8­
29­
05.
Fifth
Draft
of
the
Second
Addendum
to
the
O3
Implementation
Cost,
Energy,
and
Economic
Impact
Assessment.

1
The
Second
Addendum
to
the
Economic
Assessment
for
the
8­
hour
Ozone
Implementation
Rule
Phase
2,
Final
8­
hour
Implementation
Rule
Estimated
Differences
in
Cost,
Emission
Reductions,
Energy,
and
Economic
Impacts
from
Adopting
a
Less
Flexible
RACT
and
RFP
Implementation
Framework
Relative
to
the
Regulatory
Baseline,
A
More
Flexible
Implementation
Framework
Including
a
Qualitative
Assessment
on
Consultations
Regarding
The
Clean
Air
Interstate
Rule,
Reasonable
Further
Progress
Scenarios,
and
Reformulated
Gasoline
Requirements
and
Appendix
A:
Technical
Support
Document
by
E.
H.
Pechan
&
Associates,
Inc.
for
the
Difference
Analysis
as
well
as
Appendix
B:
Impact
of
Selected
Federal
and
Local
Control
Measures
on
Predicted
8­
hour
Design
Values
in
the
Eastern
U.
S.

Prepared
by
the
Office
of
Air
Quality
Planning
and
Standards
&
Office
of
Policy
Analysis
&
Review
Office
of
Air
and
Radiation
U.
S.
Environmental
Protection
Agency
August
29,
2005
8­
29­
05.
Fifth
Draft
of
the
Second
Addendum
to
the
O3
Implementation
Cost,
Energy,
and
Economic
Impact
Assessment.

2
Table
of
Contents
Sections
of
the
Difference
Analysis
1.
Introduction
and
Summary
2.
RACT
and
RFP
Options
3.
Data
4.
Methodology
5.
Estimated
Differences
and
Limitations
6.
Other
Considerations
Technical
Appendices
Appendix
A:
Technical
Support
Document
for
the
Emission
Reduction,
Cost,
Energy,
and
Economic
Impact
Assessment
of
RACT
and
RFP
Options
Appendix
B:
Impact
of
Selected
Federal
and
Local
Measures
on
Predicted
8­
hour
Design
Values
in
the
Eastern
U.
S.
8­
29­
05.
Fifth
Draft
of
the
Second
Addendum
to
the
O3
Implementation
Cost,
Energy,
and
Economic
Impact
Assessment.

3
1.0
Introduction
and
Summary
1.1
Background
The
second
addendum
to
the
2003
Cost,
Emission
Reduction,
Energy,
and
Economic
Impact
Assessment
of
the
Proposed
Rule
Establishing
the
Implementation
Framework
for
the
8­
hour
0.08ppm
Ozone
National
Ambient
Air
Quality
Standard
(
NAAQS)
addresses
the
potential
economic
consequences
of
alternative
interpretations
of
Clean
Air
Act
requirements
for
reasonably
available
control
technology
(
RACT)
and
alternative
reasonable
further
progress
(
RFP)
requirements.
The
word
potential
is
used
because
of
inherent
uncertainties
in
projecting
future
environmental
and
economic
factors.
But,
more
importantly,
the
implementation
of
the
RACT
and
RFP
requirements
will
be
carried
out
by
the
states
in
their
implementation
plan
and
rules
development
processes.
Hence,
the
realized
outcomes
may
be
different
than
those
projected
in
this
assessment.
RACT
and
RFP
requirements
are
key
elements
of
the
Phase
2,
ozone
implementation
rule.

1.1.1
Analytical
Approach
Used
in
the
Proposal
and
Phase
I
Final
Rule
Assessment.
The
analytical
approach
used
for
the
proposed
rule
as
well
as
Phase
1
of
the
final
rule
compared
the
differences
in
potential
cost,
emission
reduction,
energy
requirement,
and
economic
impact
of
alternative
implementation
frameworks
for
the
8­
hour
ozone
standard.
The
alternative
frameworks
were
composed
of
different
options
for
the
required
elements
of
state
plans
to
attain
and
maintain
the
8­
hour
O3
NAAQS.

In
those
analyses,
the
more
flexible
implementation
framework
which
provided
for
expeditious
attainment
and
maintenance
of
the
8­
hr
Ozone
NAAQS
served
as
the
regulatory
baseline.
This
reflects
the
fact
that
the
law
requires
States
to
adopt
plans
to
implement
the
8­
hour
ozone
standard
even
in
the
absence
of
this
rule.
The
analyses
compared
the
potential
consequences
of
adopting
an
alternative,
less
flexible
implementation
framework
with
the
consequences
of
adopting
the
more
flexible
framework.
This
yielded
estimates
of
potential
differences
in
cost,
emission
reduction,
energy
use,
and
economic
impacts.
There
are
inherent
uncertainties
in
projecting
future
environmental
and
economic
factors,
and
in
projecting
the
way
that
the
RACT
and
RFP
requirements
will
be
carried
out
by
the
states
in
their
implementation
plan
and
rules
development
processes.

1.1.2
Distinctions
in
the
Approach
Used
in
the
Phase
II
Final
Rule
Assessment.
The
economic
assessment
for
the
Phase
II
final
rule­
making,
uses
nonattainment
area
designations,
regulatory
status
(
Subpart
1
versus
Subpart
2),
and
classification
(
e.
g.
marginal,
moderate,
etc.)
that
have
been
adopted
in
previous
rulemakings.
In
addition,
this
assessment
uses
more
recent
8­
29­
05.
Fifth
Draft
of
the
Second
Addendum
to
the
O3
Implementation
Cost,
Energy,
and
Economic
Impact
Assessment.

1A
base
case
air
quality
simulation
answers
the
question
of
what
would
happen
in
the
absence
of
state
implementation
of
the
8­
hour
standard.
The
base
case
air
quality
simulation
used
in
this
analysis
was
the
same
one
used
to
simulate
conditions
in
the
absence
of
the
Clean
Air
Interstate
Rule.
Ideally,
the
Clean
Air
Interstate
Rule
would
be
part
of
the
base
case
simulation.

2http://
www.
epa.
gov/
oar/
oaqps/
greenbk/
gnca.
html
3Subpart
1­
"
Marginal
Like"
areas
meet
the
same
ozone
design
value
concentration
requirements
of
Subpart
2­
Moderate
areas.
Specifically,
the
design
values
are
from
0.085ppm
up
to
0.092ppm
for
Subpart
1
"
marginal
like"
and
Subpart
2­
marginal
areas.

4The
Clean
Data
Policy
Memorandum.
"
RFP,
Attainment
Demonstration,
and
Related
Requirements
for
Ozone
Nonattainment
Areas
Meeting
the
Ozone
National
Ambient
Air
Quality
Standard,"
from
John
S.
Seitz,
Director,
Office
of
Air
Quality
Planning
and
Standards.
May
10,
1995
Available
at
http://
www.
epa.
gov/
ttn/
oarpg/
t1/
memoranda/
clean15.
pdf.

4
emissions
inventory
projections
and
base
case
future
air
quality
design
value
simulations.
1
Such
information
was
not
available
at
the
time
of
the
earlier
economic
assessments.
That,
however,
does
not
take
away
from
the
findings
of
those
earlier
assessments.
Specifically,
provision
of
less
flexible
implementation
frameworks
to
attain
and
maintain
the
8­
hour
ozone
NAAQS
relative
to
more
flexible
frameworks
results
in
greater
cost,
emission
reduction,
energy,
and
economic
impacts.

1.2
Geographic,
Administrative
Requirements,
and
Methodological
Scope
1.2.1
Geographic
Scope.
There
are
126
designated
8­
hour
Ozone
National
Ambient
Air
Quality
Standard
(
8­
hr
O3
NAAQS)
non­
attainment
areas.
2
For
over
80%
of
these
areas,
the
potential
cost,
emission,
energy,
and
emission
reduction
impacts
are
not
expected
to
be
affected
by
the
choice
of
less
or
more
flexible
RACT
and
RFP
options.
There
are
several
reasons
for
this.
°
Most
designated
8­
hr
O3
NAAQS
non­
attainment
areas
are
Subpart
2
areas
which
are
classified
as
marginal
or
Subpart
1
"
marginal
like"
areas.
3
The
Phase
2
final
rule
implementing
the
8­
hour
O3
NAAQS,
consistent
with
the
Clean
Air
Act,
does
not
mandate
RACT
and
RFP
emission
reduction
options
or
requirements
for
such
areas
beyond
the
emission
reductions
needed
for
attainment.
°
For
areas
whose
sources
already
meet
RACT,
there
is
no
difference
between
the
less
flexible
RACT
and
more
Flexible
RACT.
options.
°
For
areas
which
meet
the
least
flexible
RFP
requirements
under
base
case
conditions,
there
is
no
difference
in
requirements
between
the
less
flexible
and
more
flexible
options.
°
Finally,
under
base
case
conditions,
some
Subpart
2
moderate
and
Subpart
1
moderate­
like
areas
are
projected
to
come
into
attainment
early
enough
(
and
to
stay
that
way)
to
use
the
clean
data
policy.
4
Hence,
they
can
avoid
some
of
the
RFP
requirements
of
both
options.
8­
29­
05.
Fifth
Draft
of
the
Second
Addendum
to
the
O3
Implementation
Cost,
Energy,
and
Economic
Impact
Assessment.

5Administrative
requirements
refer
to
Congressional
Mandates
such
as
the
Small
Business
Regulatory
Enforcement
Fairness
,
Unfunded
Mandates
and
Reform,
and
Paperwork
Reduction
Acts
as
well
as
Executive
Orders
pertaining
to
regulatory
review,
distributional
considerations
(
children,
low
income
and
minority,
populations,
and
tribes),
and
impacts
(
energy).

5
Nonetheless,
for
21
of
the
designated
non­
attainment
areas,
there
could
be
differences
in
cost,
emission
reduction,
energy,
and
economic
impacts.

1.2.3
Administrative
Requirements.
5
The
economic
assessment
done
for
the
proposed
8­
hour
ozone
NAAQS
implementation
rule
addressed
the
various
Administrative
Requirements
of
the
rule­
making.
However,
that
assessment
was
not
a
substitute
for
what
was
included
in
the
preambles
to
the
proposed
rule,
the
final
Phase
1
implementation
rule,
the
Phase
2
implementation
rule.
It
was
a
complement.

Similarly,
that
assessment
plus
the
first
and
second
addendums
also
serve
as
complements
to
the
language
included
in
the
Phase
2
final
8­
hour
ozone
NAAQS
implementation
rule.
This
rule
examines
two
sets
of
options
to
improve
air
quality
in
designated
non­
attainment
areas.
The
8­
hour
O3
NAAQS
is
taken
as
a
given.
That
rule,
promulgated
in
1997
was
designed
to
be
protective
of
public
health
and
welfare
with
an
adequate
margin
of
safety.
There
is
nothing
in
the
Phase
2
implementation
rule­
making
that
results
in
a
degradation
of
air
quality
for
people
in
nonattainment
areas.
Baseline
air
quality
simulations
indicate
that
air
quality
will
improve
in
these
and
other
areas
over
time
as
a
result
of
federal
rules
reducing
emissions
of
O3
precursors.
The
Phase
2
implementation
rule
will
facilitate
further
reductions
of
such
precursor
emissions
to
foster
further
improvements
in
environmental
quality
for
people
in
the
designated
non­
attainment
areas.
including
children,
low
income
and
minority
populations,
and
tribal
members.

In
the
economic
assessment
for
the
proposed
8­
hour
ozone
NAAQS
implementation
rule,
the
administrative
requirements
associated
with
federal
rule
development
such
as
Executive
Orders
and
other
federal
law
requirements
were
addressed
in
the
economic
assessment
as
well
as
the
Federal
Register
Notice.
To
avoid
redundancies,
the
administrative
requirements
are
addressed
in
the
Administrative
Requirements
Section
of
the
Federal
Register
Notice
for
the
Final
Phase
2,
8­
hour
Ozone
NAAQS
Rule­
making
with
references
made
to
the
second
addendum
and
related
assessments.

1.2.4
Methodological
Scope.
This
second
addendum
contains
both
a
qualitative
and
a
quantitative
analysis.

1.2.4.1
Qualitative
Analysis.
The
ability
to
conduct
a
quantitative
analysis
for
these
areas
is
dependent
on
information
regarding
the
geographic
boundaries
of
the
non­
attainment
8­
29­
05.
Fifth
Draft
of
the
Second
Addendum
to
the
O3
Implementation
Cost,
Energy,
and
Economic
Impact
Assessment.

6Mandatory
requirements
such
as
RACT
apply
to
emission
sources
of
particular
size.
In
this
quantitative
assessment,
the
assumed
size
was
100
tons
per
year
of
nitrogen
oxides
(
NOx)
or
volatile
organic
compounds
(
VOCs)
since
this
is
the
major
source
size
cutoff
for
subpart
1
marginal
and
moderate
areas.

6
areas,
the
coverage
and/
or
classification
of
the
areas,
base
case
conditions,
and
expected
emissions
and
future
8­
hour
design
values.
For
9
of
the
21
areas,
estimates
of
future
8­
hour
design
values
were
not
available.
Hence,
the
assessment
for
those
areas
is
qualitative.

1.2.4.2
Quantitative
Analysis.
But,
estimated
future
8­
hour
design
values
were
available
for
the
remaining
12
areas.
A
quantitative
analysis
is
conducted
for
those
areas.

1.3
Results
1.3.1
12
Area
Quantitative
Analysis.
Surprisingly,
not
all
12
of
these
areas
showed
differences
between
the
less
flexible
and
more
flexible
RACT
and
RFP
implementation
frameworks.
However,
the
technical
assessment
indicated
that
1
of
the
12
had
no
RACT
eligible
sources
in
the
nonattainment
area.
6
But,
the
assessment
found
that
in
11
of
the
areas
there
would
be
a
difference
between
the
less
flexible
RACT
and
RFP
options
relative
to
the
more
flexible
options,
the
regulatory
baseline.
°
Cost
Differences.
For
those
11
areas,
the
less
flexible
option
could
mean
more
than
$
21.5
million
(
1997$'
s)
in
control
cost
relative.
The
increase
is
not
spread
evenly
across
the
11
areas.
Estimated
costs
of
the
less
flexible
option
for
the
Providence,
Rhode
Island
nonattainment
areas
is
over
$
14
million
(
1997
$'
s).
The
assessment
suggests
these
costs
could
be
reduced
by
adopting
the
regulatory
baseline,
the
more
flexible
RACT
and
RFP
otpions.
°
Emission
Reduction
Differences.
With
more
control
cost,
there
is
often
more
emission
reductions.
Such
is
the
case
in
this
assessment.
The
less
flexible
option
results
in
20,000
more
annual
tons
reduction
in
volatile
organic
compounds
(
VOC)
in
2009
relative
to
the
more
flexible
framework.
But,
if
what
is
needed
to
attain
and
maintain
the
standard
in
a
lower
cost
manner
are
NOx
reductions,
the
additional
reductions
of
VOC
may
not
foster
more
expeditious
attainment
and
maintenance
of
the
8­
hour
ozone
NAAQS
for
such
areas.
The
assessment
also
indicates
the
less
flexible
framework
could
result
in
8400
more
tons
of
NOx
reductions
in
2009.
But,
if
those
reductions
are
not
needed
to
meet
the
standard,
they
may
not
foster
expeditious
attainment
and
maintenance
of
the
standard.
°
Energy
Differences.
The
less
flexible
RACT
and
RFP
implementation
framework
could
mean
an
additional
$
1.4
million
in
energy
expenditures.
Ninety­
six
percent
of
that
is
the
result
of
anticipated
additional
natural
gas
use.
In
quantitative
terms,
the
energy
impacts
of
the
less
flexible
RACT
and
RFP
options
represent
about
14
million
cubic
meters
of
natural
gas,
200
thousand
kwhrs
of
electricity,
and
1
thousand
tons
of
coal.
The
monetized
and
quantified
energy
impacts
could
be
averted
by
adopting
the
regulatory
baseline,
the
more
flexible
RACT
and
RFP
options.
8­
29­
05.
Fifth
Draft
of
the
Second
Addendum
to
the
O3
Implementation
Cost,
Energy,
and
Economic
Impact
Assessment.

7A
situation
is
the
application
of
controls
to
a
particular
establishment
or
to
a
sector
(
e.
g.
gasoline
service
stations)
or
product
(
e.
g.
consumer
solvents,
asphalt
).

7
°
Economic
Impact
Differences.
The
less
flexible
RACT
and
RFP
options
result
in
economic
impacts
affecting
more
sectors
and
facilities.
Simulations
suggest
higher
costs
for
facilities,
products,
or
services
in
18
source
categories.
Examples
of
source
categories
include
consumer
solvents,
cutback
asphalt,
oil
and
natural
gas
production,
municipal
landfills,
fabric
printing,
and
gasoline
service
stations.
Hundreds
of
establishments
could
be
affected
if
the
less
flexible
options
were
adopted.
The
additional
cost
as
a
percent
of
annual
revenue
surrogates
is
estimated
to
be
<
0.5%
in
86%
of
the
situations,
<
1.0%
in
92%
of
the
situations,
and
<
3%
in
96%
of
the
situations.
7
There
were
instances
where
the
annualized
cost
as
a
percent
of
the
revenue
surrogate
could
be
>
6%.
These
potential
economic
impacts
could
be
averted
with
adoption
of
the
regulatory
baseline,
the
more
flexible
RACT
and
RFP
options.

1.3.2
9
Area
Qualitative
Analysis.
Of
the
9
areas
treated
qualitatively,
all
are
in
California.
For
8
of
these
areas,
the
cost
and
other
impact
differences
may
arise
due
only
to
the
RFP
provisions
of
the
less
flexible
versus
more
flexible
options.
But,
a
comparison
of
the
2002
emissions
inventory
with
projections
and
interpolations
for
2008
indicates
reductions
in
VOC
and
NOx
emissions
with
controls
in
place.
If
those
conditions
represent
base
case,
then
some
of
these
areas
might
meet
RFP
requirements
of
both
options
without
additional
cost.
Hence,
a
cost
and
other
impact
difference
would
not
be
realized.
The
other
area
may
have
cost
and
other
impact
differences
due
both
the
RACT
and
RFP
provisions
of
the
less
versus
the
more
flexible
options.

1.4
Limitations.

There
are
a
variety
of
limitations
to
any
forward
looking
analysis.
Here
are
some
examples.

1.4.1
Double
Counting.
In
the
case
of
this
assessment,
a
recently
promulgated
economically
significant
rule,
the
"
Clean
Air
Interstate
Air
Quality
Rule,"
is
omitted
from
the
baseline.
In
addition,
certain
states
have
strengthened
their
implementation
plans
to
address
1­
hour
ozone
NAAQS
obligations.
Omission
of
these
factors
could
impact
projected
design
values
and
estimated
difference
between
the
less
flexible
RACT
and
RFP
framework
and
the
regulatory
baseline,
the
more
flexible
RACT
and
RFP
framework.

1.4.2.
Not
Reflecting
What
the
States
Will
Actually
Do.
The
second
addendum
is
a
simulation
of
what
certain
non­
attainment
areas
will
do
given
a
less
flexible
RACT
and
RFP
options
relative
to
the
more
flexible
RACT
and
RFP
implementation
framework
options.
The
actual
level
and
distribution
of
costs
and
other
impacts
is
dependent
on
what
is
in
the
state
implementation
plans.
This
in
turn
is
dependent
on
other
factors.
For
example,
the
states
may
have
a
richer
or
different
8­
29­
05.
Fifth
Draft
of
the
Second
Addendum
to
the
O3
Implementation
Cost,
Energy,
and
Economic
Impact
Assessment.

8
set
of
emission
reduction
choices
than
that
assumed
here.
In
addition,
the
states
may
choose
to
adopt
cap
and
trade
as
opposed
to
command
and
control
systems
to
satisfy
their
emission
reduction
requirements.
And/
or,
the
states
may
focus
more
on
the
distribution
of
costs
amongst
the
various
sectors
as
opposed
to
overall
level
of
cost
to
attain
and
maintain
the
8­
hour
ozone
NAAQS.

1.4.3.
Not
Doing
and
RFP
Assessment
for
the
California
Areas.
A
comparison
of
2002
versus
2010
VOC
and
NOx
controlled
emissions
for
the
affected
counties
in
the
9
California
nonattainment
areas
indicates
substantial
reductions
of
the
O3
precursor
emissions.
If
those
2010
projections
represent
base
case
control
levels,
some
of
the
9
areas
may
not
have
cost
and
other
impact
differences
due
to
RFP.
This
could
happen
if
the
areas
meet
the
less
flexible
RFP
option
(
and
hence
also
the
more
flexible
option)
under
base
case
conditions.
(
i.
e.,
without
developing
additional
local
emission
reduction
requirements).

1.4.4.
Not
Factoring
the
Distinctions
in
the
Timing
of
Control
Costs.
The
first
6­
year
RFP
requirements
are
to
be
met
by
12­
31­
08.
The
RACT
reductions
must
be
met
in
spring
of
2009.
The
control
measures
for
the
moderate
area
state
implementation
plan
attainment
demonstration
are
to
be
in
place
by
the
beginning
of
the
ozone
season
of
2009.
Of
the
21
areas
in
the
difference
analysis
10
are
either
in
Texas
or
California.
The
ozone
season
for
those
areas
starts
1­
01­
09.
Hence,
there
is
not
significant
difference
in
the
timing
of
the
RFP
control
measure
expenditures
compared
to
the
other
controls
measures.
For
the
other
nonattainment
areas
in
the
difference
analysis,
their
ozone
season
in
2009
starts
4­
01­
09.
Hence,
there
is
a
4
month
difference
in
the
timing
of
the
cost
outlays
for
the
RFP
requirements
on
the
one
hand
and
RACT
and
the
other
measures
needed
for
attainment
on
the
other
hand.
This
distinction
in
the
timing
of
control
expenditures
is
not
reflected
in
this
analysis.
The
result
is
a
potential
bias
that
could
understate
the
cost
difference
between
the
less
and
more
flexible
RFP
and
RACT
options.
How
big
is
this
time
difference
in
dollar
terms?
For
example,
with
a
real
interest
rate
of
7%,
control
expenditures
of
$
1
occurring
3
months
in
the
future
would
be
equivalent
to
$
0.98
in
expenditures
today.
With
a
3%
real
interest
rate,
the
present
value
of
a
dollar
spent
3
months
hence
would
be
$
0.99.

1.5
Structure
of
the
Second
Addendum
Section
2
of
the
addendum
describes
in
abbreviated
fashion
the
RACT
and
RFP
options
as
they
pertain
to
designated
Subpart
1
and
Subpart
2
non­
attainment
areas.
However,
the
official
description
of
those
options
is
what
is
contained
in
the
Federal
Register
Notice
for
the
Final
Phase
II
O3
8­
hour
NAAQS
implementation
rule­
making.
Section
3
describes
the
data
and
identifies
the
references
used
to
select
the
areas
with
potential
differences
and
impacts
and
to
conduct
the
impact
analysis.
Section
4
identifies
the
methodology
used
to
identify
two
sets
of
areas.
One
set
is
comprised
of
areas
that
are
likely
to
have
impact
differences.
The
other
set
includes
that
are
unlikely
to
have
differences
in
impacts.
For
the
areas
expected
to
have
impact
differences,
this
section
also
describes
the
methodology
to
assess
potential
cost,
emission
reduction,
energy
use,
and
8­
29­
05.
Fifth
Draft
of
the
Second
Addendum
to
the
O3
Implementation
Cost,
Energy,
and
Economic
Impact
Assessment.

8
Appendix
A.
Technical
Support
Document:
Potential
Impacts
of
Less
Flexible
and
More
Flexible
RFP
and
RACT
Options
in
Implementation
of
the
8­
hour
Ozone
NAAQS.
E.
H.
Pechan
&
Associates,
Inc.
5528­
B
Hempstead
Way,
Springfield,
VA
22151,
September
2005.

9
economic
impacts.
Section
5
describes
the
findings
of
the
analysis.
The
limitations
noted
in
section
1.4
apply
to
those
findings.
A
technical
support
document
is
included
as
an
appendix
to
the
second
addendum.
8
This
document
provides
information
on
the
base
case
RFP
analysis
for
selected
areas
as
well
as
the
cost,
emission
reduction,
energy,
and
economic
impact
calculations
for
12
areas
treated
quantitatively
in
the
difference
analysis.

Section
6
provides
a
qualitative
assessment
regarding
the
potential
consequences
of
the
following:
°
The
Clean
Air
Interstate
Rule
and
consultation
recommendation;
°
Alternative
reasonable
further
progress
(
RFP)
scenarios
°
year
of
the
inventory
used
to
calculate
the
first
6
year
RFP
requirement
°
consequences
of
a
Subpart
1
moderate
area
requesting
and
receiving
an
attainment
date
extension
and
the
RFP
requirements
using
a
2002
beginning
year
emissions
inventory;
and,
°
the
Reformulated
Gasoline
Requirement
(
RFG).

There
are
2
appendices
to
the
Second
Addendum..
°
Appendix
A
provides
technical
supporting
information
regarding
the
differences
in
cost,
emission
reduction,
energy,
and
economic
impacts
between
the
more
flexible
option
(
the
regulatory
baseline)
and
the
less
flexible
RFP
and
RACT
options
°
Appendix
B
describes
an
assessment
of
selected
federal
and
local
measures
on
predicted
8­
hour
design
values
for
in
the
eastern
the
U.
S.
8­
29­
05.
Fifth
Draft
of
the
Second
Addendum
to
the
O3
Implementation
Cost,
Energy,
and
Economic
Impact
Assessment.

10
2.0
RACT
and
RFP
Options
The
preambles
to
the
6/
23/
03
proposal
(
Sections
VI.
I
andVI.
K)
and
the
Phase
2
Final
8­
hour
ozone
implementation
rule
(
Sections
IV.
E
and
IV.
G)
contain
a
thorough
description
of
the
RACT
and
RFP
options.
As
noted
in
Section
1
of
this
addendum,
the
assessment
in
this
second
addendum
compares
the
potential
consequences
of
adopting
the
set
of
less
flexible
RACT
and
RFP
options
to
the
regulatory
baseline,
the
set
of
more
flexible
options
for
RACT
and
RFP.
The
applicability
of
these
options
to
any
8­
hour
designated
non­
attainment
area
depends
in
part
on
the
coverage
and
classification
of
the
designated
non­
attainment
areas.
The
options
are
summarized
and
described
in
general
terms
in
Table
2.1.

Table
2.1
General
Description
of
the
More
Flexible
and
Less
Flexible
RACT
and
RFP
Options
Rule
Element/
Type
of
Area
More
Flexible
Less
Flexible
RACT/
Subpart
1
areas
that
are
"
moderate­
like."
The
designated
non­
attainment
areas
have
8­
hr
design
values
>
92ppb
*
Areas
attaining
within
5
years
meet
RACT
through
attainment
demonstration.
If
the
area
needs
another
5
years
from
designation
to
attain,
sources
must
comply
with
RACT
by
spring
2009.
This
corresponds
to
Option
1
in
the
proposal.
Treated
like
Subpart
2
areas.
RACT
must
be
installed
by
spring
2009.
This
corresponds
to
Option
2
in
the
proposal.

RFP/
Subpart
1
areas
that
are
"
moderate­
like."
They
have
8­
hr
design
values
of
>
92ppb
RFP
is
what
is
needed
to
attain.
This
is
corresponds
to
Option
1
in
the
preamble.
RFP
is
a
15%
reduction
of
2002
VOC
&/
or
Nox
emissions
by
12­
31­
08.
This
corresponds
to
Option
2
in
the
preamble.

RFP/
Subpart
2
moderate
areas**
If
RFP
is
met
under
the
1­
hr
NAAQS,
15%
RFP
is
presumed
met
for
the
8­
hr
and
the
area
must
then
meet
Subpart
1
RFP.
If
not,
the
15%
reduction
of
2002
VOC
emissions
by
12­
31­
08
applies.
This
corresponds
to
Option
2
in
the
preamble.
RFP
is
a
15%
reduction
in
2002
VOC
emissions
by
12­
31­
08.

*
The
Clean
Air
Act
provides
no
discretion
regarding
RACT
provisions
for
Subpart
2
moderate
and
above
areas.
Under
the
Phase
2
rule,
sources
in
all
designated
Subpart
2
moderate
and
above
areas
must
comply
with
RACT
by
spring
of
2009.
**
The
subpart
2
areas
covered
in
the
quantitative
difference
anaysis
are
either
classified
as
marginal
or
moderate.
8­
29­
05.
Fifth
Draft
of
the
Second
Addendum
to
the
O3
Implementation
Cost,
Energy,
and
Economic
Impact
Assessment.

11
3.0
Data
Certain
data
help
determine
the
set
of
areas
in
the
difference
analysis.
Other
data
help
determine
the
projected
differences
in
cost,
emissions,
energy,
and
economic
impacts.
The
other
parts
of
section
3
describe
these
data
in
more
detail
as
well
as
the
associated
data
sources.

3.1
Data
used
to
determine
the
designated
nonattainment
areas
included
in
the
difference
analysis
Table
3.1
presents
descriptions,
uses,
and
sources
of
the
data
which
help
determine
which
designated
nonattainment
areas
included
in
the
difference
analysis.

Table
3.1
Areas
in
the
Difference
Analysis:
Data
Descriptions,
Uses,
&
Sources
Description
Use(
s)
Source
8­
hr
and
1­
hr
O3
NAAQS
nonattainment
areas,
geographic
information,
coverage,
classification,
design
values,
whether
areas
are
in
the
ozone
transport
region
(
OTR).
Determine
which
designated
8­
hr
non­
attainment
areas
may
not
be
subject
to
different
RACT
or
RFP
options
because
of
their
coverage
and/
or
classification.
Also,
determine
which
areas
may
have
already
met
some
of
the
requirements
as
a
result
of
the
requirements
of
their
1­
hour
classification.
And,
determine
if
area
may
have
OTR
requirements.
The
index
for
the
information
is
found
at:
http://
www.
epa.
gov/
oar/
oaqps/
green
bk/
o8index.
html
The
pertinent
links
are
"
A.
1.
d.":
non­
attainment
areas
sorted
Area/
State/
County
and
"
B.
1.":
currently
designated
1­
hr
and
8­
hr
areas.
OTR
information
at:
http://
www.
epa.
gov/
oar/
caa/
caa184.
txt
Projected
8­
hour
O3
design
values
for
non­
attainment
areas
in
the
Comprehensive
Air
Quality
Model
with
Extensions
(
CAMx)
Determine
which
areas
are
simulated
to
come
into
attainment
under
base
case
condition
by
2007
&
are
expected
to
stay
that
way
thus
using
the
Clean
Data
Policy
to
avert
RFP
requirements.
Simulations
and
interpolations
using
CAM­
x*.
See
docketed
excel
file:
8hrEA_
diffanalysis_
projections.
xls
See
docketed
Word
file:
8hrEA_
diffanalysis_
projections.
doc
Emissions
inventory
for
2002
with
projections
for
other
years
Determine
the
amount
of
reductions
off
the
2002
emissions
inventory
to
meet
the
RFP
options
Clean
Air
Interstate
Rule
(
CAIR)
Emissions
Inventory
Technical
Support
Document.
March
4,
2005
Comparison
of
RFP
requirements
net
of
creditable
reductions**
Determine
which
areas
meet
the
most
stringent
RFP
option
under
base
case
conditions
Appendix
A.
Technical
Support
Document
*
Comprehensive
Air
Quality
Model
with
Extensions.
Simulations
were
conducted
using
the
CAIR
base
case.
8­
29­
05.
Fifth
Draft
of
the
Second
Addendum
to
the
O3
Implementation
Cost,
Energy,
and
Economic
Impact
Assessment.

12
Interstate
Rule).
**
Includes
deleting
from
creditability
emission
reductions
due
to
pre­
1990
mobile
source
controls.

3.2
Data
used
in
the
Difference
Analysis
There
are
2
sets
of
areas
included
in
the
difference
analysis.
One
set
of
areas
is
outside
the
CAM­
x
domain.
The
assessment
for
the
these
areas
is
qualitative.
Another
set
of
areas
is
within
the
CAMx
Domain
and
is
treated
quantitatively.
The
data
used
for
the
quantitative
assessment
are
presented
in
Table
3.2.

Table
3.2.
Difference
Analysis:
Data
Descriptions,
Uses,
&
Sources
Description
Use(
s)
Source(
s)

Base
case
control
levels
for
the
sources.
Identify
what
sources
are
presumed
to
meet
RACT
under
the
1­
hr.
standard.
Provide
input
for
the
control
measure
and
cost
ordering
by
measure,
source
category
and
ozone
precursor.
EPA/
gov/
air/
interstateairquality/
pdf
s/
finaltechn01.
pdf
&
Appendix
A:
Technical
Support
Document
Control
measures
and
cost
ordering
($/
ton
of
emission
reduction
in
ozone
precursor(
s)
Design
low
cost
means
of
meeting
the
less
flexible
RACT
and
RFP
options
relative
to
the
regulatory
baseline.
Provide
inputs
for
estimating
difference
in
cost,
emission
reduction,
&
energy
impacts.
Referenced
in
Appendix
A:
Technical
Support
Document
Economic
Data:
sectors,
revenue
for
the
affected
geographic
areas
Develop
surrogates
for
the
annual
revenue
to
reflect
annualized
cost
as
%
of
annual
revenues
where
there
is
a
difference
between
the
less
and
more
flexible
options
Economic
Census.
http://
www.
census.
gov/
epcd/
ec97/
u
s/
US000.
HTM
Emission
reduction
targets
(
ERTs)
for
4
areas.
ERTs
are
the
amount
estimated
amount
of
reductions
needed
to
attain
the
8­
hour
standard.
Helps
avoid
an
overestimate
of
the
differences
since
reductions
from
the
less
flexible
RACT
and/
or
RFP
requirements
can
be
used
to
help
fulfill
emission
reductions
targets
objectives.
Docketed
excel
and
word
file
describing
the
process
and
estimates.
8hrEA_
diffanalysis_
controltrargets.
doc;
and,
Verification_
summarytable.
xls
Energy
Data:
the
amount
of
control
cost
difference
resulting
in
additional
natural
gas,
electricity,
coal
and
oil
use.
Assess
the
dollar
and
physical
quantities
of
additional
energy
requirements
of
the
less
flexible
RACT
&
RFP
options
relative
to
the
more
flexible
options,
Appendix
A:
Technical
Support
Document
8­
29­
05.
Fifth
Draft
of
the
Second
Addendum
to
the
O3
Implementation
Cost,
Energy,
and
Economic
Impact
Assessment.

13
1.
Use
the
EPA
Green
book
to
determine
there
are
84
Subpart
1
Areas
2.
Use
the
EPA
Green
book
to
determine
that
63
of
the
areas
are
"
marginal­
like"
(
design
value
<
0.92ppb)
and
have
no
Subpart
1RACT
or
RFP
requirements
under
the
proposed
Phase
2
rule
making
options.

3.
For
the
remaining
21
areas,
determine
if
there
are
base
case
RACT
requirements
or
if
creditable
emission
reductions
can
fulfill
the
RFP
requirements
under
the
most
stringent
RFP
option.
Where
base
case
design
value
predictions
are
available,
determine
if
the
clean
data
policy
may
be
used
to
avert
the
most
stringent
RFP
requirements.
10
of
the
21areas
should
not
have
impact
differences
due
to
the
RACT
and
RFP
options.
That
leaves
11
Subpart
1
areas
with
potential
impact
differences.
4.0
Methodology
There
are
two
major
parts
to
the
methodology.
The
first
part
allows
one
to
determine
the
areas
that
may
have
cost
and
other
impact
differences.
This
is
done
by
first
determining
those
areas
that
are
unlikely
to
have
cost
and
other
differences
are
identified.
The
remaining
areas
then
are
those
that
could
have
an
impact
difference.
The
second
part
of
the
methodology
is
used
to
determine
the
causes
and
nature
of
the
impact
differences.

4.1
Determining
which
of
the
designated
8­
hour
O3
NAAQS
non­
attainment
areas
that
are
not
expected
to
have
a
difference
in
impacts.

The
methodology
applied
to
the
designated
8­
hour
O3
NAAQS
Subpart
1
non­
attainment
areas
is
described
first
followed
by
a
description
of
the
methodology
for
the
Subpart
2
designated
non­
attainment
areas.

4.1.1
Methodology
to
determine
Subpart
1
areas
excluded
from
the
difference
analysis.
The
methodology
involves
3
steps.
See
Figure
4.1.
More
information
regarding
step
3
is
provided
in
Table
4.1.

Figure
4.1
Methodology
to
Determine
the
Excluded
Subpart
1
Areas
NEED
TO
INSERT
ARROWS
8­
29­
05.
Fifth
Draft
of
the
Second
Addendum
to
the
O3
Implementation
Cost,
Energy,
and
Economic
Impact
Assessment.

14
Table
4.1
Applying
the
Methodology
to
the
21
Subpart
1
areas.

Designated
Non­
Attainment
Area
RACT
Requirement
in
Base
Case
RFP
Met/
Averted*
in
Base
Case
Allegan,
MI
Not
required
Averted
requirement
Buffalo,
NY*
Yes,
in
an
OTC
state
Yes,
via
NOx
reductions
Cincinnati,
OH*
Yes,
was
a
1­
hr
moderate
area
Averted
requirement
Columbus,
OH
Not
required
Yes,
Via
Combination
of
VOC
and
Nox
Reductions
Door,
WI
Not
required
No,
but
some
creditable
reductions
Erie,
PA*
Yes,
in
an
OTC
state
Averted
requirement
Franklin
Co.,
PA*
Yes,
in
an
OTC
state
Averted
requirement
Hancock,
Knox,
Lincoln,
Waldo
Cos.,
ME*
Yes,
in
an
OTC
state
Averted
requirement
Indianapolis,
IN
Not
required
Averted
requirement
Jamestown,
NY*
Yes,
in
an
OTC
state
Averted
requirement
Kern
Co.,
CA
Yes,
was
1­
hr
serious
area
Not
met.
Could
not
determine
if
averted.

Kewaunee
Co.,
WI*
Yes,
was
1­
hr
moderate
area
Averted
requirement
Knoxville,
TN
Not
required
Averted
requirement
Louisville,
KY­
IN*
Yes,
was
1­
hr
moderate
area
Averted
requirement
Nevada
Co.
(
Western
Part),
CA
Not
required
Not
met.
Could
not
determine
if
averted.

Pittsburgh­
Beaver
Valley,
PA*
Yes,
in
an
OTC
state
Averted
requirement
Raleigh­
Durham­
Chapel
Hill,
NC
Not
required
in
counties
that
were
not
part
of
the
1­
hr
moderate
area
Averted
requirement
San
Diego,
CA
Yes,
was
1­
hr
moderate
area
Not
met.
Could
not
determine
if
averted.

South
Bend­
Elkhart,
IN
Not
required
(
1­
hr
marginal)
Averted
requirement
Toledo,
OH*
Yes,
was
1­
hr
moderate
Averted
requirement
Youngstown­
Warren­
Sharon,
OHPA
Not
required
for
OH
counties
Averted
requirement
8­
29­
05.
Fifth
Draft
of
the
Second
Addendum
to
the
O3
Implementation
Cost,
Energy,
and
Economic
Impact
Assessment.

15
1.
Use
the
EPA
Green
book
to
determine
there
are
42
Subpart
2
areas
2.
Use
the
EPA
Green
book
to
determine
that
there
are
16
Subpart
2
marginal
areas.
These
areas
have
no
RFP
(
or
RACT)
requirements
under
the
either
of
the
Proposed
Phase
2
rule
3.
For
the
remaining
26
moderate
and
above
areas,
determine
if
they
meet
or
avert
the
4.
For
the
remaining
13
areas,
determine
if
any
did
not
get
15%
VOC
RFP
for
the
1­
hr
standard.
For
these
areas,
there
is
not
difference
between
the
RFP
options.
There
are
3
such
*
No
projected
difference
for
these
10
areas
**
Under
the
Clean
Data
Policy
4.1.2
Methodology
to
determine
the
Subpart
2
areas
excluded
from
the
difference
analysis.
The
methodology
involves
4
steps.
See
Figure
4.2.
Table
4.2
presents
more
information
regarding
application
of
steps
3
and
for
each
affected
area.

Figure
4.2
Methodology
to
determine
the
excluded
Subpart
2
areas
Need
to
insert
arrows
8­
29­
05.
Fifth
Draft
of
the
Second
Addendum
to
the
O3
Implementation
Cost,
Energy,
and
Economic
Impact
Assessment.

16
Table
4.2
Applying
the
methodology
to
26
moderate
or
above
Subpart
2
areas
Area
RFP
met/
averted**
in
the
base
case
Baltimore*
Met
requirement
Boston­
Lawrence*
Averted
requirement
Boston­
Portsmouth*
Averted
requirement
Charlotte*
Not
met
or
averted.
However,
1­
hr
RFP
not
met
Chicago
Not
met
or
averted
Cleveland*
Not
met
or
averted.
However,
1­
hr
RFP
not
met
Dallas
Not
met
or
averted
Fredricksburg*
Averted
requirement
Greater
Connecticut*
Met
requirement
Houston*
Met
requirement
Jefferson*
Averted
requirement
LA­
San
Bernadino
Could
not
determine
if
averted.

LA­
South
Coast
Could
not
determine
if
averted.

Milwaukee
Not
met
or
averted.

New
York*
Met
requirement
Philadelphia*
Met
requirement
Poughkeepsie*
Averted
requirement
Providence
Not
met
or
averted
Riverside
Could
not
determine
if
averted.

Sacramento
Could
not
determine
if
averted.

San
Joaquin
Could
not
determine
if
averted.

Sheboygan*
Not
met
or
averted.
However,
1­
hr
RFP
not
met.

Springfield*
Averted
requirement
St.
Louis*
Averted
requirement
Ventura
Could
not
determine
if
averted.
8­
29­
05.
Fifth
Draft
of
the
Second
Addendum
to
the
O3
Implementation
Cost,
Energy,
and
Economic
Impact
Assessment.

17
Washington*
Met
requirement.

*
Excluded
from
the
difference
analysis.
**
Under
the
Clean
Data
Policy
4.2
Determining
the
impact
differences
for
selected
designated
non­
attainment
areas
between
the
more
flexible
and
less
flexible
sets
of
RFP
and
RACT
options.

Some
areas
in
the
difference
analysis
are
addressed
in
a
qualitative
fashion.
Others
are
addressed
in
a
quantitative
manner.

4.2.1
Methodology
for
areas
treated
qualitatively.
The
model
(
CAM­
x)
used
to
predict
future
ozone
design
values
in
the
east
meets
certain
performance
criteria
when
applied
there.
That
model
does
not
consistently
meet
those
performance
criteria
when
applied
in
the
west.
Hence,
the
air
quality
model
cannot
be
used
in
the
west
to
predict
base
case
future
air
quality
design
values
and
associated
information
used
to
help
determine
what
the
quantified
cost
and
other
differences
might
be.
However,
where
those
differences
could
arise
(
e.
g.
RFP
or
RACT
or
both)
can
be
determined
by
looking
at
the
present
and
past
1
hour
O3
NAAQS
classifications
for
those
areas.
In
addition,
the
base
year
(
2002)
and
projected
(
2010)
emissions
inventory
given
controls
can
be
compared
to
look
at
the
direction
and
relative
size
of
emission
changes
overtime.

The
baseline
RACT
requirements
and
RFP
are
identified
for
these
areas.
For
example,
areas
having
a
1­
hour
classification
of
moderate
had
to
meet
RACT
under
the
1­
hour
standard
and
are
assumed
to
meet
it.
If
that
is
the
case,
there
is
no
difference
between
the
less
and
more
flexible
RACT
requirements.
An
assessment
was
not
performed
to
see
if
the
least
flexible
RFP
requirements
could
be
met
in
the
base
case.
Hence,
there
is
a
potential
difference
due
the
RFP
options
in
all
the
areas.
See
Table
4.3
Table
4.3
Areas
Treated
Qualitatively
and
Where
Impact
Differences
May
Arise
Area
Difference
Possible
Because
of
RACT
Options
Difference
Possible
Because
of
RFP
Options
Kern
CO.(
eastern
Kern
only)*
No
Yes
LA­
San
Bernardino**
No
Yes
LA­
South
Coast**
No
Yes
Nevada
Co*
Yes
Yes
Riverside**
No
Yes
Sacramento**
No
Yes
San
Diego*
No
Yes
8­
29­
05.
Fifth
Draft
of
the
Second
Addendum
to
the
O3
Implementation
Cost,
Energy,
and
Economic
Impact
Assessment.

18
San
Joaquin**
No
Yes
Ventura**
No
Yes
*
Subpart
1
**
Subpart
2
4.2.2
Methodology
for
areas
treated
quantitatively.
There
are
8
Subpart
1
areas
and
4
Subpart
2
areas
in
the
quantitative
difference
analysis.
The
methodology
for
the
Subpart
1
areas
is
described
in
section
4.2.2.1
while
the
methodology
for
the
4
Subpart
2
areas
is
described
in
section
4.2.2.2.

4.2.2.1
Methodology
for
the
8
Subpart
1
areas
treated
quantitatively.
Each
of
the
8
areas
has
no
cost
in
meeting
the
regulatory
baseline,
the
more
flexible
RACT
and
RFP
options.
Table
4.4
identifies
the
area
that
have
may
have
additional
cost
in
meeting
either
the
less
flexible
RACT
or
RFP
options.

Table
4.4.
Some
of
the
features
of
the
8
Subpart
1
areas
treated
quantitatively
in
the
difference
analysis.

Area
more
flexible
RACT
more
flexible
RFP
less
flexible
RACT
less
flexible
RFP
Allegan
no
cost
no
cost
cost
no
cost
Columbus
no
cost
no
cost
cost
no
cost
Door
no
cost
no
cost
cost
cost
Indianapolis
no
cost
no
cost
cost
no
cost
Knoxville
no
cost
no
cost
cost
no
cost
Raleigh­
Durham*
no
cost
no
cost
cost
no
cost
South
Bend
no
cost
no
cost
cost
no
cost
Youngstown*
no
cost
no
cost
cost
no
cost
*
Parts
of
the
non­
attainment
area
had
prior
RACT
requirements.
Cost
differences
are
expected
for
parts
of
these
areas.
Those
parts
that
did
not
have
prior
1­
hour
O3
NAAQS
or
OTR
requirements.

These
8
Subpart
1
"
moderate­
like"
areas
are
projected
to
meet
the
8­
hr
O3
NAAQS
under
base
case
conditions.
Hence,
there
are
no
further
reductions
in
emissions
required
to
attain
and
maintain
the
standard.
The
requirements
for
the
more
flexible
set
of
options
as
described
in
general
terms
in
Table
2.1
would
define
RACT
and
RFP
as
what
is
needed
to
meet
the
standard
in
an
expeditious
manner.
Because
these
areas
are
projected
in
the
base
case
to
meet
the
standard
in
the
time
prescribed
in
the
statute,
they
are
presumed
to
incur
no
cost
in
adhering
to
the
more
flexible
set
of
8­
29­
05.
Fifth
Draft
of
the
Second
Addendum
to
the
O3
Implementation
Cost,
Energy,
and
Economic
Impact
Assessment.

9Appendix
A:
Technical
Support
Document
19
RACT
and
RFP
options.

That
is
not
the
case
for
the
less
flexible
option
set.
For
the
less
flexible
set
of
options,
there
may
be
RACT
costs
for
all
8
areas.
In
addition,
Door
is
not
projected
to
avert
the
less
flexible
RFP
requirements.
Hence,
under
the
less
flexible
option
Door
would
have
to
contend
with
RACT
and
RFP
requirements.
However,
the
RACT
would
be
creditable
in
meeting
the
RFP
requirement.

RACT
is
specific
determination
for
individual
sources
or
groups
of
sources.
What
is
provided
in
this
second
addendum
difference
analysis
is
illustrative
and
not
a
substitute
for
the
RACT
determinations
made
by
the
states.
However,
for
purposes
of
this
analysis,
RACT
is
presumed
unmet
in
the
base
case
if
the
follow
conditions
apply
for
a
particular
source:
°
Base
case
control
efficiency
is
zero
°
Base
case
emissions
are
greater
than
100
tons
°
Control
measure
exist
that
have
an
efficiency
of
<
80%
°
Cost
for
the
least
costly
measure
getting
reductions
is
<$
1561/
ton
(
1997
dollars
)

The
assessment
of
RACT
cost
includes
a
search
of
control
measures
and
emissions
inventory
data
in
view
of
the
above
conditions.

Emission
reductions
from
RACT
requirements
are
creditable
in
meeting
remaining
RFP
requirements.
The
reductions
from
the
2002
base
emission
are
compared
to
the
interpolated
emissions
inventory
values
for
2008
with
adjustments
for
emission
reductions
due
to
motor
vehicle
controls
required
prior
to
the
1990
Clean
Air
Act.
The
result
is
the
net
additional
reductions
in
VOC
or
NOx
to
meet
the
15%
RFP
requirement.
Emission
reductions
to
meet
the
less
flexible
RFP
requirements
for
these
areas
can
come
from
within
as
well
as
outside
the
non­
attainment
area.
If
they
come
from
outside
the
area
certain
restrictions
apply.
They
must
be
within
the
state
and
no
more
than
200km
away
for
NOx
reductions
and
no
more
than
100
km
away
for
VOC
reductions.
In
addition,
if
reductions
come
from
outside
the
non­
attainment
area,
the
2002
and
projected
base
case
2008
emissions
from
those
facilities
must
be
added
to
the
emissions
from
within
the
nonattainment
area.
AirControlNET
is
used
to
determine
the
lower
cost
way
to
meet
the
less
flexible
RFP
option.
The
technical
appendix
describes
the
procedures
and
base
case
and
difference
analysis
results.
9
With
the
cost
estimates
for
RACT
and
where
appropriate
RFP
(
i.
e.
Door)
comes
information
on
the
amount
of
emission
reductions
as
well
as
energy
use
relative
to
the
regulatory
baseline,
the
more
flexible
RACT
and
RFP
options.
The
investment
and
operating
cost
estimates
are
put
on
an
annual
basis
and
compared
to
annual
revenues
associated
with
facilities
of
that
type.
The
result
would
be
a
potential
price
increase
needed
to
cover
the
cost
of
control
(
not
taking
into
account
market
8­
29­
05.
Fifth
Draft
of
the
Second
Addendum
to
the
O3
Implementation
Cost,
Energy,
and
Economic
Impact
Assessment.

20
adjustments).
These
(
e.
g.
cost,
emission
reduction,
energy
requirements,
economic
impacts)
are
all
the
parts
of
the
Phase
2
differences
analysis
results
for
these
8
areas.

4.2.2.2
Methodology
for
the
4
Subpart
2
areas
treated
quantitatively
in
the
difference
analysis.
The
difference
analysis
for
these
areas
is
affected
by
consideration
of
emission
reduction
targets
to
attain
and
maintain
the
standard
and
estimated
RACT
requirements
for
a
couple
of
counties
in
one
of
the
areas.
Table
4.5
provides
a
description
of
some
of
the
features
of
the
four
areas.

Table
4.5.
Some
of
the
features
of
the
4
Subpart
2
areas
treated
quantitatively
in
the
difference
analysis.*

Area
More
Flexible
RFP
Less
Flexible
RFP***
Emission
Reduction
Target
(
ERT)*

Chicago
Expected
to
meet
requirements
in
the
base
case.
cost.
1731
tons
of
VOC
reductions
yes.
62,296
tons
of
NOx
in
counties
other
than
Cook
or
Lake.
52,952
of
VOC
for
those
counties
Dallas**
1370
tons
of
VOC
from
base
case
cost.
5931
tons
of
VOC
reductions
yes.
27,700
tons
of
NOx
reductions
Milwaukee
Expected
to
meet
requirements
in
the
base
case.
cost.
803
tons
of
VOC
reductions
yes.
34,804
tons
of
NOx
reductions
Providence
Expected
to
meet
requirements
in
the
base
case
cost.
8209
tons
of
VOC
yes.
3684
tons
of
NOx
reductions
*
The
ERT
is
an
estimate
of
what
is
required
for
attainment.
The
figures
in
the
table
are
approximations.
More
detail
is
provided
in
the
Technical
Support
Document.
**
There
are
some
counties
in
this
non­
attainment
area
under
the
8­
hour
standard
that
were
not
part
of
the
nonattainment
area
under
the
1­
hour
standard.
That
means
that
there
is
a
mandatory
RACT
requirement
for
affected
sources
in
those
counties
(
Ellis,
Johnson,
Kaufman,
Parker,
Rockwell).
Application
of
RACT
to
those
sources
is
expected
to
bring
2884
tons
of
NOx
reductions.
VOC
RACT
requirements
appear
met
in
the
base
case.
Also,
with
the
more
flexible
option
the
area
has
some
choices
in
meeting
the
RFP
requirement.
It
can
get
the
reductions
from
the
"
new"
counties.
Or,
bring
the
other
counties
into
the
base
from
which
the
15%
is
determined
and
get
the
reductions
from
those
counties.
Bringing
the
old
counties
into
the
base
would
be
1370
+
4561
or
5931
tons
of
VOC
reductions.
***
These
RFP
tonnages
do
not
reflect
adjustments
that
would
have
to
be
made
if
the
reductions
are
secured
outside
the
non­
attainment
area.
See
the
Technical
Support
Document
(
Appendix
A).
8­
29­
05.
Fifth
Draft
of
the
Second
Addendum
to
the
O3
Implementation
Cost,
Energy,
and
Economic
Impact
Assessment.

21
5.0
Estimated
Differences
and
Limitations
5.1
Areas
with
Quantitative
Analysis
Tables
5.1
through
5.4
present
the
estimated
quantitative
differences
in
cost,
emission
reduction,
energy,
and
economic
impacts
for
the
less
flexible
RACT
and
RFP
options
relative
to
the
regulatory
baseline,
the
more
flexible
options.
The
detailed
information
is
found
in
Appendix
A:
Technical
Support
Document..

5.1.1
Emission
Reduction
Differences.
Eleven
of
the
12
areas
are
found
to
have
emission
reduction
differences.
For
Allegan
County,
Michigan
and
Door,
Wisconsin,
although
there
were
RACT
requirements
under
the
less
flexible
option,
sources
either
did
not
meet
the
RACT
size
requirements
and/
or
the
criteria
used
in
this
analysis
and
set
forth
in
section
4.2.2.1.
The
less
flexible
RACT
and
RACT
options
result
in
20,155
more
tons
VOC
and
8414
tons
of
NOx
emissions
reductions
than
the
more
flexible
RACT
and
RFP
options.
The
total
estimated
emission
reductions
of
VOC
and
NOx
under
the
less
flexible
RACT
and
RFP
options
were
75820
and128616
respectively.

Table
5.1
Emission
Reductions
Differences
Between
the
Less
Flexible
&
More
Flexible
RACT
&
RFP
Options
Area
VOC
Emissions
(
TPY)
NOx
Emissions
(
TPY)
Cause
Allegan
Co.,
MI
0
0
No
RACT
sources
Chicago­
Gary­
Lake­
Cook
2713
0
Less
flexible
RFP
Columbus,
OH
0
1061
Less
flexible
RACT
Dallas,
TX
7078
0
Less
flexible
RFP
Door,
WI
1025
0
Less
flexible
RFP
Indianapolis,
IN
0
723
Less
flexible
RACT
8­
29­
05.
Fifth
Draft
of
the
Second
Addendum
to
the
O3
Implementation
Cost,
Energy,
and
Economic
Impact
Assessment.

22
Knoxville,
TN
0
4030
Less
flexible
RACT
Milwaukee,
WI
1085
0
Less
flexible
RFP
Providence,
RI
8254
0
Less
Flexible
RFP
Raleigh­
Durham,
NC
0
965
Less
Flexible
RACT
South
Bend­
Elkhart,
IN
0
333
Less
Flexible
RACT
Yngstown­
Warren­
Sharon
0
1302
Less
Flexible
RACT
The
desirability
of
these
reductions
is
a
function,
in
part,
of
their
effectiveness
in
achieving
8­
hour
O3
NAAQS
attainment
and
maintenance
objective.
For
example,
Dallas,
Milwaukee,
and
Providence
have
a
NOx
emission
reduction
target
to
attain
and
maintain
the
standard.
But,
the
less
flexible
options
yields
reductions
of
the
VOC.
All
the
areas
with
additional
NOx
reductions
attributable
to
the
less
flexible
option
do
need
those
reductions
to
meet
the
standard
under
base
case
conditions.

5.1.2
Cost
Differences
between
the
Less
Flexible
and
More
Flexible
RACT
&
RFP
Options
The
estimated
cost
to
apply
the
less
flexible
RACT
and
RFP
implementation
framework
options
is
$
22
million
more
than
the
regulatory
baseline,
the
more
flexible
RACT
and
RFP
implementation
framework
options.
Table
5.2
provides
the
estimates
of
the
cost
differences
by
area.

Table
5.2.
Estimated
Cost
Difference
by
Area
of
the
Less
Flexible
verus
the
More
Flexible
Option
Area
Cost
Difference
(
Millions
of
1997$'
s
per
year)

Allegan,
MI
0
Chicago,
ILL­
IN
0.5
Columbus,
OH
1.0
Dallas,
TX
2.1
Door,
WI
0.3
Indianapolis,
IN
0.8
Knoxville,
TN
1.0
Milwaukee,
WI
<
0.05
Providence,
RI
14.1
Raleigh­
Durham­
Chapel
Hill,
NC
0.4
8­
29­
05.
Fifth
Draft
of
the
Second
Addendum
to
the
O3
Implementation
Cost,
Energy,
and
Economic
Impact
Assessment.

23
South
Bend­
Elkhart,
IN
0.4
Youngstown­
Warren­
Sharon,
OH­
PA
0.8
As
suggested
in
section
5.1.1,
these
additional
costs
result
from
emission
reductions
that
are
not
necessarily
needed
for
expeditious
attainment
and
maintenance
of
the
8­
hr
O3
NAAQS.
Most
of
the
additional
cost
from
adopting
the
less
flexible
RACT
and
RFP
implementation
framework
options
occur
in
Providence
for
additional
VOC
reductions.
This
area
has
taken
steps
to
reduce
VOC
emission
as
part
of
efforts
to
meet
the
1­
hour
O3
NAAQS.
Hence,
the
incremental
cost
of
additional
VOC
reductions
there
may
be
higher
relative
to
some
of
the
other
areas.

5.1.3.
Energy
Differences
Between
the
Less
and
More
Flexible
RACT
and
RFP
Options.
More
energy
use
is
expected
with
the
less
flexible
RACT
and
RFP
implementation
framework.
The
cost
of
this
additional
energy
use
is
estimated
at
$
1.4
million
(
1997
$'
s).
Eighty­
five
percent
of
this
is
the
result
of
estimated
increases
in
natural
gas
use.
The
amount
of
anticipated
direct
additional
electricity,
natural
gas,
and
coal
use
is
about
200
thousand
KWHrs,
14
million
cubic
meters,
and
100
tons
respectively.
The
percent
of
the
cost
associated
with
additional
electricity,
natural
gas
and
coal
use
by
control
measure
is
presented
in
Table
5.3.
More
information
regarding
the
allocation
of
the
costs
is
presented
in
Appendix
A:
Technical
Support
Document.

Table
5.3.
Estimated
Additional
Direct
Energy
Impacts
of
the
Less
Flexible
RACT
and
RFP
Options
By
Control
Measure
as
a
Percent
of
Energy
Cost
Control
Measure
Coal
Electricity
Natural
Gas
Natural
Gas
Reburning
0
0
85.45
Selective
Catalytic
Reduction
0
3.6
0
Selective
Non­
Catalytic
Reduction
3.8
1.3
0
Thermal
Incineration
0
8.2
6.1
Water
Injection
0
3.6
0
5.1.4.
Estimated
Additional
Potential
Economic
Impacts
of
the
Less
Flexible
RACT
and
RFP
Options.
These
are
only
approximations
of
the
sources
that
may
have
additional
costs
and
hence
the
potential
for
additional
economic
impact
relative
to
the
regulatory
baseline,
the
more
flexible
RACT
and
RFP
implementation
framework
option.
Estimates
of
annualized
costs
are
compared
to
surrogates
for
annual
revenue
as
explained
in
the
Technical
Support
Document
in
Appendix
A.
Table
5.4
identifies
the
source
categories
to
which
controls
are
applied,
the
number
of
times
that
occurs,
and
the
range
of
annualized
cost
to
annualized
revenue
surrogate
percentages.
8­
29­
05.
Fifth
Draft
of
the
Second
Addendum
to
the
O3
Implementation
Cost,
Energy,
and
Economic
Impact
Assessment.

24
In
some
instances
controls
may
only
be
applied
to
some
facilities
within
a
category.
An
average
revenue
surrogate
per
facility
is
developed.
This
may
or
may
not
correspond
to
the
actual
revenues
at
the
facility
which
may
have
to
put
on
additional
controls
under
the
less
flexible
Phase
2
implementation
framework
option.
The
technical
support
document
in
Appendix
A
estimates
the
annualized
cost
to
sales
percentages
in
the
for
over
200
source
categories.
For
most
of
these
applications,
annualized
cost
as
a
percent
of
the
annual
revenue
proxy
is
less
than
0.1%.
However,
for
8
of
the
applications
for
the
source
categories
noted
in
Table
5.4,
the
percentage
is
between
1
and
3.
And,
for
4
of
the
applications
the
percentage
is
even
higher,
ranging
from
3.1
to
more
than
17%.

5.2
Areas
with
a
Qualitative
Analysis.
As
noted
in
the
methodology
section,
there
are
9
areas
where
a
qualitative
analysis
is
conducted.
We
know
from
the
quantitative
assessment
of
12
areas
in
section
5.2
that
the
less
flexible
option
is
likely
to
result
in
more
emission
reductions,
higher
costs,
higher
energy
requirements,
and
more
economic
impacts.
In
Appendix
B,
there
is
a
comparison
of
the
2002
emission
inventories
along
with
projected
2010
and
interpolated
2008
emission
of
VOC
and
NOx.
The
information
suggestions
that
the
less
flexible
option's
impacts
may
be
diminished
because
of
projected
emissions
with
control
requirements
in
place.

Table
5.4
Sources,
Application
of
Additional
Controls,
Cost
to
Revenue
Ratios
Source
Category
Number
of
Applications*

Automobile
Refinishing
6
Cement
Manufacturing
1
Consumer
Solvents
96
Cutback
Asphalt
31
Fabric
Printing
&
Coating
10
Glass
Manufacture
9
IC
Boilers
10
IC
Engines
2
Industrial
Maintenance
Coatings
4
Municipal
Landfills
11
Oil
and
Natural
Gas
Production
16
Rubber
&
Plastics
Manufacture
4
8­
29­
05.
Fifth
Draft
of
the
Second
Addendum
to
the
O3
Implementation
Cost,
Energy,
and
Economic
Impact
Assessment.

25
Service
Stations
4
Steel
Production
1
Traffic
Markings
1
Utilities
8
Wood
Products
&
Furniture
5
*
The
number
of
applications
totals
219.
However,
this
may
be
less
than
the
number
of
sources
affected.
For
examples,
controls
applying
to
all
service
stations
in
an
area
could
affect
more
than
one
service
station.

6.0
Other
Considerations
The
Phase
2
ozone
implementation
rule
economic
assessment
included
designated
non­
attainment
areas
thought
to
have
a
potential
difference
in
cost
as
a
result
of
adopting
a
less
flexible
as
opposed
to
a
more
flexible
implementation
framework.
The
scope
of
the
quantitative
assessment
included
estimates
of
the
cost,
emission
reduction,
energy,
and
economic
impacts
of
adopting
a
less
flexible
framework
relative
to
the
regulatory
baseline:
the
more
flexible
framework.

However,
there
are
also
other
considerations
which
are
addressed
qualitatively.
These
include
the
potential
consequences
of
the
following
:
°
the
Clean
Air
Interstate
Rule
(
CAIR)
and
consultation
recommendation
°
alternative
reasonable
further
progress
(
RFP)
scenarios
°
RFP
requirements
determined
from
an
emissions
inventory
from
a
more
recent
year
such
as
2004,
not
a
2002
°
assuming
a
Subpart
1
area
requests
and
receives
an
attainment
date
extension
and
has
to
comply
with
RFP
requirements
using
a
2002
emissions
inventory
°
the
Reformulated
Gasoline
Requirement
(
RFG)

6.1
CAIR
and
Recommended
Consultations.

EPA
issued
CAIR
under
Section
110(
a)(
2)(
d)
to
require
states
to
control
emissions
that
significantly
contribute
to
nonattainment,
or
interfere
with
maintenance,
of
the
PM2.5
or
8­
hour
ozone
national
ambient
air
quality
standards
by
downwind
areas
in
other
states.
Reductions
are
required
in
two
phases;
for
NOx,
compliance
with
the
initial
NOx
cap
must
be
achieved
by
2009.
EPA
has
encouraged
states
to
achieve
reductions
in
SO2
and
NOx
emissions
from
electrical
generating
units
(
EGUs)
25MW
and
greater
under
an
EPA
administered
multi­
state
trading
8­
29­
05.
Fifth
Draft
of
the
Second
Addendum
to
the
O3
Implementation
Cost,
Energy,
and
Economic
Impact
Assessment.

10For
example,
8­
hour
non­
attainment
areas
designated
as
moderate
must
fulfill
their
RFP
obligations
by
12­
31­
08.

11The
NOx
reduction
outside
the
non­
attainment
areas
for
the
simulated
local
strategy
had
to
be
from
the
same
state
as
the
non­
attainment
area
but
could
be
no
farther
than
200km
from
the
nonattainment
area.

26
program.

CAIR
and
the
state
plans
designed
to
attain
and
maintain
the
8­
hour
ozone
standard
in
individual
non­
attainment
areas,
will
work
together
to
promote
attainment
of
the
8­
hour
ozone
standard.
For
example,
to
the
extent
that
CAIR
controls
improve
air
quality
in
a
downwind
state,
the
downwind
state
will
have
lower
emission
reduction
targets
for
attaining
and
maintaining
the
8­
hour
ozone
standard.
In
addition,
CAIR
emission
reductions
in
a
state
will
help
the
state's
own
nonattainment
areas
meet
the
8­
hour
ozone
standard,
and
reductions
closer
to
the
violating
monitor
generally
will
have
greater
impact.
Depending
on
the
timing
of
the
CAIR
emission
reductions,
CAIR
emission
reductions
in
and
nearby
nonattainment
areas
also
can
help
satisfy
reasonable
further
progress
requirements.
10
A
simulated
local
control
strategy
looked
a
16
areas
projected
to
be
in
non­
attainment
in
2009
and
2010
without
CAIR
in
place.
The
strategy
predicted
reductions
in
NOx
emissions
from
25MW
and
larger
EGUs
of
about
200
thousand
tons
per
year
within
the
non­
attainment
areas
and
nearby.
11
The
CAIR
and
local
control
strategy
NOx
reductions
were
estimated
off
the
same
"
base
case"
emission
inventory.
However,
the
200
thousand
tons
of
local
control
strategy
NOx
reductions
are
not
in
addition
to
the
NOx
reductions
resulting
from
the
CAIR.
But,
the
distribution
of
NOx
emission
reductions
given
only
the
CAIR
requirement
may
be
different
from
a
situation
where
there
is
both
the
CAIR
as
well
as
ozone
attainment
plan
requirements.

There
is
analytical
uncertainty
which
clouds
the
comparison
between
CAIR
and
the
local
control
strategy
NOx
emissions
reductions
for
specific
EGUs.
Some
of
the
analytical
uncertainty
stems
from
the
fact
that
the
CAIR
simulations
used
a
market
framework
and
greater
adjustment
possibilities
for
the
electrical
generating
units.
For
example,
in
those
simulations,
there
could
be
reduced
power
output
at
some
units.
The
local
control
strategy
simulation
used
an
engineering
cost
approach.
This
approach
did
not
provide
for
price
adjustments
in
factor
markets
or
price
demand
elasticity
effects
in
product
markets.
Perhaps
more
importantly,
some
of
the
analytical
uncertainty
results
from
the
inability
to
accurately
forecast
what
state
and
local
air
quality
officials
will
require
of
the
electrical
generating
units
in
their
ozone
NAAQS
attainment
plans.

Despite
those
uncertainties,
NOx
emissions
for
25MW
and
above
EGUs
under
the
local
control
strategy
analysis
were
compared
to
emissions
for
the
same
set
of
units
under
the
CAIR.
In
some
non­
attainment
and
nearby
areas,
there
were
no
differences
in
the
predicted
NOx
levels.
For
other
areas,
under
the
CAIR,
there
were
lower
predicted
NOx
emissions
(
meaning
more
emission
8­
29­
05.
Fifth
Draft
of
the
Second
Addendum
to
the
O3
Implementation
Cost,
Energy,
and
Economic
Impact
Assessment.

27
reductions).
And,
for
still
other
areas,
there
were
lower
predicted
NOx
emissions
(
meaning
more
emission
reductions)
with
the
local
control
strategy
simulation.

Regardless
of
the
simulations
and
comparisons,
the
economic
entities
that
own
the
electrical
generating
units
must
make
decisions
how
to
meet
the
CAIR
as
well
as
other
state
and
local
NOx
emission
reduction
provisions.
The
CAIR
implementation
plans
are
due
in
2006.
Ozone
nonattainment
areas
must
submit
plan
requirements
by
2007.
Without
consultation
with
state
and
local
authorities,
an
optimal
strategy
for
CAIR
compliance
alone
may
not
be
optimal
for
compliance
with
both
the
CAIR
and
O3
attainment
plan
requirements.
Power
companies
can
reduce
regulatory
uncertainty
and
lower
cost
by
consulting
with
the
state
and
local
air
quality
officials
early.
Similarly,
air
quality
officials
who
are
concerned
with
meeting
air
quality
improvement
requirements
at
lower
cost
may
also
wish
to
engage
power
companies
and
other
emission
sources
who
may
face
multiple
environmental
requirements
within
a
short
time
period.
Achieving
tarted
reductions
from
certain
EGUs
can
lower
the
overall
cost
of
the
local
attainment
strategy
where
the
incremental
cost
of
targeted
EGU
emission
reductions
is
less
than
the
cost
of
achieving
similar
reductions
and
air
quality
improvements
from
other
types
of
sources.

The
intent
of
these
consultations
would
not
be
to
upset
market
behavior
or
incentives.
Furthermore,
we
anticipate
that
these
consultations
will
affect
individual
control
decisions
for
a
few
areas.

6.2
Alternative
Reasonable
Further
Progress
Scenarios
6.2.1
Using
a
2004
Emissions
Inventory,
not
2002,
for
Calculating
the
RFP
Requirement.
RFP
requirements
apply
to
Subpart
2
moderate
and
above
areas
as
well
as
Subpart
1
areas
that
require
an
attainment
date
beyond
5
years
from
designation.
Emission
reductions
from
state
and
federal
rules
promulgated
since
the
passage
of
the
1990
amendments
may
be
used
as
credits
against
the
RFP
requirement.
However,
emission
reductions
from
meeting
pre­
1990
federal
rules
and
state
obligations
are
not
creditable
toward
meeting
the
15%
RFP
requirement.

The
15%
is
a
percentage
of
certain
(
e.
g.
VOC)
anthropogenic
emissions
during
the
ozone
season
for
a
particular
year.
If
the
year
is
2002,
the
RFP
requirement
is
15%
of
the
2002
ozone
season
emissions
for
VOC
and/
or
NOx.
If
the
year
is
2004,
the
requirement
is
15%
of
2004
ozone
season
emissions.
If
emissions
are
expected
to
decline
overtime,
a
later
year
for
calculating
the
15%
would
mean
a
smaller
absolute
RFP
requirement.
For
example,
15%
of
1000
is
more
than
15%
of
750.

But,
certain
non­
attainment
areas
may
forego
RFP
emissions
reduction
credits
by
using
a
2004
emissions
inventory
in
lieu
of
a
2002
emissions
inventory.
For
example,
the
State
of
Texas
implemented
its
NOx
emission
reduction
strategy
between
2002
and
2004.
In
addition,
New
York
8­
29­
05.
Fifth
Draft
of
the
Second
Addendum
to
the
O3
Implementation
Cost,
Energy,
and
Economic
Impact
Assessment.

12The
date
for
meeting
the
15%
RFP
requirement
is
determined
by
2
factors.
The
first
is
a
date
6
years
from
the
inventory
used
to
calculate
the
requirement.
That
would
be
2010
using
the
2004
inventory.
The
second
factor
is
assurance
that
the
RFP
requirement
is
met
as
expeditiously
as
practicable.
For
example,
given
that
emission
reductions
to
attain
and
maintain
the
8­
hour
standard
for
Subpart
2
moderate
areas
must
be
met
at
the
start
of
the
2009
ozone
season,
that
is
the
binding
factor.
And,
the
RFP
requirement
based
on
a
2004
emissions
inventory
must
be
met
by
at
least
the
start
of
the
2009
ozone
season.

28
City
invested
heavily
in
low
emitting
diesel
construction
equipment
after
September
11,
2001.
But,
these
emission
reductions
are
not
creditable
toward
achieving
a
15%
RFP
requirement
if
the
2004
emissions
inventory
is
used.

Another
consideration
in
assessing
use
of
a
2002
versus
2004
emissions
inventory
to
determine
the
RFP
requirement
is
how
much
time
is
provided
for
the
regulated
sources
to
meet
the
RFP
requirement
and
how
much
time
is
provided
the
states
to
develop
and
submit
the
RFP
plan
to
EPA.
For
Subpart
2
areas
that
are
classified
as
moderate
or
higher,
the
first
6
year
(
15%)
RFP
requirement
using
the
2002
emissions
inventory
as
a
base
must
be
met
by
12­
31­
08.
The
state
RFP
plans
are
due
to
EPA
by
6­
15­
07.
For
states
using
a
2004
emissions
inventory,
the
RFP
plan
is
also
due
6­
15­
07.
For
Subpart
2
areas
that
are
classified
as
moderate
or
higher
choosing
to
use
the
2004
emissions
inventory,
the
RFP
requirement
must
be
met
at
the
start
of
the
ozone
season
in
2009.12
In
areas
with
a
12
month
ozone
season,
the
RFP
requirement
would
have
to
be
met
by
1­
01­
09.
For
affected
areas
with
an
ozone
season
starting
in
April,
use
of
the
2004
inventory
may
afford
regulated
sources
another
3
months
to
meet
the
RFP
requirements.

Yet
another
consideration
for
states
looking
at
the
choice
of
a
2002
versus
a
2004
emission
inventory
for
calculating
the
15%
RFP
requirement
is
the
amount
of
additional
effort
to
produce
a
quality
assured
emissions
inventory.
The
2002
emissions
inventory
is
available.
It
was
prepared
to
fulfill
the
triennial
emissions
inventory
requirements
under
40
CFR
51,
subpart
A.
Under
those
provisions,
the
next
triennial
inventory
will
be
developed
for
the
year
2005.
But,
with
a
1
to
3
year
time
lag
for
quality
assurance
and
the
need
to
have
public
review
and
comment
on
the
RFP
plan
which
is
due
to
EPA
6­
15­
07,
the
use
of
the
2005
inventory
for
determining
the
15%
RFP
requirements
may
not
be
feasible.
However,
with
a
willingness
on
the
part
of
the
state
to
spend
the
additional
resources
to
expedite
data
collection
and
quality
assurance
activities,
a
quality
assured
2004
emissions
inventory
may
be
available
for
use
in
determining
the
15%
RFP
requirement.

But,
a
consideration
that
affected
state
and
local
governments
may
want
to
undertake
before
seriously
considering
an
inventory
other
than
2002
is
whether
the
RFP
requirement
using
the
2002
emissions
inventory
presents
a
substantial
burden.
In
simulations
for
many
areas
(
See
Technical
Appendix
A
Table
4),
a
projected
2008
inventory
was
compared
to
one
for
2002.
Taking
into
account
the
creditable
and
non­
creditable
emission
reductions
over
this
period,
the
more
flexible
RFP
requirements
for
most
of
the
areas
were
met
under
base
case
conditions.
8­
29­
05.
Fifth
Draft
of
the
Second
Addendum
to
the
O3
Implementation
Cost,
Energy,
and
Economic
Impact
Assessment.

13See
Technical
Memo
from
Frank
Divitta
of
E.
H.
Pechan
to
Allen
C.
Basala
of
EPA
7­
27­
05.

14Of
course,
this
analysis
does
not
include
Subpart
1areas
in
California.
For
those
areas,
we
do
not
know
if
they
will
meet
the
15%
in
the
base
case
or
if
they
will
submit
a
plan
showing
demonstrating
attainment
in
5
years.

29
6.2.2
RFP
requirement
for
a
Subpart
1
area
requiring
more
than
5
years
to
attain
the
8­
hour
standard.
Base
case
air
quality
modeling
(
without
consideration
of
CAIR)
suggests
that
Buffalo­
Niagra
Falls,
a
Subpart
1
"
moderate­
like"
area,
would
remain
above
the
standard
in
2010
without
further
emission
reductions.
EPA
does
not
know
whether
or
not
the
state
will
submit
an
attainment
demonstration
showing
attainment
in
5
years.
Whether
or
not
attainment
can
be
demonstrated
in
5
years
may
be
dependent
upon
reductions
in
upwind
emissions
as
a
result
of
the
CAIR
and
Canadian
emission
reduction
programs
as
well
as
reductions
in
mobile
and
area
source
emissions
from
additional
local
controls
in
and
nearby
Buffalo­
Niagra
Falls.

However,
to
analyze
the
potential
consequences
if
the
area's
attainment
date
was
longer
than
5
years,
an
assessment
of
the
projected
2008
emissions
inventory
and
the
RFP
requirement
off
the
2002
emissions
inventory
was
conducted.
The
assessment
showed
that
under
base
case
conditions,
a
15%
VOC
only
RFP
requirement
would
be
met
with
an
additional
116
tons
of
emission
reductions
in
2008.
In
the
case
of
a
15%
Nox
requirement,
the
area
would
achieve
emission
reductions
greater
than
the
15%
requirement
under
base
case
conditions.
13
Subpart
1
moderate
like
areas
can
use
percentage
reductions
in
either
VOC
or
NOx
emission
to
fulfill
the
15%
requirement.
In
this
assessment,
the
15%
requirement
is
estimated
to
be
fulfilled
without
additional
expenditures.
14
6.3
Reformulated
Gasoline
Requirements
(
RFG)

The
Clean
Air
Act
of
1990
identifies
criteria
met
by
9
areas
that
must
meet
RFG
requirements.
Those
areas
are
Baltimore,
Chicago,
Hartford,
Houston,
Los
Angeles,
Milwaukee,
New
York,
Philadelphia,
and
San
Diego.
See
Section
211(
k)(
10)(
D).
There
are
also
areas
which
were
reclassified
as
severe
under
the
1­
hour
standard
under
section
181(
b)
of
the
Clean
Air
Act.
These
areas
include
Atlanta,
Baton
Rouge,
Sacramento,
San
Joaquin
Valley,
and
Washington,
DC
(
which
was
already
an
opt
in
area).
However,
none
of
these
bump
up
areas
are
classified
as
severe
or
above
under
the
8­
hour
ozone
national
ambient
air
quality
standard
(
NAAQS).

As
stated
in
the
preamble,
today's
rule
specifies
that
the
nine
original
RFG
mandatory
areas
must
continue
to
use
RFG
at
least
until
they
are
redesignated
to
attainment
for
the
8­
hour
standard.
Similarly,
areas
that
have
been
reclassified
as
severe
areas
under
section
181(
b)
of
the
Clean
Air
Act
for
the
1­
hour
ozone
NAAQS,
and
which
were
not
redesignated
to
attainment
for
the
1­
hour
NAAQS
prior
to
its
revocation,
must
continue
to
use
RFG
at
least
until
they
are
redesignated
to
attainment
for
the
8­
hour
standard.
This
does
not
change
or
affect
any
discretion
EPA
may
8­
29­
05.
Fifth
Draft
of
the
Second
Addendum
to
the
O3
Implementation
Cost,
Energy,
and
Economic
Impact
Assessment.

30
otherwise
have
under
the
RFG
provisions
to
modify
or
remove
RFG
requirements.
The
EPA
is
reserving
for
future
consideration
what
RFG
requirements
apply
to
areas
that
were
reclassified
as
severe
under
the
1­
hour
standard,
but
were
redesignated
to
attainment
for
that
standard
prior
to
its
revocation.
The
only
such
area
that
was
redesignated
to
attainment
prior
to
revocation
of
the
1­
hour
standard
is
Atlanta,
Georgia.
The
EPA
is
also
reserving
for
future
consideration
whether
areas
must
continue
using
RFG
after
they
are
redesignated
to
attainment
for
the
8­
hour
standard,
for
the
original
nine
mandatory
areas
as
well
as
the
areas
reclassified
to
severe.

The
RFG
requirements
result
from
provisions
in
the
Clean
Air
Act
and
should
continue
to
deliver
air
quality
improvement
benefits
for
these
14
areas
relative
to
no
RFG
requirement.
The
cost
of
a
potential
requirement
to
continue
RFG
after
an
area
is
redesignated
in
attainment
of
the
8­
hour
standard
would
depend
on
whether
the
area
could
maintain
the
standard
without
RFG
and
the
state's
choices
regarding
which
control
measures
can
be
waived
(
or
moved
to
the
contingency
measures
column).
If
the
RFG
measure
were
needed
for
an
area
to
maintain
air
quality
meeting
the
8­
hour
standard,
a
potential
requirement
to
continue
RFG
would
impose
no
added
cost
relative
to
the
cost
of
maintaining
the
standard.
If
the
area
could
maintain
the
standard
without
RFG
but
with
continuation
of
other
emission
reducing
measures,
the
incremental
cost
of
continuing
the
RFG
requirement
would
depend
on
the
cost
of
RFG
versus
the
cost
of
alternative
measures
to
maintain
the
air
quality
standard.
