors in § 51.308(e)(1)(A), so thatStates will be required to consider allfive factors, including visibility impacts,on an individual source basis whenmaking each individual source BARTdetermination.

The Annex Rule

In a rule dated June 5, 2003, EPAapproved the WRAP's Annex to theGCVTC report, which had beensubmitted by the WRAP prior to October1, 2000, in accordance with § 51.309(f).68 FR 33764, June 5, 2003. In thisaction, referred to as the "Annex rule,"EPA approved the quantitative SO 2emission reduction milestones and thedetailed provisions of the backstop

.market trading program developed bythe WRAP as meeting the requirementsof § 51.309(f). EPA therefore codified theAnnex provisions in § 51.309(h).Subsequently, five States and one localagency submitted SIPs developed to

.comply with all of § 51.309, includingthe Annex provisions at § 51.309(h). Inaccordance with § 51.309(c) these SIPswere submitted prior to December 31,2003.

5 http://www.epa.gov/visibilitylactions.html#ibrt.

44156


Center for Energy and EconomicDevelopment v. EPA

After the May 2004 reproposal of theBART guidelines, the DC Circuitdecided another case where BARTprovisions were at issue, Center forEnergy and Economic Development v.EPA, No. 03-1222, (D.C. Cir. Feb. 18,2005) ("CEED v. EPA"). In this case, thecourt granted a petition challengingprovisions of the regional haze rulegoverning the optional emissionstrading program for certain westernStates and Tribes (the "WRAP AnnexRule").

The court in CEED affirmed ourinterpretation of CAA 169A(b)(2) asallowing for non-BART alternativeswhere those alternatives aredemonstrated to make greater progressthan BART. (CEED, slip. op. at 13). Thecourt, however, took issue withprovisions of the regional haze rulegoverning the methodology of thatdemonstration. Specifically, 40 CFR51.308(e)(2) required that visibilityimprovements under source-specificBART-the benchmark for comparisonto the alternative program-must beestimated based on the application ofBART controls to all sources subject toBART. (This section was incorporatedinto the WRAP Annex rule by referenceat 40 CFR 51.309(f)). The court held thatwe could not require this type of groupBART approach, which was vacated inAmerican Corn Growers in a source-specific BART context, even in analternative trading program in whichState participation was wholly optional.

The BART guidelines as proposed inMay 2004 contained a section offeringguidance to States choosing to addresstheir BART-eligible sources under thealternative strategy provided for in 40CFR 51.308(e)(2). This guidanceincluded criteria for demonstrating thatthe alternative program achieves greaterprogress towards eliminating visibilityimpairment than would BART.

In light of the DC Circuit's decision inCEED, we did not address alternativeprograms in the rulemaking finalizingthe BART guidelines. However we notethat our authority to address BARTthrough alternative means was upheldin CEED, and we remain committed toproviding States with that flexibility.Today's proposed revisions to theRegional Haze Rule, which responds tothe holding in CEED, would providethat flexibility that States need toimplement alternatives to BART.

Overview of Proposed Changes to§§ 51.308(e)(2) and 51.309 of theRegional Haze Rule

The EPA continues to support Stateefforts to develop trading programs andother alternative strategies toaccomplish the requirements of theregional haze rule, including BART. Webelieve such strategies have thepotential to achieve greater progresstowards the national visibility goals,and to do so in the most cost effectivemanner practicable. Therefore, we areproposing the following amendments tothe regional haze rule at §§ 51.308(e)(2)and 51.309 to enable States to continueto develop and implement suchprograms. We request comment on all ofthe provisions in this proposed rule.

First, we are proposing amending thegenerally applicable provisions in§ 51.308(e)(2) prescribing the type ofanalysis used to determine emissionsreductions achievable from source-by-source BART, for purposes of comparingto the alternative program. Theproposed amendments would: reconcilethe methodology with the court'sdecision in CEED v. EPA; provideadditional guidance to States and Tribesregarding the minimum elements of anacceptable cap and trade program; andprovide for consistent application of theBART guidelines for EGUs betweensource-by-source programs andalternative cap and trade programs.

Second, we are proposingamendments to § 51.309 to enablecertain western States and Tribes tocontinue to utilize the strategiescontained in this section as an optionalmeans to satisfy reasonable progressrequirements for certain Class I areas,for the first long-term planning period.These changes would provide Statesand Tribes with an opportunity torevisit the details of the backstop SO 2emissions trading program withoutbeing required to assess visibility on acumulative basis when determiningemissions reductions achievable bysource-by-source BART.

II. Revisions to Regional Haze RuleSection § 51.308(e)(2)

A. Revisions Related to theDemonstration That an AlternativeProgram Makes Greater ReasonableProgress Than BART

The DC Circuit's decision in CEED v.EPA prohibits the Agency fromrequiring that a BART alternativetrading program be compared to asource-by-source BART program byassessing the effect on visibility of thesource-by-source BART program on acumulative basis. •

The general provision in the regionalhaze rule authorizing alternativeprograms in lieu of BART had requiredsuch an approach. See 40 CFR51.308(e)(2)(2004). The generalprovision, § 51.308(e)(2), wasincorporated by reference into theWRAP-specific section of the rule at§ 51.309(f)(1)(I).

Section 51.308(e)(2)(i) specified themethodology for comparing a BARTalternative trading program againstsource-by-source BART. This provisionrequired States to demonstrate that a"trading program or other alternativemeasure will achieve greater reasonableprogress than would have resulted fromthe installation and operation of BARTat all sources subject to BART in theState." The methodology consisted ofthree steps, quoted here in full:

(A) A list of all BART eligible sourceswithin the State.

(B) An analysis of the best system ofcontinuous emission control technologyavailable and associated emission reductionsachievable for each source within the Statesubject to BART. In this analysis, the Statemust take into consideration the technologyavailable, the costs of compliance, the energyand nonair quality environmental impacts ofcompliance, any pollution control equipmentin use at the source, and the remaining usefullife of the source. The best system ofcontinuous emission control technology andthe above factors may be determined on asource category basis. The State may elect toconsider both source-specific and category-wide information, as appropriate, inconducting its analysis.

(C) An analysis of the degree of visibilityimprovement that would be achieved in eachmandatory Class I Federal area as a result ofthe emission reductions achievable from allsuch sources subject to BART located withinthe region that contributes to visibilityimpairment in the Class I area, based on theanalysis conducted under § 51.308(e)(2)(i)(B).

Although the DC Circuit had foundthis methodology to be inconsistentwith the statutory requirements for

source-by-.s'ource BART, when EPArevised the regional haze rule toincorporate the WRAP Annex in 2003,we did not believe that the decision inAmerican Corn Growers in any wayaffected our ability to approvealternative measures such as tradingprograms. In reviewing our approval ofthe Annex submitted by, the WRAP,however, the GEED court stated thatEPA could not "under section 309require states to exceed invalid emissionreductions." The court granted thepetition challenging the Annex because,consistently with § 51.308(e)(2)(i), EPA'sregulations had required States toconsider "the impact of all emissionsreductions to estimate visibilityprogress."

44157


Based on our review of the CEEDcourt's ruling, we believe that ourregulations, which required an analysisof emissions reductions achievable foreach source that was bifurcated into anindividual source assessment for thefirst four of the five BART factorsidentified in the CAA for States toconsider in BART determinations, 6 anda cumulative source assessment for thefifth factor of visibility improvement,must be revised.

Revision to § 51.308(e)(2)(i) To AddressCEED

We propose to revise § 51.308(e)(2)(i)to provide that BART determinations bemade in the trading program context inthe same manner as in the source-by-source context. This would beaccomplished by a cross reference to§ 51.308(e)(1) in proposed§ 51.308(e)(2)(i)(C). Section51.308(e)(1)(A), as contained in therecent action finalizing the BARTguidelines, provides that the degree ofvisibility improvement be consideredalong with the other statutory factorswhen making BART determinations.Appendix Y to part 51 sets forth theprocess by which States should assessvisibility improvement in BARTdeterminations. Thus, with thisamendment, the regional haze rulewould not impose a bifurcatedmethodology for defining the level ofemission reductions needed by analternative program in lieu of BART. Webelieve this revision is the onlyregulatory change necessary to' complywith the court's decision in CEED. 7 Thepotential range of options States wouldhave for performing analyses incompliance with this provision isdiscussed in section B below.

Revisions to Demonstration Framework

The other proposed changes to§ 51.308(e)(2)(i) are intended to providea clearer framework for thedemonstration that an alternativeprogram provides greater reasonable

6 These four factors are the costs of compliance,the energy and non-air environmental impacts ofcompliance, any controls already in use, and theremaining useful life of the source.7 It is important to note that existing paragraph (C)

does not, in and of itself, necessarily indicate agroup BART approach. That is, if BART-equivalentreductions are estimated in an appropriate mannerunder paragraph (B) (i.e., a manner that takes intoaccount the degree of visibility improvementanticipated from controls), nothingin paragraph(C)'s requirement to analyze the degree ofimprovement expected from all sources subject toBART would run afoul of the court's prohibition ofa group-BART requirement. In other words, it is theabsence of visibility improvement as a factor in theBART determination under paragraph (B) which isproblematic, not its inclusion in paragraph (C) asan indicator of the overall improvement achievablefrom BART.

progress than BART. Specifically, wepropose revising paragraph (D) torequire States to project visibilityimprovements resulting from the,alternative program, and adding a newparagraph (E) to require that Statescompare the visibility results fromsource by source BART and thealternative program, using the testcriteria in § 51.308(e)(3).

We are also clarifying the requirementin existing § 51.308(e)(2)(i)(C) that aState analyze "the degree of visibilityimprovement that would be achieved ineach mandatory Class I Federal area asa result of the emissions reductionsachievable from all such sources subjectto BART located within the region thatcontributes to visibility impairment inthe Class I area, based on the analysisconducted under [§ 51.308(e)(2)(i)(B)]."We believe this language is somewhatambiguous, as it could be read to requirean analysis for every Federal mandatoryClass I area nationwide, regardless ofthe scope of the program at issue.Moreover, it seems to demand adetermination of what region, whichcould be a subregion of the trading area,contributes to impairment at each ClassI area. We anticipate that modeling willbe coilducted on a regionwide basis,based on emissions reductions'achievable by BART at all sourcessubject to BART within the programarea, rather than as a series of groupingsof areas of contribution with impactedClass I areas.

To clarify that every program need notaddress every Class I area nationwide,we propose adding the term "affected"to modify "class I areas" in paragraph(C). As noted in the preamble discussionof the finalization in § 51.308(e)(3) ofthe criteria for determining whether analternative program makes greaterreasonable progress than BART, stateshave some discretion in defining"affected" Class I areas. See part IV.B.of final BART guideline preamble." Wealso propose eliminating the ambiguousclause formerly in paragraph (C).

In addition, we propose to clarify (inrevised paragraph (H)) that thealternative program need not coverevery BART category, but must coverevery BART-eligible source within anaffected category. The rationale for thisis discussed below in the discussion of"Minimum Universe of AffectedSources."

Finally, we propose to add aparagraph (E) which would direct theState to compare the expected visibilityimprovement under the alternative

a http://www.epa.gov/visibilityloctions.html#bartl.

program and under BART according tothe criteria established in § 51.308(e)(3).

With these changes, paragraphswithin § 51.308(e)(2)(i) would read asfollows:

(A) A list of all BART-eligible sourceswithin the State.

(B) A list of all BART source categoriescovered by the alternative program. The Stateis not required to include every BART sourcecategory in the program, but for each sourcecategory covered, the State must include eachBART-eligible source within that category inthe analysis required by paragraph (C) below.

(C) An analysis of the degree of visibilityimprovement that would be achieved in eachaffected mandatory Class I Federal area as aresult of the emission reductions projectedfrom the installation and operation of BARTcontrols under paragraph (e)(1) of this sectionat each source subject to BART in eachsource category covered by the program.

(D) An analysis of the emissionsreductions, and associated visibilityimprovement anticipated at each Class I areawithin the State, under the trading programor other alternative measure.

(E) A determination that the emissionreductions and associated visibilityimprovement projected under (D) above (i.e.,the trading program or other alternativemeasure) comprise greater reasonableprogress, as defined in paragraph (e)(3) ofthis section, than those projected under (C)above (i.e., BART).

The new § 51.308(e)(3), crossreferenced in proposed§ 51.308(e)(2)(i)(E) aboie, was finalizedin the June 15, 2005 notice of final rulemaking for the BART guidelines. In thataction, we noted that we would seekcomment in this rulemaking on whethercompliance with the two-prongedvisibility test contained in § 51.308(e)(3)should be the only means ofdemonstrating greater reasonableprogress than BART, or whether othermeans, including qualitative factors,should also be allowed. Consequently,we seek comment in this proposal onwhether it would be reasonable to allowStates to use a weight-of-evidenceapproach to evaluate both air qualitymodeling results and other policyconsiderations. Such an approach mightbe reasonable, for example, where (1)the alternative program achievesemissions reductions that are within therange believed achievable from source-by-source BART at affected sources, (2)the program imposes a firm cap onemissions that represents meaningfulreductions from current levels and, incontrast to BART, would preventemissions growth from new sources,and (3) the State is unable to perform asufficiently robust assessment of theprograms using the two prongedvisibility test due to technical or datalimitations. Regarding the last pointabove, we are cognizant of the fact that

44158


there may not be methods available toaccurately project the distribution ofemission reductions for sourcecategories other than EGUs. Modelingtools such as the Integrated PlanningModel, which enables projections of-emission control decisions at EGUsbased on regulatory requirements with areasonable degree of confidence, do notexist for other source categories. Wetherefore seek comment on the extent towhich other, non-modeled factors maybe taken into consideration. We notethat we are not soliciting comments onthe terms of § 51.308(e)(3), as thatprovision is final.

Role of BART Guidelines for EGUs

The BART guidelines establish certaincontrol levels or emission rates aspresumptive standards for EGUs ofgreater than 200 MW capacity at plantswith total generating capacity in excessof 750 MW. These presumptive levelswere developed pursuant to EPA's dutyunder CAA section 169A(b)(2) todevelop the guidelines under whichStates are required to make BARTdeterminations for EGUs. Thepresumptive standards were developedthrough a formal rulemaking process,including extensive public commentand full analysis of costs and economicimpacts, and apply to certain EGUs ona mandatory basis in the context of§ 51.308(e)(1). Because they have beendeveloped for application on a source-specific basis, we believe it is all themore appropriate to apply them in atrading context where the burden tomeet BART-equivalent reductions maybe shared among non-BART eligiblesources as well. We therefore propose tomake the presumptive standardsguidelines applicable to alternativeprograms through a cross reference to§ 51.308(e)(1) within § 51.308(e)(2)(i)(C).Thus, when States are estimatingemissions reductions achievable fromsource-by-source BART, they mustassume that all EGUs which wouldotherwise be subject to BART willcontrol at the presumptive level, unlessthey demonstrate such presumptions arenot appropriate at particular units. Thisdemonstration should be guided by thesame criteria discussed in the BARTguidelines. We request comment on thisproposed requirement.

Minimum Universe of Affected Sources

Section 51.308(e)(2)(ii) currentlyprovides that, where a State opts toimplement an alternative strategy toBART, the program must apply, at aminimum, to all BART-eligible sourceswithin the State. Since the promulgationof the regional haze rule in 1999, EPAhas had occasion to consider BART

alternative programs in more detail,incliding the WRAP Annex and theClean Air Interstate Rule, or CAIR. 9 Wenow believe that this "all or nothing"requirement is unduly restrictive andcould pose an unnecessary barrier to thedevelopment of BART alternatives. Thereason for this is that some BART-eligible source categories might not be -suitable for participation in a tradingprogram. For example, for some sourcecategories there may be difficulty inquantifying emissions with sufficientaccuracy and precision to guaranteefungibility of emission allowances.Because of these considerations, webelieve States should have theopportunity to pursue source-by-sourceBART for one or more categories whichare more appropriately addressed in thatmanner and a trading program for othersource categories. Once a sourcecategory is selected for inclusion in thealternative program, however, all BARTsources within the effected categoriesmust be covered. Therefore, we areproposing to revise §§ 51.308(e)(2)(i)(B)and 51.308(e)(2)(ii) to this effect.

B. State Options for Complying With§ 51.308(e)(2)(i) as Proposed

Under the framework provided byCAA sections 169A and 169B, there areseveral different contexts in whichvisibility impact analysis could beconducted. The development of aBART-alternative program could entailseparate visibility analysis in as many asthree distinct stages: (1) Determiningwhich BART eligible sources are subjectto BART, (2) determining what BART is,for each source or source categorysubject to BART, and (3) determiningthe overall visibility improvementanticipated from the application ofBART to all sources subject to BART. Inaddition, the first two stages, ifconducted on a source-by-source basis,could involve hundreds of separatemodeling runs in each State. This couldimpose a tremendous burden on Stateair agency resources, and eliminate theadministrative efficiency advantages'provided by emission-tradingalternatives. The EPA therefore seeks toallow States to combine modeling stagesor use simplifying assumptions to theextent allowed by the CAA andcontrolling case law.

Before discussing the first two stages,we note that an individualized analysisis never required at the third stage-determining the overall improvementanticipated from source-by-source

- In the case of the CAIR, EPA adopted separateprovisions that allow the use of an alternativetrading program for a subset of BART-eligiblesources.

BART applied to all sources. Bydefinition, visibility modeling at thisstage must be done on a cumulativebasis. This does not make it a prohibitedapproach under CEED v. EPA, becauseat this stage of the analysis, relevantaspects of the BART benchmark and thealternative program have already beendetermined. For example, if theemissions reductions anticipated fromsource-by-source BART weredetermined by conducing a full-scaleBART analysis in accordance with§ 51.308(e)(1) on each source, includingthe use of individualiz3d modelinganalysis for each source, it would thenbe appropriate to determine the overallvisibility improvement expected fromthe application of this BART to allsources subject to BART, 0 We now turnto the discussion of the potential forproviding flexibility to States inassessing visibility in the first two stageslisted above.

1. Determination of Which BART-Eligible Sources Are Subject to BART

In the BART guidelines, announcedon June 15, 2005,11 we provide Stateswith guidance on how to determinewhich BART-eligible sources are"reasonably anticipated to cause orcontribute to any visibility impairmentat any Class I area." Such sources are'"subject to BART," meaning that theState must perform a BARTdetermination based or the fivestatutory factors. Under the guidelines,States have considerable discretion todetermine which BART-eligible sourcesare subject to BART, as the courtemphasized in American Corn Growers.

In providing States with the guidancefor these determinations, we note thatStates may choose to make BARTdeterminations for all BART-eligiblesources.' 2 Alternatively, States coulddetermine which BART-eligible sourcesare subject to BART using any of theoptions provided in the BARTguidelines. States opting to develop atrading program or other alternativemeasure may wish to exercise theirdiscretion to determine that all BART-eligible sources within affectedcategories are reasonably anticipated tocause or contribute to visibilityimpairment and therefore should be

10 This is the stage of the analysis prescribed byexisting § 51.308(e(2)(i)(C), as noted in the sectionlI.A above.

I http://www.epa.govlvisibi'ity/actions.html#bartl.

12 As noted in the preamble to the BARTguidelines, States choosing this approach shoulduse the data being developed by the regionalplanning organizations, or on their own, as part ofthe regional haze SIP development process to makea showing that the State contriautes to visibilityimpairment in one or more Class I areas.

44159


included in the analysis of emissionsreductions achievable by BART. Whilethis might eliminate the need forvisibility modeling for each BARTeligible source(reducing theadministrative burden on the State), italso maximizes the number of BART-eligible sources included in this step ofthe analysis of an alternative strategy. Atthe next stage of the process, the BARTdetermination (i.e., a determination ofemissions reductions that would beachievable under source-by-sourceBART), a visibility impact analysis ofsome sort (discussed in next sectionbelow) would still be required.Therefore, States would have theopportunity to consider the anticipatedvisibility improvement from imposingcontrols on a single source against costof control and other factors.

2. Determination of What ConstitutesBART for Each BART Eligible Source

Source-by-Source Visibility ImpactAnalysis

One way to handle the visibilityimprovement element of the BARTdetermination for all BART sourcescovered by the program would be toconduct individualized assessments ofvisibility improvement expected fromeach BART source under various controlscenarios, as described in the BARTguidelines. Such an approach wouldcomport with the court's decision inCEED v. EPA, as it would completelyavoid any taint of a "group BART"approach.

However, such an approach, whenused in the context of an alternativeprogram, could impose a significantresource burden upon the States,especially if the State is modeling alarge number of BART-eligible sourcesover a broad regional area (i.e. multipleStates). For example, a State couldpotentially need to conduct hundreds ofmodel runs to isolate individual sourcecontributions to multiple Class I areasacross multiple States, and assessseveral sets of meteorological andterrain data to appropriately simulatethe geophysical conditions influencingvisibility. We seek comments,particularly from States and interestedTribes, regarding the feasibility of suchan approach and otherrecommendations for the alternativeprogram analysis. Although such ananalysis is appropriate in the§ 51.308(e)(1) source-by-source context,there may be more streamlinedapproaches that would be appropriatefor BART determinations within analternative program.

One area of consideration might bethe type of model used. The BART

guidelines provide that CALPUFF is thepreferred model for the visibilityimprovement analysis in the source-by-source (§ 51.308(e)(1)) context but notethat other appropriate models may beused. A regional modeling approach,using a photochemical grid model, maybe more appropriate for an alternativeprogram. In many cases, regionalplanning organizations (RPOs) havealready prepared data sets that are"model ready" for a regional modelingapplication; this could significantlyreduce the resource burden on States.We request comment on a preferredmodelingmethodology and whether theuse of other models, including regionalscale models such as the CommunityMultiscale Air Quality model (CMAQ)and the Ccimprehensive Air qualityModel with extensions (CAMX), wouldbe appropriate for BART determinationsin the alternative-program context 13,

and whether their use wouldsignificantly ease the burden on States.

Potentially Permissible Uses ofCumulative Approach

Today's proposed revisions wouldrequire States to consider anticipatedvisibility improvement along with theother statutory factors whendetermining BART for each sourcesubject to BART in a source-by-sourceprogram. The analysis would then beused to compare BART to the alternativeprogram. A State that complied withthis requirement by performing a full-scale individualized visibility impactdetermination for each source wouldclearly satisfy the American CornGrowers and CEED decisions.

What is less clear from the decisionsis whether a State may, in exercising itsdiscretion, employ some type ofcumulative approach or simplifyingassumptions in the process ofconsidering visibility improvementwhen estimating emissions reductionsachievable by source-by-source BART.The EPA believes that States retain suchdiscretion, and that the holding of CEEDv. EPA is limited to circumstanceswhere the EPA attempts to require or

13 To reiterate, the comments we seek in this partof the preamble are with respect to the use of othermodels for use in the course of estimating the BART"benchmark" through the determination of BARTcontrol levels at sources subject to BART. Forexample, regional scale models might be used toinform BART determinations at many sourcessimultaneously through the use of techniqueswhich can track multiple single sourcecontributions. This type of modeling is differentfrom the use of regional scale models to assess thecumulative impact on visibility after BARTdeterminations have been made. There is noquestion that the use of regional scale models isappropriate for the latter purpose, as with our useof CMAQ to assess the visibility effects of CAIR andof the most-stringent-case BART for EGUs.

induce States to adopt cumulativeapproaches. The EPA is not requiringsuch a cumulative approach.

The court did not specifically discussthe relationship between the invalid."group BART" approach contained inthe Annex (and approved in the Annexrule) and the requirements of theregional haze rule which governed thedevelopment of the Annex in the firstplace (i.e., §§ 51.308(e)(2) and 51.309(f)).However, the idea that the EPAapparently forced this methodologyupon the States appears to be central tothe Court's reasoning in invalidating theAnnex Rule. This is most clearlydemonstrated in the court's discussionof the preliminary issue of whether thepetitioner had standing to bring the suit.In that discussion, the court held thatneither the fact that the States had achoice between the GCVTC provisions(§ 51.309) and the nationally applicableprovisions (§ 51.308), nor the fact thatStates had taken the initiative indesigning the Annex, was sufficient to"undermine the inference that EPA'spressure has been decisive." CEED v.EPA at 8-9. The issue here was whetherthe petitioner's current "injury in fact"(compliance with reportingrequirements necessitated by theAnnex) was fairly traceable to EPA'sregulatory scheme, not whether the"group BART" provision per se wasforced upon the States. However, sincethe "group BART" methodology wasprescribed by the regulations whichgoverned the Annex, to the extent EPAinduced or "pressured" States intoaccepting § 51.309, it also must havepressured them into accepting groupBART. Therefore, the CEED decision didnot address the situation where a Stateexercises its discretion to use acumulative approach to visibilitymodeling, absent any "pressure" fromthe EPA.

This reading of the case is notinconsistent with the court's statementthat group BART is "invalid in any169A context,"-a statement made inthe context of EPA's ripeness claim. TheEPA had argued the claims brought bythe petitioner in CEED v. EPA had beenripe for review in 1999 at the time theaction in American Corn Growers wasbrought and were thus precluded frombeing raised several years later.Petitioner CEED argued that AmericanCorn Growers had either invalidated§§ 51.308(e)(2) and 51.309(f) (providingthe States with the opportunity tosubmit the Annex), or regarded thoseissues as unripe at the time. CEED, Slip.Op. at 11. The court determined thatAmerican Corn Growers had notaddressed "better than BART in the 309context," and that the prior court's

44160

. Federal Register/Vol. 70, No. 146/Monday, August 1, 2005/Proposed Rules

hesitation to do so was "reasonablybased on the possibility that the BARTbenchmark used to calculate "better-than-BART" might in the end differmaterially from the original BART."Finally, the court stated that "either wayAmerican Corn Growers is read, itplainly forbade use of the original BARTmethodology in any 169A context." Id.

We read the prohibition of groupBART in "any 169A context" to meanthat, in exercising its duty under CAAsection 169A to promulgate BARTregulations, EPA may not prescribegroup BART in either the context ofsource specific BART or the context ofa trading alternative. In both cases, it isEPA that is barred from prescribing sucha methodology. Nothing in this decisionappears to bar a State exercising its owndiscretion under CAA section 169A todefine the BART benchmark using someapproach that employs a cumulativeanalysis of visibility impairment.

For the reasons above, the EPAbelieves that although EPA may notrequire a cumulative visibility approachto estimating emissions reductionsachievable from BART, States are notbarred from using such approaches ifthey so choose

C. Reliance on Emissions Reductions- Required for Other Purposes

In some cases, emissions reductionsrequired to fulfill CAA requirementsother than BART (or to fulfillrequirements of a State law or regulationnot required by the CAA) may alsoapply to some or all BART eligiblesources. In such a situation, a State maywish to determine whether thereductions thus obtained would resultin greater reasonable progress thanwould the installation and operation ofBART at all sources subject to BARTwhich are covered by the program.

One prominent example of anindependent requirement which wouldsatisfy BART for affected sources inaffected States is the CAIR. (70 FR25162, May 12, 2005). The emissionsreductions required by the CAIR are forthe purpose of addressing significantinterstate contributions to PM andozone nonattainment. The level ofemissions reductions required wasdetermined by an analysis of highly costeffective controls at EGUs. The CAIRestablishes an EPA-administered capand trade program for SO 2 and NOxfrom EGUs, in which affected Statesmay participate as a way of meetingtheir emission reduction requirements.(States can also choose to meet theiremission reduction requirements inother ways, subject to certainlimitations).

Because the CAIR trading programwould cover BART-eligible EGUs, andbecause the CAIR would result inemission reductions surplus to CAArequirements as of the baseline date ofthe SIP (defined as 2002 for regionalhaze purposes), we determined that itwas appropriate to treat participation inthis program as a potential means ofsatisfying BART requirements for thatsource sector. See section IV of thepreamble to the final BART rule. 14

The fact that the CAIR reductionswere required in order to assist inattainment of the NAAQS, rather thanfor the purpose of satisfying BART;significantly alters the consideration ofwhat type of analysis is permissible toshow greater reasonable progress thanBART. At the heart of the court'sdecision in CEED v. EPA was theconcern that by requiring States to usea group-BART approach in developingthe benchmark by which an alternativeprogram would be measured, theregional haze rule would require Statesto adopt an unduly stringent alternativeapproach. No basis for such a concernexists when an independentrequirement determines the level ofreductions required by an alternativeprogram covering a universe of sources(including BART eligible sources). Insuch a case, the better-than-BARTdemonstration is clearly an after-the-factanalysis, used simply for comparison ofthe programs, and not to define thealternative program. In the CAIRexample, the emission reduction levelswere not based on the invalid "group-BART" approach or any otherassumptions regarding BART, but weredeveloped for other reasons.Specifically, the CAIR emissionreductions were developed to assistwith attainment of the NAAQS for PM 2.5and ozone. Had EPA not performed thecomparison of CAIR to BART forvisibility progress purposes, the CAIRemission reduction requirements wouldremain unchanged. Therefore, EPAcould not be construed as imposing aninvalid BART requirement on States butrather is simply allowing States, at theiroption, to utilize the CAIR cap and tradeprogram as a means to satisfy BART foraffected EGUs. This same reasoningwould be applicable whenever anyrequirement other than BART definesthe emission reductions required by thealternative program.

Reasonable Progress as an IndependentRequirement

The EPA believes that therequirement to make reasonable

14 http://wv.epa.gov/visibility/actions.htmltbartl.

progress towards the national visibilitygoal, while related to the BARTrequirement, is a separate requirementanalogous to the NAAQS-basedrequirements in CAIR. Therefore, wherea State designs a program to meetreasonable progress goals, the "better-than-BART" demonstration would notbe used to define the alternativeprograms, and the concerns of the DCCircuit in American Corn Growers andCEED v. EPA would not be applicable.

A State may choose Io exercise itsdiscretion under CAA section 169A andsection 169B to achieve a larger portionof its reasonable progress requirementsby use of an alternative program thataffects non-BART eligiile sources(including future sources) as well asBART-eligible sources. The fact that theCAA establishes a minimum reasonableprogress requirement in the form ofBART for a certain subset of sources,based on category, size, and age, doesnot restrict the States' authority toestablish a more ambitious reasonableprogress program. The emissionreduction requirements of such a"program could be based on a number ofdifferent approaches not driven by arequirement to demonstrate greaterreasonable progress than BART. In sucha case, the better-than-BART test wouldserve simply as a check that the programhad in fact met the minimumrequirement of achieving more progressthan BART. Because the BARTestimation would not be defining theemission reductions required, the Statewould be free to use its discretion tobegin the analysis with the simplifyingassumption of a most-stringent-caseBART scenario (similar to ourapplication of the presumptive BARTEGU standards to all-BART eligiblesources in our CAIR analysis). If theprogram made greater reasonableprogress than the most--stringent-caseBART, the State could end its analysisthere. In such a case, the program wouldobviously make greater reasonableprogress than BART defined in any lessstringent manner. If the program is notshown to make greater progress thanmost-stringent-case BART, the Statecould use its discretion to performadditional analysis to determine whatprogress would be achievable by BARTafter taking into account visibility on asource-by-source basis.

To summarize, the EPA believes thatwhere a State develops a program thatinclude BART sources with the purposeof satisfying reasonable progressrequirements for a larger universe ofsources, the State's use of a most-stringent-case BART benchmark tosatisfy the better than BART test wouldnot run afoul of the D.C. Circuit's

44161


decisions, as long as EPA does notattempt to require or otherwise imposesuch a benchmark.

D. Revisions to § 51.308(e)(2) ToStandardize and Clarify the MinimumElements of Emissions TradingPrograms in Lieu of BART

EPA is proposing to add provisionsthat list fundamental elements that anycap and trade program adopted under§ 51.308(e)(2) in lieu 6f BART mustcontain. A cap and trade program, forthe purposes of this section, means aprogram that establishes a cap on totalannual emissions from the sources inthe program, issues allowances with atotal tonnage value equal to the tonnageof the cap, requires each source in theprogram to hold an amount ofallowances after the end of the year witha tonnage value at least equal to thetonnage of the source's emissions duringthe year, and allows the purchase andsale of allowances by sources or otherparties.

EPA is adding these elements in orderto provide the States with the crucialrequirements they need to adopt intotheir SIPs for a cap and trade programand also to help guide EPA's review ofthe SIPs. For a cap and trade programto function properly, States will need toadopt a number of specific provisionsinto their SIPs, hut these fundamentalelements are the ones EPA deems asnecessary to ensure the integrity of anycap and trade program adopted in a SIPunder § 51.308(e)(2)in lieu of BART.The elements listed below are consistentwith the provisions pf EPA's guidancefor economic incentive programs titled"Improving Air Quality with EconomicIncentive Programs" (EIP) (EPA-452/R-01-001, January 2001).

The following is a description of eachof the'trading program requirements thatare included in proposed§ 51.308(e)(2)(vi). For each of theseproposed requirements, EPA.requestscomment on whether we haveaddressed the requirement to anappropriate level of detail and onwhether the substance of therequirement is sufficient to ensureprogram integrity for the cap and tradeprogram.

Applicability Provisions

EPA is proposing that States andTribes must include applicabilityprovisions specifically defining whichsources are subject to the program.Applicability, or the group of sources.that the cap and trade program willaffect, must be essentially the same fromstate to state, or across a state, tominimize confusion and administrativeburdens. For a cap and trade program,

some of the factors States and Tribesmay want to consider when defining thegroup of sources subject- to the programinclude contribution to total emissionsfrom each source within a given sourcecategory, and the ability to reliablymeasure emissions from the source. Weencourage States and Tribes to designtrading programs to be as inclusive aspracticable, in order to maximize theefficiency of the market.

The emission cap of a cap and tradeprogram may be compromised if a Stateor Tribe defines the population ofsources in a way that allows productionand emissions from sources coveredunder the program to shift to those thatare not covered under the program. EPAis proposing that States and Tribes mustdemonstrate in their SIPs/TIPs that theapplicability provisions are designed toprevent any significant, potentialshifting of production and emissionsfrom sources in the program to sourcesoutside the program. For programscovering a single State, thedemonstration should address potentialshifting within the State, while multi-state programs must address shiftingamong those states covered under theprogram.

States and Tribes can demonstratethat the applicability provisions in theprogram will not result in significantshifting of emissions or production tosources outside the program by: (1)Showing that all the sources providinga product in the trading region areincluded in the cap and no sourcesoutside the cap can pick up productionfrom the capped source; or (2) otherwiseshowing that significant shifting ofproduction and emissions is unlikely tooccur, due to the nature of the programand the sources in the surrounding area.

Allowances

. Allowances are a key feature of a capand trade program. An allowance is alimited authorization for a source toemit a specified amount of a pollutant,as defined by the specific tradingprogram, during a specified period oftime. While allowances are frequentlydenominated at one ton, an allowancecould be valued at more than or lessthan one ton, depending on the needs ofthe specific trading program or themonitoring method. At the end of thecompliance period, a source owner'stotal tonnage value of allowances heldmust exceed or equal its annual actualtotal tonnage of emissions. For example,if an allowance was valued at one ton,a source that emits 1,000 tons of apollutant in a given year must hold atleast 1,000 allowances for that samepollutant.

Allowances are fully marketablecommodities. Once allocated,allowances may be bought, sold, traded,or (where allowed) banked for use infuture years.15 Allowances are thecurrency used to achieve compliancewith the emission limitationrequirements. A cap and trade programprovides compliance flexibility becauseeach covered source has fourcompliance options: (1) Emit at itsallowance allocation; (2) emit less thanits allocated allowances and transferextra allowances to other sources; (3)emit less than its allocated allowancesand (if banking is allowed) save unusedallowances for a later complianceperiod; and (4) obtain allowances fromother sources and emit more than itsallocation.

EPA proposes not to include thedetailed requirements on" how Statesand Tribes will allocate allowances fora cap and trade program adopted under§ 51.308(e)(2) in lieu of BART. A Stateor Tribe can determine how to allocateallowances as long as the SIPs/TIPsrequire that the allocation of the tonnagevalue of allowances not exceed the totalnumber of tons of emissions capped bythe budget. For example, if theemissions budget is capped at 100,000tons of emissions, and each allowance isvalued at one ton, the SIP/TIP mustprohibit the allocation of more than100,000 allowances in any year.

Monitoring, Recordkeeping, andReporting

Monitoring, recordkeeping, andreporting of a source's emissions areintegral parts of any cap and tradeprogram. Consistent and accuratemeasurement of emissions ensures thateach allowance actually represents itsspecified tonnage value of emissionsand that one ton of reported emissionsfrom one source is equivalent to one tonof reported emissions at another source.This establishes the integrity of theallowance and instills confidence in themarket mechanisms designed to providesources with flexibility in achievingcompliance. EPA is proposing that themonitoring, recordkeeping, andreporting provisions for boilers,combustion turbines, and cement kilnscomply with 40 CFR Part 75, and thatother sources include monitoring,recordkeeping, and reporting provisions

15 Allowances are typically defined as notconstituting property rights. See e.g. CAA section403(f): "An allowance allocated under this title isa limited authorization to emit sulfur dioxide inaccordance with the provision of this title. Suchallowance does not constitute a property right.Nothing in this title or in any other provision of lawshall be construed to limit the authority of theUnited States to terminate or limit suchauthorization." 42 U.S.C. 7651b(f}.

44162


that result in information of the sameprecision, reliability, accessibility andtimeliness as provided for under 40 CFRPart 75.16 Under certain circumstances,there may be some cap and tradeprograms that prevent certain sourcesfrom selling any allowances. EPA isexpressly providing that such sourcesare not subject to the requirement thatthe monitoring, recordkeeping, andreporting provisions be consistent with,or equivalent to, 40 CFR Part 75.

Tracking System

A properly designed andimplemented tracking system is criticalto the functioning of a cap and tradeprogram as allowance transfers,allocations, compliance, penalties, andbanking are all components of thesystem. The tracking system must beaccurate and efficient to allow forproper operation of an emissions tradingmarket. The tracking system must alsobe transparent, allowing all interestedparties access to the informationcontained in the accounting system.Transparency of the system increasesthe accountability for regulated sourcesand contributes to reduced transactioncosts of transferring allowances byminimizing confusion and makingallowance information readily available.The tracking system functions as theofficial record for the trading program.States, Tribes, and sources participatingin the cap and trade program need toobtain accurate information aboutprogram activities, includinginformation that allows them to trackgeneration and use of allowanceallocations and to ensure compliance.The allowance accounts in the trackingsystem are the official records forcompliance purposes.

The proposed rule requires that theSIPs/TIPs must include provisionsidentifying a specific tracking process totrack allowances and emissions. Theproposed rule requires that theimplementation plans must provide thatemissions, allowance, and transactioninformation is transparent and publicly

1" Part 75 establishes requirements for continuousemissions monitoring systems (CEMS), as well asother types of monitoring (e.g., low mass emissionsmonitoring under 40 CFR 75.19) that may be usedin lieu of CEMS under certain circumstances. Part75 also establishes a process for proposal by ownersand operators, and approval by the Administrator,of alternative monitoring systems (under subpart Eof part 75) that meet requirements concerningprecision, reliability, accessibility, and timeliness.Under today's proposed rule, a unit that meets therequirements for, and uses, monitoring specificallyprovided under part 75 (e.g., a CEMS or low massemissions monitoring) or that meets therequirements for, and uses, an alternativemonitoring system approved under subpart E ofpart 75 could be included in a cap-and-tradeprogram and could sell allowances.

available in a secure, centralized database that allows for frequent updates.The SIPs/TIPs must also provide for atracking system that provides a uniqueway to identify each allowance,enforceable procedures for recordingdata, and enforceable time frames forsubmitting information and balancingaccounts. If the trading program coversmore than one State, the tracking systemshould be coordinated among allparticipating States and consistent forall sources and other participants.

Account Representative

EPA believes it is important that eachsource owner or operator designate anindividual (account representative) whois authorized to represent the owner oroperator in all matters pertaining to thetrading program and who is responsiblefor the data reported for that source. Theaccount representative will beresponsible for, among other things,permit, compliance, and allowancerelated actions. In addition todesignating an account representative,the SIP/TIP must provide that allmatters pertaining to the account shallbe undertaken only by the designatedaccount representative. The proposedrule includes a requirement that theSIPs/TIPs must include such provisions.

Allowance Transfer

The proposed rule requires that SIPs!TIPs contain pr 6visions detailing auniform process for transferringallowances among all sources coveredby the program and other possibleparticipants. The provisions mustprovide procedures for sources torequest an allowance transfer, for therequest and transfer to be recorded inthe allowance tracking system, fornotification to the source that thetransfer has occurred, and fornotification to the public of eachtransfer and request. The provisionsmust allow timely transfer andrecording of allowances and minimizeadministrative barriers to the operationof the allowance market.

Compliance

The proposed rule requires that capand trade programs include acompliance provision that prohibits asource from emitting more emissionsthan the total tonnage value ofallowances the source holds for thatyear. The proposed rule also requiresthat the cap and trade program specifythe methods and procedures fordetermining on an annual basis whethera source holds sufficient allowances, bytotal tonnage value, for its emissions.

Penalty

-In order to provide sources with astrong incentive to comply with therequirement to hold sufficientallowances for their emissions on anannual basis and to establish animmediate minimum economicconsequence for non-compliance, theprogram must include a system formandatory allowance deductions. Weare proposing that if a source has excessemissions in a given year, allowancesallocated for the subsequent year will bededucted from the source's account inan amount at least equal to three timesthe excess emissions. F:r example, if asource had 10 tons of excess emissionsin the year 2014, and one allowance isvalued at one ton, 30 allowancesallocated for the year 2015 will bededucted from the source's account.This is consistent with 3xisting tradingprograms such as the CAIR and the NOxSIP call, and is designed to ensure thatthe penalty is a sufficient deterrent tonon-compliance.

While we are proposing that theallowance deduction would bemandatory, a source would have theright to seek administrative or judicialreview of the State's or Tribe'sdetermination that the source hadexcess emissions in a given year. Forexample, the regulations would notlimit the ability of the source to appealthe following determinations made bythe State or Tribe: The number ofallowances held by the source as of thedeadline for transferring allowances andavailable for complianc3, the amount ofthe source's emissions, and thecomparison of the amount of thesource's emissions and the total tonnagevalue of the source's allowances heldand available for compliance. If theState or Tribe determines that thesource's emissions exceed the source'stotal tonnage value of allowances for theyear, we are proposing that at least threetimes the tonnage of excess emissionsfor the year be automatically deductedfrom the source's allowance holdings forthe next year, even if an appeal ispending. The allowance deduction canbe reversed to the extent the sourceprevails on appeal, but we believe thatcertain and immediate penalties arenecessary to ensure the integrity of themarket for allowances. The mandatoryallowance deduction penalty provisionwill not limit the ability of the State,Tribe, or EPA to take enforcement actionunder State or Tribal law or the CAA.

Banking Provisions

The banking of allowances occurswhen allowances that have not beenused for compliance are set aside for use

44163


in a later compliance period. Bankingprovides compliance flexibility tosources, encourages early reductions,and encourages early application ofinnovative technology. However,banking also carries an associated risk ofdelayed or impaired achievement of airquality goals due to the use of bankedallowances. The proposed rule allowstrading programs to include provisionsfor banked allowances, so long as theSIPs/TIPs clearly identify how unusedallowances may be kept for use in futureyears and whether there are anyrestrictions on the use of any suchbanked allowances.

Periodic Assessment of the Trading.Program

The proposed rule requires thetrading program to include provisionsfor periodic assessment of the program.Such periodic assessments are a way toretrospectively assess the performanceof the trading program in meeting thegoals of the regional haze program and.determining'whether the tradingprogram needs any adjustments orchanges. At a minimum, the programeialuation mist be conducted every fiveyears to coincide with the periodicreport describing progress towards thereasonable progress goals requiredunder § 51.308(g) and must besubmitted to EPA. The informationneeded to perform the program shouldbe collected through the monitoring,recordkeeping, and reportingrequirements for the program. SIPs/TIPsshould also provide procedures to makethe public aware the program is beingassessed and to give the public anopportunity to comment on theassessment.

Section 5.3(b) of the EIP contains alist-of performance measures that Statesor Tribes should consider including inthe program assessment. Theperformance measures needed byStates/Tribes will depend upon the typeof trading program, the amount ofemissions covered by the program, thesources covered by the program, orpublic comments received duringrulemaking. EPA suggests that Statesand Tribes work closely with their EPARegional Office when developing theprogram assessment procedures.

HIL. Revisions to Regional Haze Rule§ 51.309

A. Background

The previous section discussed theproposed changes to our regulations at§ 51.308(e)(2) governing alternativeprograms to BART, in general. In thissection, we discuss the implications ofthe CEED decision on the particular

program at issue in that case-theWRAP Annex-and our proposedrevisions in the section of the haze rulewhich specifically addresses theoptional approach for certain westernstates (§ 51.309).

What Portion of the WRAP's RegionalHaze Strategies Were Affected by theCourt's Decision?

The petition for review granted by thecourt in CEED v. EPA requested that the"Annex Rule" be vacated andremanded. The "Annex Rule" refers tothe June 2003 rule approving andcodifying the "Annex" to the GrandCanyon Visibility TransportCommission (GCVTC)Recommendations. (68 FR 33764, June5, 2003). The Annex contained SO 2emission reduction milestones and thedetailed provisions of a cap and tradeprogram to be implemented.automatically if voluntary measuresfailed to achieve the milestones. TheAnnex Rule codified these provisions in§ 51.309(h)

The Annex was developed toimplement the recommendations of theGCVTC for stationary sources. Thecourt's. decision in CEED v. EPAinvalidated EPA's approval of theAnnex, but did not question the validityof the GCVTC recommendations for abackstop trading program. 17

How Is the "WRAP Annex" Related toOther Strategies Contained in RegionalHaze Rule § 51.309?

As noted, the WRAP Annex wasdesigned to implement one of therecommendations of the GCVTC. Thiscommission, the creation of which wasexpressly required by CAA section169B(f), also made numerous otherrecommendations. Other importantprovisions of the GCVTC report include:Strategies for addressing smokeemissions from wildland fires andagricultural burning; provisions toprevent pollution by encouragingrenewable energy development; andprovisions regarding clean air corridors,mobile sources, and wind-blown dust,among other things. The backstop capand trade program which eventuallybecame the Annex thus comprised onlyone component-albeit a central one-of a suite of strategies developed by theGCVTC.

The requirement that Western Statessubmit an Annex to the GCVTC report

17 Subsequent to the CEED decision, the WRAPStates expressed their disappointment with thedecision and their desire to continue working withEPA to reconcile the WRAP's program to the court'sdecision. See WRAP State's statment at http://www.wrapair.orglnews/releases/PRHolmstead ltr.pdf

in order to complete the GCVTCrecommendations as an alternativemeans of regional haze compliance wascontained in the 1999 Regional HazeRule. In that rulemaking, we determinedthat the GCVTC strategies wouldprovide for reasonable progress whensupplemented by an Annex containingquantitative emission reductionmilestones and documentation of thetrading program or other alternativemeasure. See 64 FR 35749 and 35756-57. We therefore provided that theStates' ability to comply with regionalhaze rule requirements throughimplementation of the provisions of§ 51.309 was contingent upon EPAreceiving the Annex meeting certainrequirements no later than October 1,2000. See § 51.309(f).

Five of the nine eligible States andone local agency (Bernalillo county,NM) opted to submit SIPs under section51.309 prior to the 2003 deadline in51.309(c). Doing so was not simply amatter of codifying thoserecommendations into State law but

,required the production, through aconsensus process, of numeroussubsidiary policy and technical tools.These included emissions inventoriesfor stationary, mobile, area, fire, androad dusts sources; policy agreementson va.rious issues such as annualemissions goals for wild land fires andincentives to increase renewable energyproduction (to name just a few of many);development of numerous technicalsupport documents, and, of course, thedevelopment of the actual model rulesfor the backstop trading program. Seethe "Section 309 implementationMaterial" page of the WRAP's Web siteat http://www.wrapair.org/309/index.html for a more complete listing.

The EPA believes the dedication ofthe WRAP States and Tribes to moveforward with regional hazeimplementation in an expeditiousmanner is commendable and we want tocontinue to support these efforts. Thesubstantial investment in time andresources (including millions of dollarsof Congressionally allocated funding)made over a period of more than adecade has tremendously advanced thescientific understanding of the causes ofvisibility impairment in the West. Inaddition, the GCVTC, and the WRAPafter it, have been extraordinarilysuccessful in forging consensus on alarge number of policy measures amonga wide variety of States, Tribalgovernments, environmental advocates,and industry interests. As a result, EPAbelieves there are compelling policyreasons to continue to recognize theGCVTC/WRAP strategies and to providea regulatory framework in the regional

44164


haze rule that allows for expeditedimplementation by interested States andTribes.

The EPA also has the authority topromulgate regulations which areresponsive to the GCVTCrecommendations for addressingvisibility impairment. In addition torequiring EPA to establish the GCVTC,Congress also imposed a duty upon EPAto promulgate regulations pursuant toCAA section 169A within 18 months ofreceipt of the report from the GCVTC,and to take that report into account indoing so. See CAA section 169B(e).Congress clearly intended EPA'sregional haze regulations to be informedby the knowledge and informationdeveloped by the GCVTC.

The EPA is committed to fulfilling itsobligation to further the work of theGCVTC by permitting the western statesand tribes to move forward with theregional haze program recommended bythe GCVTC. Therefore, in order toprovide GCVTC States and Tribes anopportunity to revisit the programwithout being constrained by theinvalid group BART methodology, wepropose to amend the regional haze ruleto allow states to submit (or resubmit)implementation plans under § 51.309, inconjunction with the first regional hazeSIPs otherwise required under 51.308,This will provide time for States torevisit the SO 2 milestones and backstopemission trading program.

With respect to the other strategiescontained 51.309, although these otherprovisions of § 51.309 were not affectedby the decision in CEED v. EPA and mayremain effective as a matter of State lawin each State, the EPA cannot approveimplementation plans under § 51.309 asmeeting reasonable progress until theplans contain valid provisions foraddressing stationary sources. Thebackstop SO 2 emissions trading programwas a key element of the GCVTCrecommendations, as evidenced by thefact that the use of the § 51.309strategies to satisfy reasonable progressrequirements was made contingentupon EPA receiving a satisfactoryAnnex. Because the Annex has beeninvalidated, States must have anopportunity to resubmit the details ofthe backstop trading program, beforeEPA can take action to determinewhether reasonable progressrequirements will be satisfied by§ 51.309 SIPs.

The regulatory structure proposed toprovide States and Tribes with thisopportunity is discussed in more detailbelow.

B. Proposed Regulatory Framework forStates and Tribes Choosing ToImplement the GCVTC/WRAP Strategies

We interpret the court's decision inCEED v. EPA as having vacated theprovisions in § 51.309(h) which werepromulgated in 2003. (68 FR 33764,June 5, 2003.) The vacature of theseprovisions returns § 51.309 to the statusquo ante as of that rulemaking. Thisincluded certain provisions forstationary sources contained in§ 51.309(d)(4) and the provision callingfor the submission of the Annex in thefirst place in § 51.309(f). For the reasonsdiscussed below, we are not proposingto require States to resubmit another"Annex" to the GCVTC report, and aretherefore repealing § 51.309(f); we arealso proposing to retain the generalstationary source requirements at§ 51.309(d)(4), with certainmodifications.

Will States Be Required To Submit aRevised Annex?

Section 51.309(f) made theapprovability of § 51.309 SIPscontingent upon EPA receiving from theGCVTC (or'other regional planningorganization) an "annex" to the GCVTCreport no later than October 1, 2000.The Annex was required to contain:quantitative emissions milestones forthe years 2003, 2008, 2103, and 2018,which would provide for steady andcontinuing emissions reductions for the2003-2018 period and satisfy theGCVTC goal of 50-70 percentreductions from 1990 emissions by2040. The milestones were also requiredto show greater reasonable progress thanwould be achieved by the application ofBART per § 51.308(e)(2) and beapprovable in lieu of BART. In additionto quantitative milestones meeting these,criteria, the Annex was required tocontain documentation of the"backstop" market trading program,including model rules, monitoringprovisions, provisions for the"triggering" of the trading program, andoperational details. See § 51.309(f)(1)(i)-(ii).

Section 51.309(f) further providedprocedures by which EPA wouldincorporate the provisions of the Annexinto the regional haze rule (if anacceptable Annex were received). Thisin fact occurred, with the Annex beingincorporated at § 51.309(h). Section51.309 in its totality, including the new§ 51.309(h), then governed the contentof the SIPs which were due no later thanDecember 31, 2003, per § 51.309(c).

The EPA believes the substantiverequijements of § 51.309(f) remain valid.However, we do not believe the unusual

procedural approach required by thatsection-wherein States submitprovisions for EPA to codify in federalregulation for the purpose of governingsubsequent SIP content-is eithernecessary or appropriate at this time.Therefore, we are proposing to importthose substantive provisions of§ 51.309(f) which are still relevant into§ 51.309(d)(4), and to repeal the§ 51.309(f) mechanism requiring anAnnex. We are also proposing to importinto § 51.309(d)(4) a few selectedsubstantive provisions from therepealed Annex rule (§ 51.309(h)) forreasons explained later in this section ofthe preamble.

In 1999, EPA included § 51.309 inresponse to the western States' andTribes' comments calling for recognitionof the policy development efforts of theGCVTC. The Western Governors'Association in particular requested thatEPA issue a final rule that explicitlydescribed the content of SIPs that wouldassure reasonable progress in addressingvisibility impairment on the ColoradoPlateau based on the technical work andpolicy recommendations of the GCVTC.At that time, however, the GCVTC'srecommendations did not address therequirements for BART, or providesufficient detail to allow EPA toascertain whether the backstop markettrading program that was a centralelement of the Commission'srecommendations would provide greaterreasonable progress than BART. Thepurpose of the requirement in the 1999rule that an Annex to the GCVTC reportbe submitted by October of 2000 was toinsure that the GCVTC stationary sourcerecommendations were developed andrefined in sufficient detail to enableEPA to make an up-front determinationthat SIPs based on the work of theGCVTC would meet the requirements ofthe CAA. The decision to utilize anintermediate step of requiring States andTribes to submit the details of thestationary source provisions in an"Annex", rather than directly in theirSIPs (or TIPs), was a policy decision onEPA's part to accommodate the westernState's request for endcrsement of thesubstantial work of the GCVTC. In lightof the facts as they exist now, six yearslater, the EPA does not believe that an"Annex" type approach is appropriategoing forward.

One reason that an Annex approachwould not be appropriate is that itwould not be practicable to repeat such,an approach at this .time given that allregional haze SIPs, whether under§ 51.309 or § 51.308, are due at the endof 2007, or about 18 months after

44165


today's proposal. 18 The 1999 ruleprovided that EPA would promulgateregulations incorporating the Annexprovisions within one year of receipt ofthe Annex. If a similar approach werefollowed today, there would not besufficient time for States to follow theirinternal processes for SIP revisions,even if a new Annex were made dueimmediately upon finalization of thisrule.

In addition, we are proposing thatStates submit § 51.309 SIPs at the sametime as § 51.308 SIPs. These § 51.308SIPS will establish reasonable progressgoals for all Class I areas in the region.It is expected that some States will wis]to build on the § 51.309 strategies indeveloping § 51.308 SIPs. Because bothtypes of SIPs will be reviewedconcurrently, it is a better policy interms of both administrative efficiencyand environmental progress to reviewboth §§ 51.308 and 51.309 SIPs underthe same overarching criteria, ratherthan providing prescriptiverequirements for § 51.309 which mayinterfere in unforeseen ways with theintegration of §§ 51.308 and 51.309 SIPwithout providing any environmentalbenefits.

Finally, in 1999, the GCVTC haddischarged its duties and the WRAP hanot yet established a track record forproducing consensus decisions ondifficult policy issues such as the desigof the backstop market trading prograruSix years later, the WRAP has built upconsiderable institutional capacity, witEPA's support, and is well positionedtfacilitate consensus and coordinate SIPdevelopment to insure, inter-stateconsistency, without the need forprescriptive requirements at the level cdetail formerly contained in the AnnexRule.

Therefore, we propose to amend§ 51.309(d)(4) to provide that the majossubstantive requirements formerlyrequired to be submitted in the form ofan Annex to the GCVTC report willinstead now be required in the § 51.30SIP itself. These major substantiverequirements include quantitativeemissions milestones for the years 20012013, ai.d 2018 which provide forsteady and continuing emissionsreductions, satisfy the GCVTC goal of50-70 percent reductions from 1990emissions by 2040, and achieve greateireasonable progress than would beachieved by the application of BARTper § 51.308(e)(2).

18See 42 U.S.C. 7407(d)(7)(A).

Which States and Tribes May SubmitImplementation Plans Under § 51.309 asProposed for Revision?

Because the WRAP Annex wasinvalidated due to its reliance on agroup-BART methodology, the EPAcannot condition future participation inthe § 51.309 program upon thesubmission and implementation of SIPsunder the Annex rule (i.e., the SIPs thatwere due in 2003). Doing so would havethe effect of continuing to impose uponthe four states that did not opt for§ 51.309 the choice between a § 51.309program defined by an invalidmethodology and § 51.308. Therefore,States in the 9-state visibility transportregion that did not submit a SIP in 2003under § 51.309 are not precluded fromsubmitting a SIP under § 51.309 in 2007.Tribes in the transport region, asdetermined in earlier rulemakings, arenot subject to the same deadlines andmay submit a TIP under § 51.309 at alater date. In addition, nothingprecludes States outside of the 9-statetransport region from incorporatingelements of the GCVTC strategies intotheir SIPs (under § 51.308), provided

s they demonstrate that such strategiesmeet the reasonable progressrequirements of § 51.308.

What Is the Proposed Implementationd Plan Schedule?

We are proposing that SIPs under§ 51.309 will be due at the same time as

,n those under § 51.308. Theimplementation plan deadlines forregional haze were amended by

h Congress.to provide that regional haze0 SIPs for the entire State shall be

submitted no later than three years afterthe promulgation of designations for thePM2.5 NAAQS. 19 Those designationswere promulgated by EPA on December17, 2004. Therefore regional haze SIPsare due no later than December 17,2007. CAA 107(d)(7)(A).

CAA 107(d)(7)(B) provides that theabove requirement does not precludeimplementation plan revisions by theGCVTC States in 2003. However, asportions of the haze rule that governedthe 2003 SIPs have been invalidated,States opting for § 51.309 will berequired to resubmit SIPs some time

8, after those portions have been rectifiedthrough finalization of today's proposedrule. As a practical matter it would bedifficult for States to complete thisprocess any time appreciably soonerthan the end of 2007. The EPA sees noenvironmental advantage to requiring§ 51.309 SIPs to be submitted on adifferent schedule than under § 51.308.

19 See Consolidated Appropriations Act for FiscalYear 2004, Public Law 108-199, January 23, 2004.

Moreover, simultaneous deadlines willallow States and participating Tribes tomore effectively integrate the technicalwork and policy development under thetwo sections. Therefore, we proposeamending § 51.309(c) to replace theDecember 31, 2003 deadline withDecember 17, 2007.

In addition, we are proposing todelete certain language incfuded in theSIP schedule provision in § 51.309(c)and replace it with similar provisions inthe purpose provisions in § 51.309(a).Specifically, § 51.309(c) currentlyprovides that "A Transport Region Statethat does not submit an implementationplan that complies with therequirements of this section (or whoseplan does not coinply with all of therequirements of this section) is subjectto the requirements of § 51.308 in thesame manner and to the same extent asany State not included within theTransport Region." This language wasformerly included in the SIP schedulesection to clarify that, under the formerbifurcated schedule, the final date for aState to make a decision between§§ 51.308 ahd 51.309 was at the time the§ 51.309 SIP was due, in 2003. Now thatwe are proposing the same deadline forboth sections, it is not necessary tospecify that § 51.308 will come intoeffect if a GCVTC State misses the§ 51.309 deadline. Each State in theGCVTC -may choose between submittinga SIP under §§ 51.308 and 51.309 as it'sregional haze strategy for the ColoradoPlateau Class I areas; in either case theState must submit its SIP by the samedeadline. Moreover, all GCVTC Stateswill also be required to submit SIPsunder § 51.308 whether or not theysubmit § 51.309 SIPs, in order to coverat a minimum any non-Colorado PlateauClass I areas within or affected by theStates, unless those Class I areas havebeen covered under § 51.309(g)(additional Class I areas).

Finally, § 51.309(d)(1) currentlyrequires that § 51.309 SIPs must beeffective for the entire time betweenDecember 31, 2003, and December 31,2018. We propose striking the referenceto beginning in 2003, but maintainingthe requirement to be effective through2018. We also propose adding a clauseto clarify that § 51.309 SIPs shallcontinue in effect until animplementation plan revision isapproved by EPA in accordance with§ 51.308(f). This Will provide forcontinuity of visibility protection duringthe transition to the next long-termstrategy period.

44166


.What Stationary Source Provisions Must§ 51.309 SIPs Contain?

The 1999 regional haze rule, inaddition to providing in § 51.309(h) forthe submission of an Annex containingfurther elaboration of the GCVTCstationary source recommendations,also included certain fundamentalrequirements in § 51.309(d)(4) for amarket trading program addressingstationary sources. These § 51.309(d)(4)requirements established the basicframework of the. backstop tradingapproach, which were to be given moredetailed form through the Annexprovisions. Specifically, this sectioncalled for monitoring and reporting ofSO2 emissions, criteria and proceduresfor activation and operation of thebackstop trading program, andprovisions for compliance reporting.The section also called for a report onthe necessity of adding stationary sourceprovisions for NOx and PM in the nextSIP (due in 2008). See § 51.309(d)(4)(i)-(v). Upon the finalization of the Annexrule, these provisions were amended toadd cross references as appropriate tothe new Annex rule at § 51.309(h).

The EPA believes it is appropriate toretain these provisions in § 51.309(d)(4),in order to provide for the broadcontours of a backstop cap and tradeprogram consistent with the GCVTCrecommendations. Nothing in these verygeneral requirements imposes anyinvalid constraints upon the program inviolation of CEED v. EPA. In addition,in the process of working over the pastseveral years on the development of thedetailed provisions of the Annexbackstop trading program, EPA and theStates have identified several specificareas where regulatory guidance isdesirable. Therefore, certain provisionscodified as part of the Annex rule in§ 51.309(h) have been retained as SIPrequirements in § 51.309(d)(4). Byspecifying EPA's expectations clearly inthe rule provisions, we will promoteconsistency between States and providegreater certainty for the SIP reviewprocess. In doing so, EPA is cognizantof the need to avoid importing into§ 51.309(d)(4) any provisions of theAnnex rule that were directly orindirectly dependent on or related to thespecific quantitative milestonescontained in the Annex. Therefore, wehave retained only those provisions webelieve are critical to any conceivablevariation on the GCVTC's backstoptrading program recommendation.These are described in the followingsections.

Provisions for Stationary Sources ofSulfur Dioxide

One of the critical components of theGCVTC's recommendations was theestablishment of a series of decliningcaps on regional sulfur dioxideemissions from stationary sources.These declining caps on emissions arereferred to as emissions milestones andmust provide for steady and continuingreductions in sulfur dioxide emissionsover time. While EPA is not specifyingwhat the milestones must be, thisprovision requires the States to submitmilestones for the period through 2018that are consistent with the GCVTC'sdefinition ofreasonable progress and itsgoal of reducing sulfur dioxideemissions by 2040 to 50-70 percent of1990 actual levels. We are proposingthat the milestones be defined on anannual basis. However, we do notinterpret the GCVTC's recommendationfor steady and continuing reduction asrequiring the milestones to decline eachyear. Rather, as was the case in theannex, the milestone may remain thesame for more than one year as long asthey provide for steady and continuingreductions over the course of long termplanning period.

States must also show that themilestones provide for greaterreasonable progress than would beachieved by application of BART inaccordance with § 51.308(e)(2) and beapprovable in lieu of BART. Because the§ 51.308(e)(2) is proposed to beamended to remove the group BARTrequirement, there is no longer theconcern that the § 51.309 option mightbe defined by an invalid condition.Instead, the § 51.308(e)(2)demonstration simply insures that thebackstop trading program is approvablein lieu of BART, an approach based onour interpretation of CAA 169A(b)(2)which was upheld by the D.C. Circuit.

Documentation of EmissionsCalculation Methods [(§ 51.309(d)(4)(ii)]

EPA is proposing that States mustinclude documentation of the specificmethodology used to calculateemissions in the base year for eachsource included in the program. EPA isalso proposing that States must providefor the documentation of the specificemission calculation methods used fordetermining emissions from stationarysources for each of the subsequent yearsafter the base year. This requirementwas originally included in§ 51.309(h)(2)(ii), and EPA is proposingto include it in § 51.309(d)(4)(ii). Thisprovision is necessary because inestablishing the baseline emissions forstationary sources, States will be using

emissions data that reflect the emissioncalculation methodology the source wasusing at that time. It is likely that somefacilities that have relied on emissionfactors and other less accurate methodsfor determining the emissions willimprove the accuracy of the emissionestimates. In order to ensure thedetermination of emissions andemission reductions are a true measureof progress and not a change in emissioncalculation methods, the rule requiresStates to provide documentation of theemission calculation methods that wereused for affected sources. Thisinformation will be relied upon by theStates and EPA to ensure that thecomparison of emissions at thebeginning of the program to the currentreporting year takes into accountchanges in emissions calculationmethods and ensures that comparisonsdo not provide for "paper" increases ordecreases in emissions.

Monitoring, Recordkeeping, andReporting of Sulfur Dioxide Emissions[5 51.309(d)(4)(iii)]

EPA is proposing to revise§ 51.309(d)(4)(ii) to incorporatenecessary changes reflecting the newdate of SIP submittals, to address theimplications of the court's decision inCEED v. EPA as it affects the Annex, andto add a recordkeeping requirement. Inaddition, we are renumbering§ 51.309(d)(4)(ii) through (d)(4)(iii).Under the revised language, a Statemust require monitoring and annualreporting of sulfur dioxide emissionswithin the State, and require thatrecords be retained for a minimum of 10years from the establishment of therecord in order to ensure theenforceability of the program. EPAbelieves that requiring records to beretained for 10 years is reasonablebecause of the long duration of eachplanning period (i.e., the first planningperiod for the § 51.309 program extendsto the year 2018). In addition, byrequiring records to be maintained for10 years, States will ensure that any lagbetween the first phase of the programand full implementaticn of the backstoptrading program will not hamper theenforceability of the program. EPA hasdetermined these provisions arenecessary to assess compliance with thesulfur dioxide milestones each year ofthe program. The monitoring,recordkeeping and reporting datarequired by each State must besufficient to determine whether themilestones are achieved for each yearthrough 2018.

44167

Federal Register/Vol. 70, No. 146/Monday, August 1, 2005 / Proposed Rules

Criteria and Procedures for a MarketTrading Program [§ 51.309(d)(4)(iv)]

The approach to addressing stationarysource SO 2 emissions recommended bythe GCVTC was to establish a decliningcap on emissions that would be metthrough voluntary measures. Ifvoluntary measures did not succeed,however, the GCVTC recommended thatStates implement an enforceablemarket-based program that would serveas the "backstop" to the voluntarymeasures. EPA is proposing to requireStates to include in their SIPs thecriteria and procedures forimplementing the voluntary phase ofthe program and for triggering andactivating the backstop phase of theirprograms if the voluntary measures donot succeed. The main elements of thisrequirement were originally includedunder § 51.309(h)(2)(iv), (v), and (vii),and § 51.309(h)(3). EPA is proposing toinclude these elements under§ 51.309(d)(4)(iv). This provisionrequires the States annually to compareregional sulfur dioxide emissions to themilestone to deter/nine whether themilestone was achieved for that year.The States must complete a draft annualevaluation report no later than 12months after the milestone year. TheAnnex had provided that the annualcompliance check be based on a three-year rolling average of actual emissionsversus the corresponding three-yearrolling average of the milestone, exceptfor the first two years and the last year(2018) of the program. While we do notthink it is appropriate to require the useof three-year average,we continue tobelieve that such an approach would beacceptable. We therefore propose toallow for this approach in§ 51.308(d)(4)(i). If the comparisonshows the milestone has been achieved,the plan must include procedures toactivate the backstop trading program.This provisions also requires that the,plans provideior program assessments'in the years 2013 and 2018.

Market Trading Program[§ 51.309(d)(4)(v)]

As a backstop to voluntary measures,the implementation of the markettrading program must be akin to a "turn-key" operation. EPA proposes to requirethat the plan include a complete andfully developed backstop market tradingprogram sufficient to achieve the 2018milestone that is consistent with thecriteria for cap and trade program in§ 51.308(e)(2)(vi). In the event amilestone has not been achieved, theStates will be required to make this finaldeterniination no later than 15 monthsafter the end of the first year in which

themilestone was not achieved. Thefinal determination that the milestonehas not been achieved will trigger (i.e.,activate) the trading program. After themarket trading program has beentriggered, some time will be requiredbefore the full implementation of thetrading program can be accomplished,but the trading program should comeinto effect as sooh as practicable.

Provision for 2018 Milestone[§ 51.309(d)(4)(vi)]

We are proposing new provisionsgoverning the period beginning in 2018.The § 51.309 program generally focuseson setting and achieving milestones forthe period of 2003 through 2018. Statesparticipating in the § 51.309 programwill eventually need to prepareadditional plans to address visibilitybeyond 2018. See § 51.308(f). Theseplans will need to meet therequirements of § 51.308 or otheralternate regulations EPA may adopt inthe future. The proposed language in§ 51.309(d)(4)(vi) is intended to bridgeany potential gaps between the § 51.309plan and these future plans and toensure the milestone for 2018 isachieved by the § 51.309 plans andmaintained in future plans. Section51.309(d)(4)(vi)(A) requires that § 51.309plans clearly prohibit emissionsbeginning in 2018 in excess of the 2018milestone unless and until a new plancovering the period after 2018 isapproved by EPA.

Section 51.309(d)(4)(vi)(B) requiresthat § 51.309 plans include specialprovisions for ensuring the 2018milestone is achieved beginning in2018. Specifically, this provisionrequires § 51.309 plans to address thepotential gap created by any lag betweenthe date the backstop trading program istriggered and the date the tradingprogram is fully implemented andsource compliance is required. Underthe backstop trading program, sourceshave an incentive to voluntarily achievethe milestones to avoid triggering anenforceable trading program. Becausethe § 51.309 plans are designedgenerally to cover the period betweenthe initial submission in 2007 and 2018,the deterrent incentives of the backstoptrading program are diminished whereenforceable requirements do hot beginuntil after the end of the covered periodor where puch enforceable requirementsmay never be implemented because theywill be replaced by a different planningapproach. Thus, a special regulatoryprovision is necessary to address thepossible situation where a milestone isexceeded close to, in, or after 2018 suchthat any delay in the-implementation ofthe trading program could undercut the

necessary incentives to meet the 2018milestone.

To satisfy the requirements of§ 51.309(d)(4)(vi), States will need toaddress both the situation wheremilestones are exceeded in or after2018, and the situation wheremilestones are exceeded before 2018 butthe backstop emissions trading programwill not be fully implemented andenforceable until after 2018. In bothsituations, the § 51.309 plan mustinclude special provisions, includingfinancial penalties, to prohibit andenforce against any exceedances of the2018 milestone beginning in 2018 andcontinuing until the § 51.309 program isreplaced with a plan covering the periodafter 2018.20

With respect to the financial penaltyprovisions to be included in the SIPs, itis important that the mechanism forassessing and collecting penalties besufficiently immediate to provide theproper incentives for the cap and tradeprogram. Penalties that are negotiatedand require potentially drawn outlitigation,to enforce may not ensure thatsources have a clear, known costassociated with a given amount ofexcess emissions. One option to createthe proper incentives is for States torequire automatic penalties or, for Stateslacking authority for such automaticpenalties, to create a streamlinedpenalty approach that encourages timelypayment. Specifically, EPA believesStates could adopt an approach that setsa fixed penalty (e.g.; $5,000 per ton ofexcess emissions) that sources canvolunteer.to pay to quickly settle anexcess emissions violation. The Stateswould commit to take formalenforcement action and seek higherpenalties as authorized by law againstany source that has excess emissionsand does not agree to the streamlinedsettlement. Such an enforcementstrategy, if consistently and aggressivelyadministered, should result in a penaltyscheme that is sufficiently immediate tocreate the proper cap arid tradeincentives. EPA will review Stateimplementation of any such streamlined

2 0This special penalty provision for 2018 is

distinct from the requirement for automaticallowance deductions in § 51.308(e}{2)(vi)(Jl, whichis also applicable to the WRAP's program per thecross reference to § 51.308(e)(2) in § 51.309(d)(4)(v).In the Annex rule, SIPs were required to providefor automatic allowance deductions at a 2:1 ratio,and for automatic financial penalties of $5000/tonor an alternative amount that substantially exceeds.the cost of allowances. See § 51.309(h)(x) andpreamble discussion at 68 FR 33776-33777.Because some States subsequently determined thatthey lack authority to impose automatic financialpenalties, we are proposing to instead utilize the 3:1ratio for automatic allowance deductions asprovided in § 51.308(e)(2)(vi{J) in order to insurethere is a sufficient incentive for compliance.

44168


settlement approaches and will considertaking separate federal enforcementaction in the event a State fails topursue adequate enforcement against asource declining the streamlinedsettlement. In such cases, EPA willpursue penalties up to the maximumallowed under the CAA (currently$32,500 per day per violation). Inaddition, if EPA finds a pattern of Statefailure to obtain appropriate penalties,EPA could use its authority under CAAsection 110 to call for a SIP revision toaddress the deficiency.

Provisions for NOx and PM BARTRequirements [§ 51.309(d)(4)(vii)]

In the 1999 rule § 51.309(d)(4)(v)required States to submit a reportassessing emission control strategies forstationary source NOx and PM. Thereport was required to include anevaluation of the need to establishmilestones for NOx and PM to avoid anynet increases in these pollutants fromStationary Sources within the Transportregion. The report, was also intended tosupport the potential development andimplementation of a multipollutantmarket based program. The initial§51.309 SIPs (submitted by 12/31/2003)were required to provide for SIPrevisions no later than 12/31/2008,containing any long term strategies andBART requirements for stationarysource PM and NOx.

The WRAP developed the reportrequired by this section.21 Thedevelopment of the report providedmuch useful information on the role ofPM and NOx in visibility impairment atwestern Class I areas, and thecontribution of stationary sourceemissions to impairment caused bythese pollutants. However, the reportconcluded that currently availablecomputer models could not replicate thechemical interactions of NOx with otheratmospheric constituents with sufficientaccuracy to support regulatorydecisions. For this and other reasons,the WRAP States have not yetdetermined appropriate controlstrategies for NOx and PM, but arecontinuing to work on these issues.

Therefore, we propose amending thestationary source NOx and PMprovision within § 51.309 (nownumbered § 51.309(d)(4)(vii)) to specifythat States submitting § 51.309 SIPsmust address BART for PM and NOx.This proposed provision is intended toclarify that if EPA determines that theSO 2 emission reductions milestones and

71 "Stationary Source NOx and PM Emissions inthe WRAP Region: An Initial Assessment ofEmissions, Controls. and Air Quality Impacts"http://wtiiv.wt-rapair.org/forims/mtflnox-pm.html.

backstop trading program submitted inthe § 51.309 SIPs makes greaterreasonable progress than BART for S02,this will not constitute a determinationthat BART for PM or NOx is satisfied forany sources which would otherwise besubject to BART for those pollutants.22Proposed § 51.309(d)(4)(vii) wouldallow States the flexibility to addressthese BART provisions either on asource-by-source basis under§ 51.308(e)(1), or through an alternativestrategy under § 51.308(e)(2). Thedetermination of which strategy to useis separate for each pollutant. Forexample, a State could choose toaddress PM through a source-by-sourceBART program, while addressing NOxby use of a trading program or otheralternative measure. Moreover, such analternative measure could build uponthe backstop SO, program under§ 51.309 and employ a similar approachfor PM and/or NOx, or the alternativemeasure could be completely differentthan the SO 2 approach. For example, aState (or group of States) could decideto implement a NOx cap and tradeprogram from the outset, rather thanemploy a "backstop" approach.

Projection of Visibility Improvement(§ 51.309(d)(2) and Periodic SIP Updates(§ 51.309(d)(10)

Section 51.309(d)(10), as promulgatedin 1999, required periodic SIP revisionsin 2008, 2013, and 2018. Among otherthings, these revisions were to includean assessment of whether current SIPelements and strategies are sufficient toenable the State (and other Statesaffected by its emissions) to meet "allestablished reasonable progress goals."§ 51.309(d)(10)(i)(G). Section51.309(d)(10) also required that if theState determines that existing measureswere inadequate to meet reasonableprogress goals, the State must revise itsSIP to contain additional strategieswithin one year, or take certain otherspecified actions in the event thatemission sources in other jurisdictionsthreaten reasonable progress. See§ 51.309(d)(10)(ii)(A)-(D).

Because implementation of § 51.309SIPs has been delayed by the CEEDdecision and the consequent need torevise § 51.309 in this rulemaking, a SIPrevision in 2008 will no longer beappropriate. Under today's proposed

22 In limited circumstances, it may be possible fora State to demonstrate that an alternative programwhich controls only emissions of SO could achievegreater visibility improvement than application ofsource-specific BART controls on emissions of SO,NOx and/or PM. We nevertheless believe that sucha showing will be quite difficult to make in mostgeographic areas, given that controls on SO.emissions alone in most cases will result inincreased formation of ammonium nitrate particles.

revisions to § 51.309, SIPs will not bedue until December 2007, and thereforewill not have been in effect long enoughto permit assessment in 2008. Giventhese facts, we believe that the visibilityprojection called for by § 51.309(d)(2)should serve as a demonstration that thecomplete strategies contained in§ 51.309 SIPs comprise reasonableprogress for the 16 mandatory federalareas on the Colorado Plateau.

This also points to a need forclarification of what that reasonableprogress test entails. Section51.309(d)(10) refers to strategies whichmeet "established reasonable progressgoals." As the preamble notes, thelanguage of § 51.309(d) is virtuallyidentical to the periodic SIP reviewprovisions in §§ 51.308(g) and51.308(h). 64 FR 35755. In the § 51.308context, the meaning oi that term isclear, as § 51.308(d)(1) calls for theestablishment of reasonable progress, indeciviews, for each fedaral mandatoryClass I area, based upon a uniform rateof progress to natural conditions in 2064and the application of the statutoryreasonable progress factors. See 64 FR35731. Section 51.308(d)(1) alsoprovides that reasonable progress goalsmust "ensure no degradation ofvisibility for the least impaired days." Inthe § 51.309 context, however, it is lessclear what yardstick should be usedagainst the visibility pr:jections becauseby definition reasonabl3 progress under§ 51.309 is defined as c3mpliance withall the provisions of § 51.309.

In our Guidance for Tracking ProgressUnder the Regional tfaze Rule, weexplained:

Section 169A(a}(4) and other subsections ofthe Clean Air Act call for ieasonable progress"toward meeting the national goal" ofeliminating man-made impairment ofvisibility. Since any progress goal calling fordegradation of visibility, even at a modestrate, would not be progress toward the goal,it is unlikely that EPA could propose toapprove any demonstratio -s that purport toshow further visibility degradation asreasonable progress, (e.g.,. n sit uations wherevisibility would be expected to dograde, andsuch projected degradations would belessened but not reversed thru proposedemission control strategies). EPA-454/B-03-004, September 2003, at p. 1-9.

Therefore, although reasonableprogress for the 16 Class 1 areas on theColorado Plateau is not defined by the"glide path" methodology in § 51.308,we propose establishing as a minimumcriterion of reasonable progress for theseareas a requirement of no degradationfrom baseline conditions, for both the 20percent most impaired and 20 percentleast impaired days. These criteriashould be used in the visibility

44169

Federal Register / Vol. 70, No. 146/Monday, August 1, 2005 / Proposed Rules

projection under § 51.309(d)(2) and inthe progress reports under§ 51.309(d)(10). Furthermore, theassessment required in§ 51.309(d)(10)(i)(C) should beconducted as described in the TrackingProgress guidelines. Baselineconditions, as defined in that document,should be based on monitoring datafrom the 2000-2004 period.

We also wish to clarify that aprojection of visibility conditions is notnecessarily limited to the output of airquality simulation models. Under§ 51.309(d)(2), the State could use thesame methods to project visibilityimprovement that a State could useunder § 51.308(d)(3)(ii) and (iii) todemonstrate how its long term strategywill satisfy its contribution to achievingthe reasonable progress goalsestablished for each Class I area theState may affect. Examples of suchmethods are described in the EPA'sDraft Guidance for DemonstratingAttainment of Air Quality Goals forPM2.5 and Regional Haze (January 2,2001).

Additional Class I Areas [§ 51.309(g)]

In the 1999 rule, § 51.309(g) providedthat a State could satisfy reasonableprogress requirements for mandatoryClass I Federal areas in addition to the16 Class I areas on the Colorado plateauby implementing the strategies in§ 51.309. To do so, a State was requiredto establish reasonable progress goals forthe additional Class I areas and adoptadditional measures if necessary, inaccordance with § 51.308(d)(1) through(4) (i.e., the generally applicablerequirements for reasonable progress).States were also required to declare inthe SIP submitted no later thanDecember 31, 2003 whether their otherClass I areas would be addressed under§ 51.308 or under § 51.309(g). Section51.309(g)(4)(i) clarified that States couldbuild upon and take credit for thestrategies under § 51.309 in developinglong term strategies for additional ClassI areas. Section 51.309(g)(4)(ii) clarified,that the SO 2 backstop emissions tradingprogram could satisfy BART foradditional Class I areas, subject to ademonstration that greater reasonableprogress would be achieved at suchClass I areas.

We are proposing to retain thesubstance of the additional Class I areaprovisions in § 51.309(g), but toeliminate the requirement that Statesmake a declaration in the SIP due in2003 as to which section of the rulewould be used to address additionalClass I areas. This change is to conformwith our determination, discussedearlier in this preamble, that it is no

longer appropriate to impose a 2003deadline or to condition futureparticipation in § 51.309 strategies uponthe submission of SIPs in 2003. Otheradministrative changes in the structureof § 51.309 are proposed toaccommodate this change (i.e.,renumbering of paragraphs andcorrections of cross references).

IV. Statutory and Executive OrderReviews

A. Executive Order 12866: RegulatoryPlanning and Review

Under Executive Order 1Z866 (58 FR51735, October 4, 1993), the Agencymust determine whether the regulatoryaction is "significant" and thereforesubject to Office of Management andBudget (OMB) review and therequirements of the Executive Order.The Order defines "significantregulatory action" as one that is likelyto result in a rule that may:

(1) Have an annual effect on theeconomy of $100 million or more oradversely affect in a material way theeconomy, a sector of the economy,productivity, competition, jobs, theenvironment, public health or safety, orState, local, or Tribal governments orcommunities;

(2) Create a serious inconsistency orotherwise interfere with an action takenor planned by another agency;

(3) Materially alter the budgetaryimpact of entitlements, grants, user fees,or loan programs or the rights andobligations of recipients thereof; or

(4) Raise novel legal or policy issuesarising out of legal mandates, thePresident's priorities, or the principlesset forth in the Executive Order."

Pursuant to the terms of ExecutiveOrder 12866, we have determined thatthis proposed rule is a significantregulatory action. We have thereforeprovided it to OMB for review.

Today's proposed rule would provideStates and interested Tribes withoptional means, such as emissionstrading programs, to comply with CAArequirements for BART. The proposedrule would require that alternativesachieve greater "reasonable progress"towards CAA visibility goals thanwould source-by-source BART. By theirnature, emissions trading programs aredesigned to achieve a given level ofenvironmental improvemdnt in the mostcost effective manner possible.Therefore, today's proposed rule wouldachieve at least as a great a societalbenefit as source-by-source BART, at asocial cost that is likely to be less than,or at worst equal to, the social costs ofsource-by-source BART.

In the Regulatory Impact Analysis(RIA) for our recent promulgation of the

source-by-source BART guidelines, wedetermined that the social costs ofsource-by-source BART for both EGUsand non-EGUs nationwide was between$0.3 and $2.9 billion (1999 dollars),depending on the level of stringencyimplemented by States and on theinterest rate used. The human healthbenefits of BART, in contrast, rangedfrom $1.9 to $12 billion (1999 dollars),depending on the same variables. Thesefigures do not include many otherhuman health benefits that could not bequantified or monetized, including allbenefits attributable to ozone reduction(the benefits were based on reductionsin PM only). In addition, economicbenefits due to visibility improvementin the southeastern and southwesternU.S. were estimated to be from $80.million to $420 million. Finally, BARTwould also produce visibility benefits inother parts of the country, and non-visibility ecosystem benefits, whichwere also not quantified. Therefore, thesocial benefits of BART far outweigh thesocial costs.

It is not possible to lierform aneconomic analysis of today's rulebecause the actual parameters of anytrading programs in lieu of BART willbe determined by States and Tribes.However, because trading programalternatives would produce comparableoverall benefits (in the course ofsatisfying the requirement to achievegreater "reasonable progress" towardsvisibility goals ) and use market forcesto reduce costs, the benefits of today'srule would also far outweigh the costs.

B. Paperwork Reduction Act

This action does not add any newrequirements involving the collection ofinformation as defined by thePaperwork Reduction Act, 44 U.S.C.3501 et seq. The OMB has approved theinformation collection requirementscontained in the' final Regional Hizeregulations (64 FR 35714, July 1, 1999)and has assigned OMB control number2060-0421 (EPA ICR No. 1813.04).

Burden means the total time, effort, orfinancial resources expended by personsto generate, maintain, retain, or discloseor provide information to or for aFederal agency. This includes the timeneeded to review instructions; develop,acquire, install, and utilize technology -and systems for the purposes ofcollecting, validating, and verifyinginformation, processing andmaintaining information, and disclosingand providing information; adjust theexisting ways to comply with anypreviously applicable instructions andrequirements; train personnel to be ableto respond to a collection ofinformation; search data sources;

44170


complete and review the collection ofinformation; and transmit or otherwisedisclose the information. An agencymay not conduct or sponsor, and aperson is not required to respond to acollection of information unless itdisplays a currently valid OMB controlnumber. The OMB control numbers forEPA's regulations are listed in 40 CFRpart 9 and 48 CFR chapter 15.

C. Regulatory Flexibility Act

The Regulatory Flexibility Act (RFA),as amended by the Small BusinessRegulatory Enforcement Fairness Act of1996 (SBREFA), 5 U.S.C. 601 et seq.,generally requires an agency to preparea regulatory flexibility analysis of anyrule subject to notice and commentrulemaking requirements under theAdministrative Procedure Act or anyother statute unless the agency certifiesthat the rule will not have a significanteconomic impact on a substantialnumber of small entities. Small entitiesinclude small businesses, smallorganizations, and small governmentaljurisdictions.

For purposes of assessing the impactsof today's proposed rulemaking onsmall entities, small entity is defined as:(1) A small business that is a smallindustrial entity as defined in the U.S.Small Business Administration (SBA)size standards (as discussed on the SBAWeb site at http://www.sba.gov/sizelindextableofsize.html); (2) a smallgovernmental jurisdiction that is agovernment of a city, county, town,school district or special district with apopulation of less than 50,000; and (3)a small organization that is any not-for-profit enterprise which is independentlyowned and operated and is notdominant in its field.

After considering the economicimpacts of today's proposed rule onsmall entities, I certify that this actionwill not have a significant economicimpact on a substantial number of smallentities. This proposed rule will notimpose any requirements on smallentities. This proposed rule wouldrevise the provisions of the regionalhaze rule governing alternative tradingprograms, and provide additionalguidance to States, which are notdefined as small entities. We continueto be interested in the potential impactsof our rules on small entities andwelcome comments on issues related tosuch impacts.

D. Unfunded Mandates Reform Act

Title II of the Unfunded MandatesReform Act of 1995 (Pub. L. 104-4)(UMRA), establishes requirements forFederal agencies to assess the effects oftheir regulatory actions on State, local,

and Tribal governments and the privatesector. Under section 202 of the UMRA,2 U.S.C. 1532, EPA generally mustprepare a written statement, including acost-benefit analysis, for any proposedor final rule that "includes any Federalmandate that may result in theexpenditure by State, local, and Tribalgovernments, in the aggregate, or by theprivate sector, of $100,000,000 or more* * * in any one year." A "Federalmandate" is defined under section421(6), 2 U.S.C. 658(6), to include a"Federal intergovernmental mandate"and a "Federal private sector mandate."A "Federal intergovernmentalmandate," in turn, is defined to includea regulation that "would impose anenforceable duty upon State, local, ortribal governments," section421(5)(A)(i), 2 U.S.C. 658(5)(A)(i),except for, among other things, a dutythat is "a condition of Federalassistance," section 421(5)(A)(i)(I). A"Federal private sector mandate"includes a regulation that "wouldimpose an enforceable duty upon theprivate sector," with certain exceptions,section 421(7)(A), 2 U.S.C. 658(7)(A).

Before promulgating an EPA rule forwhich a written statement is neededunder section 202 of the UMRA, section205, 2 U.S.C. 1535, of the UMRAgenerally requires EPA to identify andconsider a reasonable number ofregulatory alternatives and adopt theleast costly, most cost-effective, or leastburdensome alternative that achievesthe objectives of the rule. In addition,before EPA establishes any regulatoryrequirements that may significantly oruniquely affect small governments,including tribal governments, it musthave developed under section 203 of theUMRA a small government agency plan.The plan must provide for notifyingpotentially affected small governments,enabling officials of affected smallgovernments to have meaningful andtimely input in the development of EPAregulatory proposals with significantFederal intergovernmental mandates,and informing, educating, and advisingsmall governments on compliance withthe regulatory requirements.

We believe that this rulemaking is notsubject to the requirements of UMRA.For regional haze SIPs overall, it isquestionable whether a requirement tosubmit a SIP revision constitutes aFederal mandate, as discussed in thepreamble to the regional haze rule (64FR 35761, July 1, 1999). However,today's proposed rule contains noFederal mandates (under the regulatoryprovisions of title II of the UMRA) forState, local or Tribal governments or theprivate sector. In addition, the programcontained in 40 CFR 51.309, including

today's revisions, is an optionalprogram. Because the alternative tradingprograms under 40 CFR 51.308 and 40CFR 51.309 are options that each of theStates may choose to exercise, theserevisions to §§ 51.308 and 51.309 do notestablish any regulatory requirementsthat may significantly or uniquely affectsmall governments, including Tribalgovernments. The program is notrequired and, thus is clearly not a"mandate." Moreover, as explainedabove, today's proposed rule wouldreduce any regulatory burdens.Accordingly, this rule will not result inexpenditures to State, local, and tribalgovernments, in the aggregate, or theprivate sector, of $100 million or morein any given year. Thus EPA is notobligated, under section 203 of UMRA,to develop a small government agencyplan.

E. Executive Order 13132: Federalism

Executive Order 13132, entitled"Federalism" (64 FR 43255, August 10,1999), requires EPA to develop anaccountable process to ensure"meaningful and timely input by Stateand local officials in the development ofregulatory policies that have federalismimplications." "Policies that havefederalism implications" is defined inthe Executive Order to includeregulations that have "substantial directeffects on the States, on the relationshipbetween the national government andthe States, or on the distribution ofpower and responsibilities among thevarious levels of government."

Under section 6(b) of Executive Order13132, EPA may not hsue a regulationthat has federalism implications, thatimposes substantial direct compliancecosts, and that is not required by statute,unless the Federal government providesthe funds necessary to pay the directcompliance costs incurred by State andlocal governments, or EPA consults withState and local officials early in theprocess of developing a regulation.Under section 6(c) of Executive Order13132, EPA may not issue a regulationthat has federalism implications andthat preempts State law, unless EPAconsults with State and local officialsearly in the process of developing theregulation.

This proposed rule does not havefederalism implications. It would nothave substantial direct effects on theStates, on the relationship between thenational government amd the States, oron the distribution of power andresponsibilities among the variouslevels of government, as specified inExecutive Order 13132. As describedabove, this proposed rule containsrevisions to §§ 51.308 and 51.309 of the

44171

Federal Register/ Vol. 70, No. 146 / Monday, August 1, 2005 / Proposed Rules

regional haze rule which would reduceany regulatory burden on the States. Inaddition, these are optional programsfor States. These revisions to §§ 51.308and 51.309, accordingly, would notdirectly impose significant newrequirements on State and localgovernnents. Moreover, even if today'sproposed revisions did have federalismimplications, these proposed revisionswould not impose substantial directcompliance costs on State or localgovernments, nor would they preemptState law. Thus, Executive Order 13132does not apply to this proposed rule.

Consistent with EPA policy, wenonetheless did consult.withrepresentatives of State and localgovernments in developing thisproposed rule. This rule directlyimplements specific recommendationsfrom the Western Regional AirPartnership (WRAP), which includesrepresentatives from all the affectedStates.

In the spirit of Executive Order 13132and consistent with EPA policy topromote communications between EPAand State and local governments, EPAspecifically solicits comment on today'srule from State and local officials.

F-Executive Order 13175: Consultationand Coordination With Indian TribalGovernments

Executive Order 13175, entitled"Consultation and Coordination withIndian Tribal Governments" (65 FR67249, November 6, 2000), requires EPAto develop an accountable process toensure "meaningful and timely input bytribal officials in the development ofregulatory policies that'have tribalimplications." "Policies that have tribalimplications" is defined in theExecutive Order to include regulationsthat have "substantial direct effects onone or more Indian tribes, on therelationship between the Federalgovernment and the Indian tribes, or onthe distribution of power andresponsibilities between the Federalgovernment and Indian tribes."

This proposed rule will overall reduceany regulatory burden on the Tribes.Moreover, the §§ 51.308 and 51.309programs are optional programs forTribes. Accordingly, this proposed rulewould not have tribal implications. Inaddition, this proposed rule woulddirectly implement specificrecommendations from the WesternRegional Air Partnership (WRAP),which includes representatives of Tribalgovernments. Thus, although thisproposed rule would not have tribalimplications, representatives of Tribalgovernments have had the opportunity

to provide input into development ofthe recommendations forming its basis.

G. Executive Order 13045: Protection ofChildren From Environmental Healthand Safety Risks

Executive Order 13045: "Protection ofChildren from Environmental Healthand Safety Risks" (62 FR 19885, April23, 1997) applies to any rule that: (1) Isdetermined to be "economicallysignificant" as defined under ExecutiveOrder 12866, and (2) concerns anenvironmental health or safety risk thatEPA has reason to believe may have adisproportionate effect on children. Ifthe regulatory action meets both criteria,the Agency must evaluate theenvironmental health or safety effects ofthe planned rule on children, andexplain why the planned regulation ispreferable to other potentially effectiveand reasonably feasible alternativesconsidered by the Agency.

The EPA interprets Executive Order13045 as applying only to thoseregulatory actions that are based onhealth or safety risks, such that theanalysis required under section 5-501 ofthe Order has the potential to influencethe regulation. Similarly to the recentlyfinalized source-specific BARTrevisions (70 FR 39104, July 6, 2005),this proposed rule is not subject toExecutive Order 13045 because it doesnot establish an environmental standardbased on health or safety risks.Therefore this proposed rule does notinvolve decisions on environmentalhealth or safety risks that maydisproportionately affect children. TheEPA believes that the emissionsreductions from the control strategiesconsidered in this rulemaking willfurther improve air quality and willfurther improve children's health.

H. Executive Order 13211:Actions ThatSignificantly Affect Energy Supply,Distribution or Use

This proposed rule is not subject toExecutive Order 13211, "Actions thatSignificantly Affect Energy Supply,Distribution, or Use" (66 FR 28355, May22, 2001) because it is not likely to havea significant adverse effect on thesupply, distribution, or use of energy.This rule is not a "significant energyaction," because it will have less thana 1 percent impact on the cost of energyproduction and does not exceed otherfactors described by OMB that mayindicate a significant adverse effect.(See, "Guidance for Implementing E.O.13211," OMB Memorandum 01-27 (July13, 2001) www.whitehouse.gov/omb/memoranda/mOl-27.html.) Thisproposed rule provides an optional costeffective and less burdensome

alternative to source-by-source BART asrecently finalized (70 FR 39104, July 6,2005); we have already found thatsource-by-source BART is not likely tohave a significant adverse effect on thesupply, distribution, or use of energy.The 1999 regional haze rule providessubstantial flexibility to the States,allowing them to adopt alternativemeasures such as a trading program inlieu of requiring the installation andoperation of BART on a source bysource basis. This-proposed rulecontains provisions governing thesealternative measures, which willprovide an alternative to BART thatreduces the overall cost of the regulationand its impact on the energy supply.

L National Technology TransferAdvancement Act

Section 12(d) of the NationalTechnology Transfer and AdvancementAct of 1995 ("NTTAA"), Public Law104-113, section 12(d) (15 U.S.C. 272note) directs EPA to use voluntaryconsensus standards in its regulatoryactivities unless to do so would beinconsistent with applicable law orotherwise impractical. Voluntaryconsensus standards are technicalstandards (e.g., materials specifications,test methods, sampling procedures, andbusiness practices) that are developed oradopted by voluntary consensusstandards bodies. The NTTAA directsEPA to provide Congress, through OMB,explanations when the Agency decidesnot to use available and applicablevoluntary consensus standards.

This proposed rulemaking does notinvolve technical standards. Therefore,EPA is not considering the use of anyvoluntary consensus standards. We-welcome comments on this aspect of theproposed rulemaking and, specifically,invite the public to identify potentially-applicable voluntary consensusstandards and to explain why suchstandards should be used in thisregulation.

J. Executive Order 12898: FederalActions To Address EnvironmentalJustice in Minority Populations andLow-Income Populations

Executive Order 12898 requires thateach Federal agency make achievingenvironmental justice part of its missionby identifying and addressing, asappropriate, disproportionately highand adverse human health orenvironmental effects of its programs,policies, and activities on minoritiesand low-income populations. Therequirements of Executive Order 12898have been previously addressed to theextent practicable in the RegulatoryImpact Analysis (RIA) for the regional

44172

Federal Register/Vol. 70, No. 146/Monday, Augugt 1, 2005/Proposed Rules

haze rule (cited above), particularly inchapters 2 and 9 of the RIA. Thisproposed rule makes no changes thatwould have a disproportionately highand adverse human health orenvironmental effect on minorities andlow-income populations.

IV. Statutory Provisions and LegalAuthority

Statutory authority for today'sproposed rule comes from sections169(a) and 169(b) of the CAA (42 U.S.C.7545(c) and (k)). These sections requireEPA to issue regulations that willrequire States to revise their SIPs toensure that reasonable progress is madetoward the national visibility goalsspecified in section 169(A).

List of Subjects in 40 CFR Part 51

Environmental protection,Administrative practice and procedure,Air pollution control, Intergovernmentalrelations, Lead, Nitrogen dioxide,Ozone, Particulate matter, Reportingand recordkeeping requirements, Sulfuroxides, Volatile organic compounds.

Dated: July 21, 2005.Stephen L. Johnson,Administrator.

For the reasons set forth in thepreamble, part 51 of chapter I of title 40of the Code of Federal Regulations isproposed to be amended as follows:

PART 51-REQUIREMENTS FORPREPARATION, ADOPTION, ANDSUBMITTAL OF IMPLEMENTATIONPLANS

1. The authority citation for part 51continues to read as follows:

Authority: 23 U.S.C. 101; 42 U.S.C. 7401-7671q.

Subpart P-Protection of Visibility

2. Section 51.308 is amended byrevising paragraphs (e)(2)(i)(A),(e)(2)(i)(B), (e)(2)(i)(C), and (e)(2)(ii), andadding paragraphs (e)(2)(i)(D),(e)(2)(i)(E), and (e)(2)(vi) to read asfollows:

§51.308 Regional haze programrequirements.* * * * *

(e) * * *(2) * * *(i) * * *

(A) A list of all BART-eligible sourceswithin the State.

(B) A list of all BART sourcecategories covered by the alternativeprogram. The State is not required toinclude every BART source category inthe program, but for each sourcecategory covered, the State must include

each BART-eligible source within thatcategory in the analysis required byparagraph (e)(2)(i)(C) of this section.

(C) An analysis of the degree ofvisibility improvement that would beachieved in each affected mandatoryClass I Federal area as a result of theemission reductions projected from theinstallation and operation of BARTcontrols under paragraph (e)(1) of thissection at each source subject to BARTin each source category covered by theprogram.

(D) An analysis of the emissionsreductions, and associated visibilityimprovement anticipated at each Class Iarea within the State, under the tradingprogram or other alternative measure,

(E) A determination that the emissionreductions and associated visibilityimprovement projected under paragraph(e)(2)(i)(D) of this section (i.e., thetrading program or other alternativemeasure) comprise greater reasonableprogress, as defined in paragraph (e)(3)of this section, than those projectedunder paragraph (e)(2)(i)(C) of thissection (i.e., BART).

(ii) A demonstration that theemissions trading program or alternativemeasures will apply, at a minimum, toall BART-eligible sources within thecovered source categories within theState. Those sources having a federallyenforceable emission limitationdetermined by the State and approvedby EPA as meeting BART in accordancewith section 302(c) or paragraph (e)(1)of this section do not need to meet therequirements of the emissions tradingprogram or alternative measure, but maychoose to participate if they meet therequirements of the emissions tradingprogram or alternative measure.* * * * *

(vi) A cap and trade program adoptedby a State in lieu of BART must includethe following elements:

(A) Applicability provisions definingwhich sources are subject to theprogram. The state must demonstratethat the applicability provisions(including the size criteria for includingsources in the program) are designed toprevent any significant, potentialshifting within the state of productionand emissions from sources in theprogram to sources outside the program.In the case of programs includingmultiple states, the states mustdemonstrate that the applicabilityprovisions cover essentially the samesize facilities and, if source categoriesare specified, the same source categoriesand prevent any significant, potentialshifting within such states of productionand emissions to sources outside theprogram.

(B) Allowance provisions ensuringthat the total tonnage value ofallowances issued each year under theprogram will never exceed the totalnumber of tons of the emissions capestablished by the budget or milestone.

(C) Monitoring provisions providingfor consistent and accurate emissionsmeasurements to ensure that eachallowance actually represents the samespecified tonnage of emissions and thatemissions are measured with similaraccuracy at all sources in the program.The monitoring provisions must require,that boilers, combustion turbines, andcement kilns allowed to sell allowancescomply with part 75 of this chaptei. Themonitoring provisions for other sourcesallowed to sell allowances must requirethat such sources provide emissionsinformation with the same precision,reliability, accessibility, and timelinessas information provided under part 75of this chapter.

(D) Recordkeeping provisions thatensure the enforceability of theemissions monitoring provisions andother program requirements. Therecordkeeping provisions must requirethat sources allowed to sell allowancescomply with the recordkeepingprovisions of part 75 of this chapter.(E) Reporting provisions requiring

timely reporting of monitoring data withsufficient frequency to ensure theenforceability of the emissionsmonitoring provisions and otherprogram requirements and the ability toaudit the program. The reportingprovisions must require that sourcesallowed to sell allowances comply withthe reporting provisions of part 75 ofthis chapter, except that, if theAdministrator is not the tracking systemadministrator for the program,emissions may be reported to thetracking system administrator, ratherthan the Administrator.

(F) Tracking system provisions whichprovide for a tracking system that ispublicly available in a secure,centralized database to track in aconsistent manner all allowances andemissions in the program.(G) Authorized account representative

provisions ensuring that a source owneror operator designates one individualwho is authorized to represent theowner or operator in all matterspertaining to the trading program.

(H) Allowance transfer provisionsproviding procedures that allow timelytransfer and recording of allowances,minimize administrative barriers to theoperation of the allowance market andensure that such procedures applyuniformly to all sources and otherpotential participants in the allowancemarket.

44173


(I) Compliance provisions prohibitinga source from emitting a total tonnage ofa pollutant that exceeds the tonnagevalue of its allowance holdings andincluding the methods and proceduresfor determining whether emissionsexceed allowance holdings. Suchmethod and procedures shall applyconsistently from source to source.

(J) Penalty provisions providing formandatory allowance deduction forexcess emissions that apply consistentlyfrom source to source. The tonnagevalue of the allowances deducted shallequal at least three times the tonnage ofthe excess emissions.

(K) For a trading program that allows.banking of allowances, provisionsclarifying any resfrictions on the use ofthese banked allowances.

(L) Program Assessment provisionsproviding for periodic programevaluation to assess whether theprogram is accomplishing its goals, andwhether modifications to the programare needed to enhance performance ofthe program.

3. 51.309 is amended as follows:a. Revising paragraph (a).b. Revising paragraphs (b)(5) and

(b)(7).c. Revising paragraph (c).d. Revising paragraphs (d)(1), (d)(4)(i)

through (v) and (d)(10).e. Revising paragraph (f).f. Revising paragraphs (g) introductory

text-and paragraphs (g)(1) and (2).g. Removing paragraphs (g)(3) and

(g)(4).h. Adding paragraphs (d)(vi)(A),

(d)(vi)(B) and (d)(vii).i. Removing paragraph (h).

§ 51.309 • Requirements related to theGrand Canyon Visibility TransportCommission.

(a) What is the purpose of this'section? This section establishes therequirements for the first regional hazeimplementation plan to address regionalhaze visibility impairment in the 16Class I areas covered by the GrandCanyon Visibility TransportCommission Report. For the periodthrough 2018, certain States (defined inparagraph (b) of this section asTransport Region States) may choose toimplement the Commission'srecommendations within the frameworkof the national regional haze programand applicable requirements of the Actby complying with the provisions of thissection. If a transport-region Statesubmits an implementation plan whichis approved by EPA as meeting therequirements of this section, it will bedeemed to comply'with therequirements for reasonable progresswith respect to the 16 Class I areas for

the period from approval of the planthrough 2018. Any Transport RegionState electing not to submit animplementation plan under this sectionis subject to the requirements of§ 51.308 in the same manner and to thesame extent as any State not includedwithin the Transport Region. Except asprovided in paragraph (g) of thissection, each Transport Region State isalso subject to the requirements of§ 51.308 with respect to any otherFederal mandatory Class I areas withinthe State or affected by emissions fromthe State.

(b) * * *(5) Milestone means the maximum

level of annual regional sulfur dioxideemissions, in tons per year, for a givenyear, assessed annually, through theyear 2018, consistent with paragraph(d)(4) of this section.* * * * *

(7) Base year means the year forwhich data for a source included withinthe program were used by the WRAP tocalculate emissions as a starting pointfor development of the milestonerequired by paragraph (d)(4)(i) of thissection.• * * * *

(c) Implementation Plan Schedule.Each Transport Region State electing tosubmit an implementation plan underthis section must submit such a plan nolater than December 17, 2007. IndianTribes may submit implementationplans after this deadline.

(d) * * ** (1) Time period covered. Theimplementation plan must be effectivethrough December 31, 2018, and shallcontinue in effect until animplementation plan revision isapproved by EPA in accordance with§ 51.308(f).

(4) * * *

(i) Provisions for stationary sourcesulfur dioxide.The plan submissionmust include a sulfur dioxide programthat contains quantitative emissionsmilestones for stationary soutce sulfurdioxide emissions for each year through2018. Compliance with the annualmilestones may be measured bycomparing a three-year rolling averageof actual emissions with a rollingaverage of the emissions milestones forthe same three years. The milestonesmust provide for steady and continuingemissions reductions through 2018consistent with the Commission'sdefinition of reasonable progress, itsgoal of 50 to 70 percent reduction insulfur dioxide emissions from 1990actual emission levels by 2040,applicable requirements under the CAA,

and the timing of implementation planassessments of progress andidentification of deficiencies which willbe due in the years 2013 and 2018. Themilestones must be shown to providefor greater reasonable progress thanwould be achieved by application ofBART pursuant to § 51.308(e)(2) andapprovable in lieu of BART.

(ii) Documentation of emissionscalculation methods. The plansubmission, must includedocumentation of the specificmethodology used to calculateemissions during the base year for eachemitting unit included in the program.The implementation plan must alsoprovide for documentation of anychange to the specific methodology usedto calculate emissions at any emittingunit for any year after the base year.

(iii) Monitoring, recordkeeping, andreporting of sulfur dioxide emissions.The plan submission must includeprovisions requiring the monitoring,recordkeeping, and annual reporting ofactual stationary source sulfur dioxideemissions within the State. Themonitoring, recordkeeping, andreporting data must be sufficient todetermine annually whether the 'milestone for each year through 2018 isachieved. The plan submission mustprovide for reporting of these data bythe State to the Administrator and to theregional planning organization. Theplan must provide for retention ofrecords for at least 10 years from theestablishment of the record.

(iv) Criteria and Procedures for aMarket Trading Program..The plan mustinclude the criteria and procedures forconducting an annual evaluation ofwhether the milestone is achieved andin accordance with paragraph (d)(4)(v)of this section, for activating a markettrading program in the event themilestone is not achieved. A draft of theannual report evaluating whether themilestone for each year is achieved shallbe completed no later than 12 monthsof the end of eachmilestone year. Theplan must also provide for assessmentsof the program in the years 2013 and2018.

(v) Market Trading Program. Theimplementation plan must includerequirements for a market tradingprogram to be implemented in the eventa milestone is not achieved. The planshall require that the market tradingprogram be activated beginning no laterthan 15 months after the end of the firstyear ir which the milestone is notachieved. The plan shall also requirethat sources comply, as soon aspracticable, with the requirement tohold allowances covering theiremissions. Such market trading program

44174


must be sufficient to achieve themilestones in paragraph (d)(4)(i) of thissection, and must be consistent with theelements for such programs outlined in§ 51.308(e)(2)(vi).

(vi) Provision for the 2018 milestone.(A) Unless and until a revised

implementation plan is submitted inaccordance with § 51.308(f) andapproved by EPA, the implementationplan shall prohibit emissions fromcovered stationary sources in any yearbeginning in 2018 that exceed the year2018 milestone. In no event shall amarket-based program approved under§ 51.308(f) allow an emissions cap thatis less stringent than the 2018milestone, unless the milestones arereplaced by a different program thatmeets BART and reasonable progressrequirements established in § 51.308,and is approved by EPA.

(B) The implementation plan mustprovide a framework, includingfinancial penalties for excess emissionsbased on the 2018 milestone, sufficientto ensure that the 2018 milestone willbe met even if the implembntation of themarket trading program in paragraph(d)(4)(v) of this section has not yet beentriggered, or the source allowancecompliance provision of the tradingprogram is not yet in effect.

(vii) Provisions for stationary sourceNOx and PM. The implementation planmust contain any necessary long termstrategies and BART requirements forstationary source PM and NOx. Anysuch BART provisions may besubmitted pursuant to either§ 51.308(e)(1) or § 51.308(e)(2).

(10) Periodic implementation planrevisions. Each Transport Region Statemust submit to the Administratorperiodic reports in the years 2013 and2018. The progress reports must be inthe form of implementation planrevisions that comply with theprocedural requirements of §§ 51.102and 51.103.

(f) [Reserved](g) Additional Class I areas. Each

Transport Region State implementingthe provisions of this section as thebasis for demonstrating reasonableprogress for mandatory Class I Federalareas other than the 16 Class I areasmust include the following provisionsin its implementation plan. If aTransport Region State submits animplementati6n plan which is approvedby EPA as meeting the requirements ofthis section, it will be deemed tocomply with the requirements forreasonable progress for the period fromapproval of the plan to 2018.

1) A demonstration of expectedvisibility conditions for the mostimpaired and least impaired days at theadditional mandatory Class I Federalarea(s) based on emissions projectionsfrom the long-term strategies in theimplementation plan. Thisdemonstration may be based onassessments conducted by the Statesand/or a regional planning body.

(2) Provisions establishing reasonableprogress goals and implementing anyadditional measures necessary todemonstrate reasonable progress for theadditional mandatory Federal Class Iareas. These provisions must comply

with the provisions of§ 51.308(d)(1)through (4).

(i) In developing long-term strategiespursuant to § 51.308(c.)(3), the State maybuild upon the strategies implementedunder paragraph (d) of this section, andtake full credit for the visibilityimprovement achieved through thesestrategies.

(ii) The requirement under § 51.308(e)related to Best Available RetrofitTechnology for regional haze is deemedto be satisfied for pollutants addressedby the milestones and backstop tradingprogram if, in establishing the emissionreductions milestones under paragraph(d)(4) of this section, it is shown thatgreater reasonable progress will beachieved for these additional Class Iareas than would be achieved throughthe application of source-specific BARTemission limitations under§ 51.308(e)(1).

(iii) The Transport Region State mayconsider whether any strategiesnecessary to achieve the reasonableprogress goals required by paragraph(g)(2) of this section are incompatiblewith the strategies implemented underparagraph (d) of this section to theextent the State adequatelydemonstrates that the incompatibility isrelated to the costs of :he compliance,the time necessary for compliance, theenergy and no air quality environmentalimpacts of compliance, or the remaininguseful life of any existing source subjectto such requirements.

[FR Doc. 05-14930 Filed 7-29-05; 8:45 am]BILLING CODE 6560-50-P

44175

Date post:	30-Apr-2018
Category:	Documents
Upload:	hoangnhi
View:	218 times
Download:	2 times

Environmental Protection Agency · AGENCY: Environmental Protection Agency (EPA). ACTION: ......

Documents