

[Federal Register: April 28, 2006 (Volume 71, Number 82)]
[Rules and Regulations]               
[Page 25287-25302]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28ap06-13]                         


[[Page 25287]]

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Part II





Environmental Protection Agency





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40 CFR Parts 51 and 96



Inclusion of Delaware and New Jersey in the Clean Air Interstate Rule; 
Final Rule


[[Page 25288]]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 51 and 96

[EPA-HQ-OAR-2003-0053; FRL-8048-1]
RIN 2060-AM95

 
Inclusion of Delaware and New Jersey in the Clean Air Interstate 
Rule

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: In today's action, we are finalizing regulations to include 
Delaware and New Jersey in the Clean Air Interstate Rule (CAIR) for 
fine particles (PM2.5), based on our assessment that they 
contribute significantly to a downwind State's nonattainment. In the 
CAIR, we determined that upwind States that contribute 0.2 [mu]g/
m3 or more to a downwind PM2.5 nonattainment area 
are potentially deemed to be contributing significantly to 
nonattainment in the downwind State. The EPA proposed to augment the 
analytical approach used in the CAIR by supplementing the air quality 
step of the contribution analysis. Based on the results of this 
augmented analytical approach, we proposed that Delaware and New Jersey 
should be covered by the CAIR for annual sulfur dioxide 
(SO2) and nitrogen oxides (NOX) requirements and 
are finalizing the regulation to include these States in the CAIR for 
PM2.5.

DATES: This final rule is effective on June 27, 2006.

ADDRESSES: The EPA has established a docket for this action under 
Docket ID No. EPA-HQ-OAR-2003-0053. All documents in the docket are 
listed on the http://www.regulations.gov Web site. Although listed in 

the index, some information is not publicly available, e.g., 
Confidential Business Information (CBI) or other information whose 
disclosure is restricted by statute. Certain other material, such as 
copyrighted material, is not placed on the Internet and will be 
publicly available only in hard copy form. Publicly available docket 
materials are available either electronically through http://www.regulations.gov
 or in hard copy at the Air Docket, EPA/DC, EPA 

West, Room B102, 1301 Constitution Ave., NW., Washington, DC. The 
Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through 
Friday, excluding legal holidays. The telephone number for the Public 
Reading Room is (202) 566-1744. The Air Docket telephone number is 
(202) 566-1742.

FOR FURTHER INFORMATION CONTACT: General questions concerning today's 
action should be addressed to Jan King, U.S. EPA, Office of Air Quality 
Planning and Standards, Air Quality Strategies and Standards Division, 
Mail Code C539-02, Research Triangle Park, NC 27711, telephone (919) 
541-5665, e-mail king.jan@epa.gov. For legal questions, please contact 
Steven Silverman, U.S. EPA, Office of General Counsel, Mail Code 2344A, 
1200 Pennsylvania Avenue, NW., Washington, DC 20460, telephone (202) 
564-5523, e-mail at silverman.steven@epa.gov. For questions regarding 
air quality analyses, please contact Norm Possiel, U.S. EPA, Office of 
Air Quality Assessment Division, Mail Code C439-01, Research Triangle 
Park, NC 27711, telephone (919) 541-5692, e-mail at 
possiel.norm@epa.gov. For questions regarding the electric generating 

units (EGUs) cost analyses, emissions inventories, and budgets, and 
also for questions regarding the model cap and trade programs, please 
contact Sam Waltzer, U.S. EPA, Office of Atmospheric Programs, Clean 
Air Markets Division, Mail Code 6204J, 1200 Pennsylvania Avenue, NW., 
Washington, DC 20460, telephone (202) 343-9175, e-mail at 
waltzer.sam@epa.gov. For questions regarding statewide emissions 

inventories, please contact Marc Houyoux, U.S. EPA, Office of Air 
Quality Assessment Division, Mail Code C339-02, Research Triangle Park, 
NC 27711, telephone (919) 541-3649, e-mail at houyoux.marc@epa.gov. For 
questions regarding emissions reporting requirements, please contact 
Bill Kuykendal, U.S. EPA, Office of Air Quality Planning and Standards, 
Emissions, Monitoring, and Analysis Division, Mail Code D205-01, 
Research Triangle Park, NC 27711, telephone (919) 541-5372, e-mail at 
kuykendal.bill@epa.gov. For questions regarding analyses required by 

statutes and executive orders, please contact Linda Chappell, U.S. EPA, 
Office of Air Quality Planning and Standards, Air Quality Strategies 
and Standards Division, Mail Code C339-01, Research Triangle Park, NC 
27711, telephone (919) 541-2864, e-mail at chappell.linda@epa.gov.

SUPPLEMENTARY INFORMATION:

Web Site for Rulemaking Information

    The EPA has established a Web site for this rulemaking at http://www.epa.gov/cleanairinterstaterule/ or http://www.epa.gov/cair/ which 
A> which 
includes the rulemaking actions and certain other related information 
that the public may find useful.

Judicial Review

    Section 307(b)(1) of the CAA indicates which Federal Courts of 
Appeal have venue for petitions of review of final actions by EPA. This 
section provides, in part, that petitions for review must be filed in 
the Court of Appeals for the District of Columbia Circuit if (i) the 
agency action consists of ``nationally applicable regulations 
promulgated, or final action taken, by the Administrator,'' or (ii) 
such action is locally or regionally applicable, if ``such action is 
based on a determination of nationwide scope or effect and if in taking 
such action the Administrator finds and publishes that such action is 
based on such a determination.''
    Any final action related to the CAIR is ``nationally applicable'' 
within the meaning of section 307(b)(1). As an initial matter, through 
this rule, EPA interprets section 110(a)(2)(D)(i) of the Clean Air Act 
(CAA), a provision which has nationwide applicability. In addition, the 
CAIR applies to 28 States and the District of Columbia. The CAIR is 
also based on a common core of factual findings and analyses concerning 
the transport of pollutants between the different States subject to it. 
Finally, EPA has established uniform approvability criteria that would 
be applied to all States subject to the CAIR. For these reasons, the 
Administrator also is determining that any final action regarding the 
CAIR is of nationwide scope and effect for purposes of section 
307(d)(1). Thus, any petitions for review of final actions regarding 
the CAIR must be filed in the Court of Appeals for the District of 
Columbia Circuit within 60 days from the date final action is published 
in the Federal Register.

Outline

I. Overview
    A. What Are the Central Requirements of This Rule?
    B. Why Are We Taking This Action?
II. Air Quality Analysis of Ozone and PM2.5 Contributions 
in the CAIR
    A. Analysis of Highly Cost-Effective Controls and Timeframe for 
Emissions Reductions
    1. Overall Criteria
    2. Evaluation of Cost Effectiveness and Feasibility
    3. CAIR Regionwide SO2 and NOX Emissions 
Reductions Requirements
III. Inclusion of Delaware and New Jersey in the CAIR for 
PM2.5
    A. Why EPA Is Revising the Status of Delaware and New Jersey in 
the CAIR
    B. Results of Updated Air Quality Modeling for Delaware and New 
Jersey
IV. Findings and Action

[[Page 25289]]

    A. Findings of Significant Contribution for Delaware and New 
Jersey
    B. SIP Approval Criteria
    C. SIP Submittal Deadline
    D. Emissions Reporting Requirements
V. Expected Effects of This Action
    A. Emissions
    B. Air Quality
VI. Statutory and Executive Order Reviews
    A. Executive Order 12866: Regulatory Planning and Review
    B. Paperwork Reduction Act
    C. Regulatory Flexibility Act
    D. Unfunded Mandates Reform Act
    E. Executive Order 13132: Federalism
    F. Executive Order 13175: Consultation and Coordination With 
Indian Tribal Governments
    G. Executive Order 13045: Protection of Children From 
Environmental Health and Safety Risks
    H. Executive Order 13211: Actions That Significantly Affect 
Energy Supply, Distribution or Use
    I. National Technology Transfer Advancement Act
    J. Executive Order 12898: Federal Actions To Address 
Environmental Justice in Minority Populations and Low-Income 
Populations
    K. Congressional Review Act

I. Overview

    By notice of proposed rulemaking dated May 12, 2005, EPA proposed 
to include Delaware and New Jersey in the CAIR, which was published on 
the same date (70 FR 25162). We are finalizing that proposal here. The 
final rule requires Delaware and New Jersey to adopt and submit State 
implementation plans (SIPs), under the requirements of CAA section 
110(a)(2)(D), that would eliminate emissions of specified amounts of 
SO2 and NOX which contribute significantly to 
nonattainment of the PM2.5 National Ambient Air Quality 
Standard (NAAQS) in a downwind State. Although Delaware and New Jersey 
are now combined to determine significant contribution, these States 
may independently determine which sources to subject to controls, and 
which control measures to adopt. The EPA's analysis indicates that 
emissions reductions from EGUs are highly cost effective, and EPA 
encourages Delaware and New Jersey to adopt controls for EGUs. To do 
so, they must place an enforceable limit, or cap, on EGU emissions (see 
section VII of the CAIR for a more detailed discussion). The EPA has 
calculated the amount of each State's EGU emissions cap, or budget, 
based on reductions that EPA has determined are highly cost effective 
(see section IV of this rule). Delaware and New Jersey may also allow 
their EGUs to participate in an EPA-administered cap and trade program 
as a way to reduce the cost of compliance. The cap and trade programs 
are described in more detail in section VIII of the preamble to the 
final CAIR.

A. What Are the Central Requirements of This Rule?

    In today's action, we establish SIP requirements for the affected 
upwind States of Delaware and New Jersey under CAA section 
110(a)(2)(D)(i). Section 110(a)(2)(D)(i) of the CAA requires SIPs to 
contain adequate provisions prohibiting air pollutant emissions from 
sources or activities in those States which emissions contribute 
significantly to nonattainment in, or interfere with maintenance by, 
any other State with respect to a NAAQS. Based on air quality modeling 
analyses and cost analyses, EPA has concluded that SO2 and 
NOX emissions in Delaware and New Jersey, through the 
phenomenon of air pollution transport,\1\ contribute significantly to 
downwind nonattainment of the PM2.5 NAAQS.\2\ In addition to 
making the findings of significant contribution to nonattainment, EPA 
is requiring Delaware and New Jersey to make specified amounts of 
SO2 and NOX emissions reductions to eliminate 
their significant contribution to downwind States. Delaware and New 
Jersey are required to adopt and submit SIP revisions with the 
necessary control measures by September 11, 2006.
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    \1\ In today's final rule, when we use the term ``transport'' we 
mean to include the transport of both fine particles 
(PM2.5) and their precursor emissions.
    \2\ In the CAIR, the 23 States along with the District of 
Columbia that must reduce SO2 and NOX 
emissions for the purposes of the PM2.5 NAAQS are: 
Alabama, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, 
Louisiana, Maryland, Michigan, Minnesota, Mississippi, Missouri, New 
York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, 
Texas, Virginia, West Virginia, and Wisconsin.
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B. Why Are We Taking This Action?

    On May 12, 2005, we proposed to include Delaware and New Jersey in 
the CAIR for PM2.5. Our assessment was that the combination 
of the two States does contribute significantly to PM2.5 
nonattainment in New York County, NY, and to one or more counties in 
eastern Pennsylvania. In that action, we proposed the following:
     Combining Delaware and New Jersey for purposes of 
assessing whether that combination contributes significantly to 
nonattainment of the PM2.5 NAAQS by downwind receptors under 
section 110(a)(2)(D);
     Requiring Delaware and New Jersey, under CAA section 
110(a)(2)(D), to adopt SIP requirements for addressing annual emissions 
of the PM2.5 precursors NOX and SO2;
     Adding requirements for control of annual emissions of 
SO2 and NOX;
     Requiring that SIPs to achieve the required 
PM2.5 emissions reductions be submitted as soon as 
practicable, but no later than 18 months after the date of signature of 
the CAIR, i.e., September 11, 2006, the same deadline as in the CAIR; 
and
     Providing model cap and trade programs for EGUs in the 
CAIR and administering these programs.
    Delaware and New Jersey are already subject to the CAIR for 
purposes of ozone, and must reduce ozone season emissions of 
NOX starting in 2009. We proposed to add requirements for 
control of annual emissions of NOX by 2009 and 
SO2 by 2010 for purposes of PM2.5. We also 
proposed larger reductions by 2015 for NOX and 
SO2 in order to avoid contributing significantly to 
PM2.5 nonattainment, or interfere with maintenance, in other 
States.
    We performed air quality modeling to determine the contribution 
from projected 2010 SO2 and NOX emissions in 
Delaware and New Jersey combined to PM2.5 nonattainment in 
downwind States. The results of this modeling were provided in a Notice 
of Data Availability (NODA) (70 FR 37068, June 28, 2005). The results 
show that the largest contribution from Delaware and New Jersey was 
0.23 [mu]g/m3 to PM2.5 nonattainment in New York 
County, New York. This amount exceeds EPA's PM2.5 
significance criterion of 0.2 [mu]g/m3.
    Based on a comment we received from the State of Delaware on the 
proposed rule, we have updated our 2010 emissions projections for 
Delaware and re-ran the model for Delaware and New Jersey. Materials 
relevant to this have been placed in the docket. See section III.B of 
this rule for further discussion of this comment and our response. The 
revised modeling confirms that the combination of Delaware and New 
Jersey make a significant contribution to PM2.5 
nonattainment in at least one downwind State thus necessitating SIP 
revisions under section 110(a)(2)(D) to eliminate the significant 
contribution. Therefore, we are finalizing the requirement for Delaware 
and New Jersey that they adopt SIP requirements for addressing annual 
emissions of the PM2.5 precursors NOX and 
SO2.

II. Air Quality Analysis of Ozone and PM2.5 Contributions in 
the CAIR \3\
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    \3\ This discussion is for readers' convenience. The EPA did not 
reconsider or otherwise reopen any aspect of the CAIR in this 
rulemaking, except for the matter specifically proposed.
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    For the CAIR, we performed State-by-State zero-out modeling to 
quantify the

[[Page 25290]]

contribution from emissions in each State to future ozone and 
PM2.5 nonattainment in other States and to determine whether 
that contribution meets requirements of the ``contribute 
significantly'' test. This zero-out modeling technique provides an 
estimate of downwind impacts by comparing the model predictions from 
the 2010 base case to the predictions from a run in which all 
anthropogenic NOX emissions (in the case of ozone) or all 
anthropogenic SO2 and NOX emissions (in the case 
of PM2.5) are removed from specific States, one State at a 
time. After considering an updated analysis and public comments, we 
applied a threshold of 0.2 [mu]g/m3 for PM2.5 for 
this determination.
    For more detailed discussions of EPA's analytical approach, 
findings, and final actions in the CAIR, see 70 FR 25162, May 12, 2005.

A. Analysis of Highly Cost-Effective Controls and Timeframe for 
Emissions Reductions

1. Overall Criteria
    In the CAIR rulemaking, we considered a variety of factors in 
evaluating the source categories from which highly cost-effective 
reductions may be available and the level of reduction assumed from 
that sector. These include:
     The availability of information,
     The identification of source categories emitting 
relatively large amounts of the relevant emissions,
     The performance and applicability of control measures,
     The cost effectiveness of control measures, and
     Engineering and financial factors that affect the 
availability of control measures.
    We further stated that overall, ``We are striving * * * to set up a 
reasonable balance of regional and local controls to provide a cost-
effective and equitable governmental approach to attainment with the 
NAAQS for fine particles and ozone.'' These criteria are unaffected by 
this rule.
2. Evaluation of Cost Effectiveness and Feasibility
    The CAIR preamble (70 FR 25195-25229) describes EPA's determination 
of regionwide SO2 and NOX control levels. As 
described in section IV in the CAIR preamble, EPA determined that 
highly cost-effective emissions reductions may be obtained by 
controlling EGUs. The EPA determined the amounts of emissions 
reductions that must be eliminated in upwind States to help downwind 
States achieve attainment of the PM2.5 and ozone 
NOX NAAQS, by assuming the application of highly cost-
effective control measures to EGUs and determining the emissions 
reductions that would result.
    For the CAIR, EPA determined highly cost-effective regionwide 
amounts of emissions reductions based on comparison to reference lists 
of the cost effectiveness of other regulatory controls. We developed 
reference lists for both average and marginal cost effectiveness of 
those other controls. By comparison to the reference lists, EPA 
determined that the CAIR final (2015) SO2 and NOX 
regionwide control levels are highly cost effective. The EPA also 
developed marginal cost-effectiveness curves for SO2 and 
NOX abatement at varying levels of stringency, to 
corroborate its cost-effectiveness determinations.
    The EPA determined the interim control levels (commencing in 2009 
for NOX and in 2010 for SO2) based on evaluating 
the feasibility of installing the necessary emission control retrofits. 
Although the interim regionwide control levels were determined based on 
feasibility considerations, EPA also evaluated the cost effectiveness 
of the interim control levels to ensure that they were also highly cost 
effective.
    Section IV.A describes our evaluation of highly cost-effective 
controls and section IV.C in the CAIR notice of final rulemaking (NFR) 
preamble describes EPA's feasibility analysis. Section V in the CAIR 
NFR preamble describes the method EPA used to apportion regionwide 
control levels to the affected States. A technical support document in 
the CAIR docket entitled ``Modeling of Control Costs, Emissions, and 
Control Retrofits for Cost Effectiveness and Feasibility Analyses'' 
describes EPA's use of the Integrated Planning Model (IPM) for its 
cost-effectiveness and feasibility analyses. In addition, a technical 
support document entitled ``Boilermaker Labor Analysis for the Final 
Clean Air Interstate Rule'' provides further explanation of EPA's 
feasibility analyses. Documentation for IPM, as well as IPM output 
files, are available in the CAIR docket listed in the ADDRESSES section 
of this rule.
3. CAIR Regionwide SO2 and NOX Emissions 
Reductions Requirements
    The CAIR NFR requires annual SO2 and NOX 
reductions in the District of Columbia and the 23 States listed in 
section I.A above. If all affected States choose to implement the CAIR 
annual SO2 emission reduction requirements by controlling 
EGUs, the regionwide annual SO2 emissions caps that will 
apply in these 23 States and the District of Columbia are 3.6 million 
tons in 2010 and 2.5 million tons in 2015. If all affected States 
choose to implement the CAIR annual NOX emission reduction 
requirements by controlling EGUs, the regionwide annual NOX 
emissions caps that will apply for EGUs in these 23 States and the 
District of Columbia are 1.5 million tons in 2009 and 1.3 million tons 
in 2015.
    The CAIR does not require annual SO2 or NOX 
emissions reductions in Delaware or New Jersey for purposes of the 
PM2.5 NAAQS.\4\ However, today, EPA is requiring annual 
SO2 and NOX reductions in these two States for 
that purpose. Annual SO2 and NOX budgets for 
Delaware and New Jersey are presented in section IV.B of this preamble. 
Since EPA is finalizing annual SO2 and NOX 
budgets for Delaware and New Jersey, the States may choose to implement 
their annual emission reduction requirements by controlling EGUs. If 
the States choose to control EGUs, the CAIR regionwide EGU caps will 
include reduction requirements for these two States. The updated annual 
SO2 caps, including Delaware and New Jersey, would be 3.7 
million tons in 2010 and 2.6 million tons in 2015. The updated annual 
NOX caps, including Delaware and New Jersey, would be 1.5 
million tons in 2009 and 1.3 million tons in 2015.
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    \4\ The CAIR does require ozone season NOX emissions 
reductions in Delaware and New Jersey for ozone.
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III. Inclusion of Delaware and New Jersey in the CAIR for 
PM2.5

A. Why EPA Is Revising the Status of Delaware and New Jersey in the 
CAIR

    Section 110(a)(2)(D)(i) of the CAA requires States to include in 
their SIPs adequate provisions prohibiting emissions that will 
contribute significantly to nonattainment in, or interfere with 
maintenance by, any other State. The term ``contribute significantly'' 
is not further defined, so in implementing this section we have had to 
develop an analytical approach to give the term specific meaning. The 
underlying logic of the analytical approach used in both the 
NOX SIP Call and the CAIR is that the emission reduction 
efforts needed to reach attainment should be reasonably balanced 
between the State containing a nonattainment area and upwind States 
significantly contributing to the nonattainment. In this way, control 
efforts on one side of a border are not undermined (and even rendered 
futile) by out-of-State emissions, and highly

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cost-effective emissions reductions by out-of-State sources which 
contribute significantly to downwind receptors' nonattainment are 
achieved. We believe this approach is both efficient and equitable, so 
that overall costs are less and costs are more fairly distributed than 
if the burden of reaching attainment were entirely on the State with 
the nonattainment area. Congress had the same purpose when it enacted 
section 110(a)(2)(D). See 64 FR 29260-61, May 25, 1999 (summarizing 
Legislative History of section 110(a)(2)(D) predecessor provision).
    We are retaining this underlying analytical approach, but treating 
Delaware and New Jersey as special cases and as a single geographic 
area for PM2.5. Specifically, we are combining Delaware and 
New Jersey for purposes of assessing significant contribution to 
nonattainment of the PM2.5 NAAQS by downwind receptors under 
section 110(a)(2)(D), and applying the finding from that combined 
assessment to each State.
    The analytical approach used for the CAIR has two parts, the first 
of which is a test of whether the air quality contribution from one 
entire State to nonattainment in any part of another State is 
substantial enough to be considered significant, pending consideration 
of control costs. For ozone, we used a test for this first part which 
is based on several metrics of air quality contribution, involving 
absolute magnitude, relative magnitude, and frequency. For 
PM2.5, we used a test with the single criterion of whether 
the PM2.5 air quality contribution from an upwind State to 
nonattainment in a downwind State, due to total anthropogenic 
SO2 and NOX emissions in the upwind State, was 
0.2 [mu]g/m\3\ or more. We believe that this specific form of the 
analytical approach used in the final CAIR rule has very appropriately 
identified a set of 23 States and the District of Columbia that should 
make certain reductions in annual emissions by 2009 for NOX 
and by 2010 for SO2, and larger reductions by 2015 for 
NOX and SO2, in order to avoid contributing 
significantly to PM2.5 nonattainment in other States.
    In the course of applying that analytical approach, we realized 
that a geographically small upwind State may have a maximum 
contribution on other States that is below the air quality contribution 
threshold used in the CAIR simply because of its size. Nevertheless, it 
may clearly contribute to PM2.5 nonattainment in a downwind 
State(s). Delaware and New Jersey are examples of this geographic 
phenomenon. In this instance they are embedded in the much larger NE 
Corridor nonattainment area that covers the area from Virginia to 
Massachussetts. Upon further examination, EPA found that Delaware and 
New Jersey each has substantial emissions for its size with emission 
densities that are greater than some of the neighboring States included 
in the CAIR. Therefore, excluding Delaware or New Jersey from emission 
reduction requirements related to PM2.5 would not achieve 
the desired balancing of local and upwind controls. Excluding either 
State could forgo opportunities for highly cost-effective control that 
would improve air quality in nearby States' PM2.5 
nonattainment areas. Ignoring the contributions of Delaware and New 
Jersey could result in both air quality detriments and cost 
inefficiencies and inequities.
    The EPA considered alternative approaches to addressing this issue. 
We do not believe it would be appropriate to consider amending or 
revising the contribution significance criteria set forth in the final 
CAIR notice. Nevertheless, we believe that these two States, which 
combined represent a significant source of PM2.5 precursor 
emissions, should not be considered to be below the air quality 
contribution threshold, in the unique circumstances presented here, 
solely because of their comparatively small geographic size. We have 
faced a similar issue with respect to small geographic entities in the 
NOX SIP Call, where we combined emissions of Delaware, 
Maryland, and the District of Columbia, and more recently in the CAIR, 
where we combined emissions of the District of Columbia and Maryland.
    The final CAIR's exclusion of Delaware and New Jersey for purposes 
of PM2.5 drew our attention because of features unique to 
Delaware and New Jersey. Table III-1 and Table III-2 in the proposal to 
include Delaware and New Jersey in the CAIR PM2.5 region (70 
FR 25414 and 25415, respectively) present relevant facts regarding 
Delaware and New Jersey. We believe the following specific conditions 
with respect to Delaware and New Jersey justify the departure from the 
CAIR significance criteria because both States:
     Are contiguous;
     Have relatively small land area;
     Have high emissions densities;
     Are near major cities where PM2.5 nonattainment 
affects large populations; and
     Are located between upwind States and at least one 
downwind area linked to an upwind State.

On balance, we believe the most appropriate way to address the factual 
situation presented here is to consider Delaware's and New Jersey's 
contributions together, as one unit of analysis. We also note that both 
States assented to this approach. Since Delaware and New Jersey are 
already subject to the CAIR for purposes of ozone, the remainder of 
this discussion focuses on PM2.5 considerations.
    Delaware and New Jersey are both relatively small in land area; 
both are smaller than any of the 23 States already subject to the CAIR 
for purposes of PM2.5. Portions of both States are urbanized 
and industrialized, and overall both have a high emissions density, 
comparable to that of their neighbors.\5\ Delaware has an emissions 
density of 76.1 tons/year per square mile, almost twice that of 
neighboring Pennsylvania and also higher than that of Maryland, States 
already linked to downwind PM2.5 nonattainment areas. New 
Jersey has an emissions density of 46.6 tons/year per square mile, 
above that of Pennsylvania although somewhat lower than that of 
Maryland.
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    \5\ By emissions density we mean the total SO2 and 
NOX emissions from each State in tons per year, divided 
by the geographic area of the State in square miles. For comparing 
emissions densities for the purposes of contributions to 
PM2.5 nonattainment, we have compared the emissions 
density expressed in terms of SO2 plus NOX 
emissions per square mile. Such a comparison is a reasonable measure 
of comparison that is independent of the disparity in the land area 
size of the two States.
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    Delaware and New Jersey are near major cities where current 
PM2.5 nonattainment affects large populations. Also, both 
are relatively near a county or counties in other States that are 
projected to still be in nonattainment for PM2.5 in 2010 in 
the base modeling case. Delaware and New Jersey are also near large 
markets for electric power in other States subject to the CAIR for 
PM2.5, and both are part of the PJM Interconnect electric 
generation. As a result, there is a potential for emissions shifting 
from States subject to the PM2.5 requirements of the CAIR to 
States not subject to those requirements, e.g., Delaware and New 
Jersey.
    Both Delaware and New Jersey lie between upwind States that are now 
subject to the CAIR for both ozone and PM2.5 and downwind 
receptor PM2.5 nonattainment areas that are linked to one or 
both of those upwind States. Maryland has already been determined to 
contribute significantly to nonattainment in both Philadelphia and New 
York City. Pennsylvania has already been determined to contribute 
significantly to nonattainment in New York City, and New York has been 
determined to contribute to nonattainment in Lancaster County,

[[Page 25292]]

Pennsylvania. New Jersey lies between Pennsylvania and New York City, 
and Delaware lies between part of Maryland and both Philadelphia and 
New York City. This means that emissions from Delaware and New Jersey 
are mixed with the emissions of these other upwind States and arrive 
together at the downwind nonattainment areas in other States. Moreover, 
Delaware and New Jersey are closer to these receptors.
    Given these highly distinctive facts, considered in conjunction 
with the data concerning the downwind emissions contributions from 
Delaware and New Jersey, it is reasonable that Delaware and New Jersey 
be viewed as an entity for assessing significance of PM2.5 
nonattainment in downwind States. We did this by treating the 
combination of these two small States as a unit, and then evaluating 
the combined emissions with the 0.2 [mu]g/m\3\ threshold for 
PM2.5 air quality contribution used in the CAIR. As noted, 
this is consistent with our approach in the NOX SIP Call and 
other aspects of the CAIR in which we also aggregated certain States in 
assessing significant contribution. We note also that Delaware and New 
Jersey lie side-by-side and together form a compact geographic area. We 
believe this further supports combining them for purposes of this 
analysis. By combining these two small States, we believe the 
underlying cost-balancing and control program efficiency goals of our 
original analytical approach can be better met.
    Virtually every commenter (including New Jersey and Delaware) 
agreed with this approach. The only negative comment termed the 
proposed approach ``arbitrary'' (without further analysis), and 
requested that EPA adhere to existing approaches for assessing 
significant contribution. The EPA disagrees that aggregating Delaware 
and New Jersey emissions is arbitrary, for the reasons just set 
forward. Indeed, given the facts here (especially the emission density 
and geographic location of the two States), it could be argued that it 
is arbitrary not to combine the emissions for those two States in 
assessing significance of contribution. Moreover, past EPA practice in 
both the CAIR and the NOX SIP Call has aggregated emissions 
across State boundaries in similar circumstances, as explained above.

B. Results of Updated Air Quality Modeling for Delaware and New Jersey

    The proposed rule for including Delaware and New Jersey in the CAIR 
included an analysis of the contribution of anthropogenic 
SO2 and NOX emissions in these two States to 
PM2.5 nonattainment in other States. This analysis was based 
upon the sum of the contributions from Delaware and from New Jersey to 
each downwind nonattainment receptor. The contribution from each of 
these two States was determined based on air quality modeling of each 
State individually. Details on EPA's PM2.5 contribution 
modeling approach can be found in the Air Quality Modeling Technical 
Support Document for the final CAIR.\6\ In brief, the modeling approach 
involves ``zero-out'' model simulations in which the SO2 and 
NOX emissions from sources in a given State or multi-State 
area are removed from a 2010 base case scenario.\7\ The predictions 
from this 2010 ``zero-out'' run are compared to predictions from the 
corresponding 2010 Base Case simulation to quantify the contributions 
to downwind ``modeled plus monitored'' PM2.5 nonattainment 
receptors. In the proposal, we stated that we would reassess the 
contribution from Delaware and New Jersey combined by performing 
``zero-out'' modeling in which SO2 and NOX 
emissions are removed from both States in a single model run. We 
conducted the combined Delaware/New Jersey zero-out modeling and the 
results were provided in the NODA (70 FR 37068; June 28, 2005).
---------------------------------------------------------------------------

    \6\ Docket No. EPA-HQ-OAR-2003-0053-2151.
    \7\ 2010 base case does not include emissions reductions 
expected to result from implementation of the CAIR.
---------------------------------------------------------------------------

    The EPA did not receive any significant comment challenging the 
proposal to combine Delaware and New Jersey emissions to assess 
significance of contribution to downwind States' PM2.5 NAAQS 
nonattainment. However, one commenter stated that EPA's modeling of 
Delaware and New Jersey failed to account for the effect on 
SO2 emissions in Delaware of an enforcement action against 
the Motiva refinery. The commenter said that not accounting for the 
27,000 tons per year reduction in SO2 at this facility, as 
required by a Consent Decree, inflates Delaware's 2010 base case 
emissions.
    In response to this comment, EPA adjusted downward the projected 
2010 emissions at the Motiva refinery to reflect the required 
reductions and remodeled the combined contributions from Delaware and 
New Jersey. As a result, 2010 emissions from Delaware in the revised 
modeling were lower than in the NODA modeling by over 29,000 tons per 
year for SO2 and over 500 tons per year for NOX. 
In remodeling Delaware and New Jersey, EPA used the same 
PM2.5 modeling platform as was used for the CAIR 
PM2.5 contribution modeling. The contributions from Delaware 
and New Jersey to PM2.5 nonattainment in other States based 
on the revised modeling are provided in Table III-1. These results show 
that the maximum downwind contribution from Delaware and New Jersey 
combined is 0.21 [mu]g/m\3\ which exceeds EPA's PM2.5 
contribution significance criterion of 0.20 g/m\3\. Thus, the revised 
modeling for Delaware and New Jersey combined confirms that these 
States make a significant contribution to PM2.5 
nonattainment in a downwind State (namely New York County, New York, 
which includes New York City).

  Table III-1.--PM2.5 Contributions ([mu]g/m\3\) From Delaware and New
                 Jersey Combined to PM2.5 Nonattainment
------------------------------------------------------------------------
                                                              PM2.5
             State                       County            contribution
------------------------------------------------------------------------
Alabama........................  Jefferson Co..........           <  0.05
Alabama........................  Russell Co............           <  0.05
Delaware.......................  New Castle Co.........             0.15
District of Columbia...........  District of Columbia..             0.08
Georgia........................  Bibb Co...............           <  0.05
Georgia........................  Clarke Co.............           <  0.05
Georgia........................  Clayton Co............           <  0.05
Georgia........................  Cobb Co...............           <  0.05
Georgia........................  DeKalb Co.............           <  0.05
Georgia........................  Floyd Co..............           <  0.05
Georgia........................  Fulton Co.............           <  0.05

[[Page 25293]]


Georgia........................  Walker Co.............           <  0.05
Illinois.......................  Cook Co...............           <  0.05
Illinois.......................  Madison Co............           <  0.05
Illinois.......................  St. Clair Co..........           <  0.05
Indiana........................  Clark Co..............           <  0.05
Indiana........................  Dubois Co.............           <  0.05
Indiana........................  Lake Co...............           <  0.05
Indiana........................  Marion Co.............           <  0.05
Indiana........................  Vanderburgh Co........           <  0.05
Kentucky.......................  Fayette Co............           <  0.05
Kentucky.......................  Jefferson Co..........           <  0.05
Maryland.......................  Anne Arundel Co.......             0.11
Maryland.......................  Baltimore City........             0.10
Michigan.......................  Wayne Co..............           <  0.05
New York.......................  New York Co...........             0.21
North Carolina.................  Catawba Co............           <  0.05
North Carolina.................  Davidson Co...........           <  0.05
Ohio...........................  Butler Co.............           <  0.05
Ohio...........................  Cuyahoga Co...........           <  0.05
Ohio...........................  Franklin Co...........           <  0.05
Ohio...........................  Hamilton Co...........           <  0.05
Ohio...........................  Jefferson Co..........           <  0.05
Ohio...........................  Lawrence Co...........           <  0.05
Ohio...........................  Mahoning Co...........           <  0.05
Ohio...........................  Montgomery Co.........           <  0.05
Ohio...........................  Scioto Co.............           <  0.05
Ohio...........................  Stark Co..............           <  0.05
Ohio...........................  Summit Co.............           <  0.05
Pennsylvania...................  Allegheny Co..........           <  0.05
Pennsylvania...................  Beaver Co.............           <  0.05
Pennsylvania...................  Berks Co..............             0.13
Pennsylvania...................  Cambria Co............           <  0.05
Pennsylvania...................  Dauphin Co............             0.09
Pennsylvania...................  Delaware Co...........             0.15
Pennsylvania...................  Lancaster Co..........             0.15
Pennsylvania...................  Philadelphia Co.......             0.15
Pennsylvania...................  Washington Co.........           <  0.05
Pennsylvania...................  Westmoreland Co.......           <  0.05
Pennsylvania...................  York Co...............             0.12
Tennessee......................  Hamilton Co...........           <  0.05
Tennessee......................  Knox Co...............           <  0.05
West Virginia..................  Berkeley Co...........           <  0.05
West Virginia..................  Brooke Co.............           <  0.05
West Virginia..................  Cabell Co.............           <  0.05
West Virginia..................  Hancock Co............           <  0.05
West Virginia..................  Kanawha Co............           <  0.05
West Virginia..................  Marion Co.............           <  0.05
West Virginia..................  Marshall Co...........           <  0.05
West Virginia..................  Ohio Co...............           <  0.05
West Virginia..................  Wood Co...............           <  0.05
------------------------------------------------------------------------

IV. Findings and Action

A. Findings of Significant Contribution for Delaware and New Jersey

    We find that emissions of the PM2.5 precursors 
SO2 and NOX emitted by Delaware and New Jersey 
contribute significantly to nonattainment of the PM2.5 NAAQS 
in New York. Accordingly, we are finalizing SIP requirements for 
Delaware and New Jersey under section 110(a)(1) to meet the 
requirements of section 110(a)(2)(D)(i), namely, to contain adequate 
provisions to prohibit SO2 and NOX emissions from 
sources or activities within the States from ``contribut[ing] 
significantly to nonattainment'' of the PM2.5 NAAQS in 
downwind States.

B. SIP Approval Criteria

    The CAIR added two new sections to title 40 of the Code of Federal 
Regulations, Sec. Sec.  51.123 and 51.124 containing requirements 
related to NOX and SO2 respectively, which 
establish the requirement for submission of SIP revisions to comply 
with the CAIR and the criteria which EPA will use to review these 
revisions for approval or disapproval. The content of these sections is 
presented in section VII of the preamble to the CAIR. Delaware and New 
Jersey are already subject to the ozone-related provisions of these 
sections but not to the provisions that relate to PM2.5. We 
are amending these two sections to extend the PM2.5-related 
provisions to both States. The practical effect of the amendments will 
be to subject the States to budgets (if they choose to control large 
EGUs) for annual emission reduction requirements of NOX and 
SO2.

[[Page 25294]]

Delaware and New Jersey Statewide Annual Emissions Budgets
    The NOX and SO2 annual and ozone season 
budgets for New Jersey and Delaware are shown below in Tables IV-1 and 
IV-2.

                     Table IV-1.--Annual NOX Budgets
                                 [Tons]
------------------------------------------------------------------------
                     Year                         Delaware    New Jersey
------------------------------------------------------------------------
2009..........................................        4,166       12,670
2015..........................................        3,472       10,558
------------------------------------------------------------------------


                     Table IV-2.--Annual SO2 Budgets
                                 [Tons]
------------------------------------------------------------------------
                     Year                         Delaware    New Jersey
------------------------------------------------------------------------
2010..........................................       22,411       32,392
2015..........................................       15,687       22,674
------------------------------------------------------------------------

    State annual SO2 budgets for the years 2010-2014 (Phase 
I) are based on a 50 percent reduction from title IV allocations for 
all units in the affected State. The State annual budgets for 2015 and 
beyond (Phase II) are based on a 65 percent reduction from title IV 
allowances allocated to units in the affected State for SO2 
control.
    The EPA calculated State NOX budgets through a fuel-
adjusted heat-input basis, as in the CAIR. State budgets were 
determined by multiplying historic heat input data (summed by fuel) by 
different adjustment factors for the different fuels. These factors 
reflect the relative differences in the average NOX 
emissions rates for each fuel type. The average NOX 
emissions rates were derived by totaling 1999 through 2001 heat input 
and emissions for each fuel type (i.e., coal, natural gas, and oil), in 
each State. The resulting adjustment factors from this calculation are 
1.0 for coal, 0.4 for gas and 0.6 for oil. The factors reflect the 
inherently higher emissions rate of coal-fired plants, and consequently 
the greater burden on coal plants to control emissions. The regional 
budget was then apportioned to States on a pro-rata basis, based on 
each State's share of total adjusted average heat input. For a more 
detailed discussion of how the budgets were calculated, see the 
proposal (70 FR 25416).
Compliance Supplement Pool (CSP) Allowances and the Statewide Budgets
    The final CAIR annual NOX cap and trade rule provides 
additional incentives for early annual NOX reductions by 
creating a CSP for CAIR States from which they can distribute 
allowances for early, annual NOX emissions reductions in the 
years 2007 and 2008. The CSP functions much like the NOX SIP 
Call's CSP. The CSP is comprised of CAIR annual NOX 
allowances of vintage year 2009.
    In the final CAIR, EPA apportions a 200,000 ton CSP to all States 
in the CAIR region. The CSP was apportioned based on a State's share of 
the required emissions reductions (i.e., the difference between their 
State baseline emissions and their projected emissions under the CAIR). 
States may distribute these CAIR NOX allowances to sources 
based upon either: (1) A demonstration to the State of NOX 
emissions reductions in surplus of any existing NOX emission 
control requirements; or (2) a demonstration to the State that the 
facility has a ``need'' that would affect electricity grid reliability; 
or, another method chosen by the State. Sources that wish to receive 
CAIR CSP allowances can be awarded one CAIR annual NOX 
allowance for every ton of NOX emissions reductions. (Should 
a State receive more requests for allowances than their share of the 
CAIR CSP, the State would pro-rate the allowance distribution). 
Determination of surplus emissions must use emissions data measured 
using part 75 monitoring.
    The CSP for CAIR States affected by the CAIR NFR has a total of 
198,494 CAIR NOX allowances in addition to the annual CAIR 
NOX budgets. With Delaware and New Jersey as part of the 
final CAIR program, they will be allotted an additional 1,503 
allowances. Table IV-3 shows the NOX CSP for New Jersey and 
Delaware.

               Table IV-3.--NOX Compliance Supplement Pool
                                 [Tons]
------------------------------------------------------------------------
              Delaware                            New Jersey
------------------------------------------------------------------------
                     843                                  660
------------------------------------------------------------------------

C. SIP Submittal Deadline

    We are also finalizing the requirement that PM2.5 
transport SIPs be submitted, under CAA section 110(a)(1), as soon as 
practicable, but not later than 18 months from the date of signature of 
the CAIR, i.e., September 11, 2006. While EPA did not receive public 
comment regarding the proposed Delaware and New Jersey CAIR SIP 
revision for PM2.5, EPA notes that this deadline will be 
less than 18 months from today's final action and less than the 12-
month timeline EPA had expected at the time of the publication of the 
Delaware and New Jersey CAIR proposal. However, we continue to believe 
that Delaware and New Jersey have sufficient time to develop and submit 
CAIR SIP revisions for the following reasons.
    First, Delaware and New Jersey were included in the initial CAIR 
finding of significant contribution for PM2.5 precursors, so 
Delaware and New Jersey have been aware that they might have to submit 
transport SIPs for PM2.5 since the CAIR proposal was 
published on January 30, 2004. Moreover, we are adopting all of the key 
features of the initial CAIR proposal, including the same annual 
SO2 and NOX reductions and budgets and the same 
implementation mechanisms. In addition, Delaware and New Jersey have 
been aware of the CAIR model trading rules, which they may choose to 
adopt as a highly cost-effective control remedy, for the same length of 
time as the other CAIR States. Again, since these States have been on 
notice regarding these issues, we believe that it is reasonable to 
require Delaware and New Jersey to submit their CAIR SIP revisions for 
PM2.5 on the same timeline as other CAIR PM2.5 
States.
    The EPA modeling projects that, when Delaware and New Jersey are 
included in the CAIR SO2 and NOX annual trading 
programs, these States would achieve the required emissions reductions 
with limited installation of advanced emissions controls. Specifically, 
EPA modeling projected the installation of one flue gas desulfurization 
(FGD) control device in New Jersey.\8\ By requiring the Delaware and 
New Jersey CAIR SIP revisions by September 11, 2006, sources will have 
40 months to plan and install the one additional FGD device EPA 
predicts will be installed. This exceeds the 27 months EPA estimates it 
takes for the installation of a FGD device. Also, we believe sufficient 
boiler maker labor and other resources exist to support one additional 
FGD device installation by January 1, 2010.
---------------------------------------------------------------------------

    \8\ The EPA modeling shows that no additional selective 
catalytic reduction (SCR) units would be required in the two States. 
Analysis is based upon comparisons of projected emissions control 
equipment retrofits in IPM runs with and without Delaware and New 
Jersey. See IPM runs (``CAIR 2004 Final DE and NJ'') in the docket 
for further details.
---------------------------------------------------------------------------

    For all these reasons, also put forth in the Delaware and New 
Jersey NPR, we think it reasonable that Delaware and New Jersey submit 
PM2.5 transport SIPs by September 11, 2006.

D. Emissions Reporting Requirements

    In order to provide emissions inventory information that will allow 
EPA to better monitor the implementation and effects of the

[[Page 25295]]

CAIR's emissions reductions, EPA incorporated into the CAIR the pre-
existing emission inventory reporting requirements applicable to States 
affected by the CAIR. Those CAIR requirements were specific to whether 
a State was affected by the annual emissions reductions requirements 
for SO2 and NOX or only the ozone-season 
reduction requirements for NOX. Because we are applying the 
annual emissions reductions requirements to Delaware and New Jersey, we 
are also placing these two States under the corresponding provisions of 
the emissions reporting requirements. The only practical effect of this 
change relative to existing requirements is that if either State 
chooses to obtain some of the required annual emissions reductions from 
a source which emits less than 2,500 tons/year of both SO2 
and NOX and that source is not also made subject to the EPA-
operated emissions trading programs, the State must report the annual 
emissions of that source to EPA annually in contrast to the triennial 
requirement that presently applies to such sources.

V. Expected Effects of This Action

A. Emissions

    The EPA has conducted power sector analysis of the CAIR using the 
IPM. The IPM is a dynamic linear programming model that can be used to 
examine air pollution control policies for SO2 and 
NOX throughout the contiguous United States for the entire 
power system. Documentation for IPM can be found at  http://www.epa.gov/airmarkets/epa-ipm
.

    Emissions of SO2 and NOX in the CAIR region 
would be higher under the final CAIR where Delaware and New Jersey are 
only included in a summer season ozone cap, similar to Connecticut and 
Massachusetts. Since these two States are being included as part of the 
annual SO2 and NOX caps for the CAIR, emissions 
in the region will be reduced by another 48,000 tons of SO2 
and 11,000 tons of NOX from the final CAIR scenario by 2015.
    The inclusion of Delaware and New Jersey in the annual CAIR 
requirements will result in additional reductions of SO2 and 
NOX that will help achieve attainment in downwind States. 
These additional reductions are shown in Table V-1.
---------------------------------------------------------------------------

    \9\ The CAIR region for purposes of this table includes the 
following States: Alabama, Arkansas, Connecticut, Delaware, District 
of Columbia, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, 
Louisiana, Maryland, Massachusetts, Michigan, Minnesota, 
Mississippi, Missouri, New Jersey, New York, North Caorlina, Ohio, 
Pennsylvania, South Carolina, Tennessee, Texas, Virginia, West 
Virginia, Wisconsin.

                   Table V-1.--Annual Emissions From Affected Sources for the CAIR Region \9\
                                                 [Thousand tons]
----------------------------------------------------------------------------------------------------------------
                                                                        2010                      2015
                                                             ---------------------------------------------------
                                                                  SO2          NOX          SO2          NOX
----------------------------------------------------------------------------------------------------------------
Base Case...................................................        8,868        2,826        8,056        2,853
Final CAIR (DE and NJ Included for Ozone Season NOX Only)...        5,336        1,592        4,216        1,342
CAIR Modified By This Rule (DE and NJ Included for Annual           5,305        1,582        4,168        1,331
 SO2 and NOX)...............................................
Difference between CAIR Scenarios...........................           32           10           48           11
----------------------------------------------------------------------------------------------------------------
Note: Numbers may not add due to rounding.

B. Air Quality

    Section VI of the preamble to the CAIR describes the air quality 
modeling performed to determine the projected impacts of the CAIR on 
PM2.5 and 8-hour ozone of the SO2 and 
NOX emissions reductions in the control region modeled. The 
modeling used to estimate the air quality impact of these reductions 
assumed annual SO2 and NOX controls for Arkansas, 
Delaware, and New Jersey (as had been proposed before completion of the 
final contribution analysis) in addition to the 23 States plus the 
District of Columbia. Since Arkansas, Delaware, and New Jersey are not 
included in the final CAIR PM2.5 region, the modeled 
estimated impacts are overstated for the final CAIR which excludes all 
three States from the CAIR region for PM2.5. Because 
Delaware and New Jersey now are subject to the PM2.5-related 
emissions limits for SO2 and NOX, the air quality 
modeling for the final CAIR better approximates the net effects of the 
CAIR plus today's rule, but still overestimates the air quality changes 
somewhat due to the continued discrepancy regarding Arkansas. The 
Regulatory Impact Analysis for the CAIR discusses these differences in 
scenarios in more detail.
    The EPA analyzed the impacts of the regional emissions reductions 
in both 2010 and 2015. These impacts are quantified by comparing air 
quality modeling results for the regional control scenario to the 
modeling results for the corresponding 2010 and 2015 base case 
scenarios. The 2010 and 2015 emissions reductions and air quality 
improvements from the regional control strategy modeled are presented 
in summary form in section VI of the preamble to the CAIR and in detail 
in the Emission Inventory Technical Support Document and the Air 
Quality Modeling Technical Support Document for the CAIR.
    The EPA estimates, based on the air quality analysis for the CAIR, 
that the required SO2 and NOX emissions 
reductions would, by themselves, bring into attainment 52 of the 80 
counties that are otherwise expected to be in nonattainment for 
PM2.5 in 2010, and 57 of the 75 counties that are otherwise 
expected to be in nonattainment for PM2.5 in 2015. The EPA 
further estimates that the required NOX emissions reductions 
would, by themselves, bring into attainment 3 of the 40 counties that 
are otherwise expected to be in nonattainment for 8-hour ozone in 2010, 
and 6 of the 22 counties that are expected to be in nonattainment for 
8-hour ozone in 2015. In addition, today's rule will improve 
PM2.5 and 8-hour ozone air quality in the areas that will 
remain nonattainment for those two NAAQS after implementation of 
today's rule. Because of today's rule, the States with those remaining 
nonattainment areas will find it less burdensome and less expensive to 
reach attainment by adopting additional local controls. The CAIR will 
also reduce PM2.5 and 8-hour ozone levels in attainment 
areas.
    We have not conducted an incremental analysis of the air quality 
effects from the proposed extension of the annual emissions reductions 
requirements to New Jersey and Delaware. However, IPM modeling of EGU 
emissions indicates that assuming that all States join the EPA trading

[[Page 25296]]

programs, highly cost-effective emissions reductions will be 
distributed across the region in addition to Delaware and New Jersey 
themselves, and contribute to the attainment of these two States' 
downwind neighbors as well as other States with nonattainment areas.

VI. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review

    Under Executive Order 12866 (58 FR 51735, October 4, 1993), the 
Agency must determine whether a regulatory action is ``significant'' 
and therefore subject to Office of Management and Budget (OMB) review 
and the requirements of the Executive Order. The Order defines 
``significant regulatory action'' as one that is likely to result in a 
rule that may:
    1. Have an annual effect on the economy of $100 million or more or 
adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or Tribal governments or 
communities;
    2. Create a serious inconsistency or otherwise interfere with an 
action taken or planned by another agency;
    3. Materially alter the budgetary impact of entitlements, grants, 
user fees, or loan programs or the rights and obligations of recipients 
thereof; or
    4. Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order.
    In view of its important policy implications and potential effect 
on the economy of over $100 million, this rule and the CAIR program 
inclusive of this rule has been judged to be an economically 
``significant regulatory action'' within the meaning of the Executive 
Order. As a result, today's rule was submitted to OMB for review, and 
EPA prepared an economic analysis of the CAIR program including this 
rule entitled ``Regulatory Impact Analysis of the Final Clean Air 
Interstate Rule'' (March 2005).
1. What Economic Analyses Were Conducted for the Rulemaking?
    The analyses conducted for the CAIR program (CAIR final rule plus 
this New Jersey and Delaware rule) provide several important analyses 
of impacts on public welfare. These include an analysis of the social 
benefits, social costs, and net benefits of the regulatory scenario. 
The economic analyses also address issues involving small business 
impacts, unfunded mandates (including impacts for Tribal governments), 
environmental justice, children's health, energy impacts, and 
requirements of the Paperwork Reduction Act.
2. What Are the Benefits and Costs of the CAIR Program?
    The benefit-cost analysis shows that substantial net economic 
benefits to society are likely to be achieved due to reduction in 
emissions resulting from the CAIR program that includes annual 
SO2 and NOX controls for New Jersey and Delaware. 
The results show that the CAIR program would be highly beneficial to 
society, with annual net benefits (benefits less costs) of 
approximately $71.4 or $60.4 billion in 2010 and $98.5 or $83.2 billion 
in 2015. These alternative net benefits estimates occur due to 
differing assumptions concerning the social discount rate used to 
estimate the annual value of the benefits of the rule with the lower 
estimates relating to a discount rate of 7 percent and the higher 
estimates a discount rate of 3 percent. All amounts are reflected in 
1999 dollars. For more information, see the NFR for the CAIR published 
in the Federal Register (70 FR 25162; May 12, 2005) and the Regulatory 
Impact Analysis for the Final Clean Air Interstate Rule (March 2005).
3. What Are the Incremental Costs to the Power Industry Associated With 
This New Jersey and Delaware Rule?
    The costs presented here represent the total incremental cost to 
the electric power industry of reducing NOX and 
SO2 emissions to meet the reduction requirements set forth 
in the rule, assuming all States participate in a regionwide cap and 
trade program. These costs estimates are referred to as private costs, 
and these estimates differ from the cost of the program to society or 
social cost estimates presented for the CAIR program discussed 
previously. As shown in Table VI-1, EPA estimates the annual private 
costs of this rule to include Delaware and New Jersey in the CAIR are 
approximately $30 million in 2010 and $40 million in 2015. All 
estimates reflect 1999 dollars. Overall, the impacts of the CAIR 
program are modest, particularly in light of the large benefits we 
expect. Delaware and New Jersey are part of the PJM electricity region, 
which is an extremely large regional transmission organization that 
manages electricity movement through several Mid-Atlantic and Mid-
Western States. The PJM ensures that plants are operated efficiently 
and power is supplied reliably and safely. Other States already in the 
CAIR are also part of the PJM, and EPA does not anticipate that retail 
electricity prices will be greatly affected by the CAIR, inclusive of 
this rule to include Delaware and New Jersey. Retail electricity prices 
are projected to increase roughly 2.0-2.6 percent with the CAIR program 
(inclusive of this rule) in the 2010 and 2015 timeframe, and then drop 
below 2.0 percent thereafter. For the MAAAC Power Region, which 
includes Delaware and New Jersey, retail electricity prices are 
projected to increase roughly 3.2 to 3.4 percent with the CAIR program 
(inclusive of this rule) in the 2010 and 2015 timeframe, and then drop 
below 1.0 percent, thereafter. The effects of the CAIR program on 
natural gas prices and the electric power industry generation mix are 
also small, with a 1.6 percent or less increase in natural gas prices 
projected from 2010 to 2020.
    With the Delaware and New Jersey rule and the CAIR, we estimate 
there will be continued reliance on coal-fired generation. Coal-fired 
generation is projected to remain at roughly 50 percent of total 
electricity generated. A relatively small amount of coal-fired 
capacity, about 5.2 GW \10\ (1.7 percent of all coal-fired capacity and 
0.5 percent of all generating capacity), is projected to be uneconomic 
to maintain. For the most part, these units are small and infrequently 
used generating units that are dispersed throughout the CAIR region. 
Units projected to be uneconomic to maintain may be ``mothballed,'' 
retired, or kept in service to ensure transmission reliability in 
certain parts of the grid.
---------------------------------------------------------------------------

    \10\ 0.5 GW of this capacity occurs as a result of the inclusion 
of Delaware and New Jersey in the CAIR.
---------------------------------------------------------------------------

    As demand grows in the future, additional coal-fired generation is 
projected to be built under the CAIR program. As a result, both coal-
fired generation and coal production for electricity generation are 
projected to increase from 2003 levels by about 15 percent in 2010 and 
25 percent by 2020, and we expect a small shift towards greater coal 
production in Appalachia and the interior coal regions of the country 
with the CAIR.
    For today's rule, EPA analyzed the costs and other economic inputs 
using the IPM described earlier and the EPA Retail Pricing Model (RPM). 
The additional annualized incremental costs of including Delaware and 
New Jersey in the CAIR program primarily occur because of the 
additional installation

[[Page 25297]]

and operation of a modest amount of pollution control equipment.

  Table VI-1.--Annualized Incremental Private Costs for the CAIR Region
                With and Without Delaware and New Jersey
                       [Billions of 1999 dollars]
------------------------------------------------------------------------
                 Program                   Costs in 2010   Costs in 2015
------------------------------------------------------------------------
Final CAIR (DE and NJ: Ozone Season NOX            $2.53           $3.85
 Only)..................................
Final CAIR Plus NJ and DE Proposal (DE              2.56            3.89
 and NJ: Annual SO2 and NOX.............
Difference Between CAIR Scenarios.......            0.03            0.04
------------------------------------------------------------------------
Source: EPA 2004-2005, Integrated Planning Model. Results differ from
  those reported in the CAIR RIA reflecting more recent modeling results
  for the CAIR.

4. What Potential Benefits May Be Associated With This Rule?
    Air quality modeling was not conducted for the New Jersey and 
Delaware rule. For this reason, an analysis of the potential benefits 
for the New Jersey and Delaware rule cannot be determined with any 
degree of specificity. However, based on the air quality modeling 
results for the CAIR, we can make ``ball park'' estimates of the 
benefits and net benefits that might occur with this rule. Including 
New Jersey and Delaware in the CAIR program would result in additional 
reductions of SO2 and NOX emissions. This ``ball 
park'' estimate approach assumes the benefits-per-ton for reductions of 
SO2 and NOX emissions for Delaware and New Jersey 
will equate to the average benefits-per-ton resulting from the CAIR 
program. Using this approach, we estimate that approximately $630 
million of the total annual CAIR program benefits previously discussed 
are attributable to annual SO2 and NOX controls 
for New Jersey and Delaware in 2010. This estimate increases to over 
$1.1 billion in 2015. The full CAIR analysis including New Jersey and 
Delaware showed a benefit-cost ratio of as high as 39:1 in 2015. Based 
on the relatively low estimated private costs of including New Jersey 
and Delaware of $30 million in 2010 and $40 million in 2015, it is 
highly likely that benefits would exceed the costs of including 
Delaware and New Jersey in the CAIR even if benefits of controlling 
SO2 and NOX for New Jersey and Delaware are 
substantially lower than the average benefit estimates for the CAIR in 
general. It is highly unlikely that benefits are much lower than the 
average given the urban nature of much of New Jersey, and the proximity 
of New Jersey and Delaware to many heavily populated urban areas.

B. Paperwork Reduction Act

    The information collection requirements in this rule have been 
submitted for approval to the OMB under the Paperwork Reduction Act, 44 
U.S.C. 3501 et seq. The Information Collection Request (ICR) document 
prepared by EPA has been assigned EPA ICR number 2184.02.
    The purpose of the ICR is to estimate the anticipated monitoring, 
reporting, and recordkeeping burden estimates and associated costs for 
States, local governments, and sources that are expected to result from 
this final rule. This ICR describes the nature of the information 
collection and the estimated burden for this rule. In cases where 
information is already collected by a related program, the ICR takes 
into account only the additional burden. This situation arises in 
States that are also subject to requirements of the Consolidated 
Emissions Reporting Rule (EPA ICR number 0916.10; OMB control number 
2060-0088) or for sources that are subject to the Acid Rain Program 
(EPA ICR 2152.01; EPA ICR number 1633.13; OMB control number 2060-0258) 
or NOX SIP Call (EPA ICR number 1857.03; OMB control number 
2060-0445) requirements.
    The total monitoring, recordkeeping, and reporting burden to 
sources resulting from Delaware and New Jersey choosing to participate 
in a regional cap and trade program are expected to be approximately 
$263,000 at the time the monitors are initially used. This estimate 
includes the annualized cost of installing and operating appropriate 
SO2 and NOX emissions monitoring equipment to 
measure and report the total emissions of these pollutants from 
affected EGUs (serving generators greater than 25 megawatt capacity) 
for this rule. The burden to State and local air agencies includes any 
necessary SIP revisions, performing monitoring certification, and 
fulfilling audit responsibilities.
    Burden means the total time, effort, or financial resources 
expended by persons to generate, maintain, retain, or disclose or 
provide information to or for a Federal agency. This includes the time 
needed to review instructions; develop, acquire, install, and utilize 
technology and systems for the purposes of collecting, validating, and 
verifying information, processing and maintaining information, and 
disclosing and providing information; adjust the existing ways to 
comply with any previously applicable instructions and requirements; 
train personnel to be able to respond to a collection of information; 
search data sources; complete and review the collection of information; 
and transmit or otherwise disclose the information.
    An agency may not conduct or sponsor, and a person is not required 
to respond to a collection of information unless it displays a 
currently valid OMB control number. The OMB control numbers for EPA's 
regulations in 40 CFR are listed in 40 CFR part 9.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) generally requires an agency 
to prepare a regulatory flexibility analysis of any rule subject to 
notice and comment rulemaking requirements under the Administrative 
Procedure Act or any other statute unless the agency certifies that the 
rule will not have a significant economic impact on a substantial 
number of small entities. Small entities include small businesses, 
small organizations, and small governmental jurisdictions.
    For purposes of assessing the impacts of today's rule on small 
entities, small entity is defined as: (1) A small business that is 
identified by the North American Industry Classification System (NAICS) 
Code, as defined by the Small Business Administration (SBA); (2) a 
small governmental jurisdiction that is a government of a city, county, 
town, school district or special district with a population of less 
than 50,000; and (3) a small organization that is any not-for-profit 
enterprise which is independently owned and operated and is not 
dominant in its field. Table VI-2 lists entities potentially impacted 
by this rule with applicable NAICS codes.

[[Page 25298]]



                              VI-2.--Potentially Regulated Categories and Entities
----------------------------------------------------------------------------------------------------------------
                   Category                     NAICS code \1\     Examples of potentially regulated entities
----------------------------------------------------------------------------------------------------------------
Industry......................................          221112  Fossil fuel-fired electric utility steam
                                                                 generating units.
Federal Government............................         2211122  Fossil fuel-fired electric utility steam
                                                                 generating units owned by the Federal
                                                                 government.
State/local/Tribal Government.................      \2\ 221112  Fossil fuel-fired electric utility steam
                                                                 generating units owned by municipalities.
                                                        921150  Fossil fuel-fired electric utility steam
                                                                 generating units in Indian Country.
----------------------------------------------------------------------------------------------------------------
1 North American Industry Classification System.
2 Federal, State, or local government-owned and operated establishments are classified according to the activity
  in which they are engaged.

    According to the SBA size standards for NAICS code 221112 
Utilities-Fossil Fuel Electric Power Generation, a firm is small if, 
including its affiliates, it is primarily engaged in the generation, 
transmission, and or distribution of electric energy for sale and its 
total electric output for the preceding fiscal year did not exceed 4 
million megawatt hours.
    After considering the economic impacts of today's final rule on 
small entities, I certify that this action will not have a significant 
economic impact on a substantial number of small entities. This final 
rule will not impose any requirements on small entities. Courts have 
interpreted the RFA to require a regulatory flexibility analysis only 
when small entities will be subject to the requirements of the rule. 
See Michigan v. EPA, 213 F.3d 663, 668-69 (D.C. Cir., 2000), cert. den. 
121 S.Ct. 225, 149 L.Ed.2d 135 (2001).
    This rule would not establish requirements applicable to small 
entities. Instead, this rule requires New Jersey and Delaware to 
develop, adopt, and submit SIP revisions that would achieve the 
necessary SO2 and NOX emissions reductions, and 
would leave to the States the task of determining how to obtain those 
reductions, including which entities to regulate. Moreover, because 
these States would have discretion to choose the sources to regulate 
and how much emissions reductions each selected source would have to 
achieve, EPA could not predict the effect of the rule on small 
entities. Although not required by the RFA, the Agency has conducted a 
small business analysis for the CAIR program inclusive of the New 
Jersey and Delaware proposal.
    Overall, about 445 MW of total small entity capacity, or 1.0 
percent of total small entity capacity in the CAIR region, is projected 
to be uneconomic to maintain under the CAIR relative to the base case. 
In practice, units projected to be uneconomic to maintain may be 
``mothballed,'' retired, or kept in service to ensure transmission 
reliability in certain parts of the grid. Our IPM modeling is unable to 
distinguish between these potential outcomes.
    The EPA modeling identified 264 small power-generating entities 
within the entire CAIR region based upon the definition of small entity 
outlined above. The EPA excluded from this analysis 189 small entities 
that were not projected to have at least one unit with a generating 
capacity of 25 MW or great operating in the base case. Thus, we found 
that 75 small entities may potentially be affected by the CAIR program. 
Of these 75 small entities, 28 may experience compliance costs in 
excess of 1 percent of revenues in 2010, and 46 may in 2015, based on 
the Agency's assumptions of how the affected States implement control 
measures to meet their emissions budgets as set forth in this 
rulemaking. Potentially affected small entities experiencing compliance 
costs in excess of 1 percent of revenues have some potential for 
significant impact resulting from implementation of the CAIR. However, 
it is the Agency's position that because none of the affected entities 
currently operate in a competitive market environment, they should be 
able to pass the costs of complying with the CAIR on to rate-payers. 
Moreover, the decision to include only units greater than 25 MW in size 
exempts 185 small entities that would otherwise be potentially affected 
by the CAIR.
    Two other points should be considered when evaluating the impact of 
the CAIR program (inclusive of the New Jersey and Delaware rule), 
specifically, and cap and trade programs more generally, on small 
entities. First, under the CAIR program, the cap and trade program is 
designed such that States determine how NOX allowances are 
to be allocated across units. A State that wishes to mitigate the 
impact of the rule on small entities might choose to allocate 
NOX allowances in a manner that is favorable to small 
entities. Finally, the use of cap and trade in general will limit 
impacts on small entities relative to a less flexible command-and-
control program.

D. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-
4) (UMRA), establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and Tribal 
governments and the private sector. Under section 202 of the UMRA, 2 
U.S.C. 1532, EPA generally must prepare a written statement, including 
a cost-benefit analysis, for any proposed or final rule that ``includes 
any Federal mandate that may result in the expenditure by State, local, 
and Tribal governments, in the aggregate, or by the private sector, of 
$100,000,000 or more * * * in any one year.'' A ``Federal mandate'' is 
defined under section 421(6), 2 U.S.C. 658(6), to include a ``Federal 
intergovernmental mandate'' and a ``Federal private sector mandate.'' A 
``Federal intergovernmental mandate,'' in turn, is defined to include a 
regulation that ``would impose an enforceable duty upon State, Local, 
or Tribal governments,'' section 421(5)(A)(i), 2 U.S.C. 658(5)(A)(i), 
except for, among other things, a duty that is ``a condition of Federal 
assistance,'' section 421(5)(A)(i)(I). A ``Federal private sector 
mandate'' includes a regulation that ``would impose an enforceable duty 
upon the private sector,'' with certain exceptions, section 421(7)(A), 
2 U.S.C. 658(7)(A).
    Before promulgating an EPA rule for which a written statement is 
needed under section 202 of the UMRA, section 205, 2 U.S.C. 1535, of 
the UMRA generally requires EPA to identify and consider a reasonable 
number of regulatory alternatives and adopt the least costly, most 
cost-effective, or least burdensome alternative that achieves the 
objectives of the rule.
    The EPA prepared a written statement for the CAIR final inclusive 
of this rule consistent with the requirements of section 202 of the 
UMRA. Furthermore, as EPA stated in the rule, EPA is not directly 
establishing any regulatory requirements that may significantly or 
uniquely affect small governments, including Tribal governments. Thus, 
EPA is not obligated to develop under

[[Page 25299]]

section 203 of the UMRA a small government agency plan. Furthermore, in 
a manner consistent with the intergovernmental consultation provisions 
of section 204 of the UMRA, EPA carried out consultations with the 
governmental entities affected by this rule.
    For several reasons, however, EPA is not reaching a final 
conclusion as to the applicability of the requirements of UMRA to this 
rulemaking action. First, it is questionable whether a requirement to 
submit a SIP revision would constitute a Federal mandate in any case. 
The obligation for a State to revise its SIP that arises out of section 
110(a) of the CAA is not legally enforceable by a court of law, and at 
most is a condition for continued receipt of highway funds. Therefore, 
it is possible to view an action requiring such a submittal as not 
creating any enforceable duty within the meaning of section 
421(5)(9a)(I) of UMRA (2 U.S.C. 658 (a)(I)). Even if it did, the duty 
could be viewed as falling within the exception for a condition of 
Federal assistance under section 421(5)(a)(i)(I) of UMRA (2 U.S.C. 
658(5)(a)(i)(I)).
    As noted earlier, however, notwithstanding these issues, EPA 
prepared the statement that would be required by UMRA if its statutory 
provisions applied for the CAIR final rule and this rule. The EPA also 
consulted with governmental entities as would be required by UMRA. 
Consequently, it is not necessary for EPA to reach a conclusion as to 
the applicability of the UMRA requirements.
    The EPA conducted an analysis of the economic impacts anticipated 
from the CAIR program inclusive of the New Jersey and Delaware proposal 
for government-owned entities. The modeling conducted using the IPM 
projects that about 340 MW of municipality-owned capacity (about 0.4 
percent of all subdivision, State and municipality capacity in the CAIR 
region) would be uneconomic to maintain under the CAIR program, beyond 
what is projected in the base case. In practice, however, the units 
projected to be uneconomic to maintain may be ``mothballed,'' retired, 
or kept in service to ensure transmission reliability in certain parts 
of the grid. For the most part, these units are small and infrequently 
used generating units that are dispersed throughout the CAIR region.
    The EPA modeling identified 265 State or municipally-owned 
entities, as well as subdivisions, within the entire CAIR region. The 
EPA excluded from the analysis government-owned entities that were not 
projected to have at least one unit with generating capacity of 25 MW 
or greater in the base case. Thus, we excluded 184 entities from the 
analysis. We found that 81 government entities will be potentially 
affected by the CAIR. Of the 81 government entities, 20 may experience 
compliance costs in excess of 1 percent of revenues in 2010, and 39 may 
in 2015, based on our assumptions of how the affected States implement 
control measures to meet their emissions budgets as set forth in this 
rulemaking.
    Government entities projected to experience compliance costs in 
excess of 1 percent of revenues have some potential for significant 
impact resulting from implementation of the CAIR. However, as noted 
above, it is EPA's position that because these government entities can 
pass on their costs of compliance to rate-payers, they will not be 
significantly impacted. Furthermore, the decision to include only units 
greater than 25 MW in size exempts 179 government entities that would 
otherwise be potentially affected by the CAIR program.
    The above points aside, potentially adverse impacts of the CAIR 
program on State and municipality-owned entities could be limited by 
the fact that the cap and trade program is designed such that States 
determine how NOX allowances are to be allocated across 
units. A State that wishes to mitigate the impact of the rule on State 
or municipality-owned entities might choose to allocate NOX 
allowances in a manner that is favorable to these entities. Finally, 
the use of cap and trade in general will limit impacts on entities 
owned by small governments relative to a less flexible command-and-
control program.

E. Executive Order 13132: Federalism

    Executive Order 13132, entitled ``Federalism'' (64 FR 43255, August 
10, 1999), requires EPA to develop an accountable process to ensure 
``meaningful and timely input by State and local officials in the 
development of regulatory policies that have federalism implications.'' 
``Policies that have federalism implications'' is defined in the 
Executive Order to include regulations that have ``substantial direct 
effects on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government.''
    This rule does not have federalism implications. It will not have 
substantial direct effects on the States, on the relationship between 
the national government and the States, or on the distribution of power 
and responsibilities among the various levels of government, as 
specified in Executive Order 13132. The CAA establishes the 
relationship between the Federal government and the States, and this 
rule does not impact that relationship. Thus, Executive Order 13132 
does not apply to this rule. In the spirit of Executive Order 13132, 
and consistent with EPA policy to promote communications between EPA 
and State and local governments, EPA specifically solicited comment on 
the CAIR from State and local officials.

F. Executive Order 13175: Consultation and Coordination With Indian 
Tribal Governments

    Executive Order 13175, entitled ``Consultation and Coordination 
with Indian Tribal Governments'' (65 FR 67249, November 9, 2000), 
requires EPA to develop an accountable process to ensure ``meaningful 
and timely input by Tribal officials in the development of regulatory 
policies that have Tribal implications.'' The CAIR program (CAIR final 
and New Jersey and Delaware rule) does not have Tribal implications as 
specified in Executive Order 13175.
    The CAIR program addresses transport of pollutants that are 
precursors for ozone and PM2.5. The CAA provides for States 
and Tribes to develop plans to regulate emissions of air pollutants 
within their jurisdictions. The regulations clarify the statutory 
obligations of States and Tribes that develop plans to implement this 
rule. The Tribal Authority Rule (TAR) give Tribes the opportunity to 
develop and implement CAA programs, but it leaves to the discretion of 
the Tribe whether to develop these programs and which programs, or 
appropriate elements of a program, the Tribe will adopt.
    The CAIR program does not have Tribal implications as defined by 
Executive Order 13175. It does not have a substantial direct effect on 
one or more Indian Tribes, because no Tribe has implemented a federally 
enforceable air quality management program under the CAA at this time. 
Furthermore, the CAIR program does not affect the relationship or 
distribution of power and responsibilities between the Federal 
government and Indian Tribes. The CAA and the TAR establish the 
relationship of the Federal government and Tribes in developing plans 
to attain the NAAQS, and this rule does nothing to modify that 
relationship. Because the CAIR program does not have Tribal 
implications, Executive Order 13175 does not apply.
    If one assumes a Tribe is implementing a Tribal Implementation 
Plan, today's rule could have

[[Page 25300]]

implications for that Tribe, but it would not impose substantial direct 
costs upon the Tribe, nor preempt Tribal law. As provided above, EPA 
has estimated that the total annual private costs for the CAIR program 
inclusive of the New Jersey and Delaware rule for the CAIR region as 
implemented by State, local, and Tribal governments is approximately 
$2.4 billion in 2010 and $3.6 billion in 2015 (1999 dollars). There are 
currently very few emissions sources in Indian country that could be 
affected by the CAIR program and the percentage of Tribal land that 
will be impacted is very small. For Tribes that choose to regulate 
sources in Indian country, the costs would be attributed to inspecting 
regulated facilities and enforcing adopted regulations.
    Although Executive Order 13175 does not apply to this rule, EPA 
consulted with Tribal officials in developing the CAIR program. The EPA 
encouraged Tribal input at an early stage. Also, EPA held periodic 
meetings with the States and the Tribes during the technical 
development of the CAIR program. Three meetings were held with the Crow 
Tribe, where the Tribe expressed concerns about potential impacts of 
the CAIR on their coal mine operations. The addition of Delaware and 
New Jersey to the CAIR program does not have any bearing upon the 
concerns expressed by the Tribes. In addition, EPA held three calls 
with Tribal environmental professionals to address concerns specific to 
the Tribes. These discussions have given EPA valuable information about 
Tribal concerns regarding the development of the CAIR program. The EPA 
has provided briefings for Tribal representatives and the newly formed 
National Tribal Air Association (NTAA), and other national Tribal 
forums. Input from Tribal representatives was taken into consideration 
in development of the CAIR program.

G. Executive Order 13045: Protection of Children From Environmental 
Health and Safety Risks

    Executive Order 13045, ``Protection of Children from Environmental 
Health and Safety Risks'' (62 FR 19885, April 23, 1997) applies to any 
rule that (1) is determined to be ``economically significant'' as 
defined under Executive Order 12866, and (2) concerns an environmental 
health or safety risk that EPA has reason to believe may have a 
disproportionate effect on children. If the regulatory action meets 
both criteria, Section 5-501 of the Order directs the Agency to 
evaluate the environmental health or safety effects of the planned rule 
on children, and explain why the planned regulation is preferable to 
other potentially effective and reasonably feasible alternatives 
considered by the Agency.
    The CAIR program inclusive of the Delaware and New Jersey rule is 
not subject to the Executive Order, because it does not involve 
decisions on environmental health or safety risks that may 
disproportionately affect children. The EPA believes that the emissions 
reductions from the strategies in this rule will further improve air 
quality and will further improve children's health.

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

    Executive Order 13211 (66 FR 28355, May 22, 2001) provides that 
agencies shall prepare and submit to the Administrator of the Office of 
Regulatory Affairs, OMB, a Statement of Energy Effects for certain 
actions identified as ``significant energy actions.'' Section 4(b) of 
Executive Order 13211 defines ``significant energy actions'' as any 
action by an agency (normally published in the Federal Register) that 
promulgates or is expected to lead to the promulgation of a final rule 
or regulation, including notices of inquiry, advance notices of final 
rulemaking, and notices of final rulemaking: (1)(i) That is a 
significant regulatory action under Executive Order 12866 or any 
successor order, and (ii) is likely to have a significant adverse 
effect on the supply, distribution, or use of energy; or (2) that is 
designated by the Administrator of the Office of Information and 
Regulatory Affairs as a ``significant energy action.'' The CAIR program 
(the CAIR final and the New Jersey and Delaware rule) is a significant 
regulatory action under Executive Order 12866, and the CAIR program may 
have a significant adverse effect on the supply, distribution, or use 
of energy.
    If States choose to obtain the emissions reductions required by the 
CAIR final and this rule by regulating EGUs, EPA projects that 
approximately 5.3 GW of coal-fired generation (0.5 GW due to the 
inclusion of Delaware and New Jersey) may be removed from operation by 
2010. In practice, however, the units projected to be uneconomic to 
maintain may be ``mothballed,'' retired, or kept in service to ensure 
transmission reliability in certain parts of the grid. For the most 
part, these units are small and infrequently used generating units that 
are dispersed throughout the CAIR region. Less conservative assumptions 
regarding natural gas prices or electricity demand would create a 
greater incentive to keep these units operational. The EPA projects 
that the average annual electricity price will increase by less than 
2.7 percent in the CAIR region (and less than 3.5 percent in the MAAC 
Power Region, which includes Delaware and New Jersey) for the CAIR 
program. The EPA does not believe that the CAIR final and this rule 
will have any other impacts that exceed the significance criteria.
    The EPA believes that a number of features of today's rulemaking 
serve to reduce its impact on energy supply. First, the optional 
trading program provides considerable flexibility to the power sector 
and enables industry to comply with the emission reduction requirements 
in the most cost-effective manner, thus minimizing overall costs and 
the ultimate impact on energy supply. The ability to use banked 
allowances from the existing title IV SO2 Trading Program 
and the NOX SIP Call Trading Program also provide additional 
flexibility. Second, the CAIR program caps are set in two phases and 
provide adequate time for EGUs to install pollution controls. For more 
details concerning energy impacts, see the Regulatory Impact Analysis 
for the Final Clean Air Interstate Rule (March 2005).

I. National Technology Transfer Advancement Act

    Section 12(d) of the National Technology Transfer Advancement Act 
(NTTAA) of 1995 (Pub. L. 104-113; 15 U.S.C. 272 note) directs EPA to 
use voluntary consensus standards in its regulatory and procurement 
activities unless to do so would be inconsistent with applicable law or 
otherwise impractical. Voluntary consensus standards are technical 
standards (e.g., materials specifications, test methods, sampling 
procedures, business practices) developed or adopted by one or more 
voluntary consensus bodies. The NTTAA directs EPA to provide Congress, 
through annual reports to OMB, with explanations when an agency does 
not use available and applicable voluntary consensus standards.
    The CAIR final and this rule would require all sources that 
participate in the trading program under part 96 to meet the applicable 
monitoring requirements of part 75. Part 75 already incorporates a 
number of voluntary consensus standards. Consistent with the Agency's 
Performance Based Measurement System (PBMS), part 75 sets forth 
performance criteria that allow the use of alternative methods to the 
ones set forth in part 75. The PBMS approach is intended to be more 
flexible and cost effective for the regulated community; it is also 
intended to encourage innovation in analytical technology and improved 
data quality. At this time, EPA is not

[[Page 25301]]

recommending any revisions to part 75; however, EPA periodically 
revises the test procedures set forth in part 75. When EPA revises the 
test procedures set forth in part 75 in the future, EPA will address 
the use of any new voluntary consensus standards that are equivalent. 
Currently, even if a test procedure is not set forth in part 75, EPA is 
not precluding the use of any method, whether it constitutes a 
voluntary consensus standard or not, as long as it meets the 
performance criteria specified; however, any alternative methods must 
be approved through the petition process under section 75.66 before 
they are used under part 75.

J. Executive Order 12898: Federal Actions to Address Environmental 
Justice in Minority Populations and Low-Income Populations

    Executive Order 12898, ``Federal Actions to Address Environmental 
Justice in Minority Populations and Low-Income Populations,'' requires 
Federal agencies to consider the impact of programs, policies, and 
activities on minority populations and low-income populations. 
According to EPA guidance,\11\ agencies are to assess whether minority 
or low-income populations face risks or a rate of exposure to hazards 
that are significant and that ``appreciably exceed or is likely to 
appreciably exceed the risk or rate to the general population or to the 
appropriate comparison group.'' (EPA, 1998)
---------------------------------------------------------------------------

    \11\ U.S. Environmental Protection Agency, 1998. Guidance for 
Incorporating Environmental Justice Concerns in EPA's NEPA 
Compliance Analyses. Office of Federal Activities, Washington, DC, 
April, 1998.
---------------------------------------------------------------------------

    In accordance with Executive Order 12898, the Agency has considered 
whether the CAIR program inclusive of the New Jersey and Delaware rule 
may have disproportionate negative impacts on minority or low income 
populations. The Agency expects the CAIR program to lead to reductions 
in air pollution and exposures generally. For this reason, negative 
impacts to these sub-populations that appreciably exceed similar 
impacts to the general population are not expected.

K. Congressional Review Act

    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the 
Small Business Regulatory Enforcement Fairness Act of 1996, generally 
provides that before a rule may take effect, the agency promulgating 
the rule must submit a rule report, which includes a copy of the rule, 
to each House of the Congress and to the Comptroller General of the 
United States. The EPA will submit a report containing this rule and 
other required information to the U.S. Senate, the U.S. House of 
Representatives, and the Comptroller General of the United States prior 
to publication of the rule in the Federal Register. A major rule cannot 
take effect until 60 days after it is published in the Federal 
Register. This action is a ``major rule'' as defined by 5 U.S.C. 
804(2). This rule will be effective June 27, 2006.

L. Judicial Review

    Section 307(b)(1) of the CAA indicates which Federal Courts of 
Appeal have venue for petitions of review of final actions by EPA. This 
section provides, in part, that petitions for review must be filed in 
the Court of Appeals for the District of Columbia Circuit if (i) the 
agency action consists of ``nationally applicable regulations 
promulgated, or final action taken, by the Administrator,'' or (ii) 
such action is locally or regionally applicable, if ``such action is 
based on a determination of nationwide scope or effect and if in taking 
such action the Administrator finds and publishes that such action is 
based on such a determination.''
    Any final action related to the CAIR is ``nationally applicable'' 
within the meaning of section 307(b)(1). As an initial matter, through 
this rule, EPA interprets section 110(a)(2)(D)(i) of the CAA, a 
provision which has nationwide applicability. In addition, the CAIR 
applies to 28 States and the District of Columbia. The CAIR is also 
based on a common core of factual findings and analyses concerning the 
transport of pollutants between the different States subject to it. 
Finally, EPA has established uniform approvability criteria that would 
be applied to all States subject to the CAIR. For these reasons, the 
Administrator also is determining that any final action regarding the 
CAIR is of nationwide scope and effect for purposes of section 
307(d)(1). Thus, any petitions for review of final actions regarding 
the CAIR must be filed in the Court of Appeals for the District of 
Columbia Circuit within 60 days from the date final action is published 
in the Federal Register.

List of Subjects

40 CFR Part 51

    Administrative practice and procedure, Air pollution control, 
Intergovernmental relations, Nitrogen dioxide, Ozone, Particulate 
matter, Reporting and recordkeeping requirements, Sulfur oxides, 
Volatile organic compounds.

40 CFR Part 96

    Administrative practice and procedure, Air pollution control, 
Nitrogen oxides, Reporting and recordkeeping requirements.

    Dated: March 15, 2006.
Stephen L. Johnson,
Administrator.

0
Title 40, Chapter I, of the Code of Federal Regulations is amended as 
follows:

PART 51--[AMENDED]

0
1. The authority citation for part 51 continues to read as follows:

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

Subpart G--[Amended]

0
2. Section 51.123 is amended as follows:
0
a. By revising paragraphs (c)(1) and (c)(3).
0
b. In the table to paragraph (e)(2) by adding entries for ``Delaware'' 
and ``New Jersey'' in alphabetical order.
0
c. In the table to paragraph (e)(4)(ii) by adding entries for 
``Delaware'' and ``New Jersey'' in alphabetical order.


Sec.  51.123  Findings and requirements for submission of State 
implementation plan revisions relating to emissions of oxides of 
nitrogen pursuant to the Clean Air Interstate Rule.

* * * * *
    (c) * * *
    (1) Alabama, Delaware, Florida, Illinois, Indiana, Iowa, Kentucky, 
Louisiana, Maryland, Michigan, Mississippi, Missouri, New Jersey, New 
York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, 
Virginia, West Virginia, Wisconsin, and the District of Columbia shall 
be subject to the requirements contained in paragraphs (e) through (cc) 
of this section;
* * * * *
    (3) Arkansas, Connecticut, and Massachusetts shall be subject to 
the requirements contained in paragraphs (q) through (cc) of this 
section.
* * * * *
    (e) * * *
    (2) * * *

------------------------------------------------------------------------
                                                          Annual EGU NOX
                                          Annual EGU NOX    budget for
                  State                     budget for       2015 and
                                             2009-2014      thereafter
                                              (tons)          (tons)
------------------------------------------------------------------------

                                * * * * *
Delaware................................           4,166           3,472

                                * * * * *
New Jersey..............................          12,670          10,558

[[Page 25302]]



                                * * * * *
------------------------------------------------------------------------

* * * * *
    (4)(i) * * *
    (ii) * * *

------------------------------------------------------------------------
                                                            Compliance
                          State                             supplement
                                                               pool
------------------------------------------------------------------------

                                * * * * *
Delaware................................................             843

                                * * * * *
New Jersey..............................................             660

                                * * * * *
------------------------------------------------------------------------

* * * * *


Sec.  51.124  [Amended]

0
3. Section 51.124 is amended by revising paragraph (c) and by adding 
entries for ``Delaware'' and ``New Jersey'' in the table in paragraph 
(e)(2) to read as follows:


Sec.  51.124  Findings and requirements for submission of State 
implementation plan revisions relating to emissions of sulfur dioxide 
pursuant to the Clean Air Interstate Rule.

    (a) * * *
* * * * *
    (c) The following States are subject to the requirements of this 
section: Alabama, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, 
Kentucky, Louisiana, Maryland, Michigan, Minnesota, Mississippi, 
Missouri, New Jersey, New York, North Carolina, Ohio, Pennsylvania, 
South Carolina, Tennessee, Texas, Virginia, West Virginia, Wisconsin, 
and the District of Columbia.
* * * * *
    (e) * * *
    (2) * * *

------------------------------------------------------------------------
                                                          Annual EGU SO2
                                          Annual EGU SO2    budget for
                  State                     budget for       2015 and
                                             2010-2014      thereafter
                                              (tons)          (tons)
------------------------------------------------------------------------

                                * * * * *
Delaware................................          22,411          15,687

                                * * * * *
New Jersey..............................          32,392          22,674

                                * * * * *
------------------------------------------------------------------------

* * * * *

0
4. Section 51.125 is amended by revising paragraph (a)(1) to read as 
follows:


Sec.  51.125  Emissions reporting requirements for SIP revisions 
relating to budgets for SO2 and NOX emissions.

    (a) * * *
    (1) Alabama, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, 
Kentucky, Louisiana, Maryland, Michigan, Minnesota, Mississippi, 
Missouri, New Jersey, New York, North Carolina, Ohio, Pennsylvania, 
South Carolina, Tennessee, Texas, Virginia, West Virginia, Wisconsin, 
and the District of Columbia.
* * * * *

PART 96--[AMENDED]

0
5. The authority citation for part 96 continues to read as follows:

    Authority: 42 U.S.C. 7401, 7403, 7410, 7601, and 7651, et seq.

Subpart EE--[Amended]

0
6. In Sec.  96.140 the table is amended by adding entries for 
``Delaware'' and ``New Jersey'' in alphabetical order to read as 
follows:


Sec.  96.140  State trading budgets.

* * * * *

------------------------------------------------------------------------
                                                           State trading
                                           State trading    budget for
                  State                     budget for       2015 and
                                             2009-2014      thereafter
                                              (tons)          (tons)
------------------------------------------------------------------------

                                * * * * *
Delaware................................           4,166           3,472

                                * * * * *
New Jersey..............................          12,670          10,558

                                * * * * *
------------------------------------------------------------------------


0
7. In Sec.  96.143 the table is amended, in paragraph (a), by adding 
entries for ``Delaware'' and ``New Jersey'' in alphabetical order to 
read as follows:


Sec.  96.143  Compliance supplement pool.

    (a) * * *

------------------------------------------------------------------------
                                                            Compliance
                          State                             supplement
                                                            pool (tons)
------------------------------------------------------------------------

                                * * * * *
Delaware................................................             843

                                * * * * *
New Jersey..............................................             660

                                * * * * *
------------------------------------------------------------------------

* * * * *
[FR Doc. 06-2750 Filed 4-27-06; 8:45 am]

BILLING CODE 6560-50-P
