Comments:
Several
State
and
industry
commenters
supported
EPA's
proposed
approach.
These
commenters
stated
that
the
level
of
emissions
reductions
required
by
the
NOx
SIP
Call
is
far
greater
than
the
level
of
reductions
achieved
by
controls
that
have
been
determined
to
be
NOx
RACT.
Other
commenters
pointed
out
that
many
companies
have
employed
averaging
programs
for
NOx
SIP
Call
compliance
and
want
this
option
preserved
under
the
8­
hour
ozone
standard
since
requiring
sources
to
individually
meet
NOx
RACT
requirements
would
greatly
increase
the
costs
of
compliance
at
sources
already
subject
to
the
NOx
cap­
and­
trade
program
without
achieving
greater
emissions
reductions.
One
State
encourages
EPA
to
provide
this
exemption
to
other
areas
subject
to
approved
cap­
and­
trade
programs
in
addition
to
those
areas
affected
by
the
NOx
SIP
Call.
The
EPA
also
received
comments,
primarily
from
several
States
and
environmental
groups,
opposing
the
approach.
These
commenters
stated
that
there
are
no
exceptions
to
the
RACT
mandates
in
either
subpart
1
or
subpart
2
for
sources
subject
to
SIP
call
cap­
and­
trade
programs,
and
EPA
is
without
authority
to
invent
such
an
exception.
Because
the
NOx
SIP
Call's
cap­
andtrade
program
does
not
require
emission
control
technologies
to
be
installed
at
a
particular
source,
some
commenters
conclude
that
RACT
requirements
are
necessary
and
appropriate
to
ensure
that
all
sources
implement
at
least
a
minimum
level
of
control.
One
State
indicated
there
have
been
numerous
cases
where
sources
subject
to
the
NOx
SIP
Call
have
not
had
to
install
controls
comparable
to
RACT.
Commenters
also
suggested
that
RACT
is
intended
to
be
a
benchmark
for
control
technology
at
individual
stationary
sources,
not
a
level
of
regional
reductions.
In
addition,
some
commenters
noted
that
the
NOx
SIP
Call
requirements
are
specific
to
the
ozone
season,
where
RACT
requirements
are
year
round.
Consequently,
these
commenters
recommended
that
EPA
should
also
consider
non­
ozone
related
nitrogen
issues,
including
fine
particles,
visibility,
nitrification
and
acidification
of
watersheds
and
eutrophication
of
coastal
waters
all
of
which
would
be
reduced
with
year­
round
controls.
Response:
As
described
below,
EPA
believes
that
sources
meet
ozone
NOx
RACT
requirements
if
they
comply
with
the
NOx
SIP
Call
trading
program
or,
in
states
where
all
CAIR
reductions
are
achieved
by
EGUs,
rules
implementing
CAIR.
Accordingly,
the
State
need
not
perform
a
NOx
RACT
analysis
for
sources
subject
to
the
State's
emission
cap­
and­
trade
program
where
the
cap­
andtrade
program
has
been
adopted
by
the
State
or
approved
by
EPA
or
a
Federal
implementation
plan
is
in
place
meeting
the
NOx
SIP
Call
requirements
or,
in
states
achieving
CAIR
reductions
solely
from
EGUs,
the
CAIR
NOx
requirements.
In
addition,
the
State
need
not
submit
a
new
NOx
RACT
SIP
for
those
sources.
The
EPA
believes
the
RACT
mandate
in
subpart
1
and
subpart
2
applies
in
specific
geographic
areas
but
does
not
necessarily
1EPA
analyzed
data
from
IPM
runs
for
the
CAIR
which
project
electricity
generating
units
that
are
expected
to
have
NOx
controls
in
2010;
in
the
CAIR
base
case
as
few
as
3­
11
EGUs
are
projected
to
be
without
NOx
controls
and
subject
to
an
8­
hour
ozone
NOx
RACT.
(
see
Response
to
Comments
document
in
the
docket).

2In
the
1998
NOx
SIP
Call
Rule,
average
costs
of
compliance
were
estimated
at
about
$
1500/
ton
and
average
RACT
level
costs
are
less
than
$
1300/
ton.
Recent
estimates
of
the
projected
cost
of
allowances
are
about
$
2000­
4000/
ton
(
NOx
Budget
Trading
Program,
2003
Progress
and
Compliance
Report,
August
2004,
EPA­
430­
R­
04­
010).
With
respect
to
RACT,
we
would
note
that
in
some
cases,
the
State
may
determine
that
additional
controls
are
not
technically
and
economically
feasible.
Thus,
even
if
the
State
analyzed
RACT
for
each
source
subject
to
the
cap­
and­
trade
program,
that
would
not
guarantee
additional
emissions
reductions
at
each
source
because
the
RACT
determination
for
some
could
conclude
no
additional
controls
are
required.
require
every
major
source
to
install
controls.
For
example,
as
discussed
in
a
separate
comment/
response,
where
we
are
dealing
only
with
subpart
1
RACT,
we
only
require
such
RACT
as
will
advance
attainment
or
meet
RFP.
Thus,
EPA
does
not
agree
with
commenters
who
conclude
that
RACT
requirements
are
necessary
and
appropriate
to
ensure
that
all
sources
implement
at
least
a
minimum
level
of
control
or
that
RACT
is
intended
to
be
a
benchmark
for
control
technology
at
all
individual
stationary
sources.
Some
commenters
pointed
out
that
the
NOx
SIP
Call
requirements
are
specific
to
the
ozone
season,
yet
RACT
requirements
are
year
round.
While
there
are
some
exceptions,
EPA
agrees
that
RACT
usually
is
an
application
of
controls
year
round;
thus,
there
would
be
non­
ozone­
related
nitrogen
benefits,
including
fine
particles,
visibility,
nitrification
and
acidification
of
watersheds
and
eutrophication
of
coastal
waters
due
to
year­
round
controls.
NOx
SIP
call:
We
expect
the
vast
majority
of
sources
subject
to
RACT
and
rules
implemented
by
the
State
under
CAIR
or
the
NOx
SIP
Call
would
choose
to
install
RACT
level
control
equipment
rather
than
meet
the
NOx
SIP
Call
requirements
solely
by
purchasing
allowances.
1
Most
likely
the
cost
for
purchasing
allowances
will
be
higher
than
the
cost
for
achieving
a
RACT
level
of
control.
2
In
addition,
many
units
subject
to
CAIR
or
the
NOx
SIP
Call
will
install
beyond­
RACT
controls,
as
discussed
below.
We
believe
the
combination
of
RACT­
level
controls
on
the
vast
majority
of
sources
and
the
installation
of
beyond­
RACT
controls
on
many
units
will
achieve
at
least
a
RACT
level
of
control,
on
average,
among
sources
subject
to
RACT
in
each
3The
EPA's
1992
NOx
RACT
guidance
sets
title
IV
equal
to
RACT
and
specifies
emission
rates
three
times
larger
than
the
rates
later
used
for
coal­
fired
units
in
the
NOx
SIP
Call
(
0.45­
0.50
lb/
mmBtu
versus
0.15).

4
Memorandum
of
March
16,
1994,
from
D.
Kent
Berry
re:
"
Cost­
Effective
Nitrogen
Oxides
(
NOx)
Reasonably
Available
Control
Technology
(
RACT)."
U.
S.
Environmental
Protection
Agency,
Research
Triangle
Park,
North
Carolina.
nonattainment
area.
Meeting
RACT
in
this
way
is
consistent
with
EPA
guidance
allowing
RACT
to
be
met
in
the
aggregate
within
a
nonattainment
area,
rather
than
by
each
individual
source.
The
EPA's
NOx
RACT
guidance
(
NOx
General
Preamble
at
57
FR
55625)
encourages
States
to
develop
RACT
programs
that
are
based
on
"
areawide
average
emission
rates."
Thus,
States
can
submit
a
demonstration
as
part
of
their
RACT
submittal
showing
that
the
weighted
average
emission
rate
from
sources
in
the
nonattainment
area
subject
to
RACT
 
including
sources
reducing
emissions
to
meet
the
NOx
SIP
Call
or
CAIR
NOx
requirements
 
meet
RACT
requirements.
We
agree
with
comments
indicating
the
overall
emission
reduction
due
to
the
NOx
SIP
Call
would
be
greater
overall
than
with
a
RACT
program
alone,
and
we
believe
they
would
be
greater
within
each
nonattainment
area.
All
States
submitting
SIP
revisions
to
meet
the
NOx
SIP
Call
(
October
27,
1998,
63
FR
57356)
elected
to
require
large
boilers
and
turbines
to
comply
with
an
emissions
cap­
and­
trade
program
consistent
with
EPA's
model
cap­
and­
trade
rule.
As
a
result,
all
these
sources
are
already
subject
to
stringent
control
requirements.
As
described
in
the
June
2,
2003
proposal,
these
sources
collectively
achieve
more
emissions
reductions
than
would
be
required
by
application
of
RACT
requirements
to
each
source.
In
the
NOx
SIP
Call
control
case,
electricity
generating
units
(
EGUs)
achieve
a
64
percent
reduction
beyond
the
base
case
requirements.
3
The
non­
EGUs
subject
to
the
States'
cap­
and­
trade
program
achieve
a
60
percent
reduction
from
uncontrolled
levels.
These
EGU
and
non­
EGU
reductions
are
clearly
beyond
the
30­
50
percent
expected
from
a
RACT
program.
4
We
stated
in
the
final
rule
that
the
NOx
SIP
Call
controls
"
represent
reductions
beyond
those
required
by
Title
IV
or
Title
I
RACT."
In
addition,
because
the
cap­
and­
trade
program
covers
units
serving
a
25
megawatt
generator,
it
requires
emission
reductions
at
many
units
emitting
at
less
than
the
general
RACT
threshold
of
100
tpy.
In
some
cases,
a
facility
or
a
group
of
sources
in
a
nonattainment
area
might
choose
to
meet
NOx
RACT
by
adopting
an
emissions
averaging
concept
within
the
area;
e.
g.,
over
controlling
one
or
more
large
units
and
not
controlling
other
smaller
units.
We
agree
with
comments
that
emission
averaging
and
cap­
and­
trade
programs
such
as
the
NOx
SIP
Call
Rule
achieve
5As
described
in
the
April
21,
2004
rule
(
69
FR
21608).
emission
reductions
at
lower
costs.
The
EPA's
NOx
RACT
guidance,
published
on
November
25,
1992
(
57
FR
55625),
was,
in
part,
for
the
purpose
of
"
enhancing
the
ability
of
States
to
adopt
marketbased
trading
systems
for
NOx"
and
to
encourage
States
to
"
structure
their
RACT
requirements
to
inherently
incorporate
an
emissions
averaging
concept
(
i.
e.,
installing
more
stringent
controls
on
some
units
in
exchange
for
lesser
control
on
others)."
Since
the
NOx
SIP
Call
requires
greater
reductions,
on
average,
than
RACT,
(
see
proposal
notice
at
68
FR
32839
and
discussion
below)
we
believe
the
average
emissions
across
the
facilities
(
in
this
example)
would
be
less
than
emissions
under
application
of
a
RACT
program
alone.
We
would
also
expect
this
scenario
to
be
a
short­
term
case
since
facilities
may
choose
later
to
install
controls
on
the
smaller
units
and
sell
any
excess
allowances,
depending
on
the
projected
cost
of
allowances.
As
proposed,
in
cases
where
States
have
adopted
controls
for
cement
kilns
consistent
with
the
NOx
SIP
Call
(
i.
e.,
30
percent
reduction),
the
State
may
choose
to
accept
the
NOx
SIP
Call
requirements
as
meeting
the
NOx
RACT
requirements
for
the
8­
hour
standard
and
need
not
submit
a
new
NOx
RACT
SIP
for
those
sources.
In
its
RACT
SIP
submission,
the
State
should
identify
the
cement
plants
that
are
subject
to
NOx
SIP
Call
controls
and
that,
therefore,
already
meet
RACT.
The
EPA
received
comments
from
States
supporting
the
proposal.
For
the
same
reasons,
EPA
believes
a
State
may
choose
to
accept
the
Phase
II
NOx
SIP
Call
control
level
for
stationary
internal
combustion
engines5
as
meeting
the
NOx
RACT
requirements.
Whether
our
judgment
that
non­
EGU
sources
subject
to
the
NOx
SIP
call
trading
system
meet
RACT
will
continue
to
apply
in
the
future
depends
upon
how
the
state
chooses
to
make
the
transition
from
the
NOx
SIP
call
trading
system
to
the
CAIR
trading
system.
After
2008,
EPA
will
no
longer
administer
the
NOx
SIP
call
trading
system
and
will
only
administer
the
CAIR
trading
system.
A
state
subject
to
the
NOx
SIP
call
has
three
choices
for
the
transition.
One,
a
state
can
bring
its
non­
EGU
sources
that
are
subject
to
the
NOx
SIP
call
trading
program
into
the
CAIR
trading
program
with
the
same
emissions
budget
allowed
by
the
state's
current
NOx
SIP
call
rules.
Two,
a
state
can
adopt
a
SIP
that
regulates
those
non­
EGU
sources
at
least
as
stringently
as
the
state's
current
NOx
SIP
call
rules,
but
does
not
move
those
sources
into
the
CAIR
trading
program.
Three,
a
state
can
adopt
a
new
SIP
that
meets
its
NOx
SIP
call
responsibilities,
in
whole
or
in
part,
by
regulating
sources
other
than
the
non­
EGU
sources
regulated
by
the
state's
current
NOx
SIP
call
trading
program
rules.
We
believe
it
is
unlikely
that
states
are
likely
to
choose
the
third
option,
given
that
its
non­
EGU
sources
already
would
have
complied
with
the
NOx
SIP
call
requirements.
Under
the
first
two
options,
we
believe
that
these
non­
EGU
sources
would
continue
to
satisfy
RACT.
Under
the
third
option,
the
state
would
need
to
determine
whether
non­
EGU
sources
that
had
participated
in
the
NOx
SIP
call
trading
program
continue
to
meet
RACT
(
either
individually,
or
through
averaging
among
sources
within
the
non­
attainment
area).
CAIR:
The
question
of
whether
CAIR
satisfies
RACT
for
EGUs
subject
to
the
CAIR
trading
program
may
arise
in
states
not
subject
to
the
NOx
SIP
call.
As
discussed
more
fully
in
the
CAIR
final
rulemaking
notice,
EPA
has
set
the
2009
CAIR
NOx
cap
at
a
level
that,
assuming
the
reductions
are
achieved
from
EGUs,
will
result
in
EGUs
installing
emission
controls
on
the
maximum
total
capacity
on
which
it
is
feasible
to
install
emission
controls
by
those
dates.
The
2015
NOx
cap
is
specifically
designed
to
eliminate
all
NOx
emissions
from
EGUs
that
are
highly
cost
effective
to
control
(
the
first
cap
represents
an
interim
step
toward
that
end).
In
general,
we
expect
that
the
largestemitting
sources
will
be
the
first
to
install
NOx
control
technology
and
that
such
control
technology
will
gradually
be
installed
on
progressively
smaller­
emitting
sources
until
the
ultimate
cap
is
reached.
We
do
not
believe
that
requiring
source­
specific
RACT
controls
on
EGUs
in
nonattainment
areas
will
reduce
total
NOx
emissions
from
sources
covered
by
CAIR
below
the
levels
that
would
be
achieved
under
CAIR
alone.
In
fact,
if
states
chose
to
require
smaller­
emitting
sources
in
nonattainment
areas
to
meet
source­
specific
RACT
requirements
by
2009,
they
would
likely
use
labor
and
other
resources
that
would
otherwise
be
used
for
emission
controls
on
larger
sources.
Because
of
economies
of
scale,
more
boiler­
makers
and
other
resources
may
be
required
per
megawatt
of
power
generation
for
smaller
units
than
larger
units.
In
this
case,
the
imposition
of
source­
specific
RACT
on
smaller
emitting
sources
by
2009
could
increase
costs
as
compared
to
the
level
that
would
result
under
CAIR.
In
any
event,
the
imposition
of
source­
specific
control
requirements
on
a
limited
number
of
sources
also
covered
by
a
cap­
and­
trade
program
would
not
reduce
the
total
emissions
from
sources
subject
to
the
program.
Under
a
cap­
and­
trade
program
such
as
CAIR,
there
is
a
given
number
of
allowances
that
equals
a
given
emission
level.
Source­
specific
control
requirements
may
affect
the
temporal
distribution
of
emissions
(
by
reducing
banking
and
thus
delaying
early
reductions)
or
the
spatial
distribution
of
emissions
(
by
moving
them
around
from
one
place
to
another),
but
it
does
not
affect
total
emissions.
If
source­
specific
requirements
were
targeted
at
the
units
that
can
be
controlled
most
cost­
effectively,
then
the
imposition
of
source­
specific
controls
would
achieve
the
same
result
as
the
projected
CAIR
cap­
and­
trade
program.
If
not,
however,
the
imposition
of
source­
specific
requirements
would
make
any
given
level
of
emission
reduction
more
costly
than
it
would
be
under
the
cap­
and­
trade
program
alone.
Thus,
the
imposition
of
source­
specific
RACT
on
EGUs
covered
by
CAIR
would
6This
phased
approach
is
consistent
with
EPA
NOx
RACT
guidance
issued
March
9,
1994
by
John
Seitz,
Director,
OAQPS,
"
Nitrogen
Oxides
(
NOx)
Reasonably
Available
Control
Technology
(
RACT)
for
the
Repowering
of
Utility
Boilers."
not
reduce
total
emissions,
but
would
likely
achieve
the
same
total
emission
reductions
in
a
more
costly
way.
The
EPA
believes
the
CAIR
NOx
requirements
meet
the
definition
of
RACT
for
EGUs
in
states
that
require
all
CAIR
NOx
reductions
from
EGUs.
The
EPA
defined
RACT
as
the
lowest
emission
limitation
that
a
particular
source
is
capable
of
meeting
by
the
application
of
control
technology
that
is
reasonably
available
considering
technological
and
economic
feasibility
(
44
FR
53762;
September
17,
1979).
We
determined
that
CAIR's
two­
phased
schedule
allows
the
implementation
of
as
much
of
the
NOx
controls
as
feasible
by
2009,
with
a
later
time
for
the
remaining
controls
(
70
FR
25215).
6
Thus,
we
believe
that
EGUs
subject
to
the
CAIR
NOx
controls
meet
the
definition
of
RACT
for
NOx
(
in
states
that
require
all
CAIR
NOx
reductions
from
EGUs).
Under
CAIR,
a
State
may
elect
to
meet
its
state
budget
for
NOx
emissions
solely
through
requiring
reductions
from
EGUs
or
through
requiring
reductions
from
a
combination
of
sources,
including
non­
EGUs.
If
the
State
requires
reductions
from
sources
other
than
EGUs,
it
is
not
eligible
to
participate
in
the
EPA
administered
CAIR
trading
program.
Additionally,
separate
provisions
of
the
CAIR
rule
allow
States
to
choose
to
allow
large
NOx
sources
that
are
not
electric
generating
units
to
opt­
in
to
the
program.
If
only
part
of
the
CAIR
reductions
are
required
from
EGUs,
and
the
balance
of
the
reductions
obtained
from
non­
EGU
sources,
then
the
stringency
of
CAIR
EGU
control
would
be
diminished
to
some
extent
(
an
amount
that
cannot
currently
be
determined).
Therefore,
the
rationale
for
our
judgment
that
CAIR
satisfies
RACT
would
not
apply
if
the
State's
CAIR
SIP
achieves
CAIR­
required
reductions
from
sources
other
than
EGUs,
or
if
the
State
allowed
opt­
ins.
In
either
event,
the
State
would
need
to
conduct
RACT
analyses
for
EGUs
(
either
on
an
individual
basis,
or
using
the
averaging
approach
within
the
nonattainment
area).
For
clarity,
it
should
be
noted
that
a
state
has
authority
to
conduct
its
own
RACT
analysis
for
any
source.
Also,
this
guidance
in
no
way
limits
a
State's
discretion
to
require
beyond­
RACT
NOx
reductions
from
any
source
(
including
CAIR
or
NOx
SIP
Call
sources)
in
a
plan
to
demonstrate
attainment
of
the
healthbased
ozone
standard.
In
certain
areas,
States
may
choose
to
require
NOx
controls
based
on
more
advanced
control
technologies
to
provide
for
attainment
of
the
ozone
standard.
