
[Federal Register Volume 80, Number 232 (Thursday, December 3, 2015)]
[Proposed Rules]
[Pages 75705-75778]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-29796]



[[Page 75705]]

Vol. 80

Thursday,

No. 232

December 3, 2015

Part II





Environmental Protection Agency





-----------------------------------------------------------------------





40 CFR Parts 52, 78, and 97





Cross-State Air Pollution Rule Update for the 2008 Ozone NAAQS; 
Proposed Rules

  Federal Register / Vol. 80 , No. 232 / Thursday, December 3, 2015 / 
Proposed Rules  

[[Page 75706]]


-----------------------------------------------------------------------

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 52, 78, and 97

[EPA-HQ-OAR-2015-0500; FRL-9935-25-OAR]
RIN 2060-AS05


Cross-State Air Pollution Rule Update for the 2008 Ozone NAAQS

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: The primary purpose of this proposal is to address interstate 
air quality impacts with respect to the 2008 ozone National Ambient Air 
Quality Standards (NAAQS). The EPA promulgated the Cross-State Air 
Pollution Rule (CSAPR) on July 6, 2011, to address interstate transport 
of ozone pollution under the 1997 ozone NAAQS and fine particulate 
matter (PM2.5) under the 1997 and 2006 PM2.5 
NAAQS. The EPA is proposing to update CSAPR to address interstate 
emission transport with respect to the 2008 ozone NAAQS. This proposal 
also responds to the July 28, 2015 remand by the Court of Appeals for 
the District of Columbia Circuit of certain states' ozone-season 
nitrogen oxides (NOX) emissions budgets established by 
CSAPR. This proposal also updates the status of certain states' 
outstanding interstate ozone transport obligations with respect to the 
1997 ozone NAAQS, for which CSAPR provided a partial remedy.
    This proposal finds that ozone season emissions of NOX 
in 23 eastern states affect the ability of downwind states to attain 
and maintain the 2008 ozone NAAQS. These emissions can be transported 
downwind as NOX or, after transformation in the atmosphere, 
as ozone. For these 23 eastern states, the EPA proposes to issue 
Federal Implementation Plans (FIPs) that generally update the existing 
CSAPR NOX ozone-season emissions budgets for electricity 
generating units (EGUs) and implement these budgets via the CSAPR 
NOX ozone-season allowance trading program. The EPA would 
finalize a FIP for any state that does not have an approved SIP 
addressing its contribution by the date this rule is finalized. The EPA 
is proposing implementation starting with the 2017 ozone season. In 
conjunction with other federal and state actions, these requirements 
would assist downwind states in the eastern United States in attaining 
and maintaining the 2008 ozone standard.

DATES: Comments must be received on or before January 19, 2016. Under 
the Paperwork Reduction Act (PRA), comments on the information 
collection provisions are best assured of consideration if the Office 
of Management and Budget (OMB) receives a copy of your comments on or 
before January 4, 2016.
    Public hearing. The EPA will be holding one public hearing on the 
proposed Cross-State Air Pollution Rule Update for the 2008 Ozone 
National Ambient Air Quality Standards. The hearing will be held to 
accept oral comments on the proposal. The hearing will be held on 
December 17, 2015 in Washington, DC. The hearing will begin at 9 a.m. 
EST and will conclude at 8 p.m. EST. Additional information for this 
public hearing is available in a separate Federal Register notice and 
at http://www2.epa.gov/airmarkets/proposed-cross-state-air-pollution-update-rule.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-
OAR-2015-0500, to the Federal eRulemaking Portal: http://www.regulations.gov. Follow the online instructions for submitting 
comments. Once submitted, comments cannot be edited or withdrawn. The 
EPA may publish any comment received to its public docket. Do not 
submit electronically any information you consider to be Confidential 
Business Information (CBI) or other information whose disclosure is 
restricted by statute. Multimedia submissions (audio, video, etc.) must 
be accompanied by a written comment. The written comment is considered 
the official comment and should include discussion of all points you 
wish to make. The EPA will generally not consider comments or comment 
contents located outside of the primary submission (i.e. on the web, 
cloud, or other file sharing system). For additional submission 
methods, the full EPA public comment policy, information about CBI or 
multimedia submissions, and general guidance on making effective 
comments, please visit http://www2.epa.gov/dockets/commenting-epa-dockets.

FOR FURTHER INFORMATION CONTACT: Mr. David Risley, Clean Air Markets 
Division, Office of Atmospheric Programs (Mail Code 6204M), 
Environmental Protection Agency, 1200 Pennsylvania Avenue NW., 
Washington, DC 20460; telephone number: (202) 343-9177; email address: 
Risley.David@epa.gov.

SUPPLEMENTARY INFORMATION: 

Preamble Glossary of Terms and Abbreviations

    The following are abbreviations of terms used in the preamble.

CAA or Act Clean Air Act
CAIR Clean Air Interstate Rule
CAMx Comprehensive Air Quality Model with Extensions
CBI Confidential Business Information
CEMS Continuous Emission Monitoring Systems
CFR Code of Federal Regulations
CSAPR Cross-State Air Pollution Rule
EGU Electric Generating Unit
EPA U.S. Environmental Protection Agency
FIP Federal Implementation Plan
FR Federal Register
GWh Gigawatt hours
ICR Information Collection Request
IPM Integrated Planning Model
Km Kilometer
lb/mmBtu Pounds per Million British Thermal Unit
LNB Low-NOX Burners
mmBtu Pounds per Million British Thermal Unit
MOVES Motor Vehicle Emission Simulator
NAAQS National Ambient Air Quality Standard
NBP NOX Budget Trading Program
NEI National Emission Inventory
NOX Nitrogen Oxides
NODA Notice of Data Availability
NSPS New Source Performance Standard
OFA Overfire Air
PM2.5 Fine Particulate Matter
PPB Parts Per Billion
RIA Regulatory Impact Analysis
SC-CO2 Social Cost of Carbon
SCR Selective Catalytic Reduction
SIP State Implementation Plan
SMOKE Sparse Matrix Operator Kernel Emissions
SNCR Selective Non-catalytic Reduction
SO2 Sulfur Dioxide
TSD Technical Support Document

Table of Contents

I. Executive Summary
    A. Purpose of Regulatory Action
    B. Major Provisions
    C. Benefits and Costs
II. General Information
    A. To Whom Does the Proposed Action Apply
III. Air Quality Issues Addressed and Overall Approach for the 
Proposed Rule
    A. The Interstate Transport Challenge Under the 2008 Ozone 
Standard
    1. Background on the Overall Nature of the Interstate Ozone 
Transport Problem
    2. Events Affecting Application of the Good Neighbor Provision 
for the 2008 Ozone NAAQS
    B. Proposed Approach To Address Ozone Transport Under the 2008 
Ozone NAAQS via FIPS
    1. The CSAPR Framework
    2. Partial Versus Full Resolution of Transport Obligation
    3. Why We Focus on Eastern States
    4. Short-Term NOX Emissions
    C. Responding to the Remand of CSAPR NOX Ozone-Season 
Emissions Budgets

[[Page 75707]]

    D. Addressing the Status of Outstanding Transport Obligations 
for the 1997 Ozone NAAQS
IV. Legal Authority
    A. EPA's Authority for the Proposed Rule
    1. Statutory Authority
    2. FIP Authority for Each State Covered by the Proposed Rule
V. Analyzing Downwind Air Quality and Upwind-State Contributions
    A. Overview of Air Quality Modeling Platform
    B. Emission Inventories
    1. Foundation Emission Inventory Data Sets
    2. Development of Emission Inventories for EGUs
    3. Development of Emission Inventories for Non-EGU Point Sources
    4. Development of Emission Inventories for Onroad Mobile Sources
    5. Development of Emission Inventories for Commercial Marine 
Category 3 (Vessel)
    6. Development of Emission Inventories for Other Nonroad Mobile 
Sources
    7. Development of Emission Inventories for Nonpoint Sources
    C. Air Quality Modeling to Identify Nonattainment and 
Maintenance Receptors
    D. Pollutant Transport From Upwind States
    1. Air Quality Modeling To Quantify Upwind State Contributions
    2. Application of Screening Threshold
VI. Quantifying Upwind-State EGU NOX Reduction Potential 
to Reduce Interstate Ozone Transport for the 2008 NAAQS
    A. Introduction
    B. NOX Mitigation Strategies
    1. EGU NOX Mitigation Strategies
    2. Non-EGU NOX Mitigation Strategies
    C. Uniform EGU Cost Thresholds for Assessment
    D. Assessing Cost, EGU NOX Reductions, and Air 
Quality
    E. Quantifying State Emissions Budgets
VII. Implementation Using the Existing CSAPR Ozone-Season Allowance 
Trading Program and Relationship to Other Rules
    A. Background
    B. FIP Requirements and Key Elements of the CSAPR Trading 
Programs
    1. Applicability
    2. State Budgets
    3. Allocations of Emission Allowances
    4. Variability Limits, Assurance Levels, and Penalties
    5. Implementation Approaches for Transitioning the Existing 
CSAPR NOX Ozone-Season Program to Address Transport for a 
Newer NAAQS
    6. Compliance Deadlines
    7. Monitoring and Reporting and the Allowance Management System
    8. Recordation of Allowances
    C. Submitting a SIP
    1. 2018 SIP Option
    2. 2019 and Beyond SIP Option
    3. SIP Revisions That Do Not Use the CSAPR Trading Program
    4. Submitting a SIP to Participate in CSAPR for States Not 
Included in This Proposal
    D. Title V Permitting
    E. Relationship to Other Emission Trading and Ozone Transport 
Programs
    1. Interactions With Existing CSAPR Annual Programs, Title IV 
Acid Rain Program, NOX SIP Call, 176A Petition, and Other 
State Implementation Plans
    2. Other Federal Rulemakings
VIII. Costs, Benefits, and Other Impacts of the Proposed Rule
IX. Summary of Proposed Changes to the Regulatory Text for the CSAPR 
FIPs and CSAPR Trading Program
X. Statutory and Executive Order Reviews
    A. Executive Order 12866: Regulatory Planning and Review and 
Executive Order 13563: Improving Regulation and Regulatory Review
    B. Paperwork Reduction Act (PRA)
    C. Regulatory Flexibility Act (RFA)
    D. Unfunded Mandates Reform Act (UMRA)
    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 Risks and Safety Risks
    H. Executive Order 13211: Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution or Use
    I. National Technology Transfer and Advancement Act (NTTAA)
    J. Executive Order 12898: Federal Actions To Address 
Environmental Justice in Minority Populations and Low-Income 
Populations
    K. Determinations Under Section 307(b)(1) and (d)

I. Executive Summary

    The EPA promulgated the original Cross-State Air Pollution Rule 
(CSAPR) on July 6, 2011, to address interstate ozone transport under 
the 1997 ozone National Ambient Air Quality Standards (NAAQS). The EPA 
is proposing to update CSAPR to address interstate emission transport 
with respect to the 2008 ozone NAAQS. The 2008 ozone NAAQS is an 8-hour 
standard that was set at 75 parts per billion (ppb). See 73 FR 16436 
(March 27, 2008).

A. Purpose of Regulatory Action

    The purpose of this rulemaking is to reduce interstate emission 
transport that significantly contributes to nonattainment, or 
interferes with maintenance, of the 2008 ozone NAAQS in the eastern 
U.S. To achieve this goal, this proposal would further limit ozone 
season (May 1 through September 30) NOX emissions from 
electric generating units (EGUs) in 23 eastern states.
    Ozone causes a variety of negative effects on human health, 
vegetation, and ecosystems. In humans, acute and chronic exposure to 
ozone is associated with premature mortality and a number of morbidity 
effects, such as asthma exacerbation. Ozone exposure can also 
negatively impact ecosystems.
    Studies have established that ozone occurs on a regional scale 
(i.e., thousands of kilometers) over much of the eastern U.S., with 
elevated concentrations occurring in rural as well as metropolitan 
areas. To reduce this regional-scale ozone transport, assessments of 
ozone control approaches have concluded that NOX control 
strategies are most effective. Further, studies have found that EGU 
NOX emission reductions can be effective in reducing 
individual 8-hour peak ozone concentrations and in reducing 8-hour peak 
ozone concentrations averaged across the ozone season.\1\ Specifically, 
studies indicate that EGUs' emissions, which are generally released 
higher in the air column through tall stacks and are significant in 
quantity, may disproportionately contribute to long-range transport of 
ozone pollution on a per-ton basis.\2\
---------------------------------------------------------------------------

    \1\ Summertime Zero-Out Contributions of regional NOX 
and VOC emissions to modeled 8-hour ozone concentrations in the 
Washington, DC; Philadelphia, PA, and New York City MSAs. 
``Contributions of regional air pollutant emissions to ozone and 
fine particulate matter-related mortalities in eastern U.S. urban 
areas''.
    \2\ Butler, et al., ``Response of Ozone and Nitrate to 
Stationary Source Reductions in the Eastern USA.''
---------------------------------------------------------------------------

    Clean Air Act (CAA or the Act) section 110(a)(2)(D)(i)(I), 
sometimes called the ``good neighbor provision,'' requires states \3\ 
to prohibit emissions that will contribute significantly to 
nonattainment in, or interfere with maintenance by, any other state 
with respect to any primary or secondary NAAQS.
---------------------------------------------------------------------------

    \3\ The term ``state'' has the same meaning as provided in CAA 
section 302(d) which specifically includes the District of Columbia.
---------------------------------------------------------------------------

    The EPA originally finalized CSAPR on July 6, 2011. See 76 FR 48208 
(August 8, 2011). CSAPR addresses the 1997 ozone NAAQS and the 1997 and 
2006 fine particulate matter (PM2.5) NAAQS.\4\ (See section 
IV for a discussion of CSAPR litigation and implementation.)
---------------------------------------------------------------------------

    \4\ CSAPR did not evaluate the 2008 ozone standard because the 
2008 ozone NAAQS was under reconsideration during the analytic work 
for the rule.
---------------------------------------------------------------------------

    CSAPR provides a 4-step process to address the requirements of the 
good neighbor provision for ozone or PM2.5 standards: (1) 
Identifying downwind receptors that are expected to have problems 
attaining or maintaining clean air standards (i.e., NAAQS); (2) 
determining which upwind states contribute to these identified problems 
in amounts sufficient to ``link'' them to the downwind air quality 
problems; (3)

[[Page 75708]]

for states linked to downwind air quality problems, identifying upwind 
emissions that significantly contribute to downwind nonattainment or 
interfere with downwind maintenance of a standard by quantifying 
available upwind emission reductions and apportioning upwind 
responsibility among linked states; and (4) for states that are found 
to have emissions that significantly contribute to nonattainment or 
interfere with maintenance of the NAAQS downwind, reducing the 
identified upwind emissions via regional emissions allowance trading 
programs. Each time the ozone or PM2.5 NAAQS are revised, 
this process can be applied for the new NAAQS. In this action, the EPA 
proposes to apply this 4-step process to update CSAPR with respect to 
the 2008 ozone NAAQS.
    Application of this process with respect to the 2008 ozone NAAQS 
provides the analytic basis for proposing to further limit ozone season 
EGU NOX emissions in 23 eastern states. However, the EPA 
seeks comment on this proposal from all states and stakeholders.
    The requirements of this proposal are in addition to existing, on-
the-books EPA and state environmental regulations, including the Clean 
Power Plan (CPP), which is included in the base case for this proposal. 
On August 3, 2015, President Obama and EPA announced the Clean Power 
Plan--a historic and important action on emissions that contribute to 
climate change. The CPP reduces carbon pollution from the power sector. 
Due to the compliance timeframes of the CPP, the EPA does not 
anticipate significant interactions with the CPP and the near-term 
ozone season EGU NOX emission reduction requirements under 
this proposal. However, states and utilities will be able to make their 
compliance plans with both programs in mind. Further discussion of the 
CPP is provided later in this proposal.
    In addition to reducing interstate ozone transport with respect to 
the 2008 ozone NAAQS, this proposal also addresses the status of 
outstanding interstate ozone transport obligations with respect to the 
1997 ozone NAAQS. Under CSAPR, the EPA promulgated FIPs for 25 states 
to address ozone transport under the 1997 NAAQS. For 11 of these 
states,\5\ in the 2011 final rule, CSAPR quantified ozone season 
NOX emission reductions that were not necessarily sufficient 
to eliminate all significant contribution to downwind nonattainment or 
interference with downwind maintenance of the 1997 ozone NAAQS 
downwind. Relying on base case modeling completed for this proposed 
rulemaking, this action proposes to find that the reductions required 
by those 11 FIPs were in fact sufficient to eliminate such significant 
contributions to downwind air quality problems for that standard.
---------------------------------------------------------------------------

    \5\ Alabama, Arkansas, Georgia, Illinois, Indiana, Kentucky, 
Louisiana, Mississippi, Missouri, Tennessee, and Texas. (See CSAPR 
Final Rule, 76 FR at 48220, and the CSAPR Supplemental Rule, 76 FR 
at 80760, December 27, 2011).
---------------------------------------------------------------------------

    This action also responds to the July 28, 2015 opinion of the Court 
of Appeals for the District of Columbia (D.C. Circuit) remanding 
without vacatur 11 states' CSAPR phase 2 NOX ozone-season 
emissions budgets. EME Homer City Generation, L.P. v. EPA, No. 795 F.3d 
118, 129-30, 138 (EME Homer City II). This action proposes to respond 
to that remand by replacing the budgets invalidated by the D.C. Circuit 
for nine states and by removing two states from the CSAPR 
NOX ozone-season trading program.\6\
---------------------------------------------------------------------------

    \6\ The EPA proposes to replace emissions budgets for Maryland, 
New Jersey, New York, North Carolina, Ohio, Pennsylvania, Texas, 
Virginia, and West Virginia. The EPA proposes to remove Florida and 
South Carolina from the CSAPR ozone-season NOX trading 
program.
---------------------------------------------------------------------------

    On October 1, 2015, the EPA strengthened the ground-level ozone 
NAAQS, based on extensive scientific evidence about ozone's effects on 
public health and welfare. This proposal to reduce interstate emission 
transport with respect to the 2008 ozone NAAQS is a separate and 
distinct regulatory action and is not meant to address the CAA's good 
neighbor provision with respect to the 2015 ozone NAAQS final rule.
    The Clean Air Act gives states the responsibility to address 
interstate pollution transport through good neighbor State 
Implementation Plans (SIPs). The EPA supports state efforts to submit 
good neighbor SIPs for the 2008 ozone NAAQS and has shared information 
with states to facilitate such SIP submittals. However, in the event 
that good neighbor SIPs are not submitted or cannot be approved, this 
rulemaking proposes Federal Implementation Plans (FIPs), as required 
under section 110(c)(1) of the CAA, to establish and implement EGU 
NOX reductions identified in this rule.
    On July 13, 2015, the EPA published a rule finding that 24 states 
\7\ failed to make complete submissions that address the requirements 
of section 110(a)(2)(D)(i)(I) related to the interstate transport of 
pollution as to the 2008 ozone NAAQS. See 80 FR 39961 (July 13, 2015) 
(effective August 12, 2015). The finding action triggered a 2-year 
deadline for the EPA to issue FIPs to address the good neighbor 
provision for these states by August 12, 2017.
---------------------------------------------------------------------------

    \7\ The states included in this finding of failure to submit 
are: Alabama, Arkansas, California, Florida, Georgia, Iowa, 
Illinois, Kansas, Massachusetts, Maine, Michigan, Minnesota, 
Mississippi, Missouri, New Hampshire, New Mexico, North Carolina, 
Oklahoma, Pennsylvania, South Carolina, Tennessee, Vermont, 
Virginia, and West Virginia.
---------------------------------------------------------------------------

    The EPA would finalize a FIP for a state that we find has failed to 
submit a complete good neighbor SIP or for which we issue a final rule 
disapproving its good neighbor SIP.
    The EPA proposes to align implementation of this proposed rule with 
relevant attainment dates for the 2008 ozone NAAQS, as required by the 
D.C. Circuit's decision North Carolina v. EPA.\8\ The EPA's final 2008 
Ozone NAAQS SIP Requirements Rule \9\ revised the attainment deadline 
for ozone nonattainment areas currently designated as moderate from 
December 2018 to July 2018 in accordance with the D.C. Circuit's 
decision in NRDC v. EPA.\10\ Because July 2018 falls during the 2018 
ozone season, the 2017 ozone season will be the last full season from 
which data can be used to determine attainment of the NAAQS by the July 
2018 attainment date. We believe that North Carolina compels the EPA to 
identify upwind reductions and implementation programs to achieve these 
reductions, to the extent possible, for the 2017 ozone season.
---------------------------------------------------------------------------

    \8\ 531 F.3d 896, 911-12 (D.C. Cir. 2008) (holding that EPA must 
coordinate interstate transport compliance deadlines with downwind 
attainment deadlines).
    \9\ 80 FR 12264, 12268; 40 CFR 51.1103.
    \10\ 777 F.3d 456, 469 (D.C. Cir. 2014).
---------------------------------------------------------------------------

    In order to apply the first and second steps of the CSAPR 4-step 
process to interstate transport for the 2008 ozone NAAQS, the EPA used 
air quality modeling to project ozone concentrations at air quality 
monitoring sites to 2017. The EPA evaluated these modeling projections 
for the air quality monitoring sites and considered current ozone 
monitoring data at these sites to identify receptors that are 
anticipated to have problems attaining or maintaining the 2008 ozone 
NAAQS. The EPA then used air quality modeling to evaluate contributions 
from upwind states to these downwind receptors.
    CSAPR and previous federal transport rules, such as the 
NOX SIP Call and the Clean Air Interstate Rule (CAIR)--
discussed in detail below--addressed collective contributions of ozone 
pollution from states in the eastern U.S. These rules did not address 
contributions in the 11 western

[[Page 75709]]

contiguous United States.\11\ There may be additional criteria to 
evaluate regarding collective contribution of transported air pollution 
in the West, such as those raised in EPA-state meetings to discuss 
approaches for determining how emissions in upwind states impact air 
quality in downwind states.\12\ Given that the near-term 2017 
implementation timeframe constrains the opportunity to conduct 
evaluations of additional criteria, the EPA proposes to focus this 
rulemaking on eastern states. This focus would not relieve western 
states of obligations to address interstate transport under the Act. 
The EPA and western states, working together, would continue to 
evaluate interstate transport on a case-by-case basis. While the EPA 
proposes to focus this rulemaking on eastern states, we seek comment on 
whether to include western states in this rule.
---------------------------------------------------------------------------

    \11\ For the purpose of this action, the western U.S. (or the 
West) consists of the 11 western contiguous states of Arizona, 
California, Colorado, Idaho, Montana, New Mexico, Nevada, Oregon, 
Utah, Washington, and Wyoming.
    \12\ For example, EPA-State meetings held in Research Triangle 
Park, NC on April 8, 2013 and Denver, Colorado on April 17, 2013.
---------------------------------------------------------------------------

    To apply the third step of the 4-step process, the EPA assessed 
ozone season NOX reductions that are achievable for the 2017 
ozone season. This assessment reveals that there is significant EGU 
NOX reduction potential that can be achieved for 2017 at 
reasonable cost, which would make meaningful and timely improvements in 
ozone air quality. The EPA applied a multi-factor test to evaluate EGU 
NOX reduction potential for 2017 and proposes to quantify 
EGU NOX ozone-season emissions budgets reflecting emission 
reductions from cost-effective pollution control measures achievable 
for the 2017 ozone season (estimated to obtain NOX 
reductions at a uniform cost of approximately $1,300 per ton).
    The EPA is not proposing to quantify non-EGU emission reductions to 
reduce interstate ozone transport for the 2008 ozone NAAQS at this time 
because we are uncertain that significant NOX mitigation is 
achievable from non-EGUs for the 2017 ozone season. The EPA will 
continue to evaluate whether non-EGU emission reductions can be 
achieved on a longer time-frame at a future date. However, as explained 
later in this document, this proposal seeks comment on a preliminary 
evaluation of stationary non-EGU NOX mitigation potential 
and on allowing a state to include legacy NOX SIP Call non-
EGUs in the CSAPR trading program by adopting a SIP revision that the 
EPA would approve as modifying the CSAPR trading program provisions 
with regard to that state.
    To evaluate full elimination of a state's significant contribution 
to nonattainment and interference with maintenance, EGU and non-EGU 
ozone season NOX reductions should both be evaluated. To the 
extent air quality impacts persist after implementation of the 
NOX reductions identified in this rulemaking, a final 
judgment on whether the proposed EGU NOX reductions 
represent a full or partial elimination of a state's good neighbor 
obligation for the 2008 NAAQS is therefore subject to an evaluation of 
the contribution to interstate transport from additional non-EGU 
emission sectors.
    However, the EPA believes that it is beneficial to implement, 
without further delay, EGU NOX reductions since they are 
achievable in the near term. Generally, notwithstanding that additional 
reductions may be required to fully address the states' interstate 
transport obligations, the proposed NOX emission reductions 
are needed for these states to eliminate their significant contribution 
to nonattainment and interference with maintenance of the 2008 ozone 
NAAQS and needed for downwind states with ozone nonattainment areas 
that are required to attain the standard by 2018.\13\
---------------------------------------------------------------------------

    \13\ The proposed requirements for one state, North Carolina, 
would fully eliminate that state's significant contribution to 
downwind air quality problems.
---------------------------------------------------------------------------

    At the same time, the EPA also notes that section 
110(a)(2)(D)(i)(I) of the CAA only requires upwind states to prohibit 
emissions that will significantly contribute to nonattainment or 
interfere with maintenance of the NAAQS in other states. It does not 
shift to upwind states the full responsibility for ensuring that all 
areas in other states attain and maintain the NAAQS. Downwind states 
also have control responsibilities because, among other things, the Act 
requires each state to adopt enforceable plans to attain and maintain 
air quality standards. The requirements established for upwind states 
through this proposed rule will supplement downwind states' local 
emission control strategies that, in conjunction with the certainty on 
maximum allowable upwind state EGU emissions that this proposed rule 
would provide, promote attainment and maintenance of the 2008 ozone 
NAAQS.
    To meet the fourth step of the 4-step process (i.e., 
implementation) the proposed FIPs contain enforceable measures 
necessary to achieve the emission reductions in each state. The 
proposed FIPs would require power plants in affected states (i.e., 
states that significantly contribute to ozone transport in the east) to 
participate in the CSAPR NOX ozone-season allowance trading 
program (as modified by the proposed changes described elsewhere in 
this notice). CSAPR's trading programs and EPA's prior emissions 
trading programs provide a proven implementation framework for 
achieving emission reductions. In addition to providing environmental 
certainty (i.e., a cap on emissions), these programs also provide 
regulated sources with flexibility in choosing compliance strategies. 
By using the existing CSAPR NOX ozone-season allowance 
trading program, the EPA is proposing to use an implementation 
framework that was shaped by notice and comment in previous rulemakings 
and reflects the evolution of these programs in response to court 
decisions. Further, this program is familiar to the EGUs that will be 
regulated under this rule, which means that monitoring, reporting, and 
compliance will be done as it already is under CSAPR's current ozone-
season and annual programs.\14\
---------------------------------------------------------------------------

    \14\ One state, Kansas, would have a new CSAPR ozone season 
requirement under this proposal. Kansas currently participates in 
the CSAPR NOX and SO2 annual programs. The 
remaining 22 states were included in the original CSAPR ozone-season 
program as to the 1997 ozone NAAQS.
---------------------------------------------------------------------------

    These FIP requirements, if finalized, would begin with the 2017 
ozone season and would continue for subsequent ozone seasons to ensure 
that upwind states included in this proposed rule meet their Clean Air 
Act obligation to address interstate emissions transport with respect 
to the 2008 ozone NAAQS for 2017 and future years. To the extent that 
emissions in an included state would otherwise exceed the promulgated 
emission level, these good neighbor EGU emissions limits will ensure 
that future emissions are consistent with states' ongoing good neighbor 
obligations. To the extent that emissions in an included state would be 
reduced for other reasons, for example planned lower-NOX 
emitting generation coming online, then those actions will help the 
state comply with its good neighbor requirements.
    Generally, for states that would be affected by one of the FIPs 
proposed in this action and that are already included in the CSAPR 
NOX ozone-season trading program to address interstate ozone 
transport for the 1997 NAAQS, this action proposes to revise the 
existing part 97 regulations that define that program to incorporate 
lower EGU NOX ozone-season emissions budgets for each of the 
affected states in order to reduce ozone transport for the 2008

[[Page 75710]]

ozone NAAQS.\15\ If finalized, compliance with these lower emissions 
budgets for the 2008 ozone NAAQS would also satisfy compliance with the 
existing higher emissions budgets for the 1997 ozone NAAQS. Therefore, 
the EPA proposes to replace the existing CSAPR emissions budgets (i.e. 
for the 1997 ozone NAAQS) for the affected states with the lower 
emissions budgets proposed to reduce ozone transport for the 2008 ozone 
NAAQS. Compliance with the final lower emissions budgets for the 2008 
ozone NAAQS would supersede compliance with the CSAPR NOX 
ozone-season budgets for the 1997 ozone NAAQS. This action would 
therefore respond to the remand of EME Homer City II with respect to 
the NOX ozone-season emissions budgets for nine states \16\ 
by replacing the budgets declared invalid by the court with revised 
budgets designed to address the 2008 ozone NAAQS.
---------------------------------------------------------------------------

    \15\ One state, Kansas, would have a new CSAPR ozone season 
requirement under this proposal. The remaining 22 states were 
included in the original CSAPR ozone-season program as to the 1997 
ozone NAAQS.
    \16\ The EPA proposes to replace emissions budgets for Maryland, 
New Jersey, New York, North Carolina, Ohio, Pennsylvania, Texas, 
Virginia, and West Virginia.
---------------------------------------------------------------------------

    The proposed FIPs, if finalized, would not limit states' 
flexibility in meeting their CAA requirements, as any state included in 
this proposed rule can submit a good neighbor SIP at any time that, if 
approved by the EPA, could replace the FIP for that state. 
Additionally, CSAPR already provides states with the option to submit 
abbreviated SIPs to customize the methodology for allocating 
NOX ozone-season allowances while participating in the 
ozone-season trading program and we propose to continue that approach 
in this rule.
    The EPA therefore proposes revisions to the Code of Federal 
Regulations, specifically 40 CFR part 97, subpart BBBBB (federal CSAPR 
NOX ozone-season trading program); 40 CFR 52.38(b) (rules on 
replacing or modifying the federal CSAPR NOX ozone-season 
trading program with a SIP); 40 CFR 52.540, 52.882, and 52.2140 (adding 
or limiting requirements for EGUs in certain individual states to 
participate in the CSAPR NOX ozone-season trading program); 
and 40 CFR 78.1 (modifying the list of decisions subject to 
administrative appeal procedures under part 78) to address interstate 
transport for the 2008 ozone NAAQS. In addition, various minor 
corrections are proposed to these CFR and other sections of parts 52, 
78, and 97 relating to the CSAPR ozone-season and annual trading 
programs.
    The 23 eastern states for which the EPA proposes to promulgate FIPs 
to reduce interstate ozone transport as to the 2008 ozone NAAQS are 
listed in Table I-1.

 Table I-A-1--Proposed List of Covered States for the 2008 8-Hour Ozone
                                  NAAQS
------------------------------------------------------------------------
                               State name
-------------------------------------------------------------------------
Alabama
Arkansas
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maryland
Michigan
Mississippi
Missouri
New Jersey
New York
North Carolina
Ohio
Oklahoma
Pennsylvania
Tennessee
Texas
Virginia
West Virginia
Wisconsin
------------------------------------------------------------------------

    For eastern states for which the EPA is not proposing FIPs in this 
action, the EPA notes that updates to the modeling for the final rule, 
made based on comments received on the proposal, could change the 
analysis as to which states significantly contribute to nonattainment 
or interfere with maintenance. In this regard, the final modeling could 
result in additional states being included in the final rule. 
Therefore, the EPA provides all data and methods necessary for all 
eastern states to comment on all aspects of this proposal in the Ozone 
Transport Policy Analysis TSD. This information includes EGU 
NOX ozone-season emissions budgets for all eastern states, 
in the event that final rule modeling demonstrates that additional 
states significantly contribute to downwind air quality problems.
    The EPA notes that the annual PM2.5 NAAQS was updated 
after CSAPR was promulgated (78 FR 306, January 15, 2013). However, 
this rulemaking does not address the 2012 PM2.5 standard. 
The EPA acknowledges that, in EME Homer City II, the D.C. Circuit also 
remanded without vacatur the CSAPR phase 2 SO2 emissions 
budgets as to four states. 795 F.3d at 129, 138. This proposal does not 
address the remand of these CSAPR phase 2 SO2 annual 
emissions budgets. The EPA intends to address the remand of the phase 2 
SO2 annual emissions budgets separately. The existing CSAPR 
emissions budgets and implementation programs (CSAPR SO2 
annual and NOX annual requirements), which address 
interstate transport for the 1997 and 2006 PM2.5 NAAQS, 
continue to apply at this time.

B. Major Provisions

    The major provision of this action are described in the remainder 
of this preamble and organized as follows: Section III describes the 
human health and environmental context, the EPA's overall approach for 
addressing interstate transport, and the EPA's response to the remand 
of certain CSAPR NOX ozone-season emissions budgets; section 
IV describes the EPA's legal authority for this action; section V 
describes the air quality modeling platform and emission inventories 
that the EPA used to identify downwind receptors of concern and upwind 
state ozone contributions to those receptors; section VI describes the 
EPA's proposed approach to quantify upwind state obligations in the 
form of EGU NOX emissions budgets; section VII details the 
implementation requirements including key elements of the CSAPR 
allowance trading program and deadlines for compliance; section VIII 
describes the expected costs, benefits, and other impacts of this 
proposed rule; section IX discusses proposed changes to the existing 
regulatory text for the CSAPR FIPs and the CSAPR trading programs; and 
section X discusses the statutes and executive orders affecting this 
rulemaking. The EPA invites comment on this proposed rulemaking.

C. Benefits and Costs

    The proposed rule would achieve near-term emission reductions from 
the power sector, lowering ozone season NOX in 2017 by 
85,000 tons, compared to baseline 2017 projections without the rule.
    Consistent with Executive Order 13563, ``Improving Regulation and 
Regulatory Review,'' we have estimated the costs and benefits of the 
proposed rule. Estimates here are subject to uncertainties discussed 
further in the Regulatory Impact Analysis (RIA) in the docket. The 
estimated net benefits of the proposed rule at a 3 percent discount 
rate are $700 million to $1.2 billion (2011$). The non-monetized 
benefits include reduced ecosystem effects and reduced visibility 
impairment. Discussion of the costs and benefits of the proposal is 
provided in preamble section VIII, below, and in the RIA,

[[Page 75711]]

which is found in the docket for this proposed rulemaking. The EPA's 
estimate of the proposed rule's costs and quantified benefits is 
summarized in Table I.C-1, below.

    Table I.C-1--Summary of Compliance Costs, Monetized Benefits, and
      Monetized Net Benefits of the Proposed Rule for 2017 (2011$)
------------------------------------------------------------------------
                                                 Impacts at 3 percent
                Description                   discount rate ($ millions)
------------------------------------------------------------------------
Annualized Compliance Costs\ a\............  $93.
Monetized benefits \b\.....................  700 to 1,200.
Net benefits (benefits-costs)..............  620 to 1,200.
------------------------------------------------------------------------
\a\ Total annualized social costs are estimated at a 3 percent discount
  rate. The social costs presented here reflect the EGU ozone season
  costs of complying with the proposed FIPs.
\b\ Total monetized benefits are estimated at a 3 percent discount rate.
  The total monetized benefits reflect the human health benefits
  associated with reducing exposure to ozone and PM2.5. It is important
  to note that the monetized benefits and co-benefits include many but
  not all health effects associated with pollution exposure. Benefits
  are shown as a range reflecting studies from Krewski et al. (2009)
  with Smith et al. (2009) to Lepeule et al. (2012) with Zanobetti and
  Schwartz (2008).

II. General Information

A. To whom does this action apply?

    This proposed rule affects EGUs, and regulates the following 
groups:

------------------------------------------------------------------------
                     Industry group                          NAICS *
------------------------------------------------------------------------
Fossil fuel-fired electric power generation............          221112
------------------------------------------------------------------------
* North American Industry Classification System.

    This table is not intended to be exhaustive, but rather provides a 
guide for readers regarding entities likely to be regulated by this 
action. This table lists the types of entities that the EPA is now 
aware could potentially be regulated by this action. Other types of 
entities not listed in the table could also be regulated. To determine 
whether your entity is regulated by this action, you should carefully 
examine the applicability criteria found in 40 CFR 97.504. If you have 
questions regarding the applicability of this action to a particular 
entity, consult the person listed in the FOR FURTHER INFORMATION 
CONTACT section.

III. Air Quality Issues Addressed and Overall Approach for the Proposed 
Rule

A. The Interstate Transport Challenge Under the 2008 Ozone Standard

1. Background on the Overall Nature of the Interstate Ozone Transport 
Problem
    Interstate transport of NOX emissions poses significant 
challenges with respect to the 2008 ozone NAAQS in the eastern U.S. and 
thus presents a threat to public health and welfare.
a. Nature of Ozone and the Ozone NAAQS
    Ground-level ozone is not emitted directly into the air, but is 
created by chemical reactions between NOX and volatile 
organic compounds (VOC) in the presence of sunlight. Emissions from 
electric utilities and industrial facilities, motor vehicles, gasoline 
vapors, and chemical solvents are some of the major sources of 
NOX and VOC.
    Because ground-level ozone formation increases with temperature and 
sunlight, ozone levels are generally higher during the summer. 
Increased temperature also increases emissions of volatile man-made and 
biogenic organics and can indirectly increase NOX emissions 
as well (e.g., increased electricity generation for air conditioning).
    The 2008 primary and secondary ozone standards are both 75 parts 
per billion (ppb) as an 8-hour level. Specifically, the standards 
require that the 3-year average of the fourth highest 24-hour maximum 
8-hour average ozone concentration may not exceed 75 ppb.
b. Ozone Transport
    Studies have established that ozone formation, atmospheric 
residence, and transport occurs on a regional scale (i.e., thousands of 
kilometers) over much of the eastern U.S., with elevated concentrations 
occurring in rural as well as metropolitan areas. While substantial 
progress has been made in reducing ozone in many urban areas, regional-
scale ozone transport is still an important component of peak ozone 
concentrations during the summer ozone season.
    The EPA has previously concluded in the NOX SIP Call, 
CAIR, and CSAPR that, for reducing regional-scale ozone transport, a 
NOX control strategy would be most effective. NOX 
emissions can be transported downwind as NOX or, after 
transformation in the atmosphere, as ozone. As a result of ozone 
transport, in any given location, ozone pollution levels are impacted 
by a combination of local emissions and emissions from upwind sources. 
The transport of ozone pollution across state borders compounds the 
difficulty for downwind states in meeting health-based air quality 
standards (i.e., NAAQS).
    Recent assessments of ozone, for example those conducted for the 
October 2015 Regulatory Impact Analysis of the Final Revisions to the 
National Ambient Air Quality Standards for Ground-Level Ozone (EPA-452/
R-15-007) continue to show the importance of NOX emissions 
on ozone transport. This analysis is in the docket for this proposal 
and can be also found at the EPA's Web site at: http://www3.epa.gov/ozonepollution/pdfs/20151001ria.pdf.
    There are five general categories of NOX emission 
sources: EGUs, non-EGU point, onroad mobile, non-road mobile, and area. 
Studies have found that EGU NOX emission reductions can be

[[Page 75712]]

effective in reducing individual 8-hour peak ozone concentrations and 
in reducing 8-hour peak ozone concentrations averaged across the ozone 
season. For example, a study that evaluates the effectiveness on ozone 
concentrations of EGU NOX reductions achieved under the 
NOX Budget Trading Program shows that regulating 
NOX emissions has been highly effective in reducing both 
ozone and dry-NO3 concentrations during the ozone season. 
Further, this study indicates that EGU emissions, which are generally 
released higher in the air column through tall stacks and are 
significant in quantity, may disproportionately contribute to long-
range transport of ozone pollution on a per-ton basis.\17\ Another 
study shows that EGU NOX emissions can contribute between 5 
ppb and 25 ppb to average 8-hour peak ozone concentrations in mid-
Atlantic metropolitan statistical areas.\18\
---------------------------------------------------------------------------

    \17\ Butler, et al., ``Response of Ozone and Nitrate to 
Stationary Source Reductions in the Eastern USA''.
    \18\ Summertime Zero-Out Contributions of regional 
NOX and VOC emissions to modeled 8-hour ozone 
concentrations in the Washington, DC; Philadelphia, PA, and New York 
City MSAs. ``Contributions of regional air pollutant emissions to 
ozone and fine particulate matter-related mortalities in eastern 
U.S. urban areas''.
---------------------------------------------------------------------------

    Previous regional ozone transport efforts, including the 
NOX SIP Call, CAIR, and CSAPR, required ozone season 
NOX reductions from EGUs to address interstate transport of 
ozone. The EPA has taken comment on regulating EGU NOX 
emissions to address interstate ozone transport in the notice-and-
comment process for these rulemakings. The EPA received no significant 
adverse comments in any of these proposals regarding the rules' focus 
on ozone season EGU NOX reductions to address interstate 
ozone transport.
    As described later in this notice, the EPA's analysis finds that 
the power sector continues to be capable of making NOX 
reductions at reasonable cost that reduce interstate transport with 
respect to ground-level ozone. EGU NOX emission reductions 
can be made in the near-term under this proposal by fully operating 
existing EGU NOX post-combustion controls (i.e., Selective 
Catalytic Reduction and Selective Non-Catalytic Reduction)--including 
optimizing NOX removal by existing, operational controls and 
turning on and optimizing existing idled controls; installation of (or 
upgrading to) state-of-the-art NOX combustion controls; and 
shifting generation to units with lower NOX emission rates. 
Further, additional assessment reveals that these available EGU 
NOX reductions would make meaningful and timely improvements 
in ozone air quality.
    The Clean Air Act's good neighbor provision requires states and the 
EPA to address interstate transport of air pollution that affects 
downwind states' ability to attain and maintain NAAQS. Other provisions 
of the CAA, namely sections 179B and 319(b), are available to deal with 
NAAQS exceedances not attributable to the interstate transport of 
pollution covered by the good neighbor provisions but caused by 
emission sources outside the control of a downwind state. These 
provisions address international transport and exceptional events, 
respectively.19 20
---------------------------------------------------------------------------

    \19\ The EPA recognizes that both in-state and upwind wildfires 
may contribute to monitored ozone concentrations. The EPA encourages 
all states to consider how the appropriate use of prescribed fire 
may benefit of public safety and health by resulting in fewer ozone 
exceedances for both the affected state and their neighboring 
states.
    \20\ The CAA and the EPA's implementing regulations, 
specifically the Exceptional Events Rule at 40 CFR 50.14, allow for 
the exclusion of air quality monitoring data from regulatory 
determinations when events, including wildland fires, contribute to 
NAAQS exceedances or violations if they meet certain requirements, 
including the criterion that the event be not reasonably 
controllable or preventable. Wildland fires can be of two types: 
Wildfire (unplanned) and prescribed fire (planned). Under the 
Exceptional Events Rule, wildfires are considered, by their nature, 
to be not reasonably controllable or preventable. Because prescribed 
fires on wildland are intentionally ignited for resource management 
purposes, to meet the not reasonably controllable or preventable 
criterion, they must be conducted under a certified Smoke Management 
Program or employ basic smoke management practices. Both types of 
wildland fire must also satisfy the other rule criteria. The EPA 
will soon propose revisions to the Exceptional Events Rule and 
release a draft guidance document, which applies the proposed rule 
revisions to wildfire events that could influence ozone 
concentrations. These actions, which the EPA intends to finalize in 
the summer of 2016, further clarify the treatment of wildland fires 
under the Exceptional Events Rule.
---------------------------------------------------------------------------

c. Health and Environmental Effects
    Exposure to ambient ozone causes a variety of negative effects on 
human health, vegetation, and ecosystems. In humans, acute and chronic 
exposure to ozone is associated with premature mortality and a number 
of morbidity effects, such as asthma exacerbation. In ecosystems, ozone 
exposure causes visible foliar injury, decreases plant growth, and 
affects ecosystem community composition. See the EPA's November 2014 
Regulatory Impact Analysis of the Proposed Revisions to the National 
Ambient Air Quality Standards for Ground-Level Ozone (EPA-452/P-14-
006), in the docket for this proposal and available on the EPA's Web 
site at: http://www.epa.gov/ttn/ecas/regdata/RIAs/20141125ria.pdf, for 
more information on the human health and welfare and ecosystem effects 
associated with ambient ozone exposure.
2. Events Affecting Application of the Good Neighbor Provision for the 
2008 Ozone NAAQS
    The 2008 revisions to the ozone NAAQS were promulgated on March 12, 
2008. See National Ambient Air Quality Standards for Ozone, Final Rule, 
73 FR 16436 (March 27, 2008). The revision of the NAAQS, in turn, 
triggered a 3-year deadline of March 12, 2011, for states to submit SIP 
revisions addressing infrastructure requirements under CAA sections 
110(a)(1) and 110(a)(2), including the good neighbor provision. During 
this 3-year SIP development period, on September 16, 2009, the EPA 
announced \21\ that it would reconsider the 2008 ozone NAAQS. To reduce 
the workload for states during the interim period of reconsideration, 
the EPA also announced its intention to propose staying implementation 
of the 2008 standards for a number of the requirements. On January 6, 
2010, the EPA proposed to revise the 2008 NAAQS for ozone from 75 ppb 
to a level within the range of 60 to 70 ppb. See 75 FR 2938 (January 
19, 2010). The EPA indicated its intent to issue final standards based 
upon the reconsideration by summer 2011.
---------------------------------------------------------------------------

    \21\ Fact Sheet. The EPA to reconsider Ozone Pollution 
Standards. http://www.epa.gov/groundlevelozone/pdfs/O3_Reconsideration_FACT%20SHEET_091609.pdf.
---------------------------------------------------------------------------

    On July 6, 2011, the EPA finalized CSAPR, in response to the DC 
Circuit's remand of the EPA's prior federal transport rule, CAIR. See 
76 FR 48208 (August 8, 2011). CSAPR addresses ozone transport under the 
1997 ozone NAAQS, but does not address the 2008 ozone standard, because 
the 2008 ozone NAAQS was under reconsideration during the analytic work 
for the rule.
    On September 2, 2011, consistent with the direction of the 
President, the Administrator of the Office of Information and 
Regulatory Affairs of the Office of Management and Budget returned the 
draft final 2008 ozone rule EPA had developed upon reconsideration to 
the Agency for further consideration.\22\ In view of this direction and 
the timing of the agency's ongoing periodic review of the ozone NAAQS 
required under CAA section 109 (as announced on September 29, 2008), 
the EPA decided to coordinate further proceedings on its voluntary 
reconsideration rulemaking of the 2008

[[Page 75713]]

ozone standard with that of its ongoing periodic review of the ozone 
NAAQS.\23\ Implementation for the original 2008 ozone standard was 
renewed. However, during this time period, a number of legal 
developments pertaining to the EPA's promulgation of CSAPR created 
uncertainty surrounding the EPA's statutory interpretation and 
implementation of the good neighbor provision.
---------------------------------------------------------------------------

    \22\ See Policy Assessment for the Review of the Ozone National 
Ambient Air Quality Standards, August 2014, http://www.epa.gov/ttn/naaqs/standards/ozone/data/20140829pa.pdf, at 1-9.
    \23\ Id.
---------------------------------------------------------------------------

    On August 21, 2012, the D.C. Circuit issued a decision in EME Homer 
City Generation, L.P. v. EPA addressing several legal challenges to 
CSAPR and holding, among other things, that states had no obligation to 
submit good neighbor SIPs until the EPA had first quantified each 
state's good neighbor obligation.\24\ According to that decision, the 
submission deadline for good neighbor SIPs under the CAA would not 
necessarily be tied to the promulgation of a new or revised NAAQS. 
While the EPA disagreed with this interpretation of the statute and 
sought review of the decision in the D.C. Circuit and the U.S. Supreme 
Court, the EPA complied with the D.C. Circuit's ruling during the 
pendency of its appeal. In particular, the EPA indicated that, 
consistent with the D.C. Circuit's opinion, it would not at that time 
issue findings that states had failed to submit SIPs addressing the 
good neighbor provision.\25\
---------------------------------------------------------------------------

    \24\ EME Homer City Generation, L.P. v. EPA, 696 F.3d 7, 31 
(D.C. Cir. 2012).
    \25\ See, e.g., Memorandum from the Office of Air and Radiation 
former Assistant Administrator Gina McCarthy to the EPA Regions, 
``Next Steps for Pending Redesignation Requests and State 
Implementation Plan Actions Affected by the Recent Court Decision 
Vacating the 2011 Cross-State Air Pollution Rule,'' November 19, 
2012; 78 FR 65559 (November 1, 2013) (final action on Florida 
infrastructure SIP submission for 2008 8-hour ozone NAAQS); 78 FR 
14450 (March 6, 2013) (final action on Tennessee infrastructure SIP 
submissions for 2008 8-hour ozone NAAQS); Final Rule, Findings of 
Failure To Submit a Complete State Implementation Plan for Section 
110(a) Pertaining to the 2008 Ozone National Ambient Air Quality 
Standard, 78 FR 2884 (January 15, 2013).
---------------------------------------------------------------------------

    On January 23, 2013, the Supreme Court granted the EPA's petition 
for certiorari.\26\ During 2013 and early 2014, as the EPA awaited a 
decision from the Supreme Court, the EPA initiated efforts and 
technical analyses aimed at identifying and quantifying state good 
neighbor obligations for the 2008 ozone NAAQS. As part of this effort, 
the EPA solicited stakeholder input and also provided states with, and 
requested input on, emissions inventories for 2011 (78 FR 70935, 
November 27, 2013) and inventory projections for 2018 (79 FR 2437, 
January 14, 2014).
---------------------------------------------------------------------------

    \26\ EPA v. EME Homer City Generation, L.P., 133 S. Ct. 2857 
(2013) (granting the EPA's and other parties' petitions for 
certiorari).
---------------------------------------------------------------------------

    On April 29, 2014, the Supreme Court reversed the D.C. Circuit's 
EME Homer City opinion on CSAPR and held, among other things, that 
under the plain language of the CAA, states must submit SIPs addressing 
the good neighbor provision within 3 years of promulgation of a new or 
revised NAAQS, regardless of whether the EPA first provides guidance, 
technical data, or rulemaking to quantify the state's obligation.\27\ 
Thus, the Supreme Court affirmed that states have an obligation in the 
first instance to address the good neighbor provision after 
promulgation of a new or revised NAAQS, a holding that also applies to 
states' obligation to address transport for the 2008 ozone NAAQS.
---------------------------------------------------------------------------

    \27\ EPA v. EME Homer City Generation, L.P., 134 S. Ct. 1584, 
1600-01 (2014).
---------------------------------------------------------------------------

    The Supreme Court holding affirmed that states were required to 
submit SIPs addressing the good neighbor provision with respect to the 
2008 ozone NAAQS by March 12, 2011. To the extent that states have 
failed to submit SIPs to meet this statutory obligation, then the EPA 
has not only the authority, but the obligation, to promulgate FIPs to 
address the CAA requirement.
    Following the remand of the case to the D.C. Circuit, the EPA 
requested that the court lift the CSAPR stay and toll the CSAPR 
compliance deadlines by three years. On October 23, 2014, the D.C. 
Circuit granted the EPA's request. The EPA issued an interim final rule 
to revise the regulatory deadlines in CSAPR to reflect the three-year 
delay in implementation. Accordingly, CSAPR phase 1 implementation 
began in 2015 and phase 2 will begin in 2017.\28\
---------------------------------------------------------------------------

    \28\ 79 FR 71663 (December 3, 2014).
---------------------------------------------------------------------------

    On March 6, 2015, the EPA's final 2008 Ozone NAAQS SIP Requirements 
Rule \29\ revised the attainment deadline for ozone nonattainment areas 
currently designated as moderate to July 2018. In order to demonstrate 
attainment by the deadline, the demonstration would have to be based on 
design values calculated using 2015 through 2017 ozone season data, 
since the July 2018 deadline does not afford a full ozone season of 
measured data. The EPA established this deadline in the 2015 Ozone SIP 
Requirements Rule after previously establishing a deadline of December 
31, 2018, that was vacated by the D.C. Circuit Court in Natural 
Resources Defense Council v. EPA.\30\
---------------------------------------------------------------------------

    \29\ 80 FR 12264, 12268 (Mar. 6, 2015); 40 CFR 51.1103.
    \30\ 777 F.3d 456 (D.C. Cir. 2014).
---------------------------------------------------------------------------

    On July 28, 2015, the D.C. Circuit issued its opinion regarding 
CSAPR on remand from the Supreme Court, EME Homer City II, 795 F.3d 
118. The court largely upheld CSAPR, but remanded to EPA without 
vacatur certain states' emissions budgets for reconsideration. This 
proposal responds to the remand of certain CSAPR NOX ozone-
season emissions budgets to the EPA for reconsideration; see section C 
below. Regarding the remand of CSAPR phase 2 SO2 annual 
emissions budgets as to four states, this proposal does not address 
that particular aspect of the D.C. Circuit opinion. The EPA intends to 
address the remand of the phase 2 SO2 annual emissions 
budgets separately.

B. Proposed Approach To Address Ozone Transport Under the 2008 Ozone 
NAAQS via FIPs

1. The CSAPR Framework
    CSAPR establishes a 4-step process to address the requirements of 
the good neighbor provision.\31\ The EPA proposes to follow the same 
steps for this rulemaking with respect to the 2008 ozone NAAQS. These 
steps are: (1) Identifying downwind receptors that are expected to have 
problems attaining or maintaining clean air standards (i.e., NAAQS); 
(2) determining which upwind states contribute to these identified 
problems in amounts sufficient to ``link'' them to the downwind air 
quality problems; (3) for states linked to downwind air quality 
problems, identifying upwind emissions that significantly contribute to 
nonattainment or interfere with maintenance of a standard by 
quantifying available upwind emission reductions and apportioning 
upwind responsibility among linked states; and (4) for states that are 
found to have emissions that significantly contribute to nonattainment 
or interfere with maintenance of the NAAQS downwind, reducing the 
identified upwind emissions via regional emissions allowance trading 
programs.
---------------------------------------------------------------------------

    \31\ See CSAPR, Final Rule, 76 FR 48208 (August 8, 2011).
---------------------------------------------------------------------------

    Step 1--In the original CSAPR, downwind air quality problems were 
assessed using modeled future air quality concentrations for a year 
aligned with attainment deadlines for the NAAQS considered in that 
rulemaking. The assessment of future air quality conditions generally 
accounts for on-the-books emission reductions \32\ and the most up-to-
date forecast of future emissions in the absence of the transport 
policy being evaluated (i.e., base case conditions). The locations of

[[Page 75714]]

downwind air quality problems are identified as those with receptors 
that are projected to be unable to attain (i.e., nonattainment 
receptor) or maintain (i.e., maintenance receptor) the standard. This 
proposal follows this same general approach. However, the EPA also 
proposes to consider current monitored air quality data to further 
inform the projected identification of downwind air quality problems 
for this proposal. Further details and application of step one for this 
proposal are described in section V of this notice.
---------------------------------------------------------------------------

    \32\ Since CSAPR was designed to replace CAIR, CAIR emissions 
reductions were not considered ``on-the-books.''
---------------------------------------------------------------------------

    Step 2--The original CSAPR used a screening threshold of one 
percent of the NAAQS to identify upwind states that were ``linked'' to 
downwind air pollution problems. States were identified as needing 
further evaluation for actions to address transport if their air 
quality impact \33\ was greater than or equal to the threshold for at 
least one downwind problem receptor (i.e., nonattainment or maintenance 
receptor identified in step 1). We evaluated a given state's 
contribution based on the average relative downwind impact calculated 
over multiple days. States whose air quality impacts to all downwind 
problem receptors were below this threshold did not require further 
evaluation for actions to address transport--that is, these states were 
determined to make insignificant contributions to downwind air quality 
problems and therefore have no emission reduction obligations under the 
good neighbor provision. The EPA used this threshold because much of 
the ozone nonattainment problem in the eastern half of the United 
States results from relatively small contributions from a number of 
upwind states. Use of the one percent threshold for CSAPR is discussed 
in the preambles to the proposed and final CSAPR rules. See 75 FR 45237 
(Aug. 2, 2010); 76 FR 48238, (Aug. 8, 2011). The EPA proposes to use 
this same approach for this rule. Application of step two for this 
proposal is described in section V of this notice.
---------------------------------------------------------------------------

    \33\ For ozone the impacts would include those from volatile 
organic compounds (VOC) and NOX, and from all sectors.
---------------------------------------------------------------------------

    Step 3--For states that are linked in step 2 to downwind air 
quality problems, the original CSAPR used a multi-factor test to 
evaluate emission reductions available in upwind states by application 
of uniform cost thresholds. The EPA evaluated NOX reductions 
that were available in upwind states by applying a marginal cost of 
NOX emissions to entities in these states. This approach, in 
essence, simulated placing an economic value on NOX 
emissions and evaluated emission reduction potential that was cost-
effective under this constraint. The EPA evaluated NOX 
reduction potential, cost, and downwind air quality improvements 
available at several cost thresholds in the multi-factor test. This 
evaluation quantified the magnitude of emissions that significantly 
contribute to nonattainment or interfere with maintenance of a NAAQS 
downwind and apportioned upwind responsibility among linked states, an 
approach upheld by the U.S. Supreme Court in EPA v. EME Homer City.\34\ 
The EPA proposes to apply this approach to identify NOX 
emission reductions necessary to reduce interstate transport for the 
2008 ozone NAAQS, updated to also explicitly consider over-control. For 
this proposal, the multi-factor test is also used to evaluate possible 
over-control by evaluating if an upwind state is linked solely to 
downwind air quality problems that are resolved at a given cost 
threshold, or if upwind states would reduce their emissions at a given 
cost threshold to the extent that they would no longer meet or exceed 
the 1% air quality contribution threshold. This evaluation of cost, 
NOX reductions, and air quality improvements, including its 
consideration of potential over-control, results in the EPA's 
determination of upwind emissions that significantly contribute to 
nonattainment or interfere with maintenance of the NAAQS downwind. 
Next, emissions budgets are determined. Emissions budgets are remaining 
allowable emissions after the elimination of emissions identified as 
significantly contributing to nonattainment or interfering with 
maintenance of the standard downwind. The EPA's assessment of 
significant contribution to nonattainment and interference with 
maintenance and development of EGU NOX ozone-season 
emissions budgets is described in section VI of this notice.
---------------------------------------------------------------------------

    \34\ EPA v. EME Homer City Generation, L.P., 134 S. Ct. 1584, 
1606-07 (2014).
---------------------------------------------------------------------------

    Step 4--Finally, the original CSAPR used allowance trading programs 
to implement the necessary emission reductions. Specifically, the 
emissions budgets identified in step 3 were implemented via a tradable 
allowance program. Emissions allowances were issued to units covered by 
the trading program and the allowances can be turned in at the close of 
each compliance period to account for a specified amount of ozone 
season EGU NOX emissions. Additionally, the original CSAPR 
included variability limits, which define the amount by which 
collective emissions within a state may exceed the level of the budgets 
in a given year to account for variability in EGU operations. CSAPR set 
assurance levels equal to the sum of each state's emissions budget plus 
its variability limit. The original CSAPR included assurance provisions 
that help to assure that state emissions remain below the assurance 
levels in each state by requiring additional allowance surrenders in 
the instance that emissions in the state exceed the state's assurance 
level. This limited interstate trading approach is responsive to 
previous court decisions (see discussion in section IV of this 
preamble) and has been upheld in subsequent litigation regarding CSAPR. 
The EPA proposes to apply this approach to reduce interstate transport 
for the 2008 ozone NAAQS. Implementation using the CSAPR allowance 
trading program is described in section VII of this notice.
2. Partial Versus Full Resolution of Transport Obligation
    Given the unique circumstances surrounding the implementation of 
the 2008 ozone standard that have delayed state and EPA efforts to 
address interstate transport, at this time the EPA is focusing its 
efforts on the immediately available and cost-effective emission 
reductions that are achievable by the 2017 ozone season.
a. Partial Remedy Under Proposed FIPs
    This rulemaking proposes to establish (or revise currently 
established) FIPs for 23 eastern states under the good neighbor 
provision of the CAA. These FIPs contain requirements for EGUs in these 
states to reduce ozone season NOX emissions for the 2017 
ozone season. As noted in section VI, the EPA has identified important 
EGU emission reductions that are achievable starting for the 2017 ozone 
season in each of the covered states through actions such as turning on 
and operating existing pollution controls. These readily available 
emission reductions will assist downwind states to attain and maintain 
the 2008 ozone NAAQS and will provide human health and welfare benefits 
through reduced exposure to ozone pollution.
    While these reductions are necessary to assist downwind states 
attain and maintain the 2008 ozone NAAQS and are necessary to address 
good neighbor obligations for these states, the EPA acknowledges that 
they may not be sufficient to fully address these states' good neighbor 
obligations.\35\ With respect to the 2008 ozone standard, the

[[Page 75715]]

EPA has generally not attempted to quantify the ozone season 
NOX reductions that may be necessary to eliminate all 
significant contribution to nonattainment and interference with 
maintenance in other states. Given the time constraints for 
implementing NOX reduction strategies, the EPA believes that 
implementation of a full remedy may not be achievable for 2017, even 
though a partial remedy is achievable.
---------------------------------------------------------------------------

    \35\ The proposed requirements for one state, North Carolina, 
would fully eliminate that state's significant contribution to 
downwind air quality problems.
---------------------------------------------------------------------------

    To evaluate full elimination of a state's significant contribution 
to nonattainment and interference with maintenance, EGU and non-EGU 
ozone season NOX reductions should both be evaluated. 
However, the EPA is not proposing to quantify non-EGU emissions 
reductions to address interstate ozone transport for the 2008 ozone 
NAAQS at this time because: (1) There is greater uncertainty in the 
non-EGU emission inventory estimates than for EGUs; and (2) there 
appear to be few non-EGU reductions that could be accomplished by the 
beginning of the 2017 ozone season. This is discussed further in 
section VI of this proposal and in the Non-EGU NOX 
Mitigation Strategies TSD. We intend to continue to collect information 
and undertake analysis for potential future emissions reductions at 
non-EGUs that may be necessary to fully quantify states' significant 
contributions in a future action.
    Because the reductions proposed in this action are EGU-only and 
because EPA has focused the policy analysis for this proposal on 
reductions available by 2017, for most states they represent a first, 
partial step to addressing a given upwind state's significant 
contribution to downwind air quality impacts for the 2008 ozone NAAQS. 
Generally, a final determination of whether the proposed EGU 
NOX reductions represent a full or partial elimination of a 
state's good neighbor obligation for the 2008 NAAQS is subject to an 
evaluation of the contribution to interstate transport from additional 
emission sectors, such as non-EGUs. However, the EPA believes that it 
is beneficial to implement, without further delay, EGU NOX 
reductions that are achievable in the near term. The proposed 
NOX emission reductions are needed (although they may not be 
all that is needed) for these states to eliminate their significant 
contribution to nonattainment and interference with maintenance of the 
2008 ozone NAAQS. The EPA's current statutory deadlines to promulgate 
FIPs extend until 2017 for most states, and the EPA will remain mindful 
of those deadlines as it evaluates what further steps may be necessary 
to address interstate transport for the 2008 ozone NAAQS. The EPA seeks 
comment on possible future steps that may be necessary to resolve the 
remainder of the good neighbor obligation for the 2008 ozone standard.
    The EPA has shared information with states to facilitate the 
development of the ozone transport SIPs.\36\ The EPA encourages state 
SIP development and will continue to assist states in developing 
transport SIPs regardless of whether they are covered by this proposed 
FIP. Where a state would be covered by this proposed FIP, the EPA may 
be able to partially approve SIPs that include controls on EGU 
emissions that achieve ozone season NOX emission reductions 
and/or that establish EGU NOX ozone emissions budgets 
approximately equivalent to those identified in this proposal as 
achievable by 2017. (This is discussed in more detail in Section VII.) 
In these SIPS, states could also demonstrate that they are achieving 
the same level of emissions reductions through non-EGU source measures 
as they would achieve under the EGU budgets established in the FIP. For 
example, a SIP could set EGU budgets, but allow emission reductions 
from non-EGU sources as a compliance option. EPA also seeks comment on 
methods it can use to ensure that any non-EGU reductions are 
incremental to the base case, permanent, and enforceable.
---------------------------------------------------------------------------

    \36\ On January 22, 2015, the EPA issued a memo with preliminary 
air quality modeling data that characterized interstate ozone 
transport projected to 2018. On April 8, 2015, the EPA held a 
workshop that continued a discussion with states on the path forward 
for addressing interstate transport for the 2008 8-hour ozone NAAQS. 
On August 4, 2015, we published a NODA with updated modeling that 
states could use to support development of transport SIPs.
---------------------------------------------------------------------------

b. Potential for Full Remedy Under SIPs
    The EPA also notes that many states have already submitted, or are 
currently developing, SIP submittals to address the good neighbor 
provision of the CAA for the 2008 ozone standard, and expects that some 
may assert that the state plan fully addresses the state's good 
neighbor obligation.
    The EPA anticipates that those SIPs intending to fully address the 
state's good neighbor obligations and for which the state is seeking 
approval may fall into one of two categories:
    (1) The SIP concludes that the state is meeting its good neighbor 
obligation without need for additional NOX reductions. This 
SIP could include an adequate demonstration, using EPA or state-
generated analytical results, which supports the state's conclusion 
that the state contributes insignificant amounts to downwind 
nonattainment or maintenance problems in other states. The EPA would 
generally expect to propose full approval of these SIPs.
    (2) The SIP demonstrates that the state will timely achieve 
reductions that fully address its significant contribution to 
nonattainment or interference with maintenance in downwind states. This 
demonstration could include an assessment of how all emissions source 
sectors contribute to the state's contribution and how these sectors 
are controlled in that state. States wishing to seek full approval of 
good neighbor SIPs should contact their appropriate regional office. 
Guidance on developing such SIPs is outside the scope of this action, 
but the EPA intends to work closely with any state that is interested 
in pursuing this option.
3. Why We Focus on Eastern States
    CSAPR and previous federal transport rules, such as the 
NOX SIP Call and CAIR, were designed to address collective 
contributions of ozone pollution from states in the eastern U.S. These 
rules did not address contributions in the 11 western contiguous United 
States.\37\ The EPA's air quality modeling that supports this proposed 
rule includes data for the western states. This assessment shows that 
there are problem receptors in the West to which western states 
contribute amounts greater than or equal to the screening threshold 
used to evaluate transport across eastern states (i.e., 1 percent of 
the NAAQS). However, there may be additional criteria to evaluate 
regarding transported air pollution in the West when evaluating upwind 
states' contributions to downwind air quality impacts, such as those 
discussed in EPA-state meetings to discuss approaches for determining 
how emissions in upwind states impact air quality in downwind 
states.\38\ Given that the near-term 2017 implementation timeframe 
constrains the opportunity to conduct a further evaluation of western 
states, the EPA proposes to focus this rulemaking on eastern states. 
This focus would not relieve western states of obligations to address 
interstate transport under the Act. The EPA and states working together 
would continue to evaluate interstate transport in the western states 
on a case-by-case basis. The EPA would also continue to engage

[[Page 75716]]

with western states on air quality modeling analyses and the 
implications of those analyses for interstate transport.
---------------------------------------------------------------------------

    \37\ For the purpose of this action, the western U.S. (or the 
West) consists of the 11 western contiguous states of Arizona, 
California, Colorado, Idaho, Montana, New Mexico, Nevada, Oregon, 
Utah, Washington, and Wyoming, and the eastern U.S. (or East) 
consists of the remaining states in the contiguous U.S.
    \38\ For example, EPA-State meetings held in Research Triangle 
Park, NC on April 8, 2013 and Denver, Colorado on April 17, 2013.
---------------------------------------------------------------------------

    While the EPA proposes to focus this rulemaking on eastern states, 
we seek comment on whether to include western states in this rule. The 
EPA notes that analyses developed to support this proposal, including 
air quality modeling and the EPA's assessment of EGU NOX 
mitigation potential, contain data that could be useful for states in 
developing SIPs or could be used to develop FIPs, where necessary.
    The EPA seeks comment on the data provided for western states, 
including emissions inventories, ozone concentration modeling, 
contribution modeling, and EPA's assessment of EGU NOX 
reduction potential.\39\ These data are available in the docket for 
this proposal. The EPA also solicits comment on whether to promulgate 
FIPs to address interstate ozone transport for the 2008 ozone NAAQS for 
western states, either in this rulemaking or in a subsequent 
rulemaking.
---------------------------------------------------------------------------

    \39\ On August 4, 2015, the EPA published a Notice of Data 
Availability (80 FR 46271) requesting comment on the air quality 
modeling platform and air quality modeling results that are being 
used for this proposed rule. Specifically, in the NODA, the EPA 
requested comment on the data and methodologies related to the 2011 
and 2017 emissions and the air quality modeling to project 2017 
concentrations and contributions. Comments received on that data via 
the NODA will be considered for the final rule.
---------------------------------------------------------------------------

4. Short-Term NOX Emissions
    In eastern states, the highest measured ozone days tend to occur 
within the hottest days, weeks, or months of the summer. On many high 
ozone days, there is higher demand for electricity (for instance, to 
run air conditioners). In general and technical discussions with 
representatives and officials of eastern states in April 2013 and April 
2015, and in several letters to the EPA, officials from the Ozone 
Transport Region (OTR) \40\ states suggested that EGU emissions 
transported from upwind states may disproportionally affect downwind 
ozone concentrations on peak ozone days in the eastern U.S. These 
representatives asked that the EPA consider additional ``peak day'' 
limits on EGU NOX emissions.
---------------------------------------------------------------------------

    \40\ The OTR was established by the CAA amendments of 1990 to 
facilitate addressing the ozone problem on a regional basis and 
consists of the following states: Connecticut, Delaware, Maine, 
Maryland, Massachusetts, New Hampshire, New Jersey, New York, 
Pennsylvania, Rhode Island, Vermont, the District of Columbia and 
northern Virginia. 42 U.S.C. 7511c, CAA section 184.
---------------------------------------------------------------------------

    Some states have also asked the EPA to consider whether existing 
emission controls are being turned off for short periods (e.g., 
multiple days) within the ozone season, for example during hot weeks. 
These states assert that emissions from short-term idling of controls 
may contribute to downwind ozone NAAQS exceedances in the eastern U.S. 
These states suggest that sub-seasonal limits on EGU NOX 
emissions would reduce ozone formation that might be attributable to 
short-term idling of NOX controls.
    The EPA seeks comment on whether or not short-term (e.g., peak-day) 
EGU NOX emissions disproportionately impact downwind ozone 
concentrations, and if they do, then what EGU emission limits (e.g., 
daily or monthly emission rates or differential allowance surrender 
ratios on high ozone days) would be reasonable complements to the 
proposed seasonal CSAPR requirement to mitigate this impact.

C. Responding to the Remand of CSAPR NOX Ozone-Season Emissions Budgets

    As noted above, in EME Homer City II, the D.C. Circuit declared 
invalid the CSAPR phase 2 NOX ozone-season emissions budgets 
of 11 states, holding that those budgets over-control with respect to 
the downwind air quality problems to which those states were linked for 
the 1997 ozone NAAQS. 795 F.3d at 129-30, 138. As to ten of these 
states, the court held that EPA's 2014 modeling conducted to support 
the RIA for CSAPR demonstrated that air quality problems at the 
downwind locations to which those states were linked would resolve by 
phase 2 of the CSAPR program without further transport regulation 
(either CAIR or CSAPR). Id. at 129-30. With respect to Texas, the court 
held that the record reflected that the ozone air quality problems to 
which the state was linked could be resolved at a lower cost threshold. 
Id. The court therefore remanded those budgets to EPA for 
reconsideration consistent with the court's opinion. Id. at 138. The 
court instructed the EPA to act ``promptly'' in addressing these issues 
on remand. Id. at 132.
    The court's decision explicitly applies to 11 state budgets 
involved in that litigation: Florida, Maryland, New Jersey, New York, 
North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia, 
and West Virginia. Id. at 129-30, 138. EPA is proposing in this 
rulemaking to promulgate FIPs for nine of those states to address 
interstate transport with respect to the 2008 ozone NAAQS: Maryland, 
New Jersey, New York, North Carolina, Ohio, Pennsylvania, Texas, 
Virginia, and West Virginia. The proposed FIPs incorporate revised 
emissions budgets that would supplant and replace the budgets 
promulgated in the CSAPR rule to address the 1997 ozone NAAQS, the same 
budgets remanded by the D.C. Circuit for reconsideration. Further, as 
proposed in this rule, these proposed budgets would be effective for 
the 2017 ozone season, the same period in which the phase 2 budgets 
that were invalidated by the court are currently scheduled to become 
effective. Therefore, this proposed action provides an appropriate and 
timely response to the court's remand by replacing the budgets 
promulgated in the CSAPR to address the 1997 ozone NAAQS, which were 
declared invalid by the D.C. Circuit, with budgets developed to address 
the revised and more stringent 2008 ozone NAAQS.\41\
---------------------------------------------------------------------------

    \41\ The methodology for developing the proposed budgets to 
address the 2008 ozone NAAQS is described in more detail in Sections 
VI and VII below. Section VI also includes an evaluation, as 
instructed by the court in EME Homer City II, to affirm that the 
proposed budgets do not over-control with respect to downwind air 
quality problems identified in this rule. 795 F.3d at 127-28.
---------------------------------------------------------------------------

    The EPA notes that it is able to propose addressing the D.C. 
Circuit's remand of CSAPR NOX ozone-season emissions budgets 
because the agency was already performing analysis and policy 
development for this proposal, which is directly applicable to this 
aspect of the D.C. Circuit opinion.
    Separately, various petitioners filed legal challenges in the D.C. 
Circuit to a supplemental rule that added five states to the CSAPR 
ozone-season trading program, 76 FR 80760 (Dec. 27, 2011). See Public 
Service Company of Oklahoma v. EPA, No. 12-1023 (D.C. Cir., filed Jan. 
13, 2012). The case was held in abeyance during the pendency of the 
litigation in EME Homer City. The case remains pending in the D.C. 
Circuit as of the date of signature of this proposed rule.\42\ The EPA 
notes that this rulemaking also proposes to promulgate FIPs for all 
five states added to CSAPR in the supplemental rule: Iowa, Michigan, 
Missouri, Oklahoma, and Wisconsin. The proposed FIPs incorporate 
revised emissions budgets that would supplant and replace the budgets 
promulgated in the supplemental CSAPR rule to address the 1997 ozone 
NAAQS for these five states

[[Page 75717]]

and would be effective for the 2017 ozone season.
---------------------------------------------------------------------------

    \42\ In 2012, the EPA also finalized two rules making certain 
revisions to CSAPR. 77 FR 10324 (Feb. 21, 2012); 77 FR 34830 (June 
12, 2012). Various petitioners filed legal challenges to these rules 
in the D.C. Circuit, and the cases were also held in abeyance 
pending the litigation in EME Homer City. See Wisconsin Public 
Service Corp. v. EPA, No. 12-1163 (D.C. Cir., filed Apr. 6, 2012); 
Utility Air Regulatory Group v. EPA, No. 12-1346 (D.C. Cir., filed 
Aug. 9, 2012). The cases currently remain pending in the D.C. 
Circuit.
---------------------------------------------------------------------------

    For the two remaining ozone-season states affected by this portion 
of the EME Homer City II decision, Florida and South Carolina, the EPA 
is not proposing in this action to promulgate FIPs because the air 
quality modeling performed to support the proposal does not indicate 
that these states are linked to any identified downwind nonattainment 
or maintenance receptors with respect to the 2008 ozone standard. 
Inherently then, because the 2008 ozone NAAQS is more stringent than 
the 1997 ozone NAAQS, this modeling also does not indicate that Florida 
or South Carolina are linked to any remaining air quality concerns with 
respect to the 1997 ozone standard for which the states were regulated 
in CSAPR.
    Accordingly, in order to address the Court's remand with respect to 
these two states' interstate transport responsibility under the 1997 
ozone standard, the EPA proposes to remove these states from the CSAPR 
ozone-season trading program beginning in 2017 when the phase 2 ozone-
season emissions budgets were scheduled to be implemented.
    The EPA notes that because the proposed rule modeling was performed 
prior to the D.C. Circuit's issuance of EME Homer City II, that 
modeling assumed in its baseline for all states the emission reductions 
associated with the CSAPR phase 2 ozone-season budgets. In the final 
rule modeling, the EPA will make any additional changes to the 
emissions inventories or modeling platform as may be justified based on 
comments received on the modeling performed for the proposed rule. In 
the event that air quality modeling conducted for the final rule 
demonstrates that either Florida or South Carolina are projected to 
significantly (e.g., greater than or equal to 1% of the NAAQS) 
contribute to an air quality problem with respect to the 2008 ozone 
standard in the absence of a CSAPR-related emissions budget in place 
for those states, the EPA instead proposes to finalize revised budgets 
(presented with this rulemaking for comment) for whichever of those 
states may be identified as linked to such air quality problems rather 
than remove those states from the CSAPR ozone-season trading program. 
The EPA has calculated emissions budgets for Florida and South Carolina 
that we are proposing to apply to those states if, and only if, the 
final rule air quality modeling identifies a linkage as just described. 
These proposed budgets are developed using the same methods applied to 
the 23 states that the EPA proposed to regulate in this action. These 
methods are described in section VI of this proposal and the methods 
and resulting emissions budgets are provided in the Ozone Transport 
Policy Analysis TSD.
    The EPA seeks comment on this approach with respect to addressing 
the remand as to Florida and South Carolina, including the proposed 
budgets that would apply to those states if a linkage is identified, 
which are available in the docket.
    Additionally, the EPA notes Florida and South Carolina may be 
relying upon emissions reductions that result from now-remanded 
emissions budgets in Florida and South Carolina to satisfy statutory 
obligations other than the interstate transport requirements. However, 
Florida and South Carolina may have an interest in submitting SIPs to 
continue their participation in the CSAPR NOX ozone-season 
trading program in order to meet other Clean Air Act requirements. 
Likewise, to the extent that the final modeling indicates that other 
states included in the remand of the CSAPR phase 2 NOX 
ozone-season emissions budgets are not linked to any identified 
downwind nonattainment or maintenance receptors with respect to the 
2008 ozone standard, they would not be included in the final FIPs but 
they may be interested in continuing to participate in the CSAPR 
NOX ozone-season trading program in order to meet other 
Clean Air Act requirements. The EPA seeks comment on whether to allow 
Florida, South Carolina, and other similarly situated states (if any) 
to continue their participation in the CSAPR NOX ozone-
season program through voluntary SIPs that would retain the CSAPR 
NOX ozone-season emissions budgets, contingent upon review 
and approval by the EPA.
    The D.C. Circuit also remanded without vacatur the CSAPR 
SO2 annual emissions budgets for four states (Alabama, 
Georgia, South Carolina, and Texas) for reconsideration. 795 F.3d at 
129, 138. This proposal does not address the remand of these CSAPR 
phase 2 SO2 annual emissions budgets. The EPA intends to 
address the remand of the phase 2 SO2 annual emissions 
budgets separately. The existing CSAPR annual emissions budgets and 
implementation programs (CSAPR SO2 annual and NOX 
annual requirements), which address interstate transport for the 1997 
and 2006 PM2.5 NAAQS, continue to apply at this time.

D. Addressing Outstanding Transport Obligations for the 1997 Ozone 
NAAQS

    In the original CSAPR, the EPA noted that the reductions for 11 
states may not be sufficient to fully eliminate all significant 
contribution to nonattainment or interference with maintenance for 
certain downwind areas with respect to the 1997 ozone NAAQS.\43\ The 11 
states are: Alabama, Arkansas, Georgia, Illinois, Indiana, Kentucky, 
Louisiana, Mississippi, Missouri, Tennessee, and Texas.\44\ In the 
original CSAPR, the EPA's analysis projected continued nonattainment 
and maintenance problems at downwind receptors to which these upwind 
states were linked after implementation of the CSAPR trading programs. 
Specifically, the persistent ozone problems were expected in Baton 
Rouge, Louisiana; Houston, Texas; and Allegan, Michigan according to 
the remedy case modeling conducted for the final rule. At that time the 
EPA did not address whether additional ozone season NOX 
emission reductions would be needed in these states to fully resolve 
the good neighbor obligation under the CAA with respect to the 1997 
ozone NAAQS beyond the EGU requirements promulgated in CSAPR.
---------------------------------------------------------------------------

    \43\ See CSAPR Final Rule, 76 FR at 48220, and the CSAPR 
Supplemental Rule, 76 FR at 80760, December 27, 2011.
    \44\ The EPA acknowledges that, despite its conclusion in CSAPR 
that the air quality problems to which Texas was linked in the 
original CSAPR were not fully resolved, the court concluded in EME 
Homer City II that the NOX ozone-season emissions budget 
finalized for Texas resulted in over-control as to the ozone air 
quality problems to which the state was linked. 795 F.3d at 129-30. 
As discussed below in section V, this rule proposes to respond to 
the remand of Texas's NOX ozone-season emissions budget 
by promulgating a new budget to address the 2008 ozone NAAQS. The 
EPA has also evaluated Texas's contribution to any remaining air 
quality problems with respect to the 1997 ozone NAAQS. [Text may be 
revised to reflect ongoing litigation.]
---------------------------------------------------------------------------

    To evaluate whether additional emission reductions would be needed 
in these 11 states to address the states' full good neighbor obligation 
for the 1997 ozone NAAQS, the EPA reviewed the 2017 baseline air 
quality modeling conducted for this proposal, which includes emission 
reductions associated with the CSAPR phase 2 ozone-season budgets.
    The updated 2017 air quality modeling shows that the predicted 
average DVs and maximum DVs for 2017 are below the level of the 1997 
ozone NAAQS for the downwind receptors of concern that the 11 states 
were linked to in the original CSAPR for the 1997 ozone NAAQS. Further, 
the 2017 air quality modeling shows that there are no other 
nonattainment or

[[Page 75718]]

maintenance receptors to which these areas would be linked with respect 
to the 1997 ozone NAAQS. This conclusion demonstrates that no further 
emission reductions are required to address the interstate transport 
obligations of these states with respect to the 1997 ozone NAAQS, and 
therefore EPA finds that the original CSAPR emissions budgets satisfy 
these states' full obligation to address interstate ozone transport 
under the good neighbor provision of the CAA as to that NAAQS. 
Therefore, we propose to find that the original CSAPR FIPs fully 
satisfy those 11 states' good neighbor CAA obligations regarding the 
emissions that contribute significantly to nonattainment or interfere 
with maintenance of the 1997 ozone NAAQS in other states.

IV. Legal Authority

A. EPA's Authority for the Proposed Rule

1. Statutory Authority
    The statutory authority for this proposed action is provided by the 
CAA as amended (42 U.S.C. 7401 et seq.). Specifically, sections 110 and 
301 of the CAA provide the primary statutory bases for this proposal. 
The most relevant portions of section 110 are subsections 110(a)(1), 
110(a)(2), and 110(a)(2)(D)(i)(I), and 110(c)(1).
    Section 110(a)(1) provides that states must make SIP submissions 
``within 3 years (or such shorter period as the Administrator may 
prescribe) after the promulgation of a national primary ambient air 
quality standard (or any revision thereof),'' and that these SIP 
submissions are to provide for the ``implementation, maintenance, and 
enforcement'' of such NAAQS.\45\ The statute directly imposes on states 
the duty to make these SIP submissions, and the requirement to make the 
submissions is not conditioned upon the EPA taking any action other 
than promulgating a new or revised NAAQS.\46\
---------------------------------------------------------------------------

    \45\ 42 U.S.C. 7410(a)(1).
    \46\ See EPA v. EME Homer City Generation, L.P., 134 S. Ct. 
1584, 1601 (2014).
---------------------------------------------------------------------------

    The EPA has historically referred to SIP submissions made for the 
purpose of satisfying the applicable requirements of CAA sections 
110(a)(1) and 110(a)(2) as ``infrastructure SIP'' submissions. Section 
110(a)(1) addresses the timing and general requirements for 
infrastructure SIP submissions, and section 110(a)(2) provides more 
details concerning the required content of these submissions. It 
includes a list of specific elements that ``[e]ach such plan'' 
submission must address.\47\ All states, regardless of whether the 
state includes areas designated as nonattainment for the relevant 
NAAQS, must have SIPs that meet the applicable requirements of section 
110(a)(2), including provisions of section 110(a)(2)(D)(i)(I) described 
further below and which are the focus of this proposal.
---------------------------------------------------------------------------

    \47\ EPA's general approach to infrastructure SIP submissions is 
explained in greater detail in individual notices acting or 
proposing to act on state infrastructure SIP submissions and in 
guidance. See, e.g., Guidance on Infrastructure State Implementation 
Plan (SIP) Elements under Clean Air Act Sections 110(a)(1) and 
110(a)(2) (Sept. 2013).
---------------------------------------------------------------------------

    Section 110(c)(1) requires the Administrator to promulgate a FIP at 
any time within 2 years after the Administrator: (1) Finds that a state 
has failed to make a required SIP submission, (2) finds a SIP 
submission to be incomplete pursuant to CAA section 110(k)(1)(C), or 
(3) disapproves a SIP submission, unless the state corrects the 
deficiency through a SIP revision that the Administrator approves 
before the FIP is promulgated.\48\
---------------------------------------------------------------------------

    \48\ 42 U.S.C. 7410(c)(1).
---------------------------------------------------------------------------

    Section 110(a)(2)(D)(i)(I), also known as the ``good neighbor 
provision,'' provides the basis for this proposed action. It requires 
that each state SIP shall include provisions sufficient to ``prohibit[] 
. . . any source or other type of emissions activity within the State 
from emitting any air pollutants in amounts which will--(I) contribute 
significantly to nonattainment in, or interfere with maintenance by, 
any other State with respect to any [NAAQS].'' \49\
---------------------------------------------------------------------------

    \49\ 42 U.S.C. 7410(a)(2)(D)(i)(I).
---------------------------------------------------------------------------

    The EPA has previously issued three rules interpreting and 
clarifying the requirements of section 110(a)(2)(D)(i)(I) for states in 
the eastern half of the United States. These rules, and the associated 
court decisions addressing these rules, provide important guidance 
regarding the requirements of section 110(a)(2)(D)(i)(I).
    The NOX SIP Call, promulgated in 1998, addressed the 
good neighbor provision for the 1979 1-hour ozone NAAQS and the 1997 8-
hour ozone NAAQS.\50\ The rule required 22 states and the District of 
Columbia to amend their SIPs and limit NOX emissions that 
contribute to ozone nonattainment. The EPA set a NOX ozone-
season budget for each affected state, essentially a cap on ozone 
season NOX emissions in the state. Sources in the affected 
states were given the option to participate in a regional cap-and-trade 
program, known as the NOX Budget Trading Program (NBP). The 
NOX SIP Call was largely upheld by the D.C. Circuit in 
Michigan v. EPA, 213 F.3d 663 (D.C. Cir. 2000), cert. denied, 532 U.S. 
904 (2001).
---------------------------------------------------------------------------

    \50\ 63 FR 57356 (Oct. 27, 1998).
---------------------------------------------------------------------------

    The Clean Air Interstate Rule (CAIR), promulgated in 2005, 
addressed both the 1997 PM2.5 and ozone standards under the 
good neighbor provision.\51\ CAIR required SIP revisions in 28 states 
and the District of Columbia to ensure that certain emissions of sulfur 
dioxide (SO2) and/or NOX--important precursors of 
regionally transported PM2.5 (SO2 and 
NOX) and ozone (NOX)--were prohibited. Like the 
NOX SIP Call, states were given the option to participate in 
a regional cap-and-trade program to satisfy their SIP obligations. When 
the EPA promulgated the final CAIR in May 2005, the EPA also issued a 
national rule finding that states had failed to submit SIPs to address 
the requirements of CAA section 110(a)(2)(D)(i) with respect to the 
1997 ozone and PM2.5 NAAQS, given that states were required 
by the CAA to have submitted section 110(a)(2)(D)(i)(I) SIPs for those 
standards by July 2000.\52\ This finding of failure to submit triggered 
a 2-year clock for the EPA to issue FIPs to address interstate 
transport, and on March 15, 2006, the EPA promulgated FIPs to ensure 
that the emission reductions required by CAIR would be achieved on 
schedule.\53\ CAIR was remanded to EPA by the D.C. Circuit in North 
Carolina, 531 F.3d 896 (D.C. Cir. 2008), modified on reh'g, 550 F.3d 
1176. For more information on the legal considerations of CAIR and the 
D.C. Circuit holding in North Carolina, refer to the preamble of the 
final CSAPR rule.\54\
---------------------------------------------------------------------------

    \51\ 70 FR 25162 (May 12, 2005).
    \52\ 70 FR 21147 (May 12, 2005).
    \53\ 71 FR 25328 (April 28, 2006).
    \54\ 76 FR 48208, 48217 (Aug. 8, 2011).
---------------------------------------------------------------------------

    In 2011, the EPA promulgated CSAPR to address the issues raised by 
the remand of CAIR and additionally to address the good neighbor 
provision for the 2006 PM2.5 NAAQS.\55\ CSAPR requires 28 
states to reduce SO2 emissions, annual NOX 
emissions, and/or ozone season NOX emissions that 
significantly contribute to other states' nonattainment or interfere 
with other states' abilities to maintain these air quality standards. 
To accomplish implementation aligned with the applicable attainment 
deadlines, the EPA promulgated FIPs for each of the 28 states covered 
by CSAPR. The FIPs implement regional cap-and-trade programs to achieve 
the necessary reductions. States can submit good

[[Page 75719]]

neighbor SIPs at any time that, if approved by the EPA, would replace 
the CSAPR FIP for that state. As discussed below, CSAPR was the subject 
of decisions by both the D.C. Circuit and the Supreme Court, which 
largely upheld the rule.
---------------------------------------------------------------------------

    \55\ 76 FR 48208.
---------------------------------------------------------------------------

    On August 21, 2012, the D.C. Circuit issued a decision in EME Homer 
City Generation, L.P. v. EPA, 696 F.3d 7 (D.C. Cir. 2012), vacating 
CSAPR and holding, among other things, that states had no obligation to 
submit good neighbor SIPs until the EPA had first quantified each 
state's good neighbor obligation.\56\ The implication of this decision 
was that the EPA did not have authority to promulgate FIPs as a result 
of states' failure to submit or EPA's disapproval of such SIPs. The EPA 
sought review, first with the D.C. Circuit en banc and then with the 
Supreme Court. While the D.C. Circuit declined to consider the EPA's 
appeal en banc,\57\ on January 23, 2013, the Supreme Court granted the 
EPA's petition for certiorari.\58\
---------------------------------------------------------------------------

    \56\ EME Homer City Generation, L.P. v. EPA, 696 F.3d 7, 31 
(D.C. Cir. 2012).
    \57\ EME Homer City Generation, L.P. v. EPA, No. 11-1302 (D.C. 
Cir. January 24, 2013), ECF No. 1417012 (denying the EPA's motion 
for rehearing en banc).
    \58\ EPA v. EME Homer City Generation, L.P., 133 S. Ct. 2857 
(2013) (granting the EPA's and other parties' petitions for 
certiorari).
---------------------------------------------------------------------------

    On April 29, 2014, the Supreme Court issued a decision reversing 
the D.C. Circuit's EME Homer City opinion on CSAPR and held, among 
other things, that under the plain language of the CAA, states must 
submit SIPs addressing the good neighbor provision within 3 years of 
promulgation of a new or revised NAAQS, regardless of whether the EPA 
first provides guidance, technical data or rulemaking to quantify the 
state's obligation.\59\ Thus, the Supreme Court affirmed that states 
have an obligation in the first instance to address the good neighbor 
provision after promulgation of a new or revised NAAQS, a holding that 
also applies to states' obligation to address interstate transport for 
the 2008 ozone NAAQS. The Supreme Court remanded the litigation to the 
D.C. Circuit for further proceedings.
---------------------------------------------------------------------------

    \59\ EPA v. EME Homer City Generation, L.P., 134 S. Ct. 1584, 
1600-01 (2014).
---------------------------------------------------------------------------

    Finally, on July 28, 2015, the D.C. Circuit issued its opinion on 
CSAPR regarding the remaining legal issues raised by the Petitioners on 
remand from the Supreme Court, EME Homer City II, 795 F.3d 118. This 
decision largely upheld EPA's approach to addressing interstate 
transport in CSAPR, leaving the rule in place and affirming EPA's 
interpretation of various statutory provisions and EPA's technical 
decisions. The decision also remands the rule without vacatur for 
reconsideration of EPA's emissions budgets for certain states. In 
particular and as discussed in more detail in section III, the court 
declared invalid the CSAPR phase 2 NOX ozone-season 
emissions budgets of 11 states, holding that those budgets over-control 
with respect to the downwind air quality problems to which those states 
were linked for the 1997 ozone NAAQS. The court's decision explicitly 
applies to 11 states: Florida, Maryland, New Jersey, New York, North 
Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia, and West 
Virginia. Id. at 129-30, 138. The court also remanded without vacatur 
the SO2 annual emissions budgets for four states (Alabama, 
Georgia, South Carolina, and Texas) for reconsideration. Id. at 129, 
138. The court instructed the EPA to act ``promptly'' in addressing 
these issues on remand. Id. at 132.
    Section 301(a)(1) of the CAA also gives the Administrator of the 
EPA general authority to prescribe such regulations as are necessary to 
carry out her functions under the Act.\60\ Pursuant to this section, 
the EPA has authority to clarify the applicability of CAA requirements. 
In this action, among other things, the EPA is clarifying the 
applicability of section 110(a)(2)(D)(i)(I) by identifying 
NOX emissions in certain states that must be prohibited 
pursuant to this section with respect to the 8-hour ozone NAAQS 
promulgated in 2008.
---------------------------------------------------------------------------

    \60\ 42 U.S.C. 7601(a)(1).
---------------------------------------------------------------------------

    In particular, the EPA is proposing to use its authority under 
sections 110 and 301 to promulgate FIPs that establish or revise EGU 
NOX ozone-season emissions budgets for 23 eastern states to 
mitigate their significant contribution to nonattainment or 
interference with maintenance in another state. As described in more 
detail later in this notice, generally the EPA is proposing to update 
each affected state's FIP, including revising the existing CSAPR 
budgets.\61\ The EPA is also proposing to respond to the court's remand 
in EME Homer City II with respect to the remanded NOX ozone-
season emissions budgets.
---------------------------------------------------------------------------

    \61\ One state, Kansas, would have a new CSAPR ozone season 
requirement under this proposal. The remaining 22 states were 
included in the original CSAPR ozone-season program as to the 1997 
ozone NAAQS.
---------------------------------------------------------------------------

2. FIP Authority for Each State Covered by the Proposed Rule
a. Status of State Good Neighbor SIPs for the 2008 Ozone NAAQS
    As discussed above, all states have an obligation to submit SIPs 
that address the requirements of CAA section 110(a)(2) within 3 years 
of promulgation of a new or revised NAAQS. With respect to the 2008 
ozone NAAQS, states were required to submit SIPs addressing the good 
neighbor provision by March 12, 2011. If the EPA finds that a state has 
failed to submit a SIP to meet its statutory obligation to address 
section 110(a)(2)(D)(i)(I) or if EPA disapproves a good neighbor SIP, 
then the EPA has not only the authority but the obligation, pursuant to 
section 110(c)(1), to promulgate a FIP to address the CAA requirement 
within 2 years of the finding or disapproval.
    On July 13, 2015, the EPA published a rule finding that 24 states 
failed to make complete submissions that address the requirements of 
section 110(a)(2)(D)(i)(I) related to the interstate transport of 
pollution as to the 2008 ozone NAAQS. See 80 FR 39961 (July 13, 2015) 
(effective August 12, 2015). The finding action triggered a 2-year 
deadline for the EPA to issue FIPs to address the good neighbor 
provision for these states by August 12, 2017. The states included in 
this finding of failure to submit are: Alabama, Arkansas, California, 
Florida, Georgia, Iowa, Illinois, Kansas, Massachusetts, Maine, 
Michigan, Minnesota, Mississippi, Missouri, New Hampshire, New Mexico, 
North Carolina, Oklahoma, Pennsylvania, South Carolina, Tennessee, 
Vermont, Virginia, and West Virginia.
    Since the EPA issued the findings notice, EPA has received a SIP 
submission addressing the good neighbor provision for the 2008 ozone 
NAAQS from the state of Maine on which the EPA has not yet proposed 
action.
    Several additional states--Connecticut, Nebraska, North Dakota, 
Rhode Island, South Dakota, New York, Delaware, Maryland, Indiana, 
Kentucky, Louisiana, New Jersey, Ohio, Texas, Wisconsin, and the 
District of Columbia--have previously submitted SIPs to address the 
requirements of section 110(a)(2)(D)(i)(I) for the 2008 ozone NAAQS. To 
the extent that the EPA has not finalized action on these submitted 
SIPs, these states can evaluate their submissions in light of this 
proposal and the actions we are taking to reduce interstate ozone 
transport for the 2008 ozone NAAQS. Pursuant to a judgment issued on 
May 15, 2015, the

[[Page 75720]]

EPA is required to take final action on the interstate transport SIPs 
for Nebraska and North Dakota by January 29, 2016, and for Maryland, 
Texas, Ohio and Indiana by June 7, 2016.\62\ In the event that the EPA 
finalizes disapproval or partial disapproval of any of these SIPs, that 
action would trigger the EPA's FIP authority to implement the 
requirements of the good neighbor provision for those states. 
Alternatively, if any of these states withdraws its 2008 ozone 
interstate transport SIP submittal, the EPA plans to issue a separate 
notice of finding of failure to submit for these states and will 
finalize FIPs as appropriate.
---------------------------------------------------------------------------

    \62\ See Judgment, Sierra Club v. McCarthy, Case 4:14-cv-05091-
YGR (N.D. Cal. May 15, 2015).
---------------------------------------------------------------------------

    On March 7, 2013, the EPA finalized action on the State of 
Kentucky's SIP submission addressing, among other things, the good 
neighbor provision requirements for the 2008 ozone NAAQS.\63\ The EPA 
disapproved the submission as to the good neighbor requirements. In the 
notice, the EPA explained that the disapproval of the good neighbor 
portion of the state's infrastructure SIP submission did not trigger a 
mandatory duty for the EPA to promulgate a FIP to address these 
requirements.\64\ Citing the D.C. Circuit's decision EME Homer City 
Generation v. EPA, 696 F.3d 7 (2012), the EPA explained that the court 
concluded states have no obligation to make a SIP submission to address 
the good neighbor provision for a new or revised NAAQS until the EPA 
first defines a state's obligations pursuant to that section.\65\ 
Therefore, because a good neighbor SIP addressing the 2008 ozone 
standard was not at that time required, the EPA indicated that its 
disapproval action would not trigger an obligation for the EPA to 
promulgate a FIP to address the interstate transport requirements.\66\
---------------------------------------------------------------------------

    \63\ 78 FR 14681 (March 7, 2013).
    \64\ Id. at 14683.
    \65\ Id.
    \66\ Id.
---------------------------------------------------------------------------

    On April 30, 2013, the Sierra Club filed a petition for review of 
the EPA's action based on the Agency's conclusion that the FIP clock 
was not triggered by the disapproval of Kentucky's good neighbor 
SIP.\67\ As described above, on April 29, 2014, the Supreme Court 
issued a decision reversing and vacating the D.C. Circuit's decision in 
EME Homer City. Following the Supreme Court decision, the EPA 
requested, and the court granted, vacatur and remand of the portion of 
the EPA's final action that determined that the FIP obligation was not 
triggered by the disapproval.\68\
---------------------------------------------------------------------------

    \67\ Sierra Club v. EPA, Case No. 13-3546 (6th Cir., filed Apr. 
30, 2013).
    \68\ Order, Sierra Club v. EPA, Case No. 13-3546, Document No. 
74-1 (Mar. 13, 2015).
---------------------------------------------------------------------------

    In this notice, the EPA is proposing to correct the portion of the 
disapproval notice indicating that the FIP clock would not be triggered 
by the SIP disapproval. The EPA believes that the EPA's obligation to 
develop a FIP was triggered on the date of the judgment issued by the 
Supreme Court in EPA v. EME Homer City, June 2, 2014, and the EPA is 
obligated to issue a FIP at any time within two years of that date. The 
EPA does not believe that the FIP obligation was triggered as of the 
date of the SIP disapproval because the controlling law as of that date 
was the D.C. Circuit decision in EME Homer City, which held that states 
had no obligation to submit a SIP and the EPA had no authority to issue 
a FIP until the EPA first quantified each state's emission reduction 
obligation under the good neighbor provision. Accordingly, the most 
reasonable conclusion is that the EPA's FIP obligation was triggered 
when the Supreme Court clarified the state and federal obligations with 
respect to the good neighbor provision. Thus, the EPA proposes to find 
that the FIP obligation was triggered as of June 2, 2014, and that the 
EPA is obligated to promulgate a FIP that corrects the deficiency by 
June 2, 2016.
b. States Submitting Transport SIPs Before FIP Is Finalized
    The EPA recognizes that some states are currently developing SIP 
submissions or revising their submitted SIPs to address the good 
neighbor provision of the CAA for the 2008 ozone standard. The EPA 
encourages SIP development and will continue to assist states in 
developing transport SIPs. As noted above, the EPA is subject to a 
court order requiring final action on certain state SIPs by January 29, 
and June 7, 2016.
    The fact that the EPA is proposing a FIP for any state does not 
suggest that the EPA has determined that the state's submittal is not 
approvable. If EPA finalizes approval of a state's good neighbor SIP 
before the FIP is applied, the FIP that is now being proposed for that 
state would no longer be necessary.
    Further, the EPA notes that the remedy being proposed in this 
notice are not the only means a state has to mitigate interstate ozone 
transport under the good neighbor provision. States could submit 
measures that strengthen their current SIPs and achieve reductions that 
are similar to, or more efficacious in eliminating significant 
transport than, those that would be achieved by the FIPs proposed in 
this action. The EPA strongly encourages such strengthening actions. If 
a state submits a SIP that is approved (in whole or in part) by the EPA 
via notice-and-comment rulemaking and that achieves ozone season 
NOX emission reductions and/or establishes EGU 
NOX ozone emissions budgets approximately equivalent to 
those identified by EPA as achievable by 2017, the EPA does not 
anticipate subjecting the state to the EPA's partial remedy in this FIP 
action.

V. Analyzing Downwind Air Quality and Upwind-State Contributions

    In this section, we describe the air quality modeling performed to 
(1) identify locations where we expect there to be nonattainment or 
maintenance problems for 8-hour ozone for the 2017 analytic year chosen 
for this proposal, and (2) quantify the contributions from 
anthropogenic emissions from upwind states to downwind ozone 
concentrations at monitoring sites projected to be in nonattainment or 
have maintenance problems in 2017 for the 2008 ozone NAAQS. Air quality 
modeling to assess the health and welfare benefits of the emissions 
reductions expected to result from this proposal is described in 
section VIII.
    This section includes information on the air quality modeling 
platform used in support of the proposed rule with a focus on the base 
year and future base case emission inventories. We also provide the 
projection of 2017 ozone concentrations and the interstate 
contributions for 8-hour ozone. The Air Quality Modeling Technical 
Support Document (AQM TSD) in the docket for this proposed rule 
contains more detailed information on the air quality modeling aspects 
of this rulemaking.
    On August 4, 2015, the EPA published a Notice of Data Availability 
(80 FR 46271) requesting comment on the air quality modeling platform 
and air quality modeling results that are being used for this proposed 
rule. Specifically, in the NODA, the EPA requested comment on the data 
and methodologies related to the 2011 and 2017 emissions and the air 
quality modeling to project 2017 concentrations and contributions. 
Comments received on that data via the NODA will be considered for the 
final rule.

A. Overview of Air Quality Modeling Platform

    The EPA performed air quality modeling for three emissions 
scenarios: A 2011 base year, a 2017 baseline, and a 2017 illustrative 
control case that

[[Page 75721]]

reflects the emission reductions expected from the proposed rule.\69\ 
We selected 2011 as the base year to reflect the most recent National 
Emissions Inventory (NEI). In addition, the meteorological conditions 
during the summer of 2011 were generally conducive for ozone formation 
across much of the U.S., particularly the eastern U.S. For example, as 
described in the AQM TSD, an analysis of meteorological-adjusted trends 
in seasonal mean ozone for the period 2000 through 2012 indicates that, 
on a regional basis, the summer of 2011 was typical, in terms of the 
presence of conditions conducive to ozone formation, of high ozone 
years in the eastern U.S. Additional analyses of meteorological 
conditions during the summer of 2011 in comparison to conditions during 
several other recent years can be found in the AQM TSD. The use of 
meteorological data representing conditions that are conducive for 
ozone formation is consistent with the EPA's modeling guidance for 
attainment demonstrations.\70\ As noted above, we selected 2017 as the 
projected analysis year to coincide with the attainment date for 
moderate areas under the 2008 ozone NAAQS. We used the 2017 baseline 
emissions in our air quality modeling to identify future nonattainment 
and maintenance locations and to quantify the contributions of 
emissions from upwind states to 8-hour ozone concentrations at downwind 
locations. We used the air quality modeling of the 2017 baseline and 
2017 illustrative control case emissions to estimate the air quality 
impacts and health benefits of this proposal.
---------------------------------------------------------------------------

    \69\ The 2017 illustrative control case is relevant to the EPA's 
policy analysis discussed in section VI and to the benefits and 
costs assessment discussed in section VIII of this preamble. It is 
not used to identify nonattainment or maintenance receptors or 
quantify the contributions from upwind states to these receptors.
    \70\ ``Modeling Guidance for Demonstrating Attainment of Air 
Quality Goals for Ozone, PM2.5, and Regional Haze'' U.S. 
Environmental Protection Agency, Research Triangle Park, NC. 
December 2014. http://www.epa.gov/ttn/scram/guidance/guide/Draft_O3-PM-RH_Modeling_Guidance-2014.pdf.
---------------------------------------------------------------------------

    The EPA used the Comprehensive Air Quality Model with Extensions 
(CAMx) version 6.11 \71\ to simulate pollutant concentrations for the 
2011 base year and the 2017 future year scenarios. CAMx is a grid cell-
based, multi-pollutant photochemical model that simulates the formation 
and fate of ozone and fine particles in the atmosphere. The CAMx model 
contains certain probing tools including source apportionment 
techniques that are designed to quantify the contribution of emissions 
from various sources and areas to ozone in other downwind locations. 
The CAMx model applications were performed for a modeling region (i.e., 
modeling domain) that covers the contiguous 48 states, the District of 
Columbia, and adjacent portions of Canada and Mexico using a horizontal 
resolution of 12 x 12 km. A map of the air quality modeling domain is 
provided in the AQM TSD.
---------------------------------------------------------------------------

    \71\ Comprehensive Air Quality Model with Extensions Version 
6.11 User's Guide. Environ International Corporation. Novato, CA. 
December, 2014.
---------------------------------------------------------------------------

    The 2011-based air quality modeling platform includes 2011 base 
year emissions and future year projections of these emissions and 2011 
meteorology for air quality modeling with CAMx. In the remainder of 
this section, we provide an overview of (1) the 2011 and 2017 emissions 
inventories, (2) the methods for projecting future nonattainment and 
maintenance along with a list of 2017 baseline nonattainment and 
maintenance receptors in the eastern U.S., (3) the approach to 
developing metrics to measure interstate contributions to 8-hour ozone, 
and (4) the predicted interstate contributions to downwind 
nonattainment and maintenance in the eastern U.S. We also identify 
which predicted interstate contributions are at or above the CSAPR 
screening threshold, which we are proposing to apply for regulation of 
interstate transport of ozone for purposes of the 2008 ozone standard.

B. Emission Inventories

    The EPA developed emission inventories for this proposal including 
emission estimates for EGUs, non-EGU point sources, stationary nonpoint 
sources, onroad mobile sources, nonroad mobile sources, wild fires, 
prescribed fires, and for biogenic emissions that are not the result of 
human activities. The EPA's air quality modeling relies on this 
comprehensive set of emission inventories because emissions from 
multiple source categories are needed to model ambient air quality and 
to facilitate comparison of model outputs with ambient measurements.
    To prepare the emission inventories for air quality modeling, the 
EPA processed the emission inventories using the Sparse Matrix Operator 
Kernel Emissions (SMOKE) Modeling System version 3.6.5 to produce the 
gridded, hourly, speciated, model-ready emissions for input to the CAMx 
air quality model. Additional information on the development of the 
emission inventories and on data sets used during the emissions 
modeling process are provided in the TSD ``Preparation of Emissions 
Inventories for the Version 6.2, 2011 Emissions Modeling Platform,'' 
hereafter known as the ``Emissions Modeling TSD.'' This TSD is 
available in the docket for this proposed rule and at http://www.epa.gov/ttn/chief/emch/index.html#2011.
    The EPA published Federal Register notices on November 27, 2013 (78 
FR 70935), and January 14, 2014 (79 FR 2437), to take comment on the 
2011 and 2018 \72\ emission modeling platforms, including data and 
documentation on the methods used to prepare the emission inventories 
for air quality modeling. Comments were collected for the 2011 and 2018 
emissions modeling platforms under the dockets EPA-HQ-OAR-2013-0743 and 
EPA-HQ-OAR-2013-0809, respectively. Comments from those notices that 
were accepted by the EPA have been incorporated into the emission 
modeling data and procedures for this proposal as documented in the 
Emissions Modeling TSD. As indicated above, the updated emission 
inventories, methodologies, and data were provided in a Notice of Data 
Availability published in the Federal Register on August 4, 2015 (80 FR 
46271). Comments received on the proposal data will be considered for 
the final rule.
---------------------------------------------------------------------------

    \72\ During the 2013 and 2014 pre-proposal comment periods for 
the modeling platforms, the attainment deadline for the downwind 
areas was established by regulation as December 2018. The 2008 Ozone 
NAAQS SIP Requirements Rule revised the attainment deadline for 
ozone nonattainment areas currently designated as Moderate from 
December 2018 to July 2018, which means attainment determinations 
have to be based on design values calculated using 2015 through 2017 
ozone season data. Therefore, in its July 2015 NODA and in this 
proposal, the EPA has adjusted the future year modeling to be for 
the year 2017 rather than 2018.
---------------------------------------------------------------------------

1. Foundation Emission Inventory Data Sets
    The EPA developed emission data representing the year 2011 to 
support air quality modeling of a base year from which future air 
quality could be forecasted. The EPA used the 2011 National Emission 
Inventory (NEI) version 2 (2011NEIv2), released in March 2015, as the 
primary basis for the U.S. inventories supporting the 2011 air quality 
modeling. Documentation on the 2011NEIv2 is available in the 2011 
National Emissions Inventory, version 2 TSD available in the docket for 
this proposed rule and at http://www.epa.gov/ttn/chief/net/2011inventory.html#inventorydoc. The future base case scenario modeled 
for

[[Page 75722]]

2017 includes a representation of changes in activity data and of 
predicted emission reductions from on-the-books actions, including 
planned emission control installations and promulgated federal measures 
that affect anthropogenic emissions.\73\
---------------------------------------------------------------------------

    \73\ Biogenic emissions and emissions from wild fires and 
prescribed fires were held constant between 2011 and 2017 since (1) 
these emissions are tied to the 2011 meteorological conditions and 
(2) the focus of this rule is on the contribution from anthropogenic 
emissions to projected ozone nonattainment and maintenance.
---------------------------------------------------------------------------

2. Development of Emission Inventories for EGUs
    Annual NOX and SO2 emissions for EGUs in the 
2011NEIv2 are based primarily on data from continuous emission 
monitoring systems (CEMS), with other EGU pollutants estimated using 
emission factors and annual heat input data reported to the EPA. For 
EGUs without CEMS, the EPA used data submitted to the NEI by the 
states. For more information on the details of how the 2011 EGU 
emissions were developed and prepared for air quality modeling, see the 
Emissions Modeling TSD.
    The EPA projected future 2017 baseline EGU emissions using version 
5.14 of the Integrated Planning Model (IPM) (http://www.epa.gov/powersectormodeling). IPM, developed by ICF Consulting, is a state-of-
the-art, peer-reviewed, multi-regional, dynamic, deterministic linear 
programming model of the contiguous U.S. electric power sector. It 
provides forecasts of least cost capacity expansion, electricity 
dispatch, and emission control strategies while meeting energy demand 
and environmental, transmission, dispatch, and reliability constraints. 
EPA has used IPM for over two decades to better understand power sector 
behavior under future business-as-usual conditions and to evaluate the 
economic and emission impacts of prospective environmental policies. 
The model is designed to reflect electricity markets as accurately as 
possible. The EPA uses the best available information from utilities, 
industry experts, gas and coal market experts, financial institutions, 
and government statistics as the basis for the detailed power sector 
modeling in IPM. The model documentation provides additional 
information on the assumptions discussed here as well as all other 
model assumptions and inputs.\74\
---------------------------------------------------------------------------

    \74\ Detailed information and documentation of EPA's Base Case, 
including all the underlying assumptions, data sources, and 
architecture parameters can be found on EPA's Web site at: 
www.epa.gov/airmarkets/powersectormodeling.
---------------------------------------------------------------------------

    The IPM version 5.14 base case accounts for comments received as a 
result of the NODAs released in 2013 and 2014 (including control 
configuration) as well as updated environmental regulations. This 
projected base case accounts for the effects of the finalized MATS \75\ 
and CSAPR rules, New Source Review settlements, and on-the-books state 
rules through 2014 \76\ impacting SO2, NOX, 
directly emitted particulate matter, and CO2, and final 
actions the EPA has taken to implement the Regional Haze Rule. The 
EPA's IPM base case also includes two federal non-air rules affecting 
EGUs: The Cooling Water Intake Structure (Clean Water Act section 
316(b)) rule and the Coal Combustion Residuals (CCR) rule. 
Documentation of IPM version 5.14 is in the docket and available online 
at www.epa.gov/powersectormodeling.
---------------------------------------------------------------------------

    \75\ In Michigan v. EPA, the Supreme Court reversed on narrow 
grounds a portion of the D.C. Circuit decision upholding the MATS 
rule, finding that EPA erred by not considering cost when 
determining that regulation of EGUs was ``appropriate'' pursuant to 
CAA section 112(n)(1). 135 S.Ct. 192 (2015). The case was remanded 
to the D.C. Circuit for further proceedings, and the MATS rule 
currently remains in place.
    \76\ For any specific version of IPM there is a cutoff date 
after which it is no longer possible to incorporate updates into the 
input databases. For version 5.14, that cutoff date was November 
2014.
---------------------------------------------------------------------------

    After the receptor and contribution analyses for this proposal were 
underway, the EPA released an updated IPM base case, version 5.15, and 
the final Clean Power Plan (CPP).\77\ In order to reflect all on-the-
books policies as well as the most current power sector modeling data, 
the EPA performed an assessment, described in section V-D below, to 
reflect inclusion of IPM 5.15 with the CPP in the base case for this 
proposal. The EPA plans to use this base case, including the final CPP, 
for its modeling analysis for the final rule. However, EPA's analysis 
for the final rule may include updated or different assumptions about 
the inclusion of the CPP and the CSAPR phase 2 NOX ozone-
season or SO2 annual emissions budgets for those states with 
budgets that were declared invalid and remanded to the EPA by the D.C. 
Circuit's decision in EME Homer City II.
---------------------------------------------------------------------------

    \77\ Carbon Pollution Emission Guidelines for Existing 
Stationary Sources: Electric Utility Generating Units, 80 FR 64662 
(Oct. 23, 2015).
---------------------------------------------------------------------------

    In projecting future 2017 baseline EGU emissions, the EPA adjusted 
the 2018 IPM version 5.14 base case results to account for three 
categories of differences between 2017 and 2018. The categories are: 
(1) Adjusting NOX emissions for units with SCRs in 2018 but 
that are assumed not to operate or be installed in 2017; (2) adding 
NOX emissions for units that are retiring in 2018 but are 
projected to operate in 2017; and (3) adjusting NOX 
emissions for coal-fired units that are projected to convert to natural 
gas (i.e., ``coal-to-gas'') in 2018, but are still projected to burn 
coal in 2017. These adjustments were only made to the air quality flat 
file outputs of IPM and are discussed in greater detail in the IPM 
documentation found in the docket for this proposed rule.
3. Development of Emission Inventories for Non-EGU Point Sources
    The 2011 non-EGU point sources in the 2011 base case inventory 
match those in the 2011NEIv2. Details on the development of the 2011 
emission inventories can be found in the 2011NEIv2 TSD. Prior to air 
quality modeling, the emission inventories must be processed into a 
format that is appropriate for the air quality model to use. Details on 
the processing of the emissions for 2011 and on the development of the 
2017 non-EGU emission inventories are available in the Emissions 
Modeling TSD. Projection factors and percent reductions in this 
proposal reflect comments received as a result of the NODAs in 2013 and 
2014, along with emission reductions due to national and local rules, 
control programs, plant closures, consent decrees and settlements. 
Reductions from several Maximum Achievable Control Technology (MACT) 
and National Emission Standards for Hazardous Air Pollutants (NESHAP) 
standards are included. Projection approaches for corn ethanol and 
biodiesel plants, refineries and upstream impacts represent 
requirements pursuant to the Energy Independence and Security Act of 
2007 (EISA).
    For aircraft emissions at airports, the EPA developed projection 
factors based on activity growth projected by the Federal Aviation 
Administration Terminal Area Forecast (TAF) system, published in March 
2013.
    Point source and nonpoint oil and gas emissions are projected to 
2018 using regional projection factors by product type using Annual 
Energy Outlook (AEO) 2014 projections to year 2017. NOX and 
VOC reductions that are co-benefits to the NESHAP and New Source 
Performance Standards (NSPS) for Stationary Reciprocating Internal 
Combustion Engines (RICE) are reflected for select source categories. 
In addition, Natural Gas Turbines and Process Heaters NSPS 
NOX controls and NSPS Oil and Gas VOC controls are reflected 
for select source categories.

[[Page 75723]]

4. Development of Emission Inventories for Onroad Mobile Sources
    The EPA developed the onroad mobile source emissions for states 
other than California using the EPA's Motor Vehicle Emissions Simulator 
(MOVES) 2014. We computed the emissions within SMOKE by multiplying 
emission factors developed using MOVES with the appropriate activity 
data. We also used MOVES emission factors to estimate emissions from 
refueling. The 2011 onroad mobile source emissions used in the 
inventory for this rule are similar but not identical to the 2011NEIv2 
emissions due to a more detailed treatment of E-85 emissions in the 
2011 emission modeling platform used for this rule. Additional 
information on the approach for generating the onroad mobile source 
emissions is available in the Emissions Modeling TSD. Onroad mobile 
source emissions for California are consistent with the emissions 
submitted by the state as reflected in the 2011NEIv2.
    In the future-year modeling for mobile sources, we included all 
national measures known at the time of modeling. The future scenarios 
for mobile sources reflect projected changes to fuel usage and onroad 
mobile control programs finalized as of the date of the model run. 
Finalized rules that are incorporated into the mobile source emissions 
include: Tier 3 Standards (March 2014), the Light-Duty Greenhouse Gas 
Rule (March 2013), Heavy (and Medium)-Duty Greenhouse Gas Rule (August 
2011), the Renewable Fuel Standard (February 2010), the Light Duty 
Greenhouse Gas Rule (April 2010), the Corporate-Average Fuel Economy 
standards for 2008-2011 (April 2010), the 2007 Onroad Heavy-Duty Rule 
(February 2009), and the Final Mobile Source Air Toxics Rule (MSAT2) 
(February 2007). Impacts of rules that were in effect in 2011 are 
reflected in the 2011 base year emissions at a level that corresponds 
to the extent to which each rule had penetrated into the fleet and fuel 
supply by the year 2011. Local control programs such as the California 
LEV III program are included in the onroad mobile source emissions. 
Activity data for onroad mobile sources was projected using AEO 2014. 
Because EPA changed the model year from 2018 to 2017 between its pre-
proposal modeling and the modeling conducted for this proposal (see 
footnote 64), and due to the substantial amount of lead time required 
to generate emission factors with MOVES, the EPA was unable to directly 
generate emission factors for 2017 prior to the modeling used to 
support this proposed rule. Therefore, for this proposal, future year 
onroad mobile source emissions were computed for 2018 and adjusted to 
2017 levels using adjustment factors derived from national MOVES runs 
for 2017 and 2018. Emission factors will be generated directly for 2017 
prior to air quality modeling for the final rule.
5. Development of Emission Inventories for Commercial Marine Category 3 
(Vessel)
    The commercial marine category 3 vessel (``C3 marine'') emissions 
in the 2011 base case emission inventory for this proposed rule are 
consistent with those in the 2011NEIv2. These emissions reflect 
reductions associated with the Emissions Control Area proposal to the 
International Maritime Organization control strategy (EPA-420-F-10-041, 
August 2010); reductions of NOX, VOC, and CO emissions for 
new C3 engines that went into effect in 2011; and fuel sulfur limits 
that went into effect as early as 2010. The cumulative impacts of these 
rules through 2017 are incorporated in the 2017 projected emissions for 
C3 marine sources.
6. Development of Emission Inventories for Other Nonroad Mobile Sources
    To develop the nonroad mobile source emission inventories other 
than C3 marine for the modeling platform, the EPA used monthly, county, 
and process level emissions output from the National Mobile Inventory 
Model (NMIM) (see http://www.epa.gov/otaq/nmim.htm). State-submitted 
emissions data for nonroad sources were used for Texas and California. 
These emissions are consistent with those in the 2011NEIv2.
    The EPA also used NMIM to project nonroad mobile emissions for 
future years. Development of the future year nonroad emissions require 
a substantial amount of lead time and the emissions were prepared for 
the year 2018 before the model year was changed to 2017 when the 
attainment date was revised in the 2008 Ozone NAAQS SIP Requirements 
Rule. To develop a 2017 nonroad emissions inventory for this proposal 
that accounted for the difference between 2017 and 2018 emissions 
levels, we calculated the nonroad emissions for 2018, and then adjusted 
those emissions to 2017 levels using national adjustment factors 
derived from national NMIM runs for 2017 and 2018. Emissions specific 
to 2017 will be developed for the modeling that will support the final 
rule. The nonroad mobile emission control programs include reductions 
to locomotives, diesel engines and marine engines, along with standards 
for fuel sulfur content and evaporative emissions. A comprehensive list 
of control programs included for mobile sources is available in the 
Emissions Modeling TSD.
7. Development of Emission Inventories for Nonpoint Sources
    The emissions for stationary nonpoint sources in our 2011 base case 
emission inventory are largely consistent with those in the 2011NEIv2. 
For more information on the nonpoint sources in the 2011 base case 
inventory, see the Emissions Modeling TSD and the 2011NEIv2 TSD.
    Where states provided EPA with information about projected control 
measures or changes in nonpoint source emissions, the EPA incorporated 
those inputs in its projections. We included adjustments for state fuel 
sulfur content rules for fuel oil in the Northeast. Projected emissions 
for portable fuel containers reflect the impact of projection factors 
required by the final Mobile Source Air Toxics (MSAT2) rule and the 
EISA, including updates to cellulosic ethanol plants, ethanol transport 
working losses, and ethanol distribution vapor losses.
    The EPA developed regional projection factors for nonpoint oil and 
gas sources by product type based on Annual Energy Outlook (AEO) 2014 
projections to year 2018. We reflected criteria air pollutant (CAP) co-
benefit reductions resulting from the National Emission Standards for 
Hazardous Air Pollutants (NESHAP) for Reciprocating Internal Combustion 
Engines (RICE) and NSPS rules and Oil and Gas NSPS VOC controls for 
select source categories. Additional details on the projections are 
available in the Emissions Modeling TSD.

C. Air Quality Modeling To Identify Nonattainment and Maintenance 
Receptors

    In this section, we describe the air quality modeling performed to 
identify locations where we expect there to be nonattainment or 
maintenance problems for the 2008 8-hour ozone NAAQS in the 2017 
analytic future year chosen for this proposal. We then describe how we 
factored current monitored data into the identification of sites as 
having either nonattainment or maintenance concerns for the purposes of 
this rulemaking. These sites are used as the ``receptors'' for 
quantifying the contributions of emissions in upwind states to 
nonattainment and maintenance concerns in downwind locations.

[[Page 75724]]

    In this proposed rule, the EPA is relying on CSAPR's approach to 
identify separate nonattainment and maintenance receptors in order to 
give independent effect to both the ``contribute significantly to 
nonattainment'' and the ``interfere with maintenance'' prongs of 
section 110(a)(2)(D)(i)(I), consistent with the D.C. Circuit's 
direction in North Carolina.\78\ In its decision on remand from the 
Supreme Court, the D.C. Circuit confirmed that EPA's approach to 
identifying maintenance receptors in CSAPR comported with the court's 
prior instruction to give independent meaning to the ``interfere with 
maintenance'' prong in the good neighbor provision. EME Homer City II, 
795 F.3d at 136.
---------------------------------------------------------------------------

    \78\ 531 F.3d at 910-911 (holding that the EPA must give 
``independent significance'' to each prong of CAA section 
110(a)(2)(D)(i)(I)).
---------------------------------------------------------------------------

    In CSAPR, the EPA identified nonattainment receptors as those 
monitoring sites that are projected to have average design values that 
exceed the NAAQS. The EPA separately identified maintenance receptors 
as those receptors that would have difficulty maintaining the relevant 
NAAQS in a scenario that takes into account historical variability in 
air quality at that receptor. The CSAPR approach for identifying 
nonattainment and maintenance receptors relied only upon air quality 
model projections of measured design values. In CSAPR, if the average 
design value in the analysis year was projected to exceed the NAAQS, 
then the monitoring site is identified as a nonattainment receptor 
without consideration of whether the monitoring site is currently 
measuring ``clean data'' (i.e., design values below the NAAQS based on 
the most recent three years of measured data). In prior transport 
rulemakings, such as the NOX SIP Call and CAIR, the EPA 
defined nonattainment receptors as those areas that both currently 
monitor nonattainment and that the EPA projects will be in 
nonattainment in the future compliance year.\79\ We explained that we 
had the most confidence in our projections of nonattainment for those 
counties that also measure nonattainment for the most recent period of 
available ambient data. In CSAPR, we were compelled to deviate from 
this practice of incorporating monitored data into EPA's evaluation of 
projected nonattainment receptors because the most recent monitoring 
data then available reflected large emission reductions from CAIR, 
which CSAPR was designed to replace. As recently affirmed by the D.C. 
Circuit, it was therefore reasonable for the EPA to decide not to 
compare monitored data reflecting CAIR emissions reductions to its 
modeling projections that instead excluded CAIR from its baseline.\80\
---------------------------------------------------------------------------

    \79\ 63 FR at 57375, 57377 (Oct. 27, 1998); 70 FR at 25241 (May 
12, 2005). See also North Carolina, 531 F.3d at 913-914 (affirming 
as reasonable EPA's approach to defining nonattainment in CAIR).
    \80\ EME Homer City II, 795 F.3d at 135-36; see also 76 FR 48208 
at 48230-31 (August 8, 2011).
---------------------------------------------------------------------------

    As the EPA is not replacing an existing transport program in this 
rulemaking proposal, we are proposing to consider current monitored 
data as part of the process for identifying projected nonattainment 
receptors for this rulemaking. Accordingly, in this rulemaking, the EPA 
is proposing to return to our prior practice of comparing our modeled 
nonattainment projections to current monitored air quality. For the 
purposes of this rulemaking, the EPA proposes to identify as 
nonattainment receptors those monitors that both currently measure 
nonattainment and that the EPA projects will be in nonattainment in 
2017.
    As noted above, in CSAPR the EPA identified maintenance receptors 
as those receptors that would have difficulty maintaining the relevant 
NAAQS in a scenario that takes into account historical variability in 
air quality at that receptor. The variability in air quality was 
determined by evaluating the ``maximum'' future design value at each 
receptor based on a projection of the maximum measured design value 
over the relevant period.
    The EPA interprets the projected maximum future design value to be 
a potential future air quality outcome consistent with the meteorology 
that yielded maximum measured concentrations in the ambient data set 
analyzed for that receptor. The EPA also recognizes that previously 
experienced meteorological conditions (e.g., dominant wind direction, 
temperatures, air mass patterns) promoting ozone formation that led to 
maximum concentrations in the measured data may reoccur in the future. 
The maximum design value gives a reasonable projection of future air 
quality at the receptor under a scenario in which such conditions do, 
in fact, reoccur. The projected maximum design value is used to 
identify upwind emissions that, under those circumstances, could 
interfere with the downwind area's ability to maintain the NAAQS. 
Therefore, the EPA assesses the magnitude of the maximum projected 
design value for 2017 at each receptor in relation to the 2008 ozone 
NAAQS and, where such a value exceeds the NAAQS, EPA determines that 
receptor to be a ``maintenance'' receptor for purposes of defining 
interference with maintenance in this proposal, consistent with the 
method used in CSAPR and upheld by the D.C. Circuit in EME Homer City 
II.\81\ That is, monitoring sites with a maximum design value that 
exceeds the NAAQS are projected to have a maintenance problem in 2017.
---------------------------------------------------------------------------

    \81\ See 795 F.3d at 136.
---------------------------------------------------------------------------

    Consistent with the CSAPR methodology, monitoring sites with a 
projected maximum design value that exceeds the NAAQS, but with a 
projected average design value that is below the NAAQS, are identified 
as maintenance-only receptors. In addition, those sites that are 
currently measuring clean data, but are projected to be nonattainment 
based on the average design value and that, by definition, are 
projected to have a maximum design value above the standard are also 
identified as maintenance-only receptors. We are not proposing that 
monitored data have any effect on the EPA's determination of 
maintenance receptors using the CSAPR method since even those receptor 
sites that are not currently monitoring violations are still subject to 
conditions that may allow violations to reoccur and therefore have 
future maintenance concerns.
    The following is a brief summary of the procedures for projecting 
future-year 8-hour ozone average and maximum design values to 2017. 
Consistent with the EPA's modeling guidance we use the air quality 
modeling results in a ``relative'' sense to project future 
concentrations. That is, the ratios of future year model predictions to 
base year model predictions are used to adjust ambient ozone design 
values \82\ up or down depending on the relative (percent) change in 
model predictions for each location. The modeling guidance recommends 
using measured ozone concentrations for the 5-year period centered on 
the base year as the air quality data starting point for future year 
projections. This average design value is used to dampen the effects of 
inter-annual variability in meteorology on ozone concentrations and to 
provide a reasonable projection of future air quality at the receptor 
under ``average'' conditions. Because the base year for this proposal 
is 2011, we are using the base period 2009-2013 ambient ozone design 
value data in order to project

[[Page 75725]]

2017 average design values in a manner consistent with the modeling 
guidance.
---------------------------------------------------------------------------

    \82\ The ozone design value at a particular monitoring site is 
the 3-year average of the annual 4th highest daily maximum 8-hour 
ozone concentration at that site.
---------------------------------------------------------------------------

    The approach for projecting future ozone design values involved the 
projection of an average of up to 3 design value periods, which include 
the years 2009-2013 (design values for 2009-2011, 2010-2012, and 2011-
2013). The 2009-2011, 2010-2012, and 2011-2013 design values are 
accessible at www.epa.gov/airtrends/values.html. The average of the 3 
design values creates a ``5-year weighted average'' value. The 5-year 
weighted average values were then projected to 2017. To project 8-hour 
ozone design values we used the 2011 base year and 2017 future base-
case model-predicted ozone concentrations to calculate relative 
reduction factors (RRFs) for the location of each monitoring site. The 
RRFs were applied to the 2009-2013 average ozone design values and the 
individual design values for 2009-2011, 2010-2012, and 2011-2013 
through the following steps:
    Step 1: For each monitoring site, we calculate the average 
concentration across the 10 days with the 10 highest 8-hour daily 
maximum ozone predictions in the 2017 baseline \83\ using the 
predictions in the nine grid cells that include or surround the 
location of the monitoring site. The RRF for a site is the ratio of the 
mean prediction in the future year to the mean prediction in the 2011 
base year. The RRFs were calculated on a site-by-site basis.\84\
---------------------------------------------------------------------------

    \83\ As specified in the attainment demonstration modeling 
guidance, if there are fewer than 10 modeled days greater than or 
equal to (>=) 70 ppb, then the threshold is lowered in 1 ppb 
increments (to as low as 60 ppb) until there are 10 days. If there 
are fewer than 5 days >= 60 ppb, then an RRF calculation is not 
completed for that site.
    \84\ Sites with insufficient valid design values were not 
included in the calculation. In addition, sites with fewer than 5 
days with predicted 8-hour ozone >= 60 ppb in 2018 were dropped from 
the analysis.
---------------------------------------------------------------------------

    Step 2: The RRF for each site is then multiplied by the 2009-2013 
5-year weighted average ambient design value for that site, yielding an 
estimate of the future average design value at that particular 
monitoring location.
    Step 3: We calculate the maximum future design value by multiplying 
the RRF for each site by the three base periods (2009-2011, 2010-2012, 
and 2011-2013) separately. The highest of the three future values is 
the projected maximum design value. Consistent with the truncation and 
rounding procedures for the 8-hour ozone NAAQS, the projected design 
values are truncated to integers in units of ppb.\85\
---------------------------------------------------------------------------

    \85\ 40 CFR part 50, Appendix P to Part 50--Interpretation of 
the Primary and Secondary National Ambient Air Quality Standards for 
Ozone.
---------------------------------------------------------------------------

    Projected design values that are greater than or equal to 76 ppb 
are considered to be violating the NAAQS in 2017. For those sites that 
are projected to be violating the NAAQS based on the average design 
values in 2017, we examined measured design values for the period 2012-
2014, which is the most recent available measured design values at the 
time of this proposal. As noted above, we are proposing to identify 
nonattainment receptors in this rulemaking as those sites that are 
violating the NAAQS based on current measured air quality and also have 
projected average design values of 76 ppb or greater. Maintenance-only 
receptors therefore include both (1) those sites with projected average 
design values above the NAAQS that are currently measuring clean data 
and (2) those sites with projected average design values below the 
level of the NAAQS, but with projected maximum design values of 76 ppb 
or greater. In addition to the maintenance-only receptors, the 2017 
ozone nonattainment receptors are also maintenance receptors because 
the maximum design values for each of these sites is always greater 
than or equal to the average design value. The monitoring sites that we 
project to be nonattainment and maintenance receptors for the ozone 
NAAQS in the 2017 baseline are used for assessing the contribution of 
emissions in upwind states to downwind nonattainment and maintenance of 
ozone NAAQS as part of this proposal.
    Table V.C-1 contains the 2009-2013 base period average and maximum 
8-hour ozone design values, the 2017 baseline average and maximum 
design values, and the 2012-2014 design values for the 8 sites in the 
eastern U.S. projected to be 2017 nonattainment receptors. Table V.C-2 
contains this same information for the 6 maintenance-only sites in the 
eastern U.S. that are projected nonattainment but currently measuring 
clean data. Table V.C-3 contains this same information for the 23 
maintenance-only sites in the eastern U.S. that are projected to have 
average design values below the NAAQS, but maximum design values above 
the NAAQS. The design values for all monitoring sites in the U.S. are 
provided in docket item EPA-HQ-OAR-2015-0500-0006. Additional details 
on the approach for projecting average and maximum design values are 
provided in the modeling guidance, Model Attainment Test Software \86\ 
documentation, and the AQM TSD. The EPA is seeking comment on the 
proposed methods for determining projected nonattainment and 
maintenance receptors.
---------------------------------------------------------------------------

    \86\ Abt Associates, 2014. User's Guide: Modeled Attainment Test 
Software. http://www.epa.gov/scram001/modelingapps_mats.htm.

  Table V.C-1--Average and Maximum 2009-2013 and 2017 Baseline 8-Hour Ozone Design Values and 2012-2014 Design Values (ppb) at Projected Nonattainment
                                                                Sites in the Eastern U.S.
                                                                [Nonattainment receptors]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                          Average design  Maximum design
           Monitor ID                    State              County          value 2009-     value 2009-   Average design  Maximum design     2012-2014
                                                                               2013            2013         value 2017      value 2017     design value
--------------------------------------------------------------------------------------------------------------------------------------------------------
90013007........................  Connecticut.......  Fairfield.........            84.3            89.0            77.1            81.4            84.0
90019003........................  Connecticut.......  Fairfield.........            83.7            87.0            78.0            81.1            85.0
90099002........................  Connecticut.......  New Haven.........            85.7            89.0            77.2            80.2            81.0
480391004.......................  Texas.............  Brazoria..........            88.0            89.0            81.4            82.3            80.0
481210034.......................  Texas.............  Denton............            84.3            87.0            76.9            79.4            81.0
484392003.......................  Texas.............  Tarrant...........            87.3            90.0            79.6            82.1            77.0
484393009.......................  Texas.............  Tarrant...........            86.0            86.0            78.6            78.6            80.0
551170006.......................  Wisconsin.........  Sheboygan.........            84.3            87.0            77.0            79.4            81.0
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 75726]]


 Table V.C-2--Average and Maximum 2009-2013 and 2017 Baseline 8-Hour Ozone Design Values and 2012-2014 Design Values (ppb) at Sites in the Eastern U.S.
                                           That Are Projected Nonattainment But Currently Measuring Clean Data
                                                              [Maintenance-only receptors]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Average design  Maximum design
           Monitor ID                   State              County         value 2009-     value 2009-   Average design  Maximum design  2012-2014 design
                                                                             2013            2013         value 2017      value 2017          value
--------------------------------------------------------------------------------------------------------------------------------------------------------
240251001......................  Maryland..........  Harford..........            90.0            93.0            81.3            84.0              75.0
360850067......................  New York..........  Richmond.........            81.3            83.0            76.3            77.8              73.0
361030002......................  New York..........  Suffolk..........            83.3            85.0            79.2            80.8              73.0
390610006......................  Ohio..............  Hamilton.........            82.0            85.0            76.3            79.1              75.0
482011034......................  Texas.............  Harris...........            81.0            82.0            76.8            77.8              72.0
482011039......................  Texas.............  Harris...........            82.0            84.0            78.2            80.2              72.0
--------------------------------------------------------------------------------------------------------------------------------------------------------


Table V.C-3--Average and Maximum 2009-2013 and 2017 Baseline 8-Hour Ozone Design Values and 2012-2014 Design Values (ppb) at Projected Maintenance Sites
                                                   in the Eastern U.S. Based on the CSAPR Methodology
                                                              [Maintenance-only receptors]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Average design  Maximum design
           Monitor ID                   State              County         value 2009-     value 2009-   Average design  Maximum design  2012-2014 design
                                                                             2013            2013         value 2017      value 2017          value
--------------------------------------------------------------------------------------------------------------------------------------------------------
90010017.......................  Connecticut.......  Fairfield........            80.3            83.0            75.8            78.4              82.0
211110067......................  Kentucky..........  Jefferson........            82.0            85.0            75.8            78.6   Incomplete Data
211850004......................  Kentucky..........  Oldham...........            82.0            86.0            73.7            77.3              74.0
240053001......................  Maryland..........  Baltimore........            80.7            84.0            73.2            76.2              72.0
260050003......................  Michigan..........  Allegan..........            82.7            86.0            75.5            78.5              83.0
261630019......................  Michigan..........  Wayne............            78.7            81.0            74.0            76.2              74.0
340071001......................  New Jersey........  Camden...........            82.7            87.0            74.2            78.1              76.0
340150002......................  New Jersey........  Gloucester.......            84.3            87.0            75.1            77.5              76.0
340230011......................  New Jersey........  Middlesex........            81.3            85.0            73.0            76.3              74.0
340290006......................  New Jersey........  Ocean............            82.0            85.0            73.9            76.6              75.0
360810124......................  New York..........  Queens...........            78.0            80.0            75.7            77.6              72.0
420031005......................  Pennsylvania......  Allegheny........            80.7            82.0            75.3            76.5              77.0
421010024......................  Pennsylvania......  Philadelphia.....            83.3            87.0            75.1            78.4              75.0
480850005......................  Texas.............  Collin...........            82.7            84.0            74.9            76.0              78.0
481130069......................  Texas.............  Dallas...........            79.7            84.0            74.0            78.0              78.0
481130075......................  Texas.............  Dallas...........            82.0            83.0            75.8            76.7              77.0
481211032......................  Texas.............  Denton...........            82.7            84.0            75.1            76.3              79.0
482010024......................  Texas.............  Harris...........            80.3            83.0            75.9            78.5              72.0
482010026......................  Texas.............  Harris...........            77.3            80.0            73.5            76.1              67.0
482010055......................  Texas.............  Harris...........            81.3            83.0            75.4            77.0              75.0
482011050......................  Texas.............  Harris...........            78.3            80.0            74.6            76.2              72.0
484390075......................  Texas.............  Tarrant..........            82.0            83.0            75.5            76.4              79.0
484393011......................  Texas.............  Tarrant..........            80.7            83.0            74.5            76.6              75.0
--------------------------------------------------------------------------------------------------------------------------------------------------------

D. Pollutant Transport From Upwind States

1. Air Quality Modeling To Quantify Upwind State Contributions
    This section documents the procedures the EPA used to quantify the 
impact of emissions from specific upwind states on 2017 8-hour design 
values for identified downwind nonattainment and maintenance receptors. 
The EPA used CAMx photochemical source apportionment modeling to 
quantify the impact of emissions in specific upwind states on downwind 
nonattainment and maintenance receptors for 8-hour ozone. CAMx employs 
enhanced source apportionment techniques that track the formation and 
transport of ozone from specific emissions sources and calculates the 
contribution of sources and precursors to ozone for individual receptor 
locations. The strength of the photochemical model source apportionment 
technique is that all modeled ozone at a given receptor location in the 
modeling domain is tracked back to specific sources of emissions and 
boundary conditions to fully characterize culpable sources.
    The EPA performed nationwide, state-level ozone source 
apportionment modeling using the CAMx Ozone Source Apportionment 
Technology/Anthropogenic Precursor Culpability Analysis (OSAT/APCA) 
technique \87\ to quantify the contribution of 2017 baseline 
NOX and VOC emissions from all sources in each state to 
projected 2017 ozone concentrations at air quality monitoring sites. In 
the source apportionment model run, we tracked the ozone formed from 
each of the following contribution categories (i.e., ``tags''):
---------------------------------------------------------------------------

    \87\ As part of this technique, ozone formed from reactions 
between biogenic VOC and NOX with anthropogenic 
NOX and VOC are assigned to the anthropogenic emissions.
---------------------------------------------------------------------------

     States--anthropogenic NOX and VOC emissions 
from each state tracked individually (emissions from all anthropogenic 
sectors in a given state were combined);
     Biogenics--biogenic NOX and VOC emissions 
domain-wide (i.e., not by state);
     Boundary Concentrations--concentrations transported into 
the modeling domain;

[[Page 75727]]

     Tribes--the emissions from those tribal lands for which we 
have point source inventory data in the 2011 NEI (we did not model the 
contributions from individual tribes);
     Canada and Mexico--anthropogenic emissions from sources in 
the portions of Canada and Mexico included in the modeling domain (we 
did not model the contributions from Canada and Mexico separately);
     Fires--combined emissions from wild and prescribed fires 
domain-wide (i.e., not by state); and
     Offshore--combined emissions from offshore marine vessels 
and offshore drilling platforms.
    The contribution modeling provided contributions to ozone from 
anthropogenic NOX and VOC emissions in each state, 
individually. The contributions to ozone from chemical reactions 
between biogenic NOX and VOC emissions were modeled and 
assigned to the ``biogenic'' category. The contributions from wild fire 
and prescribed fire NOX and VOC emissions were modeled and 
assigned to the ``fires'' category. That is, the contributions from the 
``biogenic'' and ``fires'' categories are not assigned to individual 
states nor are they included in the state contributions.
    The CAMx OSAT/APCA model run was performed for the period May 1 
through September 30 using the projected 2017 baseline emissions and 
2011 meteorology for this time period. The hourly contributions \88\ 
from each tag were processed to obtain the 8-hour average contributions 
corresponding to the time period of the 8-hour daily maximum 
concentration on each day in the 2017 model simulation. This step was 
performed for those model grid cells containing monitoring sites in 
order to obtain 8-hour average contributions for each day at the 
location of each site. The model-predicted contributions were then 
applied in a relative sense to quantify the contributions to the 2017 
average design value at each site. The resulting 2017 contributions 
from each tag to each monitoring site in the eastern and western U.S. 
along with additional details on the source apportionment modeling and 
the procedures for calculating contributions can be found in the AQM 
TSD. The EPA is seeking comment on the methodologies for calculating 
ozone contributions.
---------------------------------------------------------------------------

    \88\ Contributions from anthropogenic emissions under 
``NOX-limited'' and ``VOC-limited'' chemical regimes were 
combined to obtain the net contribution from NOX and VOC 
anthropogenic emissions in each state.
---------------------------------------------------------------------------

    The average contribution metric is intended to provide a reasonable 
representation of the contribution from individual states to the 
projected 2017 design value, based on modeled transport patterns and 
other meteorological conditions generally associated with modeled high 
ozone concentrations at the receptor. An average contribution metric 
constructed in this manner is beneficial since the magnitude of the 
contributions is directly related to the magnitude of the design value 
at each site.
    The largest contribution from each state in the East to 8-hour 
ozone nonattainment receptors in downwind states is provided in Table 
V.D-1. The largest contribution from each state in the East to 8-hour 
ozone maintenance-only receptors in downwind states is also provided in 
Table V.D-1.

Table V.D-1--Largest Contribution to Downwind 8-Hour Ozone Nonattainment
      and Maintenance Receptors for Each State in the Eastern U.S.
------------------------------------------------------------------------
                                     Largest downwind   Largest downwind
                                     contribution to    contribution to
           Upwind state               nonattainment       maintenance
                                      receptors  for     receptors for
                                       ozone  (ppb)       ozone  (ppb)
------------------------------------------------------------------------
AL................................               0.79               1.28
AR................................               0.98               2.15
CT................................               0.00               0.46
DE................................               0.37               2.23
DC................................               0.06               0.73
FL................................               0.54               0.72
GA................................               0.47               0.58
IL................................              17.48              23.17
IN................................               6.24              14.95
IA................................               0.61               0.85
KS................................               0.80               1.03
KY................................               0.75              11.17
LA................................               3.09               4.23
ME................................               0.00               0.08
MD................................               2.07               7.11
MA................................               0.10               0.37
MI................................               2.69               1.79
MN................................               0.40               0.47
MS................................               0.78               1.48
MO................................               1.63               3.69
NE................................               0.24               0.36
NH................................               0.02               0.07
NJ................................               8.84              12.38
NY................................              16.96              17.21
NC................................               0.55               0.93
ND................................               0.11               0.28
OH................................               2.18               7.92
OK................................               1.70               2.46
PA................................               9.39              15.93
RI................................               0.02               0.08
SC................................               0.16               0.21

[[Page 75728]]

 
SD................................               0.08               0.12
TN................................               0.51               1.67
TX................................               2.44               2.95
VT................................               0.01               0.05
VA................................               1.87               5.29
WV................................               0.95               3.11
WI................................               0.34               2.59
------------------------------------------------------------------------

2. Application of Screening Threshold
    The EPA then evaluated the magnitude of the contributions from each 
upwind state to downwind nonattainment and maintenance receptors. In 
this proposal, the EPA uses an air quality screening threshold to 
identify upwind states that contribute to downwind ozone concentrations 
in amounts sufficient to ``link'' them to these to downwind 
nonattainment and maintenance receptors.
    As discussed above in section III, the EPA is proposing to 
establish the air quality screening threshold calculated as one percent 
of the NAAQS. Specifically for this rule, we propose calculating an 8-
hour ozone value for this air quality threshold of 0.75 ppb as the 
quantification of one percent of the 2008 ozone NAAQS.
    States in the East \89\ whose contributions to a specific receptor 
meet or exceed the screening threshold are considered linked to that 
receptor; those states' ozone contributions and emissions (and 
available emission reductions) are analyzed further, as described in 
section VI, to determine whether and what emissions reductions might be 
required from each state.
---------------------------------------------------------------------------

    \89\ As discussed in section III this assessment shows that 
there are problem receptors in the West where western states 
contribute amounts greater than or equal to the screening threshold 
used to evaluate eastern states (i.e., 1 percent of the NAAQS). 
However, there may be additional criteria to evaluate regarding 
transported air pollution in the West and upwind state obligations. 
The EPA proposes to focus this rulemaking on eastern states, but 
seeks comment on whether to include western states in this rule.
---------------------------------------------------------------------------

    States in the East whose contributions are below the threshold are 
not included in the proposed rule and are considered to make 
insignificant contributions to projected downwind air quality problems. 
However, for eastern states for which the EPA is not proposing FIPs in 
this action, the EPA notes that updates to the modeling for the final 
rule could change the analysis as to which states have contributions 
that meet or exceed the screening threshold. In the event that air 
quality modeling conducted for the final rule demonstrates that states 
that contribute amounts below the threshold in the proposal are 
projected to contribute amounts greater than or equal to the threshold 
in the final rule modeling, the EPA instead proposes to finalize 
revised budgets (presented with this rulemaking for comment) for 
whichever of those states may be identified as linked to such air 
quality problems. The EPA has calculated emissions budgets for all 
eastern states that we are proposing to apply to those states if, and 
only if, the final rule air quality modeling identifies a linkage as 
just described. These budgets are available in the Ozone Transport 
Policy Analysis TSD.
    Based on the maximum downwind contributions in Table V.D-1, the 
following states contribute at or above the 0.75 ppb threshold to 
downwind nonattainment receptors: Alabama, Arkansas, Illinois, Indiana, 
Kansas, Kentucky, Louisiana, Maryland, Michigan, Mississippi, Missouri, 
New Jersey, New York, Ohio, Oklahoma, Pennsylvania, Texas, Virginia, 
and West Virginia. Based on the maximum downwind contributions in Table 
V.D-1, the following states contribute at or above the 0.75 ppb 
threshold to downwind maintenance-only receptors: Alabama, Arkansas, 
Delaware, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, 
Maryland, Michigan, Mississippi, Missouri, New Jersey, New York, North 
Carolina, Ohio, Oklahoma, Pennsylvania, Tennessee, Texas, Virginia, 
West Virginia, and Wisconsin. The linkages between each upwind state 
and downwind nonattainment receptors and maintenance-only receptors in 
the eastern U.S. are provided in Table V.D-2 and Table V.D-3, 
respectively.

      Table V.D-2--Linkages Between Each Upwind State and Downwind
               Nonattainment Receptors in the Eastern U.S.
------------------------------------------------------------------------
         Upwind state               Downwind nonattainment receptors
------------------------------------------------------------------------
AL............................  Tarrant Co., TX (484392003).
AR............................  Brazoria Co., TX (480391004); Tarrant
                                 Co., TX (484392003); Tarrant Co., TX
                                 (484393009).
IL............................  Brazoria Co., TX (480391004); Sheboygan
                                 Co., WI (551170006).
IN............................  Fairfield Co., CT (90013007); Fairfield
                                 Co., CT (90019003); Sheboygan Co., WI
                                 (551170006).
KS............................  Sheboygan Co., WI (551170006).
KY............................  Sheboygan Co., WI (551170006).
LA............................  Brazoria Co., TX (480391004); Denton
                                 Co., TX (481210034); Tarrant Co., TX
                                 (484392003); Tarrant Co., TX
                                 (484393009); Sheboygan Co., WI
                                 (551170006).
MD............................  Fairfield Co., CT (90013007); Fairfield
                                 Co., CT (90019003); New Haven Co., CT
                                 (90099002).
MI............................  Fairfield Co., CT (90013007); Fairfield
                                 Co., CT (90019003); New Haven Co., CT
                                 (90099002); Sheboygan Co., WI
                                 (551170006).
MS............................  Brazoria Co., TX (480391004).

[[Page 75729]]

 
MO............................  Brazoria Co., TX (480391004); Sheboygan
                                 Co., WI (551170006).
NJ............................  Fairfield Co., CT (90013007); Fairfield
                                 Co., CT (90019003); New Haven Co., CT
                                 (90099002).
NY............................  Fairfield Co., CT (90013007); Fairfield
                                 Co., CT (90019003); New Haven Co., CT
                                 (90099002).
OH............................  Fairfield Co., CT (90013007); Fairfield
                                 Co., CT (90019003); New Haven Co., CT
                                 (90099002); Sheboygan Co., WI
                                 (551170006).
OK............................  Denton Co., TX (481210034); Tarrant Co.,
                                 TX (484392003); Tarrant Co., TX
                                 (484393009); Sheboygan Co., WI
                                 (551170006).
PA............................  Fairfield Co., CT (90013007); Fairfield
                                 Co., CT (90019003); New Haven Co., CT
                                 (90099002).
TX............................  Sheboygan Co., WI (551170006).
VA............................  Fairfield Co., CT (90013007); Fairfield
                                 Co., CT (90019003); New Haven Co., CT
                                 (90099002).
WV............................  Fairfield Co., CT (90013007); Fairfield
                                 Co., CT (90019003).
------------------------------------------------------------------------


      Table V.D-3--Linkages Between Each Upwind States and Downwind
             Maintenance-Only Receptors in the Eastern U.S.
------------------------------------------------------------------------
           Upwind state                Downwind maintenance receptors
------------------------------------------------------------------------
AL................................  Hamilton Co., OH (390610006); Harris
                                     Co., TX (482010055).
AR................................  Oldham Co., KY (211850004); Allegan
                                     Co., MI (260050003); Dallas Co., TX
                                     (481130069); Dallas Co., TX
                                     (481130075); Harris Co., TX
                                     (482010026); Harris Co., TX
                                     (482010055); Harris Co., TX
                                     (482011039); Harris Co., TX
                                     (482011050); Tarrant Co., TX
                                     (484390075); Tarrant Co., TX
                                     (484393011).
DE................................  Camden Co., NJ (340071001);
                                     Gloucester Co., NJ (340150002);
                                     Ocean Co., NJ (340290006);
                                     Philadelphia Co., PA (421010024).
IL................................  Jefferson Co., KY (211110067);
                                     Oldham Co., KY (211850004); Allegan
                                     Co., MI (260050003); Wayne Co., MI
                                     (261630019); Camden Co., NJ
                                     (340071001); Gloucester Co., NJ
                                     (340150002); Ocean Co., NJ
                                     (340290006); Queens Co., NY
                                     (360810124); Suffolk Co., NY
                                     (361030002); Hamilton Co., OH
                                     (390610006); Allegheny Co., PA
                                     (420031005); Harris Co., TX
                                     (482010026); Harris Co., TX
                                     (482011039).
IN................................  Jefferson Co., KY (211110067);
                                     Oldham Co., KY (211850004);
                                     Baltimore Co., MD (240053001);
                                     Harford Co., MD (240251001);
                                     Allegan Co., MI (260050003); Wayne
                                     Co., MI (261630019); Camden Co., NJ
                                     (340071001); Gloucester Co., NJ
                                     (340150002); Middlesex Co., NJ
                                     (340230011); Ocean Co., NJ
                                     (340290006); Queens Co., NY
                                     (360810124); Richmond Co., NY
                                     (360850067); Suffolk Co., NY
                                     (361030002); Hamilton Co., OH
                                     (390610006); Allegheny Co., PA
                                     (420031005); Philadelphia Co., PA
                                     (421010024).
IA................................  Allegan Co., MI (260050003).
KS................................  Allegan Co., MI (260050003); Tarrant
                                     Co., TX (484390075); Tarrant Co.,
                                     TX (484393011).
KY................................  Baltimore Co., MD (240053001);
                                     Harford Co., MD (240251001); Camden
                                     Co., NJ (340071001); Gloucester
                                     Co., NJ (340150002); Middlesex Co.,
                                     NJ (340230011); Ocean Co., NJ
                                     (340290006); Richmond Co., NY
                                     (360850067); Hamilton Co., OH
                                     (390610006); Allegheny Co., PA
                                     (420031005); Philadelphia Co., PA
                                     (421010024).
LA................................  Collin Co., TX (480850005); Dallas
                                     Co., TX (481130069); Dallas Co., TX
                                     (481130075); Denton Co., TX
                                     (481211032); Harris Co., TX
                                     (482010024); Harris Co., TX
                                     (482010026); Harris Co., TX
                                     (482010055); Harris Co., TX
                                     (482011034); Harris Co., TX
                                     (482011039); Harris Co., TX
                                     (482011050); Tarrant Co., TX
                                     (484390075); Tarrant Co., TX
                                     (484393011).
MD................................  Fairfield Co., CT (90010017);
                                     Gloucester Co., NJ (340150002);
                                     Middlesex Co., NJ (340230011);
                                     Ocean Co., NJ (340290006); Queens
                                     Co., NY (360810124); Richmond Co.,
                                     NY (360850067); Suffolk Co., NY
                                     (361030002); Philadelphia Co., PA
                                     (421010024).
MI................................  Fairfield Co., CT (90010017);
                                     Jefferson Co., KY (211110067);
                                     Oldham Co., KY (211850004); Harford
                                     Co., MD (240251001); Camden Co., NJ
                                     (340071001); Gloucester Co., NJ
                                     (340150002); Ocean Co., NJ
                                     (340290006); Queens Co., NY
                                     (360810124); Richmond Co., NY
                                     (360850067); Suffolk Co., NY
                                     (361030002); Hamilton Co., OH
                                     (390610006); Allegheny Co., PA
                                     (420031005).
MS................................  Harris Co., TX (482010055); Harris
                                     Co., TX (482011039).
MO................................  Oldham Co., KY (211850004); Allegan
                                     Co., MI (260050003); Camden Co., NJ
                                     (340071001); Hamilton Co., OH
                                     (390610006); Harris Co., TX
                                     (482010026); Harris Co., TX
                                     (482010055); Harris Co., TX
                                     (482011039); Harris Co., TX
                                     (482011050).
NJ................................  Fairfield Co., CT (90010017); Queens
                                     Co., NY (360810124); Richmond Co.,
                                     NY (360850067); Suffolk Co., NY
                                     (361030002); Philadelphia Co., PA
                                     (421010024).
NY................................  Fairfield Co., CT (90010017); Camden
                                     Co., NJ (340071001); Gloucester
                                     Co., NJ (340150002); Middlesex Co.,
                                     NJ (340230011); Ocean Co., NJ
                                     (340290006).
NC................................  Baltimore Co., MD (240053001).
OH................................  Fairfield Co., CT (90010017);
                                     Jefferson Co., KY (211110067);
                                     Oldham Co., KY (211850004);
                                     Baltimore Co., MD (240053001);
                                     Harford Co., MD (240251001); Wayne
                                     Co., MI (261630019); Camden Co., NJ
                                     (340071001); Gloucester Co., NJ
                                     (340150002); Middlesex Co., NJ
                                     (340230011); Ocean Co., NJ
                                     (340290006); Queens Co., NY
                                     (360810124); Richmond Co., NY
                                     (360850067); Suffolk Co., NY
                                     (361030002); Allegheny Co., PA
                                     (420031005); Philadelphia Co., PA
                                     (421010024).
OK................................  Allegan Co., MI (260050003);
                                     Hamilton Co., OH (390610006);
                                     Dallas Co., TX (481130069); Dallas
                                     Co., TX (481130075); Denton Co., TX
                                     (481211032); Harris Co., TX
                                     (482010026); Harris Co., TX
                                     (482011034); Harris Co., TX
                                     (482011039); Tarrant Co., TX
                                     (484390075); Tarrant Co., TX
                                     (484393011).
PA................................  Fairfield Co., CT (90010017);
                                     Baltimore Co., MD (240053001);
                                     Harford Co., MD (240251001); Camden
                                     Co., NJ (340071001); Gloucester
                                     Co., NJ (340150002); Middlesex Co.,
                                     NJ (340230011); Ocean Co., NJ
                                     (340290006); Queens Co., NY
                                     (360810124); Richmond Co., NY
                                     (360850067); Suffolk Co., NY
                                     (361030002).
TN................................  Hamilton Co., OH (390610006);
                                     Philadelphia Co., PA (421010024).

[[Page 75730]]

 
TX................................  Baltimore Co., MD (240053001);
                                     Harford Co., MD (240251001);
                                     Allegan Co., MI (260050003); Camden
                                     Co., NJ (340071001); Gloucester
                                     Co., NJ (340150002); Ocean Co., NJ
                                     (340290006); Queens Co., NY
                                     (360810124); Richmond Co., NY
                                     (360850067); Suffolk Co., NY
                                     (361030002); Hamilton Co., OH
                                     (390610006); Allegheny Co., PA
                                     (420031005); Philadelphia Co., PA
                                     (421010024).
VA................................  Fairfield Co., CT (90010017);
                                     Baltimore Co., MD (240053001);
                                     Harford Co., MD (240251001);
                                     Gloucester Co., NJ (340150002);
                                     Middlesex Co., NJ (340230011);
                                     Ocean Co., NJ (340290006); Queens
                                     Co., NY (360810124); Richmond Co.,
                                     NY (360850067); Suffolk Co., NY
                                     (361030002); Philadelphia Co., PA
                                     (421010024).
WV................................  Baltimore Co., MD (240053001);
                                     Harford Co., MD (240251001); Camden
                                     Co., NJ (340071001); Gloucester
                                     Co., NJ (340150002); Middlesex Co.,
                                     NJ (340230011); Ocean Co., NJ
                                     (340290006); Queens Co., NY
                                     (360810124); Richmond Co., NY
                                     (360850067); Suffolk Co., NY
                                     (361030002); Hamilton Co., OH
                                     (390610006); Allegheny Co., PA
                                     (420031005); Philadelphia Co., PA
                                     (421010024).
WI................................  Allegan Co., MI (260050003); Wayne
                                     Co., MI (261630019).
------------------------------------------------------------------------

    As discussed previously, after the receptor and contribution 
analyses for this proposal were underway, the EPA released an updated 
IPM base case, version 5.15, and the final CPP. In order to reflect all 
on-the-books policies as well as the most current power sector modeling 
data, the EPA performed an assessment to reflect inclusion of IPM 5.15 
with the CPP in an ``adjusted'' base case for this proposal. All 
references below to the ``adjusted base case'' refer to the 2017 air 
quality modeling base case which has been adjusted to account for the 
revised IPM 5.15 with CPP emissions. This assessment method relied on 
the EPA's air quality modeling contribution data as well as projected 
ozone concentrations from an illustrative EGU NOX mitigation 
scenario. For more information about these methods, refer to the Ozone 
Transport Policy Analysis Technical Support Document.
    This assessment shows that two receptors--Hamilton County Ohio 
(390610006) and Richmond County New York (360850067)--that were 
projected to have average design values exceeding the NAAQS in the 
modeled 2017 baseline, are expected to have average design values below 
the NAAQS with the adjusted base case. However, these receptors are 
still expected to have maximum design values exceeding the NAAQS with 
the adjusted base case. Because both of these receptors are also 
considered maintenance receptors for the purposes of this proposal, 
their status as identified air quality concerns and the status of 
states linked to these receptors is unchanged by the adjusted base 
case.
    This assessment also shows that four receptors--Allegheny County 
Pennsylvania (420031005), Collin County Texas (480850005), Wayne County 
Michigan (261630019), and Middlesex County New Jersey (340230011)--that 
were projected to have maximum design values exceeding the NAAQS in the 
modeled base case, are expected to have maximum design values below the 
NAAQS with the adjusted base case. With the adjusted base case, these 
sites would not be considered nonattainment or maintenance receptors 
for the purposes of this proposal. However, because no state is linked 
solely to any one of these sites, changing the status of these 
receptors does not impact the scope of states linked to downwind 
nonattainment or maintenance receptors for this proposal.
    In addition to evaluating the status of downwind receptors 
identified for this proposal, the EPA evaluated whether the adjusted 
base case would reduce ozone contributions from upwind states to the 
extent that a previously linked state would have a maximum contribution 
less than the 1% threshold. This assessment shows that in the adjusted 
base case, all states are expected to remain linked (i.e., contribute 
greater than or equal to 1% of the NAAQS) to at least one downwind 
nonattainment or maintenance receptor. Therefore, using the adjusted 
base case for this proposal does not impact the scope of states linked 
to downwind nonattainment or maintenance receptors relative to the 
modeled base case.
    The analyses that EPA uses in section VI to quantify EGU 
NOX ozone-season emissions budgets for this proposal also 
rely on the adjusted base case.
    The EPA seeks comment on its assessment of the impacts of relying 
on the adjusted base case for these purposes, and on EPA's intention to 
rely on full air quality and IPM modeling of the adjusted base case to 
identify nonattainment and maintenance receptors and to inform the 
analysis of interstate ozone transport for the 2008 ozone NAAQS.

VI. Quantifying Upwind-State EGU NOX Reduction Potential To 
Reduce Interstate Ozone Transport for the 2008 NAAQS

A. Introduction

    This section describes the EPA's proposed quantification of near-
term EGU NOX reductions that are necessary to fulfill (at 
least in part) the Clean Air Act requirement to address interstate 
ozone transport for the 2008 NAAQS. This section also describes the 
EPA's proposal to translate these reductions into EGU NOX 
ozone-season emissions budgets. Section VII describes the EPA's 
proposal to implement these proposed emissions budgets via updates to 
the existing CSAPR NOX ozone-season trading program.
    As described in section V, the EPA separately identified 
nonattainment receptors and maintenance receptors. The EPA proposes to 
apply a single approach for quantifying an upwind state's ozone 
transport obligation to both nonattainment and maintenance receptors. 
It is reasonable to apply the same approach to quantify upwind-state 
reduction requirements with respect to both nonattainment and 
maintenance because the structure of the problems is the same--
emissions from sources in upwind states contributing to downwind ozone 
concentrations that put the downwind receptor at risk of nonattainment 
with respect to the EPA's clean air standards. Moreover, as all 
nonattainment receptors are also maintenance receptors because the 
maximum design value will always be equal to or exceed the average 
design value, it is reasonable to control all sites consistent with the 
level of control necessary to reduce maintenance concerns.
    As described in section III of this preamble, due to the impending 
July 2018 moderate area attainment date, the EPA is proposing, as a 
first step, to

[[Page 75731]]

quantify near-term EGU NOX ozone-season emission reductions 
to reduce interstate ozone transport for the 2008 ozone NAAQS. For this 
section, this means that the EPA is proposing to quantify ozone season 
EGU NOX reductions achievable for the 2017 ozone season 
(i.e., the last full ozone season prior to the July 2018 attainment 
date).
    The EPA's assessment of upwind state obligations in this proposal 
reflects application of a multi-factor test that considers cost, 
available emission reductions, and air quality. This is the same multi-
factor test used in the original CSAPR. This multi-factor test 
considers increasing levels of uniform control stringency, where each 
level is represented by cost, to determine the appropriate magnitude of 
pollution reduction that would reduce the impacts of interstate 
transport on downwind states and to apportion that reduction 
responsibility among collectively-contributing upwind states. This 
approach to quantifying upwind state emission reduction obligations was 
reviewed by the Supreme Court in EPA v. EME Homer City Generation, 
which held that using such an approach to apportion reduction 
responsibilities among upwind states that are collectively responsible 
for downwind air quality impacts ``is an efficient and equitable 
solution to the allocation problem the Good Neighbor Provision requires 
the Agency to address.'' 134 S.Ct. at 1607.
    There are three steps in developing and applying the multi-factor 
test to quantify upwind state emission reductions as to the 2008 ozone 
NAAQS: (1) Identify NOX mitigation strategies, focusing on 
those that can be in place for the 2017 ozone season; (2) develop 
uniform EGU NOX cost thresholds based on these NOx 
mitigation strategies; (3) assess EGU NOX mitigation 
potential that is achievable for 2017 and assess corresponding air 
quality improvements resulting from the application of each uniform 
cost threshold, including to check for over-control. This multi-factor 
evaluation informs the EPA's determination of appropriate ozone season 
EGU NOX reductions necessary to reduce significant 
contribution to nonattainment and interference with maintenance of the 
2008 ozone NAAQS for the proposed 2017 compliance year. These steps are 
discussed in further detail in the following sections.
    This proposal evaluates a range of uniform EGU NOX costs 
from $500 per ton to $10,000 per ton. This range, and the intermediate 
uniform NOX cost thresholds evaluated within that range, 
were selected based on the cost thresholds at which various EGU 
NOX control technologies are widely available, the use of 
certain EGU NOX cost thresholds in previous rules to address 
ozone transport, and EGU NOX cost thresholds incorporated 
into state requirements to address ozone nonattainment.
    In this proposal, the EPA evaluated the emission reduction 
potential in each upwind state at each uniform NOX cost 
threshold using the adjusted IPM base case 5.15. In this case, the EPA 
limited IPM's evaluation of NOX mitigation strategies to 
those that can be implemented for the 2017 ozone season, which is the 
proposed compliance timing for this rulemaking, as described in section 
VI.B below.

B. NOX Mitigation Strategies

    The following sub-sections describe the EPA's assessment of EGU and 
non-EGU point source NOX mitigation strategies. For more 
details on these assessments, refer to the EGU NOX 
Mitigation Strategies TSD and the Update to Non-EGU Emission Reductions 
Cost and Potential for States with Potentially Significant 
Contributions under the 2008 Ozone Standard TSD in the docket for this 
proposed rule.
1. EGU NOX Mitigation Strategies
    In developing this proposed rule, the EPA considered all widely 
used EGU NOX control strategies: Fully operating existing 
Selective Catalytic Reduction (SCR) and Selective Non-Catalytic 
Reduction (SNCR)--including optimizing NOX removal by 
existing, operational SCRs and SNCRs and turning on and optimizing 
existing idled SCRs and SNCRs; installation of (or upgrading to) state-
of-the-art NOX combustion controls; shifting generation to 
units with lower NOX emission rates within the same state; 
and installing new SCRs and SNCRs. Although this proposal does not 
require or impose any specific technology standards to demonstrate 
compliance, EPA determined that certain technologies would be available 
by the 2017 timeframe when assessing potential reductions in the 
region.
    For the reasons explained below, the EPA determined that the power 
sector could implement all of these NOX mitigation 
strategies, except installation of new SCRs or SNCRs, between 
finalization of this proposal in summer of 2016 and the 2017 ozone 
season. As to the installation of new SCRs or SNCRs, the amount of time 
from contract award through commissioning for retrofit with new SCR or 
SNCR exceeds 18 and 12 months, respectively. For both technologies, 
conceptual design, permitting, financing, and bid review require 
additional time. It would therefore not be feasible to retrofit new SCR 
or SNCR to achieve EGU NOX reductions in the 2017 ozone 
season. See EGU NOX Mitigation Strategies TSD for discussion 
of feasibility of EGU NOX controls for the 2017 ozone 
season. Therefore, the EPA analyzed the remaining strategies for 
purposes of quantifying upwind state obligations in this rule. 
Exclusion of new SCR and SNCR installation from this analysis reflects 
a determination only that these strategies are infeasible by 2017, not 
a determination that they are infeasible or inappropriate for 
consideration of cost-effective NOX reduction potential over 
a longer timeframe. The EPA requests comment on what EGU NOX 
mitigation strategies are feasible for the 2017 ozone season.
a. Fully Operating Existing SCRs and SNCRs
    Fully operating existing SCR and SNCRs can significantly reduce EGU 
NOX emissions quickly, using investments that have already 
been made. SCRs can achieve up to 90 percent reduction in EGU 
NOX (with sufficient installed catalyst), while SNCRs can 
achieve 20-30 percent reduction in EGU NOX, beyond the 
reductions from combustion controls. These controls are in widespread 
use across the U.S. power sector. In the east, approximately 64 percent 
of coal-fired EGU capacity and 75 percent of natural gas combined cycle 
(NGCC) EGU capacity is equipped with SCR or SNCR. Recent power sector 
data reveal that some SCR and SNCR controls are being underused.\90\ In 
some cases, controls are not fully operating (i.e., the controls could 
be operated at a higher NOX removal rate). In other cases, 
controls have been idled for years. Fully operating existing SCR and 
SNCR would be a cost-effective and readily available approach for EGUs 
to reduce NOX emissions and the EPA evaluated this 
NOX mitigation strategy in quantifying EGU NOX 
obligations for this proposal.
---------------------------------------------------------------------------

    \90\ This assessment is available in the EGU NOX 
Mitigation Strategies TSD.
---------------------------------------------------------------------------

    For existing SCRs and SNCRs that are operating to some extent, but 
not at their full pollution control capability, the EPA's analysis 
determined that $500 per ton represents the costs reflective of fully 
operating these systems. Because the SCR or SNCR is already installed 
and is at least to some extent operating, the EPA assumes that 
additional reagent (i.e., ammonia or urea) is the only

[[Page 75732]]

significant cost required for full operation. We observe that urea can 
cost on the order of $300 per metric ton. The cost for anhydrous 
ammonia is around $750 per ton.\91\ In our assessment, we assume that a 
50 percent solution is used in removing an equivalent amount of 
NOX. Thus, we estimate that sufficient reagent could be 
purchased at a cost of $500 per ton of NOX removed to 
achieve full operation for most SCRs and SNCRs. For more details on 
this assessment, refer to the EGU NOX Mitigation Strategies 
TSD in the docket for this proposed rule. The proposal seeks comment on 
this assessment.
---------------------------------------------------------------------------

    \91\ Schnitkey, G. ``Nitrogen Fertilizer Prices and 2015 
Planting Decisions.'' farmdoc daily (4):195, Department of 
Agricultural and Consumer Economics, University of Illinois at 
Urbana-Champaign, October 9, 2014.
    Permalink URL http://farmdocvdaily.illinois.edu/2014/10/nitrogen-fertilizer-prices-and-2015-planting-decisions.html.
---------------------------------------------------------------------------

    The operational difference between not fully operating and fully 
operating existing SCRs and SNCRs is increasing reagent (i.e., ammonia 
or urea) flow rate and ensuring sufficient reagent exists to sustain 
higher flow operations. Therefore, increasing NOX removal 
from these controls can be implemented by procuring more reagent. 
Stocking-up additional reagent for sustaining increased NOX 
removal could be done in a one or two weeks.\92\
---------------------------------------------------------------------------

    \92\ This assessment is available in the EGU NOX 
Mitigation Strategies TSD.
---------------------------------------------------------------------------

    For existing SCRs and SNCRs that have been idled for years, unit 
operators may need to restart payment of some fixed and variable costs 
associated with that control. Fixed and variable costs include labor, 
maintenance and repair, reagent, parasitic load, and ammonia or urea. 
As further detailed in the EGU NOX Mitigation Strategies 
TSD, which is found in the docket for this proposed rule, the EPA 
performed an in-depth cost assessment for all coal-fired units with 
SCRs, finding that 90 percent of the units had total SCR operation 
costs of $1,300 per ton of NOX removed, or less.
    Based on this assessment, the EPA proposes that turning on and 
fully operating idled SCRs is widely available at a uniform cost of 
$1,300 per ton of NOX removed. For more details on this 
assessment, refer to the EGU NOX Mitigation Strategies TSD 
in the docket for this proposed rule. The proposal seeks comment on 
this assessment.
    The EPA performed a similar assessment for fully operating existing 
idled SNCR systems, finding that the majority of the total fixed and 
variable operating cost for SNCR is related to the cost of the reagent 
used (e.g., ammonia or urea) and that the resulting cost per ton of 
NOX reduction is sensitive to the NOX rate of the 
unit prior to SNCR operation. Based on the results of this analysis, 
and in order to represent a broad range of unit-level NOX 
rates before SNCR operation, the EPA proposes that turning on and fully 
operating idled SNCRs is widely available at a uniform cost of $3,400 
per ton of NOX removed. For more details on this assessment, 
refer to the EGU NOX Mitigation Strategies TSD in the docket 
for this proposed rule. The proposal seeks comment on this assessment 
and on higher cost thresholds that would require some installation of 
new SCRs/SNCRs and the appropriate timetable or phase-in needed to 
accommodate those technologies.
    The EPA also evaluated the feasibility of turning on idled SCR and 
SNCR for the 2017 ozone season. Based on past practice and the possible 
effort to restart the controls (e.g., stockpiling reagent, bringing the 
system out of protective lay-up, performing inspections, etc.), 
returning these idled controls to operation should be available in 
equal to or less than 3 months.\93\ The proposal seeks comment on this 
assessment.
---------------------------------------------------------------------------

    \93\ This assessment is available in the EGU NOX 
Mitigation Strategies TSD.
---------------------------------------------------------------------------

b. State-of-the-Art NOX Combustion Controls
    State-of-the-art combustion controls such as low-NOX 
burners (LNB) and/or over-fire air (OFA) are cost-effective, can be 
installed quickly, and can significantly reduce EGU NOX 
emissions. Ninety-nine percent of coal-fired EGU capacity in the East 
is equipped with some form of combustion control. Combustion controls 
alone can achieve NOX emission rates of 0.15 to 0.50 lb/
mmBtu. Once installed, combustion controls reduce NOX 
emissions at all times of EGU operation. State-of-the-art combustion 
controls would be a cost-effective, timely, and readily available 
approach for EGUs to reduce NOX emissions and the EPA 
included this NOX mitigation strategy in quantifying EGU 
NOX reductions for this proposal.
    The cost of state-of-the-art combustion controls per ton of 
NOX reduced is dependent on the combustion control type and 
unit type. We estimate the cost per ton of state-of-the-art combustion 
controls to be $500 per ton to $1,200 per ton of NOX 
removed. To be conservative, the EPA proposes that installation of (or 
upgrading to) state-of-the-art NOX combustion controls is 
widely available at $1,300 per ton of NOX removed.
    As described in CSAPR the EPA has observed that upgrade, 
replacement, or installation of combustion controls has been 
demonstrated to be achievable within the timeframe provided for by this 
rulemaking and its compliance dates.\94\ The EPA revisited this 
analysis with data specific to this proposal and proposes that a 2017 
compliance timeframe is feasible for this EGU NOX mitigation 
strategy. These controls are fully proven, widely used, and with a 
reasonable effort can be procured, designed, installed, tested and be 
in operation on any coal-steam EGU consistent with the compliance 
timeframe provided for this rulemaking. The EPA proposes that this will 
be feasible for the 2017 ozone season. The proposal seeks comment on 
additional EGU NOx mitigation strategies that may be feasible for the 
2017 ozone season.
---------------------------------------------------------------------------

    \94\ ``Installation Timing for Low NOX Burners 
(LNB)'', Docket ID No. EPA-HQ-OAR-2009-0491-0051.
---------------------------------------------------------------------------

    For more details on this assessment, refer to the EGU 
NOX Mitigation Strategies TSD in the docket for this 
proposed rule. The proposal seeks comment on this assessment.
c. Shifting Generation to Lower NOX-Emitting EGUs
    Shifting generation to lower NOX-emitting EGUs, similar 
to operating existing post-combustion controls, uses investments that 
have already been made, can be done quickly, and can significantly 
reduce EGU NOX emissions.
    Since CSAPR was promulgated, electricity generation has trended 
toward lower NOX-emitting generation due to market 
conditions (e.g., low natural gas prices) and state and federal 
environmental policies. For example, new NGCC facilities, which 
represented 45% of new 2014 capacity, can achieve NOX 
emission rates of 0.0095 lb/mmBtu, compared to existing coal steam 
facilities, which emitted at an average rate across the 23 states 
included in this proposal of 0.18 lbs/mmBtu of NOX in 2014. 
This substantial difference in NOX emission performance 
between existing coal steam and new NGCC generation is due both to 
higher nitrogen content in coal compared to natural gas, as well as to 
the substantially lower generating efficiency of steam combustion 
technology compared to combined cycle combustion technology. Shifting 
generation to lower NOX-emitting EGUs would be a cost-
effective, timely, and readily available approach for EGUs to reduce 
NOX emissions and the EPA

[[Page 75733]]

included this NOX mitigation strategy in quantifying EGU 
NOX obligations for this proposal.
    Shifting generation to lower NOX-emitting EGUs occurs on 
a continuum in response to economic factors such as fuel costs and 
uniform NOX cost thresholds, including those evaluated for 
this proposal (i.e., relatively lower uniform NOX cost 
thresholds incentivize relatively fewer EGU NOX reductions 
resulting from shifting generation, while relatively higher uniform 
NOX cost thresholds encourage more EGU NOX 
reductions driven by shifting generation). As a result, the EPA 
quantified reduction potential from this EGU NOX mitigation 
strategy at each cost level identified that represents the availability 
of other pollution control measures evaluated in our assessment of 
uniform NOX cost thresholds described in section VI.C.
    In this analysis, the EPA assumed shifting generation to units with 
lower NOX emission rates could occur within the same state 
by the near-term 2017 implementation timing for this proposed rule when 
assessing state emission reduction potential for emissions budget 
purposes. This conservative approach does not capture emission 
reductions that would occur if generation was shifted more broadly 
among units in different states, which the EPA believes is feasible 
over time but which may be subject to out-of-merit order dispatch 
constraints in the near term. Limiting such generation shifting 
potential to units within each state is not a reflection of how 
generation shifting works in practice (given that the grid crosses 
state boundaries); instead, it is an analytic proxy designed to respect 
the feasibility of near-term generation shifting in light of these 
potential near-term out-of-merit order dispatch constraints. The EPA 
seeks comment on this assessment and on this limitation in quantifying 
EGU NOX reduction potential for the 2017 ozone season.
2. Non-EGU NOX Mitigation Strategies
    The EPA is not proposing to address non-EGU emission reductions in 
its efforts to reduce interstate ozone transport for the 2008 ozone 
NAAQS at this time. Compared to EGUs, there are relatively more non-EGU 
point sources and these sources on average are smaller than EGUs. The 
implication of these fleet characteristics is that there are more 
individual sources to control and there are relatively fewer emission 
reductions available from each source. Given the proposed 2017 
implementation timing for this rulemaking, we are uncertain that 
significant aggregate NOX mitigation is achievable from non-
EGU point sources for 2017. Moreover, there is greater uncertainty in 
the EPA's assessment of non-EGU point-source NOX mitigation 
potential (see below). The EPA requests comment on these issues, 
including how non-EGU reductions should be addressed and considered in 
fulfilling upwind states' good neighbor obligations under the 2008 
ozone standard in the future, as the control of non-EGUs may be a 
necessary part of addressing states' full transport obligation. States 
can always choose to reduce non-EGU emissions via good neighbor SIPs.
    The EPA has evaluated the potential for ozone season NOX 
reductions from non-EGU sources. A detailed discussion of this 
assessment is provided in the Non-EGU NOX Mitigation 
Potential TSD, located in the docket for this proposed rule. This TSD 
discusses non-EGU source category emissions, EPA tools for estimating 
emission reductions from non-EGU categories, and efforts, to date, to 
review and refine our estimates for certain states. In addition, the 
TSD contains brief discussions of available controls, costs, and 
potential emission reductions for a few specific source categories. The 
EPA views this non-EGU assessment as an initial step in future efforts 
to evaluate non-EGU categories that may be necessary to fully quantify 
upwind states' significant contribution to nonattainment and 
interference with maintenance. The EPA seeks comment on its assessment 
that non-EGU controls are not feasible by the 2017 ozone-season. It 
also seeks comment on its broader non-EGU NOX mitigation 
assessment and the availability of non-EGU NOX emission 
reductions to mitigate interstate ozone transport in years following 
2017.
    Although EPA did not find non-EGU reductions feasible by 2017 in 
this proposal, it is taking comment on that assessment. Future EPA 
rulemakings or guidance could revisit the potential for reductions from 
non-EGU sources. Under such a scenario, EPA could use a similar 
approach of identifying appropriate cost thresholds for non-EGUs and 
EGUs alike, and then identify potential emission reductions and 
corresponding emission budgets. Under this scenario, an emission budget 
could be established for all covered sources (e.g., EGUs and non-EGUs 
alike) with fungible allowances. EPA is taking comment on the potential 
to combine EGUs and non-EGUs into a single trading program to resolve 
the remaining non-attainment and maintenance issues at a later date.

C. Uniform EGU Cost Thresholds for Assessment

    As discussed above, the multi-factor test used here considers 
increasing levels of uniform control stringency, where each level is 
represented by cost, in combination with consideration of 
NOX reduction potential and corresponding air quality 
improvements. To determine which cost thresholds to use to assess 
upwind state NOX mitigation potential, the EPA evaluated EGU 
NOX control costs that represent the thresholds at which 
various control technologies are widely available (described previously 
in section VI.B), the use of certain cost thresholds in previous rules 
to address ozone transport, and cost thresholds incorporated into state 
requirements to address ozone nonattainment.
    The EPA began by determining the appropriate range of costs to 
evaluate. The lower end of the range is informed by a confluence of 
considerations. In CSAPR, $500 per ton was the EGU NOX cost 
threshold relied upon to partially address ozone transport for the less 
stringent 1997 standard. It is also the lowest marginal cost where EPA 
expects NOX reduction to be cost effective, based on our 
assessment of EGU NOX mitigation strategies (see section B). 
Specifically, the cost of this approach to NOX reduction is 
the marginal cost of running currently operating SCR and SNCR systems 
at higher levels of NOX removal than they are currently 
achieving. The EPA has not identified a discrete NOX 
pollution control measure that would achieve sufficient emission 
reductions to address relevant air quality impacts at an estimated cost 
of less than $500 per ton; as a result, the EPA has not included a 
representation of such a cost level in this proposal's analyses.\95\
---------------------------------------------------------------------------

    \95\ Additionally, the EPA notes that, as discussed in more 
detail below, no identified air quality problems were resolved at 
the $500 per ton cost threshold. Accordingly, it would not be 
practical for the EPA to evaluate emission reductions achieved at 
cost thresholds below $500 per ton.
---------------------------------------------------------------------------

    The EPA then evaluated EGU NOX cost thresholds to 
determine an appropriate upper bound for our assessment. The EPA 
identified $10,000 per ton as an upper bound, exceeding the costs of 
operating existing or installing new EGU NOX controls.
    The EPA seeks comment on whether $500 per ton is an appropriate 
minimum and $10,000 per ton is an appropriate maximum uniform cost 
threshold to evaluate for the purpose of quantifying EGU NOX 
reductions to reduce interstate ozone transport for the 2008 ozone 
NAAQS.

[[Page 75734]]

    The EPA then determined appropriate EGU NOX cost 
thresholds to evaluate within the range of $500 per ton to $10,000 per 
ton. As described above, these cost thresholds are informed by our 
assessment of the costs at which EGU NOX control strategies 
are widely available. While the EPA could evaluate additional cost 
thresholds in between those selected, this would not yield meaningful 
insights as to NOX reduction potential. The EPA has 
identified cost thresholds where control technologies are widely 
available and thereby where the most significant incremental emission 
reduction potential is expected. Analyzing costs between these cost 
thresholds is not expected to reveal significant incremental emission 
reduction potential that isn't already anticipated at the analyzed cost 
thresholds. Table VI.C-1 lists the EGU NOX cost thresholds 
evaluated and the NOX reduction strategy or policy used to 
identify each cost threshold.

                              Table VI.C-1
------------------------------------------------------------------------
      EGU NOX cost threshold
------------------------------------------------------------------------
$500/ton.........................  CSAPR ozone season NOX cost
                                    threshold; fully operating post-
                                    combustion controls that are already
                                    running.
$1,300/ton.......................  Widespread availability of restarting
                                    idled SCRs and state of the art
                                    combustion controls.
$3,400/ton.......................  NOX SIP Call ozone season NOX cost
                                    threshold, adjusted to 2014$;
                                    Widespread availability of
                                    restarting idled SNCRs.
$5,000/ton.......................  Widespread availability of new
                                    SCRs.\96\
$6,400/ton.......................  Widespread availability of new
                                    SNCRs.\97\
$10,000/ton......................  Upper bound.
------------------------------------------------------------------------

    The EPA proposes that this range and selection of interim uniform 
cost thresholds are appropriate to evaluate potential EGU 
NOX reduction obligations to address interstate ozone 
transport for the 2008 ozone NAAQS. Because these cost thresholds are 
linked to costs at which EGU NOX mitigation strategies 
become widely available in each state, the cost thresholds represent 
the break points at which the most significant step-changes in EGU 
NOX mitigation are expected. The EPA seeks comment on the 
appropriateness of evaluating these uniform cost thresholds for the 
purpose of quantifying EGU NOX reductions to reduce 
interstate ozone transport for the 2008 ozone NAAQS.
---------------------------------------------------------------------------

    \96\ The cost assessment for new SCR is available in the EGU 
NOX Mitigation Strategies TSD. While chosen to define a 
cost-threshold, new SCRs were not considered a feasible control on 
the compliance timeframe being proposed for this rule.
    \97\ The cost assessment for new SNCR is available in the EGU 
NOX Mitigation Strategies TSD. While chosen to define a 
cost-threshold, new SNCRs were not considered a feasible control on 
the compliance timeframe being proposed for this rule.
---------------------------------------------------------------------------

D. Assessing Cost, EGU NOX Reductions, and Air Quality

    The EPA analyzed ozone season NOX emission reductions 
available from the power sector in each state using IPM.\98\ The agency 
analyzed levels of uniform control stringency, where each level is 
represented by uniform EGU NOX cost thresholds listed in 
Table VI.C-1 above and repeated here: $500 per ton; $1,300 per ton; 
$3,400 per ton; $5,000 per ton; $6,400 per ton; and $10,000 per ton. 
The EPA limited IPM's NOX mitigation strategies to those 
that could be implemented for 2017, as described in section VI.B.
---------------------------------------------------------------------------

    \98\ IPM version 5.14 is discussed in preamble section IV.B, and 
as noted in preamble section V, for purposes of this quantification 
analysis EPA used an adjusted base case reflecting IPM version 5.15, 
including the Clean Power Plan. IPM documentation is in the docket 
and available at www.epa.gov/powersectormodeling.
---------------------------------------------------------------------------

    The analysis applied these uniform EGU NOX cost 
thresholds to EGUs in the 48 contiguous United States and the District 
of Columbia, starting in 2017. The analysis covered EGUs with a 
capacity (electrical output) greater than 25 MW to make the analysis 
similar to previous analyses done for interstate transport purposes. 
The EGU Emission Reduction Cost Analysis TSD, which is in the docket 
for this proposed rule, provides further details of EPA's analysis of 
ozone season NOX emission reductions occurring at the 
representative EGU NOX cost thresholds analyzed for the 2017 
ozone season.
    Table VI.D--1 shows the 2017 baseline EGU emissions and ozone 
season NOX reduction potential in each state corresponding 
to the uniform cost levels.

                          Table VI.D-1--EGU Ozone Season NOX Emission Reductions (Tons)
----------------------------------------------------------------------------------------------------------------
                                        2017 emissions         Reduction potential (short tons) at various
                                         (short tons)        representative marginal costs per ton (in 2011$)
                State                ---------------------------------------------------------------------------
                                          Base case           $500/ton          $1,300/ton         $3,400/ton
----------------------------------------------------------------------------------------------------------------
Alabama.............................             13,289              1,729              3,582              3,670
Arkansas............................              6,224                 13                104                859
Illinois............................             10,021                395                472                546
Indiana.............................             41,748              6,611             12,173             12,989
Iowa................................              7,911                186                423                717
Kansas..............................             11,332                428                438                465
Kentucky............................             27,141              3,608             11,896             12,382
Louisiana...........................             10,897                 64                117                400
Maryland............................              6,470              1,028              1,026              1,164
Michigan............................             20,049                403              3,033              3,528
Mississippi.........................              7,871                 82                297                893
Missouri............................             17,050                934                996              1,152
New Jersey..........................              3,302                370                372                378
New York............................              4,948                115                284                359
North Carolina......................             14,435              1,922              1,922              3,526

[[Page 75735]]

 
Ohio................................             27,795              5,746              9,646              9,666
Oklahoma............................             19,593                703              2,170              3,169
Pennsylvania........................             41,533              2,210             26,759             26,791
Tennessee...........................              5,554                 74                113                146
Texas...............................             58,199                685              3,610              5,810
Virginia............................              7,196                423                539              1,587
West Virginia.......................             25,384                592             10,908             12,014
Wisconsin...........................              5,257                  5                 36                107
                                     ---------------------------------------------------------------------------
    Total...........................            393,198             28,325             90,916            102,318
----------------------------------------------------------------------------------------------------------------


                    Table VI.D-1 (continued)--EGU Ozone Season NOX Emission Reductions (Tons)
----------------------------------------------------------------------------------------------------------------
                                                               Reduction potential (short tons) at various
                                                             representative marginal costs per ton (in 2011$)
                         State                          --------------------------------------------------------
                                                             $5,000/ton         $6,400/ton        $10,000/ton
----------------------------------------------------------------------------------------------------------------
Alabama................................................              4,780              5,418              5,840
Arkansas...............................................              1,147              1,242              1,935
Illinois...............................................                622                640                761
Indiana................................................             13,770             13,437             17,109
Iowa...................................................                717                717              1,317
Kansas.................................................                677                838              1,150
Kentucky...............................................             12,473             13,456             14,503
Louisiana..............................................                461                467                706
Maryland...............................................              1,176              1,369              1,369
Michigan...............................................              3,756              3,889              4,411
Mississippi............................................              1,165              1,479              2,208
Missouri...............................................              1,298              1,930              2,775
New Jersey.............................................                381                384                465
New York...............................................                370                661                906
North Carolina.........................................              3,626              4,415              4,643
Ohio...................................................              9,773             10,078             10,231
Oklahoma...............................................              3,821              5,702              6,609
Pennsylvania...........................................             26,913             26,932             27,091
Tennessee..............................................                224                241                285
Texas..................................................              6,940              7,772              8,380
Virginia...............................................              3,104              3,560              3,610
West Virginia..........................................             12,211             12,243             12,243
Wisconsin..............................................                131                276                618
                                                        --------------------------------------------------------
    Total..............................................            109,535            117,145            129,166
----------------------------------------------------------------------------------------------------------------

    Next, the EPA performed a combined multi-factor assessment of costs 
(i.e., the uniform cost thresholds evaluated), EGU NOX 
reductions (i.e., the reductions in Table VI.D-1), and corresponding 
improvements in downwind ozone concentrations. For this assessment, the 
EPA used simplifying assumptions regarding the relationship between EGU 
NOX emissions and corresponding ozone concentrations at 
nonattainment and maintenance receptors of concern. For more 
information about how this assessment was performed, refer to the Ozone 
Transport Policy Analysis Technical Support Document.
    For each nonattainment or maintenance receptor identified for this 
proposal, the EPA evaluated the air quality improvement at that 
receptor that is expected from progressively more stringent upwind EGU 
NOX reductions in states that are linked to that receptor. 
For example, the EPA evaluated the Harford County Maryland receptor 
with all linked states controlling their emissions at $500 per ton. 
This assessment showed a 0.35 ppb reduction in expected ozone design 
values at $500 per ton. The residual design values at this site are 
still expected to exceed the 2008 ozone NAAQS with an average design 
value of 81.2 ppb and a maximum design value of 83.9 ppb. Next, the EPA 
evaluated this receptor with all linked states controlling their 
emissions at $1,300 per ton. This assessment showed a 0.94 ppb 
reduction in expected ozone design values. At a cost threshold of 
$1,300 per ton, the residual design values at this site are expected to 
continue to exceed the 2008 ozone NAAQS with an average design value of 
80.6 ppb and a maximum design value of 83.3 ppb. With respect to this 
receptor, the EPA then evaluated each progressively more stringent 
uniform control stringency (i.e. $3,400 per ton; $5,000 per ton; $6,400 
per ton; and $10,000 per ton). Generally, the EPA evaluated the air 
quality improvements at each monitoring site for each progressively 
more stringent uniform EGU NOX control level. This 
information is available in the Ozone Transport Policy Analysis TSD.
    This approach evaluates interstate ozone transport for each 
receptor independently. Also, by evaluating the downwind ozone impact 
of upwind

[[Page 75736]]

reductions that are made in all linked states at the same uniform 
control stringency, this approach provides equitable treatment of all 
upwind states as to their contribution to each downwind receptor to 
which they are linked.
    The EPA aggregates the relevant data (i.e., cost of control, EGU 
NOX reduction potential, and downwind ozone reduction 
metrics) in a multi-factor test that allows the EPA to evaluate the 
cost-effectiveness of various levels of emission reductions and the 
resulting improvements in downwind ozone concentrations.
    This evaluation shows that meaningful EGU NOX reductions 
are available at reasonable cost and that these reductions can provide 
meaningful improvements in downwind ozone concentrations at the 
identified nonattainment and maintenance receptors for this proposal. 
For example, the combined downwind ozone improvement across 
nonattainment and maintenance receptors is approximately 19 ppb at the 
$1,300 per ton level. See Figure VI.1.
[GRAPHIC] [TIFF OMITTED] TP03DE15.000

    Combining costs, EGU NOX reductions, and corresponding 
improvements in downwind ozone concentrations results in a ``knee in 
the curve'' at $1,300 per ton. This uniform cost of reduction 
represents the threshold at which EGU NOX reduction 
potential and corresponding downwind ozone air quality improvements are 
maximized with respect to marginal cost. That is, the ratio of emission 
reductions to marginal cost and the ratio of ozone improvements to 
marginal cost are maximized relative to the other uniform cost 
thresholds evaluated. Further, at higher cost thresholds, as a result 
of this analysis we do not anticipate significant additional reductions 
that would justify these higher costs.
    As part of this analysis, the EPA evaluates potential over-control 
with respect to whether (1) the expected ozone improvements would be 
sufficient or greater than necessary to resolve the downwind ozone 
pollution problem (i.e., resolving nonattainment or maintenance 
problems) or (2) the expected ozone improvements would reduce upwind 
state ozone contributions to below the screening threshold (i.e., 1% of 
the NAAQS).
    In EME Homer City, the Supreme Court held that EPA cannot 
``require[ ] an upwind State to reduce emissions by more than the 
amount necessary to achieve attainment in every downwind State to which 
it is linked.'' 134 S.Ct. at 1608. On remand from the Supreme Court, 
the D.C. Circuit held that this means that EPA might overstep its 
authority ``when those downwind locations would achieve attainment even 
if less stringent emissions limits were imposed on the upwind States 
linked to those locations.'' EME Homer City II, 795 F.3d at 127. The 
D.C. Circuit qualified this statement by noting that this ``does not 
mean that every such upwind State would then be entitled to less 
stringent emission limits. Some of those upwind States may still be 
subject to the more stringent emissions limits so as not to cause other 
downwind locations to which those States are linked to fall into 
nonattainment.'' Id. at 14-15.

[[Page 75737]]

    Consistent with these instructions from the Supreme Court and the 
D.C. Circuit, the EPA evaluated whether reductions quantified under the 
evaluated cost thresholds can be anticipated to resolve any downwind 
nonattainment or maintenance problems (as defined in section V) and by 
how much.
    The EPA's assessment shows that the uniform control stringency 
represented by $500 per ton would resolve the maintenance problem at 
two downwind maintenance receptors--Ocean County, New Jersey (maximum 
design value of 75.9 ppb) and Oldham County, Kentucky (maximum design 
value of 75.8 ppb). Because no state is linked solely to one of these 
maintenance receptors, resolving these downwind air quality impact does 
not fully address any individual upwind state's good neighbor 
obligation.
    This assessment shows that the uniform control stringency 
represented by $1,300 per ton would resolve maintenance problems at 
three additional downwind maintenance receptors--Baltimore County, 
Maryland (maximum design value of 75.6 ppb), Hamilton County, Ohio 
(maximum design value of 75.1 ppb), and Gloucester County, New Jersey 
(maximum design value of 75.8 ppb). The EPA's assessment shows that 
this control level does resolve the only identified nonattainment or 
maintenance problem to which North Carolina is linked for this 
proposal--the Baltimore County, Maryland maintenance receptor. The EPA 
therefore proposes that this EGU control level would fully address 
North Carolina's good neighbor obligation with respect to the 2008 
ozone NAAQS. The EPA seeks comment on this determination.
    The EPA also proposes that, based on the information supporting 
this proposal, this level of EGU NOX control for North 
Carolina would not constitute over-control as to the Baltimore County 
receptor. The level of the 2008 ozone standard NAAQS is 75 ppb. At the 
uniform $1,300 per ton cost threshold, EPA's assessment demonstrates 
that the receptor would just be maintaining the standard, with a 
maximum design value of 75.6 ppb. Therefore, the emissions reductions 
that would be achieved at the $1,300 per ton cost threshold would not 
result in air quality improvements at the Baltimore County receptor 
significantly better than the standard such the emission reductions 
might constitute over-control as to that receptor. On the contrary, the 
emission reductions achieved in upwind states at the $1,300 per ton 
cost threshold are necessary to bring the maximum design value at the 
Baltimore County receptor into alignment with the standard. The EPA 
also seeks comment on this determination.
    For the remainder of the states for which the EPA is proposing FIPs 
in this action, none of these states are linked solely to one of these 
maintenance receptors with air quality resolved at the $1,300 per ton 
cost threshold. Therefore, resolving these downwind air quality impacts 
does not fully address any other individual upwind state's good 
neighbor obligation.
    As noted above the EPA is proposing that the $1,300 per ton EGU 
control level would fully address North Carolina's good neighbor 
obligation with respect to the 2008 ozone NAAQS. As such, based on the 
data supporting this proposal, North Carolina was excluded from 
assessment of air quality improvements at more stringent uniform EGU 
NOX control levels.
    The EPA's assessment shows that the uniform control stringency 
represented by $3,400 per ton would resolve the maintenance problem at 
two additional downwind maintenance receptors--Denton County, Texas 
(481211032) (maximum design value of 75.9 ppb) and Harris County, Texas 
(482011050) (maximum design value of 75.9 ppb). Because no state is 
linked solely to one of these maintenance receptors, resolving these 
downwind air quality impacts does not fully address any individual 
upwind state's good neighbor obligation.
    The EPA provides this summary of the evaluation for the $500 per 
ton; $1,300 per ton; and $3,400 per ton uniform cost thresholds 
because, as described below, the EPA is proposing to use the $1,300 per 
ton level and is taking comment on using the $500 per ton level or 
$3,400 per ton level to quantify ozone season EGU NOX 
requirements to reduce interstate ozone transport for the 2008 ozone 
NAAQS. Further information on the EPA's evaluation of these cost 
thresholds as well as additional cost thresholds ($5,000 per ton; 
$6,400 per ton; and $10,000 per ton) are provided in the Ozone 
Transport Policy Analysis Technical Support Document. Additionally, 
Table VI.D-2 provides a summary of the expected number of nonattainment 
and maintenance-only receptors at the adjusted base case and cost 
thresholds.

Table VI.D-2--Number of Nonattainment or Maintenance Receptors After EGU
                             NOX Mitigation
------------------------------------------------------------------------
                                           Nonattainment   Maintenance-
             Cost threshold                  receptors    only receptors
------------------------------------------------------------------------
Base Case (IPM 5.15 w/CPP)..............              12              21
$500 per ton............................              12              19
$1,300 per ton..........................              12              14
$3,400 per ton..........................              12              13
$5,000 per ton..........................              12              13
$6,400 per ton..........................              12              13
$10,000 per ton.........................              12              12
------------------------------------------------------------------------

    In EME Homer City, the Supreme Court also held that ``EPA cannot 
require a State to reduce its output of pollution . . . at odds with 
the one-percent threshold the Agency has set.'' 134 S.Ct. at 1608. The 
Court explained that ``EPA cannot demand reductions that would drive an 
upwind State's contribution to every downwind State to which it is 
linked below one percent of the relevant NAAQS.'' Id. Accordingly, the 
EPA also evaluated the potential for over-control with respect to the 
1% threshold proposed to be applied in this rulemaking at each relevant 
cost threshold. Specifically, the EPA evaluated whether the uniform 
cost thresholds would reduce upwind EGU emissions to a level where the 
contribution from each upwind state would be below the 1% threshold 
that linked the upwind state to the downwind receptors. If the EPA 
found that any state's reduction obligation at the applied cost 
threshold decreased its contribution to every downwind receptor to 
which it is linked below the 1% threshold, we would need to adjust the 
state's reduction obligation accordingly. The EPA's assessment

[[Page 75738]]

reveals that there is not over-control with respect to the 1% threshold 
at any of the evaluated uniform costs in any upwind state; in fact, 
even at the highest uniform cost threshold evaluated (e.g., $10,000 per 
ton), all upwind states that contributed greater than or equal to the 
1% threshold in the base case continued to contribute greater than or 
equal to 1% of the NAAQS to at least one downwind nonattainment or 
maintenance receptor.\99\ Therefore, the EPA does not expect any of the 
uniform cost thresholds evaluated to result in over-control relative to 
the 1% threshold. For more information about this assessment, refer to 
the Ozone Transport Policy Analysis Technical Support Document.
---------------------------------------------------------------------------

    \99\ As discussed above, North Carolina would not be regulated 
at any level higher than $1300/ton and at that level, there's no 
over-control as to the 1% threshold. In fact, while the receptor to 
which North Carolina is linked resolves its maintenance problem at 
the $1,300/ton level, North Carolina would continue to contribute 
equal to or greater than 1% to that air quality monitor.
---------------------------------------------------------------------------

    The EPA proposes to determine ozone season EGU NOX 
control requirements for upwind states to reduce interstate ozone 
transport for the 2008 ozone NAAQS based on the reduction potential 
quantified from pollution control measures that are cost-effective at 
the $1,300 per ton level. The EPA seeks comment on potentially basing 
these ozone season NOX control requirements on uniform cost 
levels that are less stringent ($500 per ton) or more stringent ($3,400 
per ton), including comments on the proposed approach to addressing a 
state like North Carolina in such a situation, which is explained 
below.
    The EPA notes that the evaluation of cost, NOX 
reductions, and ozone improvements for the final rule could show 
different results for different states. For example, one or more states 
could fully address their good neighbor obligation based on ozone 
season NOX control requirements represented by one cost 
level while one or more other states would not fully address their good 
neighbor obligation at that level and would have ozone season 
NOX control requirements based on a more stringent cost 
level in order to fully address or make further progress toward 
partially addressing their good neighbor obligation. In this situation, 
the EPA proposes that it would quantify requirements for these 
different groups of states based on different uniform control 
stringencies. This could be similar to EPA's establishing two different 
SO2 groups under the original CSAPR as to addressing 
PM2.5 transport. The EPA seeks comment on this proposed 
approach for quantifying requirements.
    The EPA also seeks comment on implementation of the resulting 
emissions budgets. The EPA proposes that if there are groups of states 
with ozone season NOX control requirements based on 
different cost levels, we would nevertheless finalize FIPs for the 
states in these groups of states that incorporate participation in a 
trading program that allows them to trade allowances with each other 
subject to limitations described in section VII of this proposal.
    By way of example and as noted above, the EPA is also seeking 
comment on potentially basing ozone season NOX control 
requirements on the $3,400 per ton uniform cost levels. If the EPA were 
to finalize ozone season NOX control requirements based on 
this level, given the specific data informing this proposal, then the 
EPA would set North Carolina's requirements based on the less stringent 
$1,300 per ton level because, as discussed above, the sole receptor to 
which North Carolina is linked for this proposal is resolved at the 
$1,300 per ton level with a maximum design value of 75.6 ppb. 
Therefore, because the $1,300 per ton level fully addresses North 
Carolina's good neighbor obligation, if EPA were to determine ozone 
season NOX control requirements based on the $3,400 per ton 
level for the remainder of states, the EPA would finalize good neighbor 
requirements for these two groups of states using different uniform 
control stringencies. The EPA proposes that it would finalize FIPs for 
the states that incorporate participation in a trading program that 
allows them to trade allowances with each other subject to limitations 
described in section VII of this proposal.
    The EPA's selection of reductions for this proposed rule is 
specific to, and appropriate for, defining near-term achievable upwind 
obligations with respect to the 2008 ozone NAAQS in states where a FIP 
is necessary. We do not intend--nor do we believe we would be justified 
in doing so in any event--that the cost-level-based determinations in 
this proposed rule impose a constraint for selection of cost levels in 
addressing transported pollution with respect to future NAAQS and/or 
any revisions to these FIPs for any other future transport rules that 
the EPA may develop to address any potential remaining obligation as to 
the current NAAQS, for which different cost levels may be appropriate.
    As described above, the EPA is proposing that the NOX 
emission reductions associated with uniform control stringency 
represented by $1,300 per ton would not result in over-control at any 
of the identified non-attainment or maintenance receptors and it is 
reasonable to require such reductions from upwind states.
    The EPA requests comment on its proposal to quantify ozone season 
EGU NOX reductions to reduce interstate transport with 
respect to the 2008 ozone NAAQS using the $1,300 per ton uniform cost 
threshold.
    Note that our assessment of EGU NOX reduction potential 
shows zero reductions available in Delaware in 2017 at any evaluated 
cost threshold. At this time, because the assessment shows no EGU 
NOX reduction potential within Delaware up to $10,000 per 
ton and because Delaware does not currently participate in the original 
CSAPR NOX ozone-season allowance trading program, the EPA is 
not proposing to promulgate a FIP for Delaware to be included in this 
rule. However, as this assessment has only considered reductions 
available at EGUs by 2017, the EPA cannot at this time conclude that 
Delaware does not have reductions available on a longer timeframe or 
from other emission sectors. Accordingly, the EPA cannot conclude at 
this time that Delaware does not significantly contribute to 
nonattainment or interfere with maintenance at downwind receptors to 
which it is linked. The EPA will evaluate additional reduction 
potential from Delaware in a future rulemaking to address the 2008 
ozone standard. The EPA seeks comment on not including Delaware in the 
proposed FIPs.
    The EPA's EGU NOX reduction assessment also shows nearly 
zero reductions available in Wisconsin in 2017 at the proposed $1,300 
per ton cost threshold. However, Wisconsin currently participates in 
the original CSAPR NOX ozone-season emissions trading 
program and Wisconsin's original CSAPR NOX ozone emissions 
budget is greater than its projected base case emissions. The EPA 
proposes to update Wisconsin's emissions budgets because not doing so 
would mean that Wisconsin, which is found to contribute above 1% to 
downwind ozone problems, could increase emissions above its base case 
level. The EPA proposes to determine ozone season NOX 
control requirements for Wisconsin to reduce interstate ozone transport 
for the 2008 ozone NAAQS based on the reduction potential quantified 
from pollution control measures that are cost-effective at the $1,300 
per ton level. For Wisconsin, based on modeling for this proposal, this 
level is similar to its projected base-case level. The EPA seeks

[[Page 75739]]

comment on the proposed FIP for Wisconsin.
    The EPA also requests comment as to whether the EPA should treat 
Delaware and Wisconsin in the same manner with respect to their 
inclusion or exclusion from the ozone-season trading program with 
respect to the 2008 ozone NAAQS. For example, the EPA requests comment 
as to whether both Delaware and Wisconsin should be included in the 
ozone-season trading program with budgets on the reduction potential 
quantified from pollution control measures that are cost-effective at 
$1,300 per ton,. EPA also requests comment as to whether both states 
should instead be excluded from the ozone-season trading program.

E. Quantifying State Emissions Budgets

    The proposed emissions budgets reflect remaining EGU emissions 
after upwind states achieve the emission reduction obligations defined 
in section VI of this proposal.
    In the original CSAPR proposal, the EPA set proposed emissions 
budgets by using an approach that considered monitored state-level heat 
input and modeled state-level emissions rates. However, for the CSAPR 
final rule, the EPA set budgets using only the modeling results from 
CSAPR's uniform cost assessment. For this rule, the EPA proposes to set 
emissions budgets by considering monitored heat input and modeled 
emissions rates, similar to the original CSAPR proposal. The EPA seeks 
comment on all aspects of quantifying state emissions budgets 
reflecting upwind obligations, including alternative metrics to heat 
input, such as generation.
    The EPA proposes to quantify state emissions budgets using the 
minimum of calculated EGU emissions budgets using the state-level EGU 
NOX emission rates that correspond to the upwind state 
reductions identified above using a uniform cost threshold of $1,300 
per ton or 2014 monitored historic emissions.
    The proposed approach for translating this EGU NOX 
reduction potential into emissions budgets is a four step process. 
First, the EPA would use the resulting 2018 state-level modeled EGU 
NOX emissions rate (lbs/mmBtu) from the IPM $1,300 per ton 
uniform cost assessment. The state-level rate is calculated as the 
total emissions from affected sources within the state, divided by the 
total heat input from these sources. Second, the EPA proposes to 
multiply this modeled state-level emissions rate by 2014 monitored 
historic state-level heat input. Multiplying the projected state-level 
emissions rate by historical heat input yields state-specific ozone 
season EGU NOX emissions for 2018. Third, the EPA proposes 
to add an adjustment to account for differences in unit availability 
between the IPM 2018 run year and 2017, yielding state-specific ozone 
season EGU NOX emissions for 2017. Finally, the EPA then 
proposes EGU emissions budgets as the minimum of this calculated 2017 
emission level or 2014 historic monitored emissions.
    This proposed approach reflects the EGU NOX reduction 
potential described above and grounds the EPA's quantification of 
emissions budgets in historical data. The proposed EGU NOx ozone-season 
emissions budgets calculated using this approach can be found in Table 
VI.E-1. Tables VI.E-2 and VI.E-3 provide the EGU NOX ozone-
season emissions budgets reflecting EGU NOX mitigation 
available for 2017 at $500 per ton and $3,400 per ton, respectively.

            Table VI.E-1--Proposed EGU NOX Ozone-Season Emissions Budgets, Reflecting EGU NOX Mitigation Available for 2017 at $1,300 per Ton
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                          2017 EGU NOX
                                                                 2014 emissions    2018 $1,300/ton   2014 Heat Input   2017 adjustment    Ozone-season
                             State                                   (tons)         emission rate        (MMBtu)        (tons) \100\    emissions budget
                                                                                     (lbs/MMBtu)                                              (tons)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Alabama.......................................................            21,075             0.049       410,477,094                 0             9,979
Arkansas......................................................            18,135             0.074       185,511,093                51             6,949
Illinois......................................................            17,520             0.062       388,382,456                 9            12,078
Indiana.......................................................            40,247             0.126       447,417,615                 0            28,284
Iowa..........................................................            13,857              0.11       151,989,571                 0             8,351
Kansas........................................................            12,297              0.12       154,921,650                 0             9,272
Kentucky......................................................            33,896             0.102       380,694,315             2,169            21,519
Louisiana.....................................................            18,278             0.097       326,662,000                17            15,807
Maryland......................................................             4,026              0.05        86,239,563             2,669             4,026
Michigan......................................................            25,065             0.112       307,723,171             1,836            19,115
Mississippi...................................................            10,229             0.069       172,406,970                 0             5,910
Missouri......................................................            31,235             0.086       330,006,788             1,210            15,323
New Jersey....................................................             2,746             0.036       112,887,439                 0             2,015
New York......................................................             5,547             0.038       235,619,397                 0             4,450
North Carolina................................................            16,759             0.078       315,255,877                 0            12,275
Ohio..........................................................            32,181             0.073       457,251,027                 0            16,660
Oklahoma......................................................            16,215             0.144       236,715,186               154            16,215
Pennsylvania..................................................            44,551             0.057       508,608,673                 0            14,387
Tennessee.....................................................             8,057             0.056       196,132,311                 0             5,481
Texas.........................................................            58,492             0.079     1,474,773,212                33            58,002
Virginia......................................................             9,695             0.076       179,324,728                 0             6,818
West Virginia.................................................            29,420             0.084       317,087,558                 0            13,390
Wisconsin.....................................................             9,087             0.054       205,305,933                 0             5,561
                                                               -----------------------------------------------------------------------------------------
    23 State Region...........................................           478,610  ................     7,581,393,627  ................           311,867
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 75740]]


             Table VI.E-2--Proposed EGU NOX Ozone-Season Emissions Budgets, Reflecting EGU NOX Mitigation Available for 2017 at $500 per Ton
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                          2017 EGU NOX
                                                                 2014 emissions     2018 $500/ton    2014 heat input   2017 adjustment    ozone-season
                             State                                   (tons)         emission rate        (MMBtu)        (tons) \101\    emissions budget
                                                                                     (lbs/MMBtu)                                              (tons)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Alabama.......................................................            21,075             0.058       410,477,094                 0            11,886
Arkansas......................................................            18,135             0.075       185,511,093                51             7,038
Illinois......................................................            17,520             0.062       388,382,456                23            12,144
Indiana.......................................................            40,247              0.15       447,417,615                 0            33,483
Iowa..........................................................            13,857             0.113       151,989,571                 0             8,614
Kansas........................................................            12,297              0.12       154,921,650                 0             9,278
Kentucky......................................................            33,896             0.149       380,694,315             4,463            32,783
Louisiana.....................................................            18,278             0.097       326,662,000                17            15,861
Maryland......................................................             4,026              0.05        86,239,563             2,672             4,026
Michigan......................................................            25,065             0.131       307,723,171             1,836            22,022
Mississippi...................................................            10,229             0.071       172,406,970                 0             6,083
Missouri......................................................            31,235             0.086       330,006,788             1,123            15,380
New Jersey....................................................             2,746             0.036       112,887,439                 0             2,016
New York......................................................             5,547             0.039       235,619,397                 0             4,607
North Carolina................................................            16,759             0.078       315,255,877                 0            12,278
Ohio..........................................................            32,181             0.088       457,251,027                 0            20,194
Oklahoma......................................................            16,215             0.156       236,715,186               154            16,215
Pennsylvania..................................................            44,551              0.15       508,608,673                 0            38,270
Tennessee.....................................................             8,057             0.056       196,132,311                 0             5,520
Texas.........................................................            58,492             0.083     1,474,773,212                 0            58,492
Virginia......................................................             9,695             0.078       179,324,728                 0             6,955
West Virginia.................................................            29,420             0.145       317,087,558                 0            22,932
Wisconsin.....................................................             9,087             0.054       205,305,933                 0             5,588
                                                               -----------------------------------------------------------------------------------------
    23 State Region...........................................           478,610  ................     7,581,393,627  ................           371,665
--------------------------------------------------------------------------------------------------------------------------------------------------------


            Table VI.E-3--Proposed EGU NOX Ozone-Season Emissions Budgets, Reflecting EGU NOX Mitigation Available for 2017 at $3,400 per Ton
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                          2017 EGU NOX
                                                                 2014 emissions    2018 $3,400/ton   2014 heat input   2017 adjustment    ozone-season
                             State                                   (tons)         emission rate        (MMBtu)        (tons) \102\    emissions budget
                                                                                     (lbs/MMBtu)                                              (tons)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Alabama.......................................................            21,075             0.048       410,477,094                 0             9,931
Arkansas......................................................            18,135             0.065       185,511,093                51             6,101
Illinois......................................................            17,520             0.062       388,382,456                 0            11,992
Indiana.......................................................            40,247             0.123       447,417,615                 0            27,585
Iowa..........................................................            13,857             0.107       151,989,571                 0             8,118
Kansas........................................................            12,297              0.12       154,921,650                 0             9,259
Kentucky......................................................            33,896             0.099       380,694,315             2,169            20,945
Louisiana.....................................................            18,278             0.094       326,662,000                17            15,378
Maryland......................................................             4,026              0.05        86,239,563             2,523             4,026
Michigan......................................................            25,065             0.108       307,723,171             1,978            18,624
Mississippi...................................................            10,229             0.064       172,406,970                 0             5,487
Missouri......................................................            31,235             0.083       330,006,788             1,500            15,240
New Jersey....................................................             2,746             0.036       112,887,439                 0             2,011
New York......................................................             5,547             0.037       235,619,397                 0             4,391
North Carolina................................................            16,759             0.068       315,255,877                 0            10,705
Ohio..........................................................            32,181             0.073       457,251,027                 0            16,637
Oklahoma......................................................            16,215             0.137       236,715,186               146            16,215
Pennsylvania..................................................            44,551             0.056       508,608,673                 0            14,358
Tennessee.....................................................             8,057             0.056       196,132,311                 0             5,449
Texas.........................................................            58,492             0.076     1,474,773,212               100            55,864
Virginia......................................................             9,695             0.065       179,324,728                 0             5,834
West Virginia.................................................            29,420             0.078       317,087,558                 0            12,367
Wisconsin.....................................................             9,087             0.054       205,305,933                 0             5,511
                                                               -----------------------------------------------------------------------------------------
    23 State Region...........................................           478,610  ................     7,581,393,627  ................           302,028
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 75741]]

VII. Implementation Using the Existing CSAPR NOX Ozone-
Season Allowance Trading Program and Relationship to Other Rules

A. Background

    This section describes implementing and enforcing the budgets 
quantified in section VI. In the 4-step CSAPR methodology previously 
described, once emission reduction potential is quantified into 
emissions budgets, the remaining step is to identify an approach for 
ensuring that such reductions occur and are enforceable. As discussed 
previously, EPA is proposing implement the budgets to address the 2008 
ozone NAAQS using the existing CSAPR trading program that allows 
limited interstate trading among states participating in the ozone-
season trading program. The EPA proposes to revise the existing 
budgets, developed to address transport as to the 1997 ozone NAAQS, 
where necessary to reflect the additional reductions that the EPA 
identified as necessary to address transport as to the 2008 NAAQS. The 
EPA will implement the trading program in each affected state through 
the issuance of a FIP.
---------------------------------------------------------------------------

    \100\ The entire 2017 Adjustment listed is not used in 
calculating for Maryland and Oklahoma because it would push their 
budget above their 2014 emissions.
    \101\ The entire 2017 Adjustment listed is not used in 
calculating for Maryland, Oklahoma, and Texas because it would push 
their budget above their 2014 emissions.
    \102\ The entire 2017 Adjustment listed is not used in 
calculating for Maryland and Oklahoma because it would push their 
budget above their 2014 emissions.
---------------------------------------------------------------------------

    In electing to propose to implement these near-term EGU reductions 
for the 2008 ozone standard using the existing CSAPR trading 
infrastructure, the EPA considered the many significant advantages of 
continuing to use the existing CSAPR program, including the ease of 
transition to the new budgets, the economic and administrative 
efficiency of trading approaches, and the flexibility afforded to 
sources regarding compliance.
    The EPA also considered views expressed by some stakeholders that a 
complementary short-term (e.g., 30-day) rate-based limit would ensure 
that control measures adopted to meet the revised budgets continue to 
operate over time. Some stakeholders have observed, for example, that 
some existing SCR and SNCR units may not have operated in recent years 
because CAIR allowance prices are below the operating costs of the 
controls. The EPA notes that in such cases, the CAIR emissions budgets 
that states were required to meet to address significant contribution 
for the 1997 NAAQS were in fact still being met. The EPA will also 
evaluate power sector behavior for 2015, the first year of CSAPR 
implementation, and provide that assessment for the final rule. The EPA 
expects that certain aspects of this proposal will alleviate some of 
these concerns. In particular, this proposal is aimed at establishing 
new, lower emissions budgets that are calculated based on a uniform 
cost that is reflective of, among other things, operating those 
controls. Furthermore, as described later in this notice, we are 
proposing adjustments to the CSAPR regulations that, if adopted, would 
address the role that the banked allowances may play in allowance 
prices. For these reasons, the EPA does not believe that including a 
short-term complementary rate-based limit in the proposed FIPs is 
necessary. Nevertheless, we invite comment on the need for such an 
approach and, from commenters arguing that it is needed, we invite 
suggestions for calculating it.
    As explained in greater detail in section IV, under CAA sections 
110(a)(1) and 110(a)(2), each state is required to submit a SIP that 
provides for the implementation, maintenance, and enforcement of each 
primary or secondary NAAQS. According to section 110(a)(2)(D)(i)(I), 
the SIP for each state, regardless of a state's designation status for 
the relevant NAAQS, must prohibit sources or other types of emissions 
activity from emitting any air pollutant in amounts that will 
``contribute significantly to nonattainment'' of the standard in a 
downwind state or ``interfere with maintenance'' of the standard in a 
downwind state. Section IV also explains in detail that the EPA is 
obligated to promulgate FIPs when we find that a state fails to submit 
a complete SIP or the EPA disapproves a SIP submittal.
    The EPA recognizes that several states included in this proposal 
have submitted transport SIPs to address the 2008 ozone standard that 
the EPA is reviewing, and it is possible that additional states may 
submit SIPs in the future. As explained in section IV above, the EPA 
may only finalize FIPs for states where FIP authority exists; that is, 
for states where either the EPA found that the state failed to submit a 
complete transport SIP or where the EPA has disapproved a transport SIP 
submittal for that state. The EPA intends to finalize these proposed 
FIPs together in a single action and, to the greatest extent possible, 
the EPA intends to take final action on SIP submittals currently before 
the agency prior to finalizing this proposal. In the event that a state 
plans to revise its SIP or submit a SIP prior to any final rule, 
contact your regional office to alert the EPA.
    By this action, the EPA is proposing federal implementation plans 
with respect to the 2008 ozone NAAQS for each state potentially covered 
by this rule. Section VI above describes the EPA's approach to defining 
state-level EGU emissions budgets that represent the EGU emissions 
remaining after reducing that state's significant contribution to 
downwind nonattainment and/or interference with maintenance. The EPA is 
proposing to implement these EGU emissions budgets in the FIPs through 
the CSAPR EGU NOX ozone-season trading program.
    When the EPA finalized CSAPR in 2011 under the good neighbor 
provision of the CAA to reduce emissions of SO2 and 
NOX from power plants in eastern states, the rule put in 
place regional trading programs to quickly and cost-effectively address 
pollution that affects air quality in downwind states. The EPA 
envisioned that the methodology could be used to address transport 
concerns under other existing NAAQS and future NAAQS revisions. See 76 
FR 48211 and 48246, August 8, 2011. Accordingly, the EPA proposes to 
use the CSAPR ozone-season trading program and related provisions as 
codified under 40 CFR part 97, subpart BBBBB and section 52.38, as 
amended in this proposal, to implement the proposed EGU NOX 
ozone-season emissions budgets for the 2008 ozone NAAQS. This program 
will be initially implemented in each state through a FIP.
    In this notice, the EPA proposes that the first control period for 
the requirements is the 2017 ozone season. A covered state would be 
required to demonstrate compliance with FIP requirements for each 
subsequent ozone season until it submits, and the EPA approves, a SIP 
or the EPA promulgates another federal rule replacing the FIP.
    The EPA notes that the compliance flexibility provided by the CSAPR 
NOX ozone-season trading program allows sources to 
demonstrate compliance by holding allowances and does not prescribe 
unit-specific and technology-specific NOX mitigation. In 
other words, while the EPA quantified EGU NOX reductions 
resulting from mitigation strategies such as operating or installing 
(or upgrading to) state-of-the-art combustion controls, no particular 
reduction strategy is required for any specific unit because the Act 
only requires that an upwind state's aggregate emissions neither 
significantly contribute to nonattainment nor interfere with 
maintenance of the NAAQS in a downwind state.

[[Page 75742]]

    In practice, the EGU emissions budgets that the EPA is proposing in 
this action are achievable for each of the 23 states through operating 
existing SCR and SNCR controls, installing or upgrading to state-of-
the-art combustion controls, or shifting generation to low-
NOX emitting units. The EPA believes that this proposed rule 
provides sufficient lead time to implement these control strategies by 
the 2017 ozone season. For the EPA's assessment of the feasibility of 
controls for 2017, refer to section VI above and the EGU NOX 
Reduction TSD in the docket for this proposal.\103\
---------------------------------------------------------------------------

    \103\ The EPA notes that a state can instead require non-EGU 
NOX emission reductions through a SIP, if they choose to 
do so.
---------------------------------------------------------------------------

    In this section of the preamble, the following topics are 
addressed: FIP requirements and key elements of the CSAPR trading 
programs; participation in the CSAPR NOX ozone-season 
trading program with a new budget; source monitoring and reporting; 
replacing the FIP with a SIP; title V permitting; and the relationship 
of this proposed rule to existing programs (NOX SIP Call, 
CSAPR trading programs, Clean Power Plan (CPP), and other ozone 
transport programs).

B. FIP Requirements and Key Elements of the CSAPR Trading Programs

    The original CSAPR establishes an NOX ozone-season 
allowance trading program that allows covered sources within each state 
to trade allowances with other sources within the same trading group. 
Pursuant to the CSAPR NOX ozone-season trading program, 
sources are required to hold one allowance for each ton of 
NOX emitted during the ozone season. We propose to use that 
same regional trading program, with adjusted budgets and certain 
additional revisions described below, as the compliance remedy for the 
proposed FIPs to address the 2008 ozone NAAQS. The first control period 
for this updated CSAPR NOX ozone-season trading program is 
proposed to begin with the 2017 ozone season, on May 1, 2017.
    In this section, the EPA is proposing to use the existing 
NOX ozone-season allowance trading system that was 
established under CSAPR in 40 CFR part 97, subpart BBBBB, to implement 
the emission reductions identified and quantified in the FIPs for this 
action.
1. Applicability
    In this proposed rule, the EPA would maintain the applicability 
provisions in the final CSAPR rule for the NOX ozone-season 
trading program (see 40 CFR 97.504).
    Under the general applicability provisions of the CSAPR final rule, 
a covered unit is any stationary fossil-fuel-fired boiler or combustion 
turbine serving at any time on or after January 1, 2005, a generator 
with nameplate capacity exceeding 25 MW producing electricity for sale, 
with the exception of certain cogeneration units and solid waste 
incineration units (see 76 FR 48273, August 8, 2011, for a discussion 
on applicability in the final CSAPR rule). The EPA is not proposing any 
changes to this provision.
2. State Budgets
    This proposal includes revisions to 40 CFR 97.510 to reflect new 
budgets for states covered under this proposal as delineated in section 
VI above. This includes the NOX ozone-season trading 
budgets, new unit set-asides, and Indian country new unit set-asides 
for 2017 and beyond, described in further detail below.
    For states already covered by the original CSAPR ozone-season 
program, the EPA proposes to update CSAPR EGU NOX ozone-
season budgets to reflect obligations to reduce interstate transport to 
address the 2008 ozone standard. For states that are newly brought into 
the CSAPR ozone-season program because emissions from the states 
significantly contribute to nonattainment or interfere with maintenance 
of the 2008 ozone NAAQS in a downwind state (i.e., Kansas based on 
information used to develop this proposal), the proposal includes an 
EGU NOX ozone-season emissions budget. For states currently 
in the CSAPR ozone-season trading program, but not identified as 
contributing to interstate ozone transport for the 2008 NAAQS (i.e., 
Georgia based on information used to develop this proposal), 
participation in CSAPR would continue unchanged pursuant to their 
previously-defined obligation (budget) with respect to the 1997 ozone 
NAAQS.
    The EPA proposes to establish reduced or new ozone-season emissions 
budgets for the 23 eastern states affected by the transport rule for 
the 2008 ozone NAAQS. The EPA proposes to implement these emissions 
budgets by allocating allowances to sources in those states equal to 
the proposed budgets for compliance starting in 2017. The EPA will 
establish allowance allocations for the existing units in each state 
through this rulemaking. Portions of the state budgets will be set 
aside for new units, and the EPA will use the existing processes set 
forth in the CSAPR regulations to annually allocate allowances to the 
new units in each state from the new unit set-asides. For states that 
are currently in the CSAPR ozone-season program, but are not affected 
under this proposed transport rule for the 2008 ozone NAAQS (i.e., 
Georgia based on information used to develop this proposal), the EPA 
will maintain the state's budget as finalized in the original CSAPR 
rulemakings.
3. Allocations of Emission Allowances
    Pursuant to the CSAPR trading program regulations, a covered source 
is required to hold sufficient allowances to cover the emissions from 
all covered units at the source during the control period for the 
NOX ozone season. The EPA assesses compliance with these 
allowance-holding requirements at the source (i.e., facility) level.
    This section explains that the EPA proposes to allocate a state's 
budget to existing units and new units in that state by applying the 
same allocation approach as finalized in CSAPR, based on a unit's 
historical heat input and its maximum historical emissions (see 76 FR 
48284, August 8, 2011). This section also describes allocation for 
Tribes, the new unit set-asides and Indian country new unit set-asides 
in each state, allocations to units that are not operating; and the 
recordation of allowance allocations in source compliance accounts.
A. Allocations for Existing Units
    The EPA proposes to implement each state's EGU NOX 
ozone-season emissions budget in the trading program by allocating the 
number of emission allowances to sources within that state, equivalent 
to the tonnage of that specific state budget, as shown in section VI. 
For these 23 states, the EPA would allocate allowances under each 
state's budget to covered units in that state. The portion of a state 
budget allocated to existing units in that state is the state budget 
minus the new unit set-aside and minus the Indian country new unit set-
aside. The new unit set-asides are portions of each budget reserved for 
new units that might locate in each state or in Indian country in the 
future. For the existing source level allocations, see the TSD called, 
``Existing Source Level Allocations for the 2008 NOX Ozone-
season Rule FIPs,'' in the docket for this rulemaking. The methodology 
used to allocate allowances to individual units in a particular state 
has no impact on that state's budget.
    For the purpose of allocations, an ``existing unit'' in CSAPR is 
one that commenced commercial operation prior to January 1, 2010. For 
the 23 states included in this proposed rulemaking for the 2008 ozone 
NAAQS, the EPA proposes to identify an ``existing unit''

[[Page 75743]]

as one that commenced commercial operation prior to January 1, 2015. 
EPA has updated information on affected units that have commenced 
commercial operation prior to January 1, 2015 (currently defined either 
as existing units or as new units pursuant to the current CSAPR 
regulations) that would allow these units to be considered existing 
units for purposes of allocations and would allow new unit set-asides 
to be fully reserved for any future new units in affected states or 
Indian country. The EPA is not proposing to change the January 1, 2010 
date for states that remain in the original CSAPR and are not affected 
by the changes proposed here (i.e., Georgia with respect to the CSAPR 
NOX ozone-season allowances and all states with respect to 
CSAPR SO2 or NOX annual allowances); thus, the 
only allowance allocations that are proposed to be changed in this 
rulemaking for any units under any of the CSAPR trading programs are 
allocations of NOX ozone-season allowances from budgets that 
are proposed to be revised in this proposed rule.
    The EPA proposes to follow the original CSAPR methodology for 
distributing, or allocating, emission allowances to existing units 
based on the unit's share of the state's heat input, limited by the 
unit's maximum historical emissions. This approach uses the highest 
three of the last five years to establish the heat input baseline for 
each unit, and constrains the unit-level allocations so as not to 
exceed the maximum historical baseline emissions during 2007-2014. As 
discussed in the original CSAPR final rule (see 76 FR 48288-9, August 
8, 2011), the EPA finds no advantage or disadvantage in this approach 
that would penalize those units that have already invested in cleaner 
fuels or other pollution reduction measures. The EPA considers this 
allocation approach to be fuel-neutral, control-neutral, transparent, 
based on reliable data, and similar to allocation methodologies 
previously used in the NOX SIP Call and Acid Rain Program. 
The EPA requests comments on following the CSAPR approach for existing 
unit allocations in states covered by this proposed rule as to the 2008 
ozone NAAQS.
    For states that have EPA-approved abbreviated SIP revisions 
adopting a different allocation methodology for sources located within 
the state for CSAPR for the 2017 ozone season and beyond, those 
provisions would address the allocation of revised NOX 
ozone-season emissions budgets established under this proposed rule, 
provided that the SIP revision includes not only specific allocations 
given the total state budget expected at the time of the SIP revision, 
but also a methodology for determining allocations from any given total 
state budget. For states that have EPA-approved full SIP revisions, the 
EPA proposes to use the EPA-approved allocation provisions of the 
state's SIP revision to allocate allowances to sources in that 
particular state using the revised emissions budget proposed to address 
interstate ozone transport for the 2008 NAAQS, again provided that the 
SIP includes not only specific allocations but a methodology for 
determining allocations from any given total state budget.
    Further, where the state regulation approved as a full or 
abbreviated SIP revision does not contain an allocation methodology but 
the materials submitted by the state to support EPA's approval of that 
regulation as a SIP revision contain the state's allocation method, 
described in an unambiguous manner, the EPA seeks comment on using that 
state-approved methodology to determine the allocations of allowances 
to sources in the state under the FIPs established in this proposed 
rule. These possible approaches could prevent a state from needing to 
submit another SIP revision to implement the same allocation provisions 
under this proposed rule that the state has already implemented under 
CSAPR before adoption of this proposed rule.
    For all other states, the EPA proposes to use the allocation method 
previously finalized in the final CSAPR rulemaking as discussed in this 
section. These provisions would not prevent any state (one with an EPA-
approved SIP revision or without) from submitting an alternative 
allocation methodology under this proposed rule for later compliance 
years. EPA requests comment on this modified allocation approach for 
states with EPA-approved SIP revisions under the current rule.
b. Allocations for New Units
    For the purpose of allocations, CSAPR identifies a ``new unit'' as 
one that commenced commercial operation on or after January 1, 2010, 
and provides a methodology for allocating emission allowances to new 
units from new unit set-asides in each state and to new units that 
locate in Indian country. See 76 FR 48290-48294 (Aug. 8, 2011), for 
more information. The FIPs that EPA is proposing will incorporate a 
trading program in which EPA is proposing to define a covered unit as a 
``new unit'' if it commences commercial operation on or after January 
1, 2015; if it becomes covered by meeting applicability criteria 
subsequent to January 1, 2015; if it relocates into a different state 
covered by this FIP; or if it was an ``existing'' covered unit that 
stopped operating for 2 consecutive years but resumes commercial 
operation at some point thereafter. To the extent that states seek 
approval of SIPs with different allocation provisions than EPA, these 
SIPs may seek to define new units differently.
    The EPA further proposes that its trading program will make 
allocations to each state for new units (the new unit set-aside) equal 
to a basic minimum 2 percent of the total state budget, plus the 
projected amount of emissions from planned units in that state (for 
instance, if planned units in state A are projected to emit 3 percent 
of the state's NOX ozone-season emissions budget, then the 
new unit set-aside for the state would be set at 5 percent, consisting 
of the basic minimum 2 percent plus an additional 3 percent for planned 
units). See 76 FR 48292. New units may receive allocations starting 
with the first year they are subject to the allowance-holding 
requirements of the rule. If unallocated to new units, set-asides are 
redistributed to unretired existing units before the compliance 
deadline. The EPA requests comments on following the CSAPR approach for 
new unit allocations under this proposal. (For more detail on the CSAPR 
new unit set-aside provisions, see 40 CFR 97.511(b) and 97.512.)
    The EPA notes that applying the CSAPR approach using the data for 
this proposal results in a new-unit set-aside for New Jersey that is 
greater than 50% of the total proposed EGU NOX ozone-season 
emissions budget for the state. This result is influenced by the EPA's 
projected emissions rates for new units that are anticipated to come 
online within states. The EPA seeks comment on these data, which are 
available in the IPM documentation in the docket for this proposal. 
Further, the EPA seeks comment on whether additional data should be 
considered--for example, reported NOX emission rates of 
recently constructed new NGCC units in each state.

[[Page 75744]]



   Table VII.B-1--Proposed EGU NOX Ozone-Season New-Unit Set-Aside Amounts, Reflecting Proposed EGU Emissions
                                                 Budgets (tons)
----------------------------------------------------------------------------------------------------------------
                                                   Proposed EGU
                                                   NOX emissions   New-unit set-   New-unit set-  Indian country
                      State                           budgets      aside amount    aside amount      set-aside
                                                      (tons)         (percent)        (tons)      amount  (tons)
 
----------------------------------------------------------------------------------------------------------------
Alabama.........................................           9,979               2             205
Arkansas........................................           6,949               2             141
Illinois........................................          12,078               5             591
Indiana.........................................          28,284               2             565
Iowa............................................           8,351               5             419               8
Kansas..........................................           9,272               3             281               9
Kentucky........................................          21,519               3             647
Louisiana.......................................          15,807               4             628              16
Maryland........................................           4,026              12             485
Michigan........................................          19,115               2             382              19
Mississippi.....................................           5,910              10             590               6
Missouri........................................          15,323               2             314
New Jersey......................................           2,015              57           1,151
New York........................................           4,450               2              93               4
North Carolina..................................          12,275               2             248              12
Ohio............................................          16,660               2             337
Oklahoma........................................          16,215               2             325              16
Pennsylvania....................................          14,387               7           1,017
Tennessee.......................................           5,481               2             109
Texas...........................................          58,002               5           2,910              58
Virginia........................................           6,818              27           1,844
West Virginia...................................          13,390               2             268
Wisconsin.......................................           5,561               2             121               6
                                                 ---------------------------------------------------------------
    23 State Region.............................         311,867  ..............          13,671             154
----------------------------------------------------------------------------------------------------------------

c. Allocations for Tribes and New Units in Indian Country
    Tribes are not required to submit tribal implementation plans. 
However, as explained in the EPA's regulations outlining Tribal Clean 
Air Act authority, the EPA is authorized to promulgate FIPs for Indian 
country as necessary or appropriate to protect air quality if a tribe 
does not submit and get EPA approval of a tribal implementation plan. 
See 40 CFR 49.11(a); see also 42 U.S.C. 7601(d)(4). For this proposed 
ozone rule, there are no existing affected units in Indian country in 
the states affected by this rule.
    Under the current rule, allowances to possible future new units 
locating in Indian country are allocated by the EPA from an Indian 
country new unit set-aside established for each state with Indian 
country. (See 40 CFR 97.511(b)(2) and 97.512(b).) Because states 
generally have no SIP authority in reservation areas of Indian country 
and other areas of Indian country over which a tribe or EPA has 
demonstrated that a tribe has jurisdiction, the EPA continues to 
allocate such allowances to sources locating in such areas of Indian 
country within a state even if the state submits a SIP to replace the 
FIP. (40 CFR 52.38(b)(5)(v) and (vi) and 52.38(b)(6).) The EPA reserves 
0.1 percent of the total state budget for new units in Indian country 
within that state (5 percent of the basic 2 percent new unit set-aside 
prior to any increase in a state's new unit set-aside amount for 
planned units). Unallocated allowances from a state's Indian country 
new unit set-aside are returned to the state's new unit set-aside and 
allocated according to the methodology described above. The EPA 
requests comment on following the CSAPR approach for new unit 
allocations in such areas of Indian country under the transport rule 
for the 2008 ozone NAAQS.
d. Units That Do Not Operate and the New Unit Set-Aside
    The EPA proposes to continue to apply for purposes of this proposed 
rule the existing CSAPR provision under which a covered unit that does 
not operate for a period of two consecutive years will receive 
allowance allocations for a total of up to five years of non-operation. 
40 CFR 97.511(a)(2). Starting in the fifth year after the first year of 
non-operation, allowances allocated to such units will instead be 
allocated to the new unit set-aside for the state in which the non-
operating unit is located. This approach allows the new unit set-asides 
to grow over time. The EPA requests comment on retaining this timeline 
for allowance allocation for non-operating units or changing the 
allowance allocation for non-operating units to, for instance, two 
years or three years, in which case allowances would revert to the new 
unit set-aside in the second or third year after the first of two 
consecutive years of non-operation of a unit.
4. Variability Limits, Assurance Levels, and Penalties
    In the original CSAPR, the EPA developed assurance provisions, 
including variability limits and assurance levels (with associated 
compliance penalties), to assure that each state will meet its 
pollution control obligations and to accommodate inherent year-to-year 
variability in state-level EGU operations.
    The original CSAPR budgets, and the updated CSAPR emissions budgets 
proposed in this notice, reflect EGU operations in an ``average year.'' 
However, year-to-year variability in EGU operations occurs due to the 
interconnected nature of the power sector and from changing weather 
patterns, demand growth, or disruptions in electricity supply from 
other units or from the transmission grid. Recognizing this, the FIP 
includes variability limits, which define the amount by which state 
emissions may exceed the level of the budgets in a given year to 
account for this variability in EGU operations. A

[[Page 75745]]

state's budget plus its variability limit equals a state's assurance 
level, which acts as a cap on each state's NOX emissions 
during a control period (that is, during the May-September ozone season 
in the case of this rule).
    To establish the variability limits in the original CSAPR, the EPA 
analyzed historical state-level heat input variability as a proxy for 
emissions variability, assuming constant emission rates. (See 76 FR 
48265, August 8, 2011.) The variability limits for ozone-season 
NOX in the original CSAPR were calculated as 21 percent of 
each state's budget, and these variability limits were then codified in 
40 CFR 97.510 along with the state budgets. Applying the CSAPR 
approach, the EPA proposes to set new variability limits applying the 
same 21 percent figure as determined in the original CSAPR to this 
proposed rule's budgets. The EPA proposes that the same 21% figure is 
appropriate to use because variability in state-level heat input across 
a multi-year period is expected to be relatively consistent around 
long-term trends. The EPA seeks comment on this approach. Table VII.B-2 
shows the proposed EGU NOX ozone-season emissions budgets, 
variability limits, and assurance levels for each state.

 Table VII.B-2--Proposed EGU NOX Ozone-Season Emissions Budgets Reflecting EGU NOX Mitigation Available for 2017
                       at $1,300 per Ton, Variability Limits, and Assurance Levels (Tons)
----------------------------------------------------------------------------------------------------------------
                                                             EGU NOX ozone-                      EGU NOX ozone-
                           State                            season emissions     Variability    season assurance
                                                                 budgets           limits            levels
----------------------------------------------------------------------------------------------------------------
Alabama...................................................             9,979             2,096            12,075
Arkansas..................................................             6,949             1,459             8,408
Illinois..................................................            12,078             2,536            14,614
Indiana...................................................            28,284             5,940            34,224
Iowa......................................................             8,351             1,754            10,105
Kansas....................................................             9,272             1,947            11,219
Kentucky..................................................            21,519             4,519            26,038
Louisiana.................................................            15,807             3,319            19,126
Maryland..................................................             4,026               845             4,871
Michigan..................................................            19,115             4,014            23,129
Mississippi...............................................             5,910             1,241             7,151
Missouri..................................................            15,323             3,218            18,541
New Jersey................................................             2,015               423             2,438
New York..................................................             4,450               935             5,385
North Carolina............................................            12,275             2,578            14,853
Ohio......................................................            16,660             3,499            20,159
Oklahoma..................................................            16,215             3,405            19,620
Pennsylvania..............................................            14,387             3,021            17,408
Tennessee.................................................             5,481             1,151             6,632
Texas.....................................................            58,002            12,180            70,182
Virginia..................................................             6,818             1,432             8,250
West Virginia.............................................            13,390             2,812            16,202
Wisconsin.................................................             5,561             1,168             6,729
                                                           -----------------------------------------------------
    Region cap............................................           311,867            65,493  ................
----------------------------------------------------------------------------------------------------------------

    The assurance provisions include penalties that are triggered when 
the state emissions as a whole exceed its assurance level. The original 
CSAPR provided that a state that exceeds its assurance level in a given 
year is assessed a total of 3-to-1 allowance surrender on the excess 
tons. Each excess ton above the assurance level must be met with one 
allowance for normal compliance plus two additional allowances to 
satisfy the penalty. The penalty is designed to deter state-level 
emissions from exceeding assurance levels. This was referred to in the 
original CSAPR as air quality-assured trading that accounts for 
variability in the electricity sector but also ensures that the 
necessary emission reductions occur within each covered state. If a 
state does not exceed its assurance level, no penalties are incurred by 
any source. Establishing assurance levels with compliance penalties 
therefore responds to the court's holding in North Carolina requiring 
the EPA to assure that sources in each state were required to eliminate 
emissions that significantly contribute to nonattainment and interfere 
with maintenance of the NAAQS in another state.\104\
---------------------------------------------------------------------------

    \104\ 531 F.3d at 908.
---------------------------------------------------------------------------

    To assess the penalty under the assurance provisions, the EPA 
evaluates whether any state's total EGU emissions in a control period 
exceeded the state's assurance level, and if so, the EPA then 
determines which owners and operators of units in the state will be 
subject to an allowance surrender requirement based on each source's 
emissions as compared to its unit-level assurance level. Since a single 
designated representative (DR) often represents multiple sources, the 
EPA evaluates which groups of units at the common DR level had 
emissions exceeding the respective common DR's share of the state 
assurance level, regardless of whether the individual source had enough 
allowances to cover its emissions during the control period. This 
provision is triggered only if two criteria are met: (1) The group of 
sources and units with a common DR are located in a state where the 
total state EGU emissions for a control period exceed the state 
assurance level; and (2) that group with the common DR had emissions 
exceeding the respective DR's share of the state assurance level.
    For more information on the CSAPR assurance provisions see 76 FR 
48294 (August 8, 2011).
5. Implementation Approaches for Transitioning the Existing CSAPR 
NOX Ozone-Season Program To Address Transport for a Newer 
NAAQS
    Consistent with the original CSAPR approach, EPA proposes that in 
this updated rulemaking, EGUs would be

[[Page 75746]]

able to trade NOX ozone-season emission allowances among 
units within the state and across state boundaries, with emissions and 
use of allowances limited by the assurance provisions. The following 
sections describe approaches to transition the existing CSAPR program 
designed for the 1997 ozone NAAQS to address interstate ozone transport 
for the 2008 ozone NAAQS.
    A primary focus of this section is the extent to which allowances 
created to address interstate transport with respect to the 1997 ozone 
NAAQS, reflecting emissions budgets at $500 per ton, are fungible with 
allowances created under this proposal to address interstate transport 
for the 2008 ozone NAAQS, reflecting emissions budgets at $1,300 per 
ton. The EPA proposes that these implementation tools are not 
presumptively equivalent, given that they were developed to address 
ozone transport under different NAAQS and using different cost 
thresholds. However, as further discussed below, the EPA is proposing 
approaches under which allowances allocated under budgets established 
to address the 1997 NAAQS could be used for compliance for addressing 
interstate transport for the 2008 NAAQS, subject to specific 
limitations. The EPA is also taking comment on several other approaches 
for addressing the transition from a program in which all budgets were 
established based on an integrated analysis using a single control cost 
threshold to address the 1997 NAAQS to a program with a mix of budgets 
established in independent analyses using different control cost 
thresholds, in some cases to address the 1997 NAAQS and in other cases 
to address the 2008 NAAQS.
a. Use of CSAPR Ozone-season Trading Program Bank in the Transport Rule 
for the 2008 Ozone NAAQS Trading Program
    Since CSAPR was promulgated in 2011, the U.S. electric sector has 
undergone considerable transformation primarily due to economic and 
market forces precipitated by the natural gas boom. For example, Henry 
Hub natural gas prices reached below $2.00 per million BTU in 2012 and 
were in the $2.00-$3.00 range for most of 2012. These prices are below 
the level initially anticipated when establishing the phase 1 and 2 
budgets, and have made the operation of lower emitting units more 
competitive, putting more downward pressure on emissions. There has 
also been turnover in the power generation fleet as newer, lower 
emitting sources replace older, higher emitting sources, putting 
further downward pressure on emissions. Approximately 28.5 GW of coal 
units retired from the fleet between 2012 and June of 2015. In 
addition, demand growth has slowed; a majority of U.S. states have 
implemented renewable portfolio standards and other energy efficiency 
programs; and high-efficiency building designs, residential energy 
conservation, roof-top solar, and other forms of distributed generation 
have grown. In combination, these factors have significantly reduced 
EGU NOX emissions between 2012 and 2015.
    As a result of protracted litigation, CSAPR implementation was 
delayed by three years, from 2012 to 2015. Due to this delay, combined 
with the market forces and changes that took place during that 
timeframe, expectations are that total banked allowances for the CSAPR 
ozone-season trading program could be in excess of 210,000 tons by the 
start of the 2017 ozone-season compliance period, which is more than 
twice the emission reduction potential estimated at the $1,300 per ton 
control level described in section VI above. This number was estimated 
by comparing recent measured emission levels to the original CSAPR 
NOX ozone-season phase 1 emissions budgets, assuming EGU 
emissions in CSAPR NOX ozone-season states for 2015 and 2016 
would continue at 2014 levels.\105\
---------------------------------------------------------------------------

    \105\ This data analysis relies on 40 CFR part 75 emissions 
reporting data as available in EPA Air Markets Program Data 
available at http://ampd.epa.gov/ampd/.
---------------------------------------------------------------------------

    The use of allowance banks generally provide a glide path for 
sources required to meet more stringent emission limits in later years 
and accommodate year-to-year variability in operation. However, 
allowing unrestricted use of the large number of banked allowances for 
compliance with this proposed rule could result in regional 2017 ozone 
season NOX emissions that exceed the collective state 
budgets quantified in this rulemaking to address transported air 
pollution with respect to the 2008 ozone standard. While the assurance 
provisions included in CSAPR do limit the ultimate amount of pollution 
that may occur in these states in 2017 (i.e., no matter how large an 
allowance bank may exist, only a portion of that bank may be used in a 
state in any given year without exceeding the assurance levels and 
incurring penalties), unrestricted use of the bank in this situation 
could allow emissions to exceed the state budgets, up to the assurance 
level, year after year.
    As described in CSAPR, the flexibility provided by the assurance 
provisions is not designed to be used repeatedly, year after year. 
Rather, the use of banked allowances is intended to be limited by 
binding emissions budgets such that drawing down the bank in one year 
is only possible because of actions taken to build up the bank in a 
previous year. Moreover, a relatively large allowance bank that enables 
emissions budgets to be exceeded year after year may encourage sources 
to postpone emission reductions that would be more timely in the 2017 
timeframe in order to align reductions with the downwind area 
attainment dates for the 2008 ozone NAAQS.
    The EPA is proposing and taking comment on a range of options for 
how to treat the use of banked 2015 and 2016 CSAPR NOX 
ozone-season allowances by units in the 23 states with new or updated 
budgets in this proposal. The use of banked allowances by states that 
are not included in the proposed FIPs to address ozone transport under 
the 2008 NAAQS (i.e., Georgia for CSAPR NOX ozone-season 
program and all states for CSAPR SO2 and NOX 
annual programs) would not be affected by these options.
    The EPA is proposing that allowances issued for compliance in 2015 
and 2016 under CSAPR may be used for compliance under the updated CSAPR 
from 2017 forward in order to smooth implementation in the first few 
years under the new budgets. However, the EPA is proposing to impose 
certain limits on the use of these banked allowances starting in 2017. 
Specifically, the EPA is proposing that sources in the 23 states with 
new or updated budgets in this proposal may use all of their banked 
allowances, but at a tonnage authorization level significantly lower 
than one ton per allowance. This would be realized through a surrender 
ratio greater than one pre-2017 allowances (vintage 2015 or 2016) to 
cover one ton of NOX emitted in 2017 and each year 
thereafter. The surrender ratio, such as four-for-one or two-for-one, 
would require more than one pre-2017 banked allowance to be used for 
each ton of ozone season NOX emitted in 2017 and beyond. 
This would have the dual effect of carrying over the banked allowances 
into the new program to promote program continuity, while also 
recognizing the environmental objectives of the updated ozone NAAQS for 
2008 and the corresponding new state emission budgets designed to help 
move air quality towards compliance with that NAAQS standard. A 
surrender ratio would respect the flexibility of sources to operate at 
their assurance levels in the program's early years, but would reduce 
the ability for the collective EGU fleet to repeatedly

[[Page 75747]]

exceed the emissions budget year after year.
    Finally, EPA believes a surrender ratio is appropriate as it 
reflects the fact that tighter budgets will put upward pressure on 
allowance value in the future. Therefore, fewer allowances will be 
needed to reach the same value of a current allowance holding, making a 
surrender ratio a natural complement to carrying over the value of the 
banked allowances in a program where more stringent emission budgets 
are replacing less stringent emission budgets.
    EPA is proposing a surrender ratio greater than one-for-one, such 
as two-for-one or four-for-one. For analytic purposes in this 
rulemaking, it reflects the four-for-one surrender ratio to illustrate 
one potential surrender ratio. However, in the final rule, EPA would 
update this assumption to reflect the surrender ratio finalized.
    This ratio of four or two banked allowances to one ton of emissions 
is derived from the ratio of the anticipated allowance bank in 2017 
(approximately 210,000 allowances) to the ozone season variability 
limit (i.e., the difference between the sum of the emissions budgets 
for all 23 states and the sum of the assurance levels for all 23 
states; approximately 60,000 tons) or the ozone season variability 
limit multiplied by two (120,000 tons), rounded to the nearest whole 
number. The EPA identified this approach to limit the emissions impact 
of using banked allowances to the magnitude of all states emitting up 
to their assurance levels for one or two years. The variability limit 
respects the upper bound variation in emissions and load EPA would 
expect in any given year. Thus, the carryover of banked allowances 
equal to one or two years' worth of variability limits provides the 
affected fleet with the ability to accommodate potential variation from 
the mean in its load and emission patterns in the first years of the 
program, while balancing the need to ensure that emissions are reduced, 
on average, to the level of the budgets and within the assurance levels 
in subsequent years.
    The EPA believes that a surrender ratio approach provides a means 
for the existing CSAPR EGU NOX ozone-season allowances to 
retain some value, while appropriately mitigating the potential adverse 
impact of the allowance bank on the emission-reducing actions needed 
from affected units in states with obligations to address interstate 
transport for the 2008 ozone NAAQS. The EPA seeks comment on a 
surrender ratio approach and on the use of a ratio, such as two-for-one 
or four-for-one, and whether an alternative ratio would be appropriate.
    The EPA is also soliciting comment on another approach that we 
believe could achieve these same goals (i.e., valuing the anticipated 
CSAPR allowance bank while promoting near-term emission reductions). 
Under this alternative approach, the EPA would issue fewer allowances 
than the tons quantified in state budgets for the 23 states affected by 
this rulemaking in the first three years of program implementation 
(i.e. 2017, 2018, and 2019). This approach recognizes that 2015 and 
2016 allowances are available to sources for compliance and would allow 
use of those banked CSAPR NOX ozone allowances at a one-to-
one turn-in ratio (i.e., one allowance is surrendered for one ton of 
emissions). By reducing overall allocations for a period of time, the 
impact of states using those banked allowances on emission levels would 
be mitigated.
    The EPA seeks comment on what percentage (below 100 percent) of 
allowances to issue, and over what number of years, under this 
alternative approach. As a specific example, the EPA seeks comment on 
implementing this approach in a manner such that the EPA would issue 
allowances to sources within each of the 23 states with updated budgets 
under this proposal at a level of 85 percent of the proposed emissions 
budgets for the first three years that the new budgets are effective. 
Using the proposed EGU NOX ozone-season emissions budget of 
9,979 tons for Alabama as an example, this would mean issuing 
approximately 8,482 allowances for each of the 2017 through 2019 
(inclusive) control periods (and the full budget for each subsequent 
control period). Applying this approach to all 23 states with updated 
budgets under this proposal (which sum to 312,824 allowances) would 
mean that EPA would issue approximately 266,900 allowances across those 
states in each of the 2017, 2018, and 2019 control periods. EGUs in 
those states would be able to use allowances from the anticipated 
210,000 allowance bank in addition to allowances issued for these years 
in order to comply with the updated CSAPR emission requirements. 
Allocating approximately 266,900 allowances for the first three years 
of the updated requirements would, based on current estimates, result 
in approximately 47,000 banked allowances used for compliance each 
year. This would leave approximately 70,000 banked allowances, which is 
roughly equivalent to the regional variability limit (i.e., the 
difference between the states' collective emissions budgets and their 
collective assurance levels). As under the illustrative four-for-one 
surrender ratio option, the remaining amount of banked allowances that 
would remain after using this initial reduced allocation is 
approximately the amount of banked allowances that would allow all 
states to emit up to their assurance levels for one year.
    The EPA also seeks comment on what other percentages of the budget 
and time-frames could be appropriately used to implement this 
alternative approach. As in the specific example above, the EPA would 
seek a combination of time and recordation percentage such that the 
ultimate influence of the anticipated allowance bank is limited to 
approximately the regional variability limit (i.e., the difference 
between the collective emissions budgets and the collective assurance 
levels).
    Under either approach, the EPA would conduct unit-level allowance 
allocations in the same manner as described above, such that each 
unit's share of its state's total allowances issued is determined by 
that allocation approach whether the EPA issues allowances in the full 
amount of the state budget with a surrender ratio for banked allowances 
or in a lesser amount to address the potential effect of the allowance 
bank (as entertained in this alternative on which we are inviting 
comment). In other words, the effect of this alternative approach would 
be to reduce unit-level allowance allocations in those years in a 
proportional manner (e.g., all unit-level allowance allocations would 
decrease by the same percentage as the reduction in total allowances 
issued below that state's budget).
    Additionally, the EPA is soliciting comment on less and more 
restrictive approaches to address use of the CSAPR EGU NOX 
ozone allowance bank. Specifically, the EPA seeks comment on: (1) 
Allowing banked 2015 and 2016 CSAPR NOX ozone allowances to 
be used for compliance with the proposed budgets for the 2008 ozone 
NAAQS starting in 2017 at a 1-to-1 ratio, or (2) completely disallowing 
the use of banked 2015 and 2016 CSAPR NOX ozone allowances 
for compliance with the proposed budgets for the 2008 ozone NAAQS 
starting in 2017. The EPA is also soliciting comment on whether and how 
the assurance provision penalty might be increased, in conjunction with 
any of the above approaches, to address the relationship of the 
allowance bank to emissions occurring under this revised program from 
2017 onward.

[[Page 75748]]

B. Use of CSAPR NOX Ozone-Season Allowances From States 
Addressing the 1997 Ozone NAAQS for Compliance in States Addressing the 
2008 Ozone NAAQS

    Consistent with the original CSAPR, EGUs covered by the seasonal 
NOX budget trading program that will be incorporated into 
these proposed FIPs are able to trade NOX ozone-season 
emission allowances among units within the state and across state 
boundaries, with emissions and the use of allowances limited by the 
assurance provisions.
    The EPA is considering how to transition allowance trading between 
the group of states that are in the CSAPR NOX ozone-season 
program with respect to the 1997 ozone NAAQS but will not have updated 
emissions budgets proposed in this action (e.g., Georgia based on this 
proposal) and the group of states for which the EPA is proposing to 
establish new or lower budgets to address the 2008 ozone NAAQS in this 
action.
    The EPA believes that, where appropriate and feasible, continuity 
of programs is important, particularly for market-based and other power 
sector regulations, as this sector makes long-term investment and 
operational decisions. However, CSAPR allowances issued under budgets 
established to address the 1997 ozone NAAQS using a $500 per ton cost 
threshold in one state may not be appropriately valued to reduce 
interstate ozone transport in another state for the 2008 NAAQS under 
this proposal where budgets are being established using a $1,300 per 
ton cost threshold. In the original CSAPR rulemaking, the EPA discussed 
the concern that allowing unrestricted trading between groups of states 
whose budgets were established using different cost thresholds would 
impact whether the necessary emission reductions would be achieved 
within each state.\106\ The assurance provisions used in CSAPR provide 
some assurance that emission reductions will occur within each state, 
but in the CSAPR rulemaking the EPA acknowledged concerns that the 
assurance provisions alone may not be sufficient. Consistent with those 
previously acknowledged concerns, the EPA is proposing in this 
rulemaking not to allow these two groups of states to trade without 
some additional assurances that the emission reductions will be 
appropriately achieved within each state.
---------------------------------------------------------------------------

    \106\ 76 FR at 48263-64.
---------------------------------------------------------------------------

    However, because of the relatively small size of the group of 
states with budgets set using the $500 per ton cost threshold, the EPA 
is not proposing to prohibit altogether trading between the two groups 
in this instance. The EPA does not expect that a single state (i.e., 
Georgia) would drastically influence emission reductions in the other 
23 states covered by this proposed rule. EPA is instead proposing to 
permit trading between the two groups of ozone states subject to 
certain restrictions on trading. In particular, the EPA is proposing to 
require that sources in states addressing the 2008 ozone NAAQS under 
this proposal may use allowances issued in states only addressing the 
1997 ozone NAAQS via the CSAPR trading programs (e.g., Georgia) at a 
rate of 2.5 allowances for each ton of NOX emitted. The EPA 
proposes a ratio of 2.5-to-1 in order to align with the ratio of the 
cost of ozone season EGU NOX reduction promulgated in the 
original CSAPR (i.e., $500 per ton) to the cost proposed for this 
rulemaking (i.e., $1,300 per ton). The EPA proposes this restriction as 
sufficient, in conjunction with the assurance provisions, to protect 
the needed reductions in the 23 states addressing interstate transport 
for the 2008 ozone NAAQS. The EPA requests comments on this approach. 
The EPA also seeks comment on using a different ratio than 2.5-to-1, 
and on using the same ratio as the ratio for the use of banked 
allowances, whether that ratio is 4-to-1 as proposed or a different 
ratio.
    The EPA is also seeking comment on allowing trading without 
distinction between the particular NAAQS (1997 ozone NAAQS or 2008 
ozone NAAQS) for which an upwind state has obligations to reduce 
transported pollution, and subject only to the constraints of the CSAPR 
assurance provisions with no additional restrictions. The EPA is 
soliciting comment on whether and how the assurance provision penalty 
might be increased in conjunction with this approach.
    Alternatively, the EPA is seeking comment on separating compliance 
between groups of upwind states under each NAAQS, whereby the use of 
NOX ozone-season emission allowances from one group (e.g., 
sources in states only covered for the 1997 ozone NAAQS) would be 
disallowed for compliance use by units in the other group (e.g., 
sources in states covered for the 2008 ozone NAAQS), similar to the 
existing separation between the CSAPR SO2 Group 1 and CSAPR 
SO2 Group 2 programs.

C. Use of CSAPR NOX Ozone-season Allowances Between States With 
Different Control Stringencies Addressing the 2008 Ozone NAAQS

    As discussed in Section VI of this proposal, the EPA notes that the 
evaluation of EGU NOX requirements for the final rule could 
show one or more states fully addressing their good neighbor obligation 
based on ozone season NOX control requirements represented 
by one cost level while one or more other states have ozone season 
NOX control requirements based on a more stringent cost 
level. In this situation, the EPA proposes that it would quantify 
requirements for these different groups of states based on different 
uniform control stringencies. However, CSAPR allowances issued under 
budgets established using a one cost threshold (e.g., $1,300 per ton) 
in one state may not be appropriately valued to reduce interstate ozone 
transport in another state where budgets might be established using 
different cost threshold (e.g., $3,400 per ton). Consistent with the 
previous discussion (regarding allowances issued in states continuing 
to address the 1997 ozone NAAQS under budgets established using $500 
per ton threshold), the EPA is proposing to permit trading between 
these groups of states subject to certain restrictions on trading. In 
particular, the EPA is proposing to require that sources in states with 
emissions budgets established using the more stringent cost thresholds 
(e.g., $3,400 per ton) may use allowances issued in states with 
emissions budgets established using the less stringent cost thresholds 
(e.g., $1,300 per ton) at a rate of allowances for each ton of 
NOX emitted based on the ratio of these cost thresholds. For 
example, states with emissions budgets established using $3,400 per ton 
could use allowances at a rate of approximately 2.5-to-1 in order to 
align with the ratio of the relevant cost thresholds. The EPA requests 
comments on allowing the states to trade with the proposed restrictions 
on the use of allowances by sources in states controlled using the more 
stringent cost threshold.
    The EPA is also seeking comment on allowing trading without 
distinction between the particular cost thresholds for which an upwind 
state has obligations to reduce transported pollution, and subject only 
to the constraints of the CSAPR assurance provisions with no additional 
restrictions. The EPA is also soliciting comment on whether and how the 
assurance provision penalty might be

[[Page 75749]]

increased in conjunction with this approach.
    Alternatively, the EPA is seeking comment on separating compliance 
between groups of upwind states under each cost threshold, whereby the 
use of NOX ozone-season emission allowances from one group 
(e.g., sources in states with allowances issued using the more 
stringent cost threshold) would be disallowed for compliance use by 
units in the other group, similar to the existing separation between 
the CSAPR SO2 Group 1 and CSAPR SO2 Group 2 
programs.

D. Summary of Proposed Allowance Surrender Ratios

    As discussed in sections a. and b. above, the EPA proposes that in 
this updated rulemaking, EGUs would be able to trade NOX 
ozone-season emission allowances among units within the state and 
across state boundaries, with emissions and use of allowances limited 
by the assurance provisions. However, the EPA is proposing to impose 
certain additional limits on the use of allowances starting in 2017 for 
EGUs in the 23 states with updated budgets in this proposal. Table VII-
2 summarizes the limits on the proposed use for CSAPR NOX 
ozone-season allowances.\107\
---------------------------------------------------------------------------

    \107\ In the regulatory text revisions for this proposal, the 
proposed limits discussed here are described in terms of the 
``tonnage equivalent'' of an allowance. In the case of 2015 or 2016 
vintage allowances used for compliance in a control period in 2017 
or later, where 4 allowances would be needed for each ton of 
emissions, each such allowance would have a tonnage equivalent of 
0.25 tons per allowance (\1/4\ = 0.25). In the case of 2017 or later 
allowances from a state with an original CSAPR budget used for 
compliance by a unit in a state with an updated budget based on the 
2008 ozone NAAQS, where 2.5 allowances would be needed for each ton 
of emissions, each such allowance would have a tonnage equivalent of 
0.40 tons per allowance (\1/2.5\ = 0.40). In a case where one 
allowance is needed for each ton of emissions, such allowances would 
have a tonnage equivalent of one ton per allowance. See proposed 40 
CFR 97.524(f) in the regulatory text for this proposal.
[GRAPHIC] [TIFF OMITTED] TP03DE15.001

6. Compliance Deadlines
    As discussed in sections II.A., III.B., and IV.A., the proposed 
rule would require NOX reductions from sources starting May 
1, 2017, to ensure that reductions are made as expeditiously as 
practicable to assist downwind states' attainment and maintenance of 
the 2008 ozone NAAQS. The compliance deadline is coordinated with the 
attainment deadline for the relevant NAAQS and the proposed rule 
includes provisions to assure that all necessary reductions occur at 
sources within each individual state.
    In section VI above, the EPA explains that this is an adequate and 
reasonable time for sources to plan for compliance and operate 
necessary controls.
    For states for which EPA has already established a FIP requiring 
their units to participate in the CSAPR NOX ozone-season 
trading program because of transport obligations under the 1997 ozone 
NAAQS, no CFR changes are necessary to accommodate this

[[Page 75750]]

compliance deadline. The EPA proposes to amend the regulatory text in 
40 CFR 97.506(c)(3) to reflect the 2017 start of compliance obligations 
for units in states that were not previously subject to the CSAPR 
NOX ozone-season trading program (e.g., Kansas). The EPA 
also proposes to amend various FIP provisions in 40 CFR part 52 to 
indicate the start and end of compliance obligations under the FIPs for 
sources in states added to the trading program under this proposed rule 
(e.g., Kansas) or removed from the trading program in response to the 
D.C. Circuit's remand of certain NOX ozone-season emissions 
budgets (e.g., Florida and South Carolina).
7. Monitoring and Reporting and the Allowance Management System
    Monitoring and reporting in accordance with the provisions of 40 
CFR part 75 are required for all units subject to the CSAPR 
NOX ozone-season trading programs and would also be required 
for all units covered under the proposed transport rule for the 2008 
ozone NAAQS requirements. The EPA proposes that the monitoring 
certification deadline by which monitors are installed and certified 
for compliance use generally would be May 1, 2017, the beginning of the 
first compliance period proposed in this rule, with potentially later 
deadlines for units that commence commercial operation after July 1, 
2016. Similarly, the EPA proposes that the first calendar quarter in 
which quarterly emission reporting is required would generally be the 
quarter including May 1, 2017. These deadlines are analogous to the 
current deadlines under CSAPR but are delayed by two years to reflect 
the fact that this rule's initial implementation year would be two 
years later than the existing CSAPR programs' initial implementation 
year.
    Under part 75, a unit has several options for monitoring and 
reporting, namely the use of a CEMS; an excepted monitoring methodology 
based in part on fuel flow metering for certain gas- or oil-fired 
peaking units; low-mass emissions monitoring for certain non-coal-
fired, low emitting units; or an alternative monitoring system approved 
by the Administrator through a petition process. In addition, sources 
can submit petitions to the Administrator for alternatives to specific 
CSAPR and part 75 monitoring, recordkeeping, and reporting 
requirements. Each CEMS must undergo rigorous initial certification 
testing and periodic quality assurance testing thereafter, including 
the use of relative accuracy test audits (RATAs) and 24-hour 
calibrations. In addition, when a monitoring system is not operating 
properly, standard substitute data procedures are applied and result in 
a conservative estimate of emissions for the period involved.
    Further, part 75 requires electronic submission of a quarterly 
emissions report to the Administrator, and in a format prescribed by 
the Administrator. The report would contain all of the data required 
concerning ozone season NOX emissions.
    Units currently subject to CSAPR NOX ozone-season or 
CSAPR NOX annual trading program requirements monitor and 
report NOX emissions in accordance with part 75, so most 
sources would not have to make any changes to monitoring and reporting 
practices. In fact, only units in Kansas currently subject to the CSAPR 
NOX annual trading program but not the CSAPR NOX 
ozone-season trading program would need to start newly reporting ozone 
season NOX mass emissions. These emissions are already 
measured under the annual program, so the change would be a minor 
reporting modification. Units in the following states monitor and 
report NOX emissions under the CSAPR NOX ozone-
season trading program and would continue to do so without change under 
the CSAPR ozone update for the 2008 NAAQS: Alabama, Arkansas, Illinois, 
Indiana, Iowa, Kentucky, Louisiana, Maryland, Michigan, Mississippi, 
Missouri, New Jersey, New York, North Carolina, Ohio, Oklahoma, 
Pennsylvania, Tennessee, Texas, Virginia, West Virginia, and Wisconsin.
8. Recordation of Allowances
    The EPA proposes to update the deadlines by which EPA would record 
allowances for the CSAPR NOX ozone-season trading program 
for the compliance periods in the years from 2017 through 2022. The 
proposed new dates would amend the recordation deadlines in 40 CFR 
97.521 as shown in the proposed regulatory text amendments at the end 
of this proposal. The existing recordation provisions require EPA to 
record either FIP-based (i.e., governed by part 97) or SIP-based 
allocations for 2017 and 2018 by July 1, 2016. The EPA proposes to 
delay this deadline to December 1, 2016. The extension would allow EPA 
to finalize any changes to the state budgets for the 2017 compliance 
period before recording 2017 allowances. This would prevent the need to 
take back allowances that were recorded under existing budgets in cases 
where state budgets are reduced. The extended deadline would still 
allow allocations to be recorded five months prior to the start of the 
2017 compliance period, giving affected units time to make compliance 
plans. Compliance true-up for the 2017 ozone season occurs after 
December 1, 2017, so affected sources would have more than a year from 
the extended recordation deadline to ensure they hold enough allowances 
for 2017 ozone season compliance. The EPA is taking comment on this new 
deadline for 2017 and 2018 allowance allocation recordation. The EPA is 
also taking comment on whether the provision to delay 2017 and 2018 
allocation recordation should be finalized ahead of final action on 
this full proposal if this proposal is not finalized before July 1, 
2016.
    The EPA is also proposing to extend the existing deadlines for 
recording CSAPR NOX ozone-season allowances for the 2019 and 
2020 compliance periods and for the 2021 and 2022 compliance periods 
each by one year, to July 1, 2018, and July 1, 2019, respectively. The 
purpose of these proposed deadline extensions is to provide time for 
states to submit SIP revisions to modify or replace the FIPs proposed 
in this rulemaking on schedules comparable to the schedules for the SIP 
revision options that the states have under the current CSAPR 
regulations. The EPA seeks comment on extending these recordation 
deadlines as discussed.

C. Submitting a SIP

    As noted earlier in this section VIII, states may replace the FIP 
with a SIP at any time if approved by the EPA. ``Abbreviated'' and 
``full'' SIP options continue to be available. An ``abbreviated SIP'' 
allows a state to submit a SIP that would modify allocation provisions 
in the NOX budget trading program that is incorporated into 
FIP to allow the state to substitute its own allocation provisions. A 
second approach, referred to as a full SIP, allows a state to adopt a 
trading program meeting certain requirements that would allow sources 
in the state to continue to use the EPA-administered trading program 
through an approved SIP, rather than a FIP. In addition, as under 
CSAPR, EPA proposes to provide states with an opportunity to adopt 
state-determined allowance allocations for existing units for the 
second compliance period under this proposed rule--in this case, the 
2018 compliance period--through streamlined SIP revisions. See 76 FR 
48208 at 48326-48332 (August 8, 2011) for additional discussion on full 
and abbreviated SIP options and 40 CFR 52.38(b).

[[Page 75751]]

1. 2018 SIP Option
    As under CSAPR, the EPA proposes to allow a state to submit a SIP 
revision establishing allowance allocations for existing units for the 
second year of the new requirements, 2018, to replace the FIP-based 
allocations. The process would be the same as under the current rule 
with deadlines shifted roughly 2 years--i.e., a state would submit a 
letter to EPA by November 15, 2016 indicating its intent to submit a 
complete SIP revision by April 1, 2017. The SIP would provide in an 
EPA-prescribed format a list of existing units and their allocations 
for the 2018 control period. If a state does not submit a letter of 
intent to submit a SIP revision, FIP allocations would be recorded by 
December 1, 2016. If a state submits a timely letter of intent but 
fails to submit a SIP revision, FIP allocations would be recorded by 
April 1, 2017. If a state submits a timely letter of intent followed by 
a timely SIP revision that is approved, the approved SIP allocations 
would be recorded by October 1, 2017.
2. 2019 and Beyond SIP Option
    For the 2019 control period and later, EPA proposes that the SIP 
submittal deadline be delayed one year, until December 1, 2017, from 
the current deadline. The deadline to then submit state allocations for 
2019 and 2020 would be June 1, 2018 and the deadline to record those 
allocations would be July 1, 2018. Under the proposed new deadlines, a 
state could submit a SIP revision for 2021 and beyond control periods 
by December 1, 2018, with state allocations due June 1, 2019, and 
allocation recordation by July 1, 2019. For 2019 control period and 
later, SIPs can be full or abbreviated SIPs. An allocation methodology 
approved in an abbreviated SIP submitted for 2017 under the existing 
CSAPR regulations could also apply under the proposed new rule in 2017 
and 2018. See section III of this preamble and 76 FR 48208 at 48326-
48332 (August 8, 2011) for additional discussion on full and 
abbreviated SIP options and 40 CFR 52.38(b).
3. SIP Revisions That Do Not Use the CSAPR Trading Program
    For a transport SIP revision that does not use the CSAPR 
NOX ozone-season trading program, EPA would evaluate the 
transport SIP based on the particular control strategies selected and 
whether the strategies as a whole provide adequate and enforceable 
provisions ensuring that the emission reductions will be achieved. The 
SIP revision at a minimum should include the following general 
elements: (1) A comprehensive baseline 2017 statewide NOX 
emission inventory (which includes growth and existing control 
requirements), which should be consistent with the 2017 emission 
inventory the EPA would use when finalizing this rulemaking to 
calculate the required state budget; (2) a list and description of 
control measures to satisfy the state emission reduction obligation and 
a demonstration showing when each measure would be in place to meet the 
2017 compliance date; (3) fully-adopted state rules providing for such 
NOX controls during the ozone season; (4) for EGUs greater 
than 25 MWe and large boilers and combustion turbines with a rated heat 
input capacity of 250 mmBtu per hour or greater, Part 75 monitoring, 
and for other units, monitoring and reporting procedures sufficient to 
demonstrate that sources are complying with the SIP; and (5) a 
projected inventory demonstrating that state measures along with 
federal measures will achieve the necessary emission reductions in time 
to meet the 2017 compliance deadline.\108\ The SIPs must meet the 
requirements for public hearing, be adopted by the appropriate board or 
authority, and establish by a practically enforceable regulation or 
permit a schedule and date for each affected source or source category 
to achieve compliance. Once the state has made a SIP submission, the 
EPA will evaluate the submission(s) for completeness. The EPA's 
criteria for determining completeness of a SIP submission are codified 
at 40 CFR part 51, appendix V.
---------------------------------------------------------------------------

    \108\ The EPA notes that the SIP is not required to include 
modeling.
---------------------------------------------------------------------------

    For further information on replacing a FIP with a SIP, see the 
discussion in the final CSAPR rulemaking (76 FR 48326, August 8, 2011). 
The EPA requests comment on what types of additional information and 
guidance would be helpful and stands ready to assist states in SIP 
development.
4. Submitting a SIP To Participate in CSAPR for States Not Included in 
This Proposal
    The EPA believes that there could be circumstances where a state 
that is not obligated to reduce NOX emissions in order to 
eliminate significant contribution to nonattainment or interference 
with maintenance of ozone standards in another state (such as Florida 
or South Carolina for purposes of this proposal) may wish to 
participate in the NOX ozone-season trading program in order 
to serve a different regulatory purpose. For example, the state may 
have a pending request for redesignation of an area to attainment that 
relies on participation in the trading program as part of the state's 
demonstration that emissions will not exceed certain levels, or the 
state may wish to rely on participation in the trading program for 
purposes of a SIP revision to satisfy certain obligations under the 
Regional Haze Rule. The EPA seeks comment on whether the EPA should 
revise the CSAPR regulations to allow the EPA to approve a SIP revision 
in which a state seeks to participate in the NOX ozone-
season trading program for a purpose other than addressing ozone 
transport obligations.
    Further, the EPA seeks comment on the conditions that should apply 
to any such approval in order to ensure that the state's participation 
is consistent with the trading program's ability to achieve the 
program's objectives with respect to interstate transport of ozone 
pollution. The EPA believes that the primary conditions for 
consideration in this circumstance would be the level of the state 
emissions budget and what, if any, limitations would be placed on the 
use of allowances issued to the sources in that state by sources in 
other states.
    The EPA specifically seeks comment on whether a presumption of 
approvability of such a SIP revision should arise, without limitations 
on the use of corresponding allowances for compliance by sources within 
that state or in other states, if the state would adopt as part of the 
SIP revision a NOX ozone-season emissions budget no higher 
than the emissions budgets that the EPA finalizes under this rule. For 
example, based on this proposal, an emissions budget that reflects EGU 
NOX mitigation strategies represented by a uniform cost of 
$1,300 per ton. The EPA notes that such emissions budgets could be 
developed using the data and analysis used to establish the emissions 
budgets for this rule.
    EPA also specifically seeks comment on whether a presumption of 
approvability of such a SIP revision should arise, with limitations on 
the use of allowances issued to the state's sources analogous to the 
limitations proposed for allowances issued to Georgia's units in this 
proposed rule, if the state would adopt as part of the SIP revision a 
NOX ozone-season emissions budget no higher than the base 
case ozone season NOX emissions that EPA projected for the 
state in the analysis used to establish the emissions budgets for this 
proposed rule.
    The EPA also specifically seeks comment on whether, in the case of 
a state previously subject to the CSAPR NOX ozone-season 
trading program (e.g., Florida or South Carolina), a

[[Page 75752]]

presumption of approvability of such a SIP revision should arise at an 
emissions level higher than the state's base case emissions in the 
analysis used to establish the emissions budgets for this proposed 
rule--for example, an emissions level equal to the state's previously 
promulgated CSAPR budget--subject to the imposition of trading 
limitations on allowances issued to the state's units analogous to the 
limitations proposed for allowances issued to Georgia's units in this 
proposal.
    Finally, the EPA also seeks comment on whether a state whose 
allowances would otherwise be subject to limitations on use analogous 
to the limitations proposed for allowances issued to Georgia's units in 
this proposed rule could avoid those limitations by adopting in a SIP 
revision a more stringent budget reflecting emission levels at higher 
dollar per ton emission reduction costs comparable to the dollar per 
ton emission reduction costs used to establish the budgets for other 
states in this proposed rule.

D. Title V Permitting

    This proposed rule, like CSAPR, does not establish any permitting 
requirements independent of those under title V of the CAA and the 
regulations implementing title V, 40 CFR parts 70 and 71.\109\ All 
major stationary sources of air pollution and certain other sources are 
required to apply for title V operating permits that include emission 
limitations and other conditions as necessary to assure compliance with 
the applicable requirements of the CAA, including the requirements of 
the applicable State Implementation Plan. CAA sections 502(a) and 
504(a), 42 U.S.C. 7661a(a) and 7661c(a). The ``applicable 
requirements'' that must be addressed in title V permits are defined in 
the title V regulations (40 CFR 70.2 and 71.2 (definition of 
``applicable requirement'')).
---------------------------------------------------------------------------

    \109\ Part 70 addresses requirements for state title V programs, 
and part 71 governs the federal title V program.
---------------------------------------------------------------------------

    The EPA anticipates that, given the nature of the units subject to 
this transport rule and given that many of the units covered here are 
already subject to CSAPR, most of the sources at which the units are 
located are already subject to title V permitting requirements. For 
sources subject to title V, the interstate transport requirements for 
the 2008 ozone NAAQS that would be applicable to them under the final 
FIPs will be ``applicable requirements'' under title V and therefore 
will need to be addressed in the title V permits. For example, 
requirements concerning designated representatives, monitoring, 
reporting, and recordkeeping, the requirement to hold allowances 
covering emissions, the assurance provisions, and liability will be 
``applicable requirements'' to be addressed in the permits.
    Title V of the CAA establishes the basic requirements for state 
title V permitting programs, including, among other things, provisions 
governing permit applications, permit content, and permit revisions 
that address applicable requirements under final FIPs in a manner that 
provides the flexibility necessary to implement market-based programs 
such as the trading programs established by CSAPR and updated by this 
proposed ozone interstate transport rule. 42 U.S.C. 7661a(b).
    In CSAPR, EPA established standard requirements governing how 
sources covered by the rule would comply with title V and its 
regulations.\110\ 40 CFR 97.506(d). Under this proposed rule, EPA 
proposes that those same requirements would continue to apply to 
sources already in the CSAPR NOX Ozone-season Trading 
Program and to any newly covered sources that have been added to 
address interstate transport of the 2008 ozone NAAQS. For example, the 
title V regulations provide that a permit issued under title V must 
include ``[a] provision stating that no permit revision shall be 
required under any approved . . . emissions trading and other similar 
programs or processes for changes that are provided for in the 
permit.'' 40 CFR 70.6(a)(8) and 71.6(a)(8). Consistent with these 
provisions in the title V regulations, in CSAPR, EPA included a 
provision stating that no permit revision is necessary for the 
allocation, holding, deduction, or transfer of allowances. 40 CFR 
97.506(d)(1). This provision is also included in each title V permit 
for a covered source. The EPA proposes to maintain its approach under 
CSAPR that allowances can be traded (or allocated, held, or deducted) 
without a revision to the title V permit of any of the sources 
involved.
---------------------------------------------------------------------------

    \110\ EPA also issued a guidance document and template that 
includes instructions describing how to incorporate the CSAPR 
applicable requirements into a source's title V permit. http://www.epa.gov/airtransport/CSAPR/pdfs/CSAPR_Title_V_Permit_Guidance.pdf.
---------------------------------------------------------------------------

    Similarly, the EPA is also proposing to maintain that sources in 
the CSAPR NOX Ozone-season Trading Program can continue to 
use the title V minor modification procedure to change their approach 
for monitoring and reporting emissions, in certain circumstances. 
Specifically, sources may use the minor modification procedure so long 
as the new monitoring and reporting approach is one of the prior-
approved approaches under CSAPR (i.e., approaches using a continuous 
emission monitoring system, an excepted monitoring system under 
appendices D and E to part 75, a low mass emissions excepted monitoring 
methodology under 40 CFR 75.19, or an alternative monitoring system 
under subpart E of part 75), and the permit already includes a 
description of the new monitoring and reporting approach to be used. 
See 40 CFR 97.506(d)(2); 40 CFR 70.7(e)(2)(i)(B) and 40 CFR 
71.7(e)(1)(i)(B). As described in our 2015 guidance, we suggest in our 
template that sources may comply with this requirement by including a 
table of all of the approved monitoring and reporting approaches under 
the rule, and the applicable requirements governing each of those 
approaches. Inclusion of the table in a source's title V permit 
therefore allows a covered unit that seeks to change or add to their 
chosen monitoring and recordkeeping approach to easily comply with the 
regulations governing the use of the title V minor modification 
procedure.
    Under CSAPR, in order to employ a monitoring or reporting approach 
different from the prior-approved approaches discussed above, unit 
owners and operators must submit monitoring system certification 
applications to the EPA establishing the monitoring and reporting 
approach actually to be used by the unit, or, if the owners and 
operators choose to employ an alternative monitoring system, to submit 
petitions for that alternative to the EPA. These applications and 
petitions are subject to EPA review and approval to ensure consistency 
in monitoring and reporting among all trading program participants. The 
EPA's responses to any petitions for alternative monitoring systems or 
for alternatives to specific monitoring or reporting requirements are 
posted on the EPA's Web site.\111\ EPA proposes to maintain the same 
approach in this proposed rule.
---------------------------------------------------------------------------

    \111\ http://www2.epa.gov/airmarkets/part-75-petition-responses.
---------------------------------------------------------------------------

    Consistent with the EPA's approach under CSAPR, the applicable 
requirements resulting from this proposed FIP would be incorporated 
into covered sources' existing title V permits either pursuant to the 
provisions for reopening for cause (40 CFR 70.7(f) and 40 CFR 71.7(f)) 
or the standard permit renewal provisions (40

[[Page 75753]]

CFR 70.7(c) and 71.7(c)).\112\ For sources newly subject to title V 
that will also be covered sources under the final FIPs, the initial 
title V permit issued pursuant to 40 CFR 70.7(a) should address the 
final FIP requirements.
---------------------------------------------------------------------------

    \112\ A permit is reopened for cause if any new applicable 
requirements (such as those under a FIP) become applicable to a 
covered source with a remaining permit term of 3 or more years. If 
the remaining permit term is less than 3 years, such new applicable 
requirements will be added to the permit during permit renewal. See 
40 CFR 70.7(f)(1)(I) and 71.7(f)(1)(I).
---------------------------------------------------------------------------

    As in CSAPR, the approach to title V permitting under the proposed 
FIPs imposes no independent permitting requirements and should reduce 
the burden on sources already required to be permitted under title V 
and on permitting authorities.

E. Relationship to Other Emission Trading and Ozone Transport Programs

1. Interactions With Existing CSAPR \113\ Annual Programs, Title IV 
Acid Rain Program, NOX SIP Call, Section 176A Petition, and 
Other State Implementation Plans
---------------------------------------------------------------------------

    \113\ The CSAPR Annual Programs are referred to in regulations 
as the Transport Rule NOX Annual Trading Program (40 CFR 
97.401-97.435), the Transport Rule SO2 Group 1 Trading 
Program (40 CFR 97.601-97.635) and the Transport Rule SO2 
Group 2 Trading Program (40 CFR 97.701-97.735).
---------------------------------------------------------------------------

a. CSAPR Annual Programs
    Nothing in this proposal affects any CSAPR NOX annual or 
CSAPR SO2 Group 1 or CSAPR SO2 Group 2 
requirements. The CSAPR annual requirements were premised on the 1997 
and 2006 PM2.5 NAAQS that are not being addressed in this 
rulemaking. The CSAPR NOX annual trading program and the 
CSAPR SO2 Group 1 and Group 2 trading programs remain in 
place and will continue to be administered by the EPA.
    The EPA acknowledges that, in addition to the ozone budgets 
discussed above, the D.C. Circuit has remanded for reconsideration the 
CSAPR SO2 budgets for Alabama, Georgia, South Carolina, and 
Texas. EME Homer City II, 795 F.3d at 138. This proposal does not 
address the remand of these CSAPR phase 2 SO2 emissions 
budgets. The EPA intends to address the remand of the phase 2 
SO2 annual emissions budgets separately.
b. Title IV Interactions
    This proposed rule if adopted would not affect any Acid Rain 
Program requirements. Any Title IV sources that are subject to 
provisions of this proposed rule would still need to continue to comply 
with all Acid Rain provisions. Acid Rain Program SO2 and 
NOX requirements are established independently in Title IV 
of the Clean Air Act, and will continue to apply independently of this 
proposed rule's provisions. Acid Rain sources will still be required to 
comply with Title IV requirements, including the requirement to hold 
Title IV allowances to cover SO2 emissions at the end of a 
compliance year.
c. NOX SIP Call Interactions
    States affected by both the NOX SIP Call and any final 
CSAPR ozone update for the 2008 NAAQS will be required to comply with 
the requirements of both rules. This proposed rule requires 
NOX ozone season emission reductions from EGUs greater than 
25 MW in nearly all NOX SIP Call states and at levels 
greater than required by the NOX SIP Call. Therefore, this 
proposed rule would satisfy the requirements of the NOX SIP 
Call for these large EGU units.
    The NOX SIP Call states used the NOX Budget 
Trading Program to comply with the NOX SIP Call requirements 
for EGUs serving a generator with a nameplate capacity greater than 25 
MW and large non-EGUs with a maximum rated heat input capacity greater 
than 250 MMBTU/hr. (In some states, EGUs smaller than 25 MW were also 
part of the NBP as a carryover from the Ozone Transport Commission 
NOX Budget Trading Program.) When the EPA promulgated CAIR, 
it allowed states to modify that program and include all NOX 
Budget Trading Program units in the CAIR NOX Ozone-season 
Trading Program as a way to continue to meet the requirements of the 
NOX SIP Call for these sources.
    In CSAPR, however, the EPA allowed states to expand applicability 
of the trading program to EGUs smaller than 25 MW but did not allow the 
expansion of applicability to include large non-EGU sources. The reason 
for excluding large non-EGU sources was largely that emissions from 
these sources were generally much lower than the budget amount and 
there was concern that surplus allowances created as a result of an 
overestimation of baseline emissions and subsequent shutdowns (since 
1999 when the NOX SIP Call was promulgated) would prevent 
needed reductions by the EGUs to address significant contribution to 
downwind air quality impacts.
    Since then, states have had to find appropriate ways to continue to 
show compliance with the NOX SIP Call, particularly for 
large non-EGUs.\114\ Most states that included such sources in CAIR are 
still working to find suitable solutions.\115\
---------------------------------------------------------------------------

    \114\ CSAPR generally satisfies NOX SIP Call 
requirements for EGUs in most affected states because the CSAPR cap 
is lower than the EGU portion of the NOX SIP Call 
emission levels.
    \115\ Affected sources continue to report ozone season emissions 
using part 75 as required by the NOX SIP Call and 
emissions in most states cannot (or are not likely to) exceed 
NOX SIP Call non-EGU budget levels.
---------------------------------------------------------------------------

    Therefore, the EPA is taking comment on whether to allow any 
NOX SIP Call state affected by this proposed rule to 
voluntarily submit a SIP revision at a budget level that is 
environmentally neutral to address the state's NOX SIP Call 
requirement for ozone season NOX reductions. The SIP 
revision could include a rule to expand the applicability of the CSAPR 
NOX ozone-season trading program to include all 
NOX Budget Trading Program units. Analysis shows that these 
units (mainly large non-EGU boilers, combustion turbines, and combined 
cycle units with a maximum rated heat input capacity greater than 250 
mmBtu/hr) continue to emit well below their portion of the 
NOX SIP Call budget. In order to ensure that the necessary 
amount of EGU emission reductions occur for this proposed rule, the 
corresponding state ozone-season emissions budget amount could be 
increased by the lesser of the highest ozone season NOX 
emissions (in the last 3-5 years) \116\ from those units or the 
relevant non-EGU budget under the NOX SIP Call, and this 
small group of non-EGUs could participate in the CSAPR ozone-season 
trading program. The environmental impact would be neutral using this 
approach, and hourly reporting of emissions under part 75 would 
continue. This approach would address requests by states for help in 
determining an appropriate way to address the continuing NOX 
SIP Call requirement as to non-EGU sources. EPA proposes that if this 
option is finalized that the variability limits established for EGUs be 
unchanged as a result of including these non-EGUs. The assurance 
provisions would apply to EGUs, and emissions from non-EGUs would not 
affect the assurance levels.
---------------------------------------------------------------------------

    \116\ EPA requests comment on the appropriate time period for 
this determination.
---------------------------------------------------------------------------

    The NOX SIP Call generally requires that states choosing 
to rely on large EGUs and large non-EGUs for meeting NOX SIP 
Call emission reduction requirements must establish a NOX 
mass emissions cap on each source and require part 75, subpart H 
monitoring. As an alternative to source-by-source NOX mass 
emission caps, a state may impose NOX emission rate limits 
on each source and use maximum operating capacity for estimating 
NOX mass emissions or may rely on other requirements that 
the state demonstrates to be equivalent to either the NOX 
mass

[[Page 75754]]

emission caps or the NOX emission rate limits that assume 
maximum operating capacity. Collectively, the caps or their 
alternatives cannot exceed the portion of the state budget for those 
sources. See 40 CFR 51.121(f)(2) and (i)(4). If the EPA were to allow a 
state to expand the applicability of this proposed rule to include all 
the NOX Budget Trading Program units in the CSAPR 
NOX ozone-season trading program, the cap requirement would 
be met through the new budget and the monitoring requirement would be 
met through the trading program provisions, which require part 75 
monitoring. Whether this option is finalized or not, the EPA will work 
with states to ensure that NOX SIP Call obligations continue 
to be met. The EPA requests comment on the voluntary inclusion of 
NOX SIP Call non-EGUs in this 2008 ozone-season proposed 
rule.
d. CAA Section 176A Petition To Expand the OTR
    On December 9, 2013, the EPA received a CAA section 176A petition 
from the states of Connecticut, Delaware, Maryland, Massachusetts, New 
Hampshire, New York, Rhode Island, and Vermont. The petition was 
amended on December 12, 2013 to add the state of Pennsylvania as a 
petitioning state. The petition requests that the EPA add 8 states and 
the remainder of the Commonwealth of Virginia to the current Ozone 
Transport Region that was established under CAA section 184.\117\ The 
EPA will address this petition at a future date.
---------------------------------------------------------------------------

    \117\ The named 8 states are: Illinois, Indiana, Kentucky, 
Michigan, North Carolina, Ohio, Tennessee, and West Virginia. 
Currently, the portion of the Commonwealth of Virginia in the OTR is 
in the consolidated metropolitan statistical area that includes the 
District of Columbia and northern Virginia.
---------------------------------------------------------------------------

e. Other State Implementation Plans
    In this proposal, the EPA has not conducted any technical analysis 
to determine whether compliance with the proposed rule would satisfy 
other requirements for EGUs in any attainment or nonattainment areas 
(e.g., RACT or BART). For that reason, the EPA is not now making 
determinations nor establishing any presumptions that compliance with 
the proposed rule satisfies any other requirements for EGUs. Based on 
analyses that states conduct on a case-by-case basis, states may be 
able to conclude that compliance with the proposed rule for certain 
EGUs fulfills other SIP requirements.
2. Other Federal Rulemakings
a. Clean Power Plan
    On August 3, 2015, President Obama and EPA announced the Clean 
Power Plan--a historic and important action on emissions that 
contribute to climate change. The CPP reduces carbon pollution from the 
power sector. With strong but achievable standards for power plants, 
and customized goals for states to cut the carbon pollution 
(CO2) that is driving climate change, the Clean Power Plan 
(CPP) provides national consistency, accountability and a level playing 
field while reflecting each state's energy mix.
    The Clean Air Act--under section 111(d)--creates a partnership 
between EPA, states, tribes and U.S. territories--with EPA setting a 
goal and states and tribes choosing how they will meet it. The CPP 
follows that approach. The CPP establishes interim and final 
CO2 emission performance rates and statewide goals. States 
then develop and implement plans that ensure that the power plants in 
their state--either individually, together or in combination with other 
measures--achieve these rates or goals. States will be required to 
submit a state plan, or an initial submittal with an extension request, 
by September 6, 2016. Complete state plans must be submitted no later 
than September 6, 2018. The interim rates and goals are assessed over 
the years 2022 to 2029 and the final CO2 emission 
performance rates, rate-based goals, or mass-based goals are assessed 
for 2030 and after.
    Because the final deadline for states to submit complete plans 
under the CPP is September 2018 and because mandatory CPP reductions do 
not begin until the interim period (i.e., starting in 2022), the EPA 
does not anticipate significant interactions with the CPP and the near-
term (i.e., starting in 2017) ozone season EGU NOX emission 
reduction requirements under this proposal.
    However the EPA notes that actions taken to reduce CO2 
emissions (e.g., deployment of zero-emitting generation) may also 
reduce ozone season NOX emissions. To the extent that states 
or electric utilities consider emission reduction strategies to meet 
these two separate requirements--CPP and interstate ozone transport--in 
a coordinated manner, they may find efficiency gains in that actions to 
meet the CPP goals may also help meet interstate ozone transport 
requirements.
    The EPA believes that timing flexibility provided in the CPP offers 
significant benefits that allow states to develop plans that will help 
achieve a number of goals, including, but not limited to: Reducing 
cost, addressing reliability concerns, addressing concerns about 
stranded assets, and facilitating the integration of meeting the 
emission guidelines and compliance by affected EGUs with other air 
quality and pollution control obligations on the part of both states 
and affected EGUs.
    The EPA is also cognizant of the potential influence of addressing 
interstate ozone transport on the CPP. As states and utilities 
undertake the near- and longer-term planning that will be needed for 
the CPP, they will have the opportunity to consider how compliance with 
this proposed rule can anticipate, or be consistent with, expected 
compliance strategies for the CPP. While some EGU NOX 
mitigation strategies, most notably shifting generation from higher-
NOX emitting coal-fired units to lower NOX 
emitting NGCC units, can potentially also reduce CO2 
emissions, the EGU emissions analysis performed for this interstate 
transport action does not results in a notable difference in 
CO2 emissions. However, EPA's results do not preclude states 
and utilities from considering these programs together. And, as the EPA 
has structured the interstate transport obligations that would be 
established by this proposal as requirements to limit aggregate 
affected EGU emissions and the EPA is not proposing to enforce source-
specific emission reduction requirements, EGU owners have the 
flexibility to plan for compliance with the interstate ozone transport 
requirements in ways that are consistent with state and EGU strategies 
to reduce CO2 emissions for the Clean Power Plan.
    With respect to concerns about potentially stranded investments 
\118\ in NOX control equipment, the EPA's budget-setting 
approach quantifies NOX reductions from upgrading combustion 
controls at coal-fired units. However, CSAPR's flexible compliance does 
not require that specific NOX controls be installed at any 
specific facilities, and we would not expect such controls to be 
installed on units that may not be economic to operate in the future.
---------------------------------------------------------------------------

    \118\ A potential stranded investment is an investment in an EGU 
NOX reduction strategy (e.g., combustion controls) for 
which the affected EGU retires before the investment is fully 
depreciated.
---------------------------------------------------------------------------

b. 2015 Ozone Standard
    On October 1, 2015, the EPA strengthened the ground-level ozone 
NAAQS to 70 ppb, based on extensive scientific evidence about ozone's 
effects on public health and welfare. This proposed rule to update 
CSAPR to address interstate emissions transport

[[Page 75755]]

with respect to the 2008 ozone NAAQS is a separate and distinct 
regulatory action and is not meant to address the CAA's good neighbor 
provision with respect to the strengthened 2015 ozone NAAQS.
    The EPA is mindful of the need to address ozone transport for the 
2015 ozone NAAQS. The statutory deadline for the EPA to finalize area 
designations is October 1, 2017. Further, good neighbor SIPs from 
states are due on October 1, 2018. The steps taken under this proposal 
to reduce interstate ozone transport, when finalized, will help states 
attain and maintain the 2015 ozone NAAQS. Moreover, to facilitate the 
implementation of the CAA good neighbor provision the EPA intends to 
provide information regarding steps 1 and 2 of the CSAPR framework in 
the fall of 2016. In particular, the EPA expects to conduct modeling 
necessary to identify projected nonattainment and maintenance receptors 
and identify the upwind states that contribute significantly to these 
receptors.

VIII. Costs, Benefits, and Other Impacts of the Proposed Rule

    The EPA evaluated the costs, benefits, and impacts of compliance 
with the proposed EGU NOX ozone-season emissions budgets 
that reflect uniform NOX costs of $1,300 per ton (see 
proposed emissions budgets in table VI.1). In addition, the EPA also 
assessed compliance with other more and less stringent alternative EGU 
NOX ozone-season emissions budgets, reflecting uniform 
NOX costs of $3,400 per ton and $500 per ton, respectively 
(see alternative emissions budgets in tables VI.2 and VI.3). The EPA 
evaluated the impact of implementing these emissions budgets to reduce 
interstate transport for the 2008 ozone NAAQS in 2017. More details for 
this assessment can be found in the Regulatory Impact Analysis in the 
docket for this proposed rule.
    The EPA notes that its analysis of the regulatory control scenarios 
(i.e., the proposal and more and less stringent alternatives) is 
illustrative in nature, in part because the EPA proposes to implement 
the proposed EGU NOX emissions budgets via a regional 
NOX ozone-season allowance trading program. This 
implementation approach provides utilities with the flexibility to 
determine their own compliance path. The EPA's assessment develops and 
analyzes one possible scenario for implementing the NOX 
budgets proposed by this action and one possible scenario for 
implementing the more and less stringent alternatives.
    Table VIII.1 provides the projected 2017 EGU emissions reductions 
for the evaluated regulatory control scenarios.

 Table VIII.1--Projected 2017 Emissions Reductions of NOX, SO2, and CO2 With the Proposed NoX Emissions Budgets
                                     and More or Less Stringent Alternatives
                                                   [TONS] \1\
----------------------------------------------------------------------------------------------------------------
                                                                                  More stringent  Less stringent
                                                                     Proposal       alternative     alternative
----------------------------------------------------------------------------------------------------------------
NOX (annual)....................................................          89,969          92,582          23,686
NOX (ozone season)..............................................          84,856          83,680          25,051
SO2 (annual)....................................................             383             425             301
CO2 (annual)....................................................         610,092         614,385         719,760
----------------------------------------------------------------------------------------------------------------
\1\ NOX and SO2 emissions are reported in English (short) tons; CO2 is reported in metric tons.

    The EPA estimates the costs associated with compliance with the 
illustrative proposed regulatory control alternative to be 
approximately $93 million annually. These costs represent the private 
compliance cost of reducing NOX emissions to comply with the 
proposal and include monitoring, recordkeeping, and reporting costs. 
Table VIII.2 provides the estimated costs for the evaluated regulatory 
control scenarios, including the proposal and more and less stringent 
alternatives. Estimates are in 2011 dollars.

 Table VIII.2--Cost Estimates for Compliance With the Proposed NOX Emissions Budgets and More and Less Stringent
                                                  Alternatives
                                                   [2011]$ \1\
----------------------------------------------------------------------------------------------------------------
                                                                                  More stringent  Less stringent
                                                                     Proposal       alternative     alternative
----------------------------------------------------------------------------------------------------------------
Costs...........................................................             $93             $96            $4.7
----------------------------------------------------------------------------------------------------------------
\1\ Levelized annualized costs over the period 2016 through 2040, discounted using the 4.77 discount rate used
  in IPM's objective function of minimizing the net present value of the stream of total costs of electricity
  generation.

    In this analysis, the EPA monetized the estimated benefits 
associated with reducing population exposure to ozone and 
PM2.5 and co-benefits of decreased emissions of 
CO2, but was unable to monetize the co-benefits associated 
with reducing exposure to mercury, carbon monoxide, and NO2, 
as well as ecosystem effects and visibility impairment. In addition, 
the EPA expects positive health and welfare impacts associated with 
reduced levels of hydrogen chloride, but could not quantify these 
impacts. Among the benefits it could quantify, the EPA estimated 
combinations of health benefits at discount rates of 3 percent and 7 
percent (as recommended by the EPA's Guidelines for Preparing Economic 
Analyses [U.S. EPA, 2014] and OMB's Circular A-4 [OMB, 2003]) and 
climate co-benefits at discount rates of 5 percent, 3 percent, 2.5 
percent, and 3 percent (95th percentile) (as recommended by the 
interagency working group). The EPA estimates the monetized ozone-
related benefits \119\ of the proposal to be $490 million to $790 
million (2011$) in 2017 and the

[[Page 75756]]

 PM2.5-related co-benefits \120\ of the proposal to be $190 
million to $430 million (2011$) using a 3% discount rate and $170 
million to $380 million (2011$) using a 7% discount rate. Further, the 
EPA estimates CO2-related co-benefits of $6.5 to $66 million 
(2011$). Additional details on this analysis are provided in the RIA 
for this proposal. Tables VIII.3 and VIII.5 summarize the quantified 
monetized human health and climate benefits of the proposal and the 
more and less stringent control alternatives. Table VIII.4 summarizes 
the estimated avoided ozone- and PM2.5-related health 
incidences for the proposal and the more and less stringent control 
alternatives.
---------------------------------------------------------------------------

    \119\ The ozone-related health benefits range is based on 
applying different adult mortality functions (i.e., Smith et al. 
(2009) and Zanobetti and Schwartz (2008)).
    \120\ The PM2.5-related health co-benefits range is 
based on applying different adult mortality functions (i.e., Krewski 
et al. (2009) and Lepeule et al. (2012)).

Table VIII.3--Estimated Health Benefits of Projected 2017 Emissions Reductions for the Proposal and More or Less
                                             Stringent Alternatives
                                             [Millions of 2011]$ \1\
----------------------------------------------------------------------------------------------------------------
                                                                               More stringent    Less stringent
                                                                Proposal         alternative       alternative
----------------------------------------------------------------------------------------------------------------
NOX (as ozone)............................................      $490 to $790      $500 to $820      $140 to $220
NOX (as PM2.5):
    3% Discount Rate......................................        190 to 430        190 to 440         49 to 110
    7% Discount Rate......................................        170 to 380        170 to 390         45 to 100
Total:
    3% Discount Rate......................................      670 to 1,200      690 to 1,300        190 to 340
    7% Discount Rate......................................      650 to 1,200      670 to 1,200        180 to 330
----------------------------------------------------------------------------------------------------------------
\1\ The health benefits range is based on adult mortality functions (e.g., from Krewski et al. (2009) with Smith
  et al. (2009) to Lepeule et al. (2012) with Zanobetti and Schwartz (2008)).


Table VIII.4--Summary of Estimated Avoided Ozone-Related and PM2.5-Related Health Incidences From Projected 2017
                Emissions Reductions for the Proposal and More or Less Stringent Alternatives\1\
----------------------------------------------------------------------------------------------------------------
                                                                                  More stringent  Less stringent
                                                                     Proposal       alternative     alternative
----------------------------------------------------------------------------------------------------------------
                                          Ozone-Related Health Effects
----------------------------------------------------------------------------------------------------------------
Avoided Premature Mortality:
    Smith et al. (2009) (all ages)..............................              48              50              14
    Zanobetti and Schwartz (2008) (all ages)....................              81              83              23
Avoided Morbidity:
    Hospital admissions--respiratory causes (ages > 65).........              79              81              22
    Emergency room visits for asthma (all ages).................             320             330              90
    Asthma exacerbation (ages 6-18).............................          93,000          95,000          26,000
    Minor restricted-activity days (ages 18-65).................         240,000         240,000          67,000
    School loss days (ages 5-17)................................          77,000          79,000          22,000
----------------------------------------------------------------------------------------------------------------
                                          PM2.5-Rrelated Health Effects
----------------------------------------------------------------------------------------------------------------
Avoided Premature Mortality:
    Krewski et al. (2009) (adult)...............................              21              22               6
    Lepeule et al. (2012) (adult)...............................              48              50              13
    Woodruff et al. (1997) (infant).............................              <1              <1              <1
Avoided Morbidity:
    Emergency department visits for asthma (all ages)...........              12              12               3
    Acute bronchitis (age 8-12).................................              31              32               8
    Lower respiratory symptoms (age 7-14).......................             390             400             100
    Upper respiratory symptoms (asthmatics age 9-11)............             560             570             150
    Minor restricted-activity days (age 18-65)..................          16,000          16,000           4,200
    Lost work days (age 18-65)..................................           2,700           2,700             700
    Asthma exacerbation (age 6-18)..............................             580             600             150
    Hospital admissions--respiratory (all ages).................               6               7               2
    Hospital admissions--cardiovascular (age > 18)..............               8               8               2
    Non-Fatal Heart Attacks (age 18).................  ..............  ..............  ..............
    Peters et al. (2001)........................................              25              26               7
                                                                 -----------------------------------------------
        Pooled estimate of 4 studies............................               3               3               1
----------------------------------------------------------------------------------------------------------------
\1\ All estimates are rounded to whole numbers with two significant figures.


[[Page 75757]]


Table VIII.5--Estimated Global Climate Co-Benefits of CO2 Reductions for the Proposal and More or Less Stringent
                                                  Alternatives
                                             [Millions of 2011$] \1\
----------------------------------------------------------------------------------------------------------------
                                                                                  More stringent  Less stringent
                   Discount rate and statistic                       Proposal       alternative     alternative
----------------------------------------------------------------------------------------------------------------
5% (average)....................................................            $6.5            $6.5            $7.6
3 (average).....................................................              23              23              27
2.5 (average)...................................................              35              35              41
3 (95th percentile).............................................              66              66              78
----------------------------------------------------------------------------------------------------------------
\1\ The social cost of carbon (SC-CO2) values are dollar-year and emissions-year specific. SC-CO2 values
  represent only a partial accounting of climate impacts.

    The EPA combined this information to perform a benefit-cost 
analysis for this proposal (shown in table VIII.6 and for the more and 
less stringent alternatives--shown in the RIA in the docket for this 
proposed rule).

Table VIII.6--Total Costs, Total Monetized Benefits, and Net Benefits of
                      the Proposal in 2017 for U.S.
                           [Millions of 2011$]
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Climate Co-Benefits....................  $23.
Air Quality Health.....................  670 to 1200.
Total Benefits.........................  700 to 1200.
Annualized.............................  93.
Net Benefits...........................  600 to 1100.
Non-Monetized..........................  Non-monetized climate benefits.
                                         Reductions in exposure to
                                          ambient NO2 and SO2.
                                         Reductions in mercury
                                          deposition.
                                         Ecosystem benefits assoc. with
                                          reductions in Visibility
                                          impairment.
------------------------------------------------------------------------

    There are additional important benefits that the EPA could not 
monetize. Due to current data and modeling limitations, our estimates 
of the co-benefits from reducing CO2 emissions do not 
include important impacts like ocean acidification or potential tipping 
points in natural or managed ecosystems. Unquantified benefits also 
include climate co-benefits from reducing emissions of non-
CO2 GHGs (e.g., nitrous oxide and methane) and co-benefits 
from reducing direct exposure to SO2, NOX, and 
hazardous air pollution (e.g., mercury), as well as from reducing 
ecosystem effects and visibility impairment. Based upon the foregoing 
discussion, it remains clear that the benefits of this proposed action 
are substantial, and far exceed the costs. Additional details on 
benefits, costs, and net benefits estimates are provided in the RIA for 
this proposal.
    For this proposed rule, the EPA analyzed the costs to the electric 
power sector using IPM. The IPM is a dynamic linear programming model 
that can be used to examine the economic impacts of air pollution 
control policies for SO2 and NOX throughout the 
contiguous United States for the entire power system. Documentation for 
IPM can be found in the docket for this rulemaking or at www.epa.gov/powersectormodeling.
    The EPA provides a qualitative assessment of economic impacts 
associated with electricity price changes to consumers that may result 
from this proposed rule. This assessment can be found in the RIA for 
this proposed rule.
    Executive Order 13563 directs federal agencies to consider the 
effect of regulations on job creation and employment. According to the 
Executive Order, ``our regulatory system must protect public health, 
welfare, safety, and our environment while promoting economic growth, 
innovation, competitiveness, and job creation. It must be based on the 
best available science'' (Executive Order 13563, 2011). Although 
standard benefit-cost analyses have not typically included a separate 
analysis of regulation-induced employment impacts, employment impacts 
are of particular concern and questions may arise about their existence 
and magnitude.
    States have the responsibility and flexibility to implement 
policies and practices as part of developing SIPs for compliance with 
the emissions budgets found in this proposed rule. Given the wide range 
of approaches that may be used and industries that could be affected, 
quantifying the associated employment impacts is difficult.

IX. Summary of Proposed Changes to the Regulatory Text for the CSAPR 
FIPs and CSAPR Trading Programs

    This section describes proposed amendments to the regulatory text 
in the CFR for the CSAPR FIPs and the CSAPR NOX Ozone-Season 
Trading Program related to the findings and remedy discussed throughout 
this preamble. This section also describes other minor proposed 
corrections to the existing CFR text for the CSAPR FIPs and the CSAPR 
trading programs more generally.
    The proposed regulatory text amendments related to the CSAPR FIPs 
and the CSAPR NOX Ozone-Season Trading Program would be made 
in parts 52, 78, and 97 of title 40 of the CFR. Proposed changes to 
update the list of states that would be subject to FIPs to address 
obligations related to transported ozone pollution are in Sec. Sec.  
52.38(b)(2) (summarizing all states subject to FIPs), 52.540 (ending 
FIP for Florida), 52.882 (establishing FIP for Kansas), and 52.2140 
(ending FIP for South Carolina). Section 97.510 contains the proposed 
changes establishing or revising the amounts of NOX Ozone-
Season trading budgets, new unit set-asides (NUSAs), Indian country 
NUSAs, and variability limits for states whose sources participate in 
the CSAPR NOX Ozone-Season Trading Program. Additional 
proposed changes to accommodate trading program participation by 
sources whose coverage

[[Page 75758]]

starts in different years are in Sec. Sec.  97.506(c)(3) (compliance 
deadlines), 97.512 (NUSA allowance allocation procedures), 97.530(b) 
(monitor certification deadlines), and 97.534(d) (reporting deadlines).
    Proposed changes to Sec.  52.38(b)(3) through (5) would update 
states' options to submit SIP revisions which, upon approval by the 
EPA, would modify certain CSAPR trading program provisions as applied 
to those states or replace the states' FIPs with SIPs--options that 
correspond closely to states' SIP revision options under CSAPR as 
initially promulgated. Proposed changes in Sec.  97.521 (allowance 
recordation) delay the deadlines for recording CSAPR NOX 
Ozone-Season allowances for the control periods in 2018 through 2022 in 
order to coordinate with the proposed updated submission deadlines for 
the optional SIP revisions. A similar proposed delay in the deadline 
for recording allowances for the control period in 2017 would provide 
time to finalize this rulemaking and would thereby allow the EPA to 
record allocations of 2017 allowances based on the final revised 
budgets instead of recording allocations based on existing budgets that 
are proposed to be superseded.
    The proposed limitations on the use of emission allowances issued 
for a compliance period before 2017 or from the state NOX 
Ozone-Season trading budget for Georgia are implemented by redefining 
sources' obligations under the trading program in terms of ``tonnage 
equivalents'' of allowances rather than in terms of nominal quantities 
of allowances. Section 97.502 contains a proposed new definition of 
``tonnage equivalent'' and related proposed modifications to the 
definitions of ``CSAPR NOX Ozone-Season allowance'' and 
``CSAPR NOX Ozone-Season emissions limitation.'' A new Sec.  
97.524(f) sets out the proposed procedures for determining the tonnage 
equivalent of an allowance. Additional proposed changes to reflect the 
use of allowances based on their tonnage equivalents (rather than their 
nominal numbers) to meet various obligations are contained in 
Sec. Sec.  97.506(c) (standard requirements relating to NOX 
emissions), 97.511(c) (corrections of incorrect allowance allocations), 
97.524 (compliance with emissions limitations and excess emissions 
provisions), and 97.525 (compliance with assurance provisions). A 
proposed change to Sec.  78.1 would make EPA's determinations of the 
tonnage equivalents of particular allowance holdings subject to the 
administrative appeal procedures set forth in part 78.
    In addition to the proposed CFR changes described above, this 
proposal also includes other minor amendments throughout the sections 
of parts 52, 78, and 97 implementing CSAPR, including sections 
implementing CSAPR's other three emissions trading programs. The most 
common category of these minor changes consists of proposed corrections 
to cross-references. Some cross-references would change as a result of 
this proposal and corrections of those cross-references are therefore 
related to the changes described above, while other cross-references as 
originally published indicated incorrect locations because of 
typographical errors or indicated correct locations but did not use the 
correct CFR format. In virtually all cases, the intended correct cross-
reference can be determined from context, but the corrections clarify 
the regulations.
    Besides the proposed corrections to cross-references, most of the 
remaining proposed corrections address other typographical errors. 
However, a small number of the proposed CFR changes correct errors that 
are not cross-references or obviously typographical errors. While the 
EPA views all of these proposed corrections as noncontroversial, a few 
merit a short explanation.
    First, the phrase ``with regard to the State'' or ``the State and'' 
would be added in a number of locations in Sec. Sec.  52.38 and 52.39 
where it was inadvertently omitted. The added phrase clarifies that 
when the EPA approves a state's SIP revision as modifying or replacing 
provisions in a CSAPR trading program, the modification or replacement 
is effective only with regard to that particular state. Correcting the 
omissions of these phrases would make the language concerning SIP 
revisions consistent for all the types of SIP revisions under all the 
CSAPR trading programs.
    Second, the phrase ``in part'' would be removed from the existing 
FIP language in various sections of part 52 for certain states with 
Indian country to clarify that in order to replace a CSAPR FIP 
affecting the sources in these states, a SIP revision must fully, not 
``in part,'' correct the SIP deficiency identified by the EPA as the 
basis for the FIP. The intended purpose of the words ``in part''--
specifically, to indicate that approval of a state's SIP revision would 
not relieve any sources in Indian country within the borders of the 
state from obligations under the FIP--is already served by other 
language in those FIPs. The proposed corrections would make the 
language in these CSAPR FIPs consistent with the FIP language for the 
remaining CSAPR FIPs that address states with Indian country. Analogous 
proposed changes to the general CSAPR FIP language in Sec. Sec.  
52.38(a)(5) and (6) and (b)(5) and (6) and 52.39(f), (i), and (j) would 
remove the phrase ``in whole or in part'' (referencing states without 
Indian country and states with Indian country, respectively) while 
adding language distinguishing the effect that the EPA's approval of a 
SIP revision would have on sources in the state from the lack of effect 
on any sources in Indian country within the borders of the state.
    Third, language would be added to Sec.  78.1 clarifying that 
determinations by the EPA Administrator under the CSAPR trading 
programs that are subject to the part 78 administrative appeal 
procedures are subject to those procedures whether the source in 
question participates in a CSAPR trading program under a FIP or under 
an approved SIP revision. This approach is consistent with the approach 
taken under CAIR FIPs and SIPs and with the EPA's intent in CSAPR, as 
evidenced by the lack of any proposal or discussion in the CSAPR 
rulemaking regarding deviation from the historical approach. This 
approach is also consistent with provisions in Sec. Sec.  52.38 and 
52.39 prohibiting approvable SIP revisions from altering certain 
provisions of the CSAPR trading programs, including the provisions 
specifying that administrative appeal procedures for determinations of 
the EPA Administrator under the trading programs are set forth in part 
78.
    Fourth, the phrase ``steam turbine generator'' would be changed to 
``generator'' in the list of required equipment in the definition of a 
``cogeneration system'' in Sec. Sec.  97.402, 97.502, 97.602, and 
97.702. Absent this correction, a combustion turbine in a facility that 
uses the combustion turbine in combination with an electricity 
generator and heat recovery steam generator, but no steam turbine, to 
produce electricity and useful thermal energy would not meet the 
definition of a ``cogeneration unit.'' The proposed correction would 
clarify that a combustion turbine in such a facility should be able to 
qualify as a ``cogeneration unit'' (assuming it meets other relevant 
criteria) under the CSAPR trading programs, as it could under the CAIR 
trading programs. The consistency of this approach with the EPA's 
intent in the CSAPR rulemaking is evidenced by the lack of any proposal 
or discussion in that rulemaking regarding the concept of narrowing the 
set of

[[Page 75759]]

facilities qualifying for an applicability exemption as cogeneration 
units. To the contrary, as discussed in the preamble to the CSAPR 
proposal (75 FR 45307, August 2, 2010), the definition of 
``cogeneration system'' was created in CSAPR to potentially broaden the 
set of facilities qualifying for the exemption, specifically by 
facilitating qualification as ``cogeneration units'' for certain units 
that might not meet the required levels of efficiency on an individual 
basis but that operate as components of multi-unit ``cogeneration 
systems'' that do meet the required levels of efficiency.
    Fifth, the deadline for recording certain allowance allocations 
under Sec. Sec.  97.421(j), 97.521(j), 97.621(j), and 97.721(j) would 
be changed from the ``date on which'' the EPA receives the necessary 
allocation information to the date ``15 days after the date on which'' 
the EPA receives the information. The EPA's lack of intention in the 
CSAPR rulemaking to establish the deadline as defined prior to the 
correction is evidenced by the impracticability of complying with such 
a deadline.
    Sixth, a proposed change to a description of a required notice 
under the assurance provisions in Sec. Sec.  97.425(b)(2)(iii)(B), 
97.525(b)(2)(iii)(B), 97.625(b)(2)(iii)(B), and 97.725(b)(2)(iii)(B) 
would modify the phrase ``any adjustments'' to the phrase 
``calculations incorporating any adjustments'' in order to clarify that 
the required notice will identify not only any adjustments made to 
previously noticed calculations, but also the complete calculations 
with (or without) such adjustments. The intended meaning is clear from 
the subsequent provisions that use this notice as the point of 
reference for the complete calculations used in the succeeding 
administrative procedures.
    Finally, the EPA notes that the proposed amendments include 
updating the nomenclature in the CFR from its name as initially 
proposed--``Transport Rule'' or ``TR''--to its name as finalized--
``Cross-State Air Pollution Rule'' or ``CSAPR.'' This update is 
intended to reduce confusion and simplify communications regarding the 
regulations by allowing a single name to be used in all contexts.
    The EPA invites comment on the proposed regulatory text amendments 
described above and shown at the end of this notice.

X. Statutory and Executive Order Reviews

    Additional information about these statutes and Executive Orders 
can be found at http://www2.epa.gov/laws-regulations/laws-and-executive-orders.

A. Executive Order 12866: Regulatory Planning and Review and Executive 
Order 13563: Improving Regulation and Regulatory Review

    This action is an economically significant regulatory action that 
was submitted to the Office of Management and Budget (OMB) for review. 
Any changes made in response to OMB recommendations have been 
documented in the docket. The EPA prepared an analysis of the potential 
costs and benefits associated with this action. This analysis, which is 
contained in the ``Regulatory Impact Analysis for the Proposed Cross-
State Air Pollution Rule Update for the 2008 Ozone NAAQS'' [EPA-452/R-
15-009], is available in the docket and is briefly summarized in 
section VIII of this preamble.
    Consistent with Executive Orders 12866 and 13563, the EPA estimated 
the costs and benefits for three regulatory control alternatives: The 
proposed EGU NOX ozone-season emissions budgets and more and 
less stringent alternatives. This proposed action would reduce ozone 
season NOX emissions from EGUs in 23 eastern states. Actions 
taken to comply with the proposed EGU NOX ozone-season 
emissions budgets would also reduce emissions of other criteria air 
pollution and hazardous air pollution emissions, including annual 
NOX, and CO2. The benefits associated with these 
co-pollutant reductions are referred to as co-benefits, as these 
reductions are not the primary objective of this proposed rule.
    The RIA for this proposal analyzed illustrative compliance 
approaches for implementing the proposed FIPs. This proposal would 
establish EGU NOX ozone-season emissions budgets for 23 
states and implement these budgets via the existing CSAPR 
NOX ozone-season allowance trading program.
    The EPA evaluated the costs, benefits, and impacts of implementing 
the proposed EGU NOX ozone-season emissions budgets that 
reflect uniform NOX costs of $1,300 per ton (see proposed 
emissions budgets in table VI.1). In addition, the EPA also assessed 
implementation of other more and less stringent alternative EGU 
NOX ozone-season emissions budgets, reflecting uniform 
NOX costs of $3,400 per ton and $500 per ton, respectively 
(see alternative emissions budgets in tables VI.2 and VI.3). The EPA 
evaluated the impact of implementing these emissions budgets to reduce 
interstate transport for the 2008 ozone NAAQS in 2017. More details for 
this assessment can be found in the Regulatory Impact Analysis in the 
docket for this proposed rule.
    The EPA notes that its analysis of the regulatory control scenarios 
(i.e., the proposal and more and less stringent alternatives) is 
illustrative in nature, in part because the EPA proposes to implement 
the proposed EGU NOX emissions budgets via a regional 
NOX ozone-season allowance trading program. This 
implementation approach provides utilities with the flexibility to 
determine their own compliance path. The EPA's assessment develops and 
analyzes one possible scenario for implementing the NOX 
budgets proposed by this action and one possible scenario for 
implementing the more and less stringent alternatives.
    The EPA estimates the costs associated with compliance with the 
illustrative proposed regulatory control alternative to be 
approximately $93 million (2011$) annually. These costs represent the 
private compliance cost of reducing NOX emissions to comply 
with the proposal.
    In this analysis, the EPA monetized the estimated benefits 
associated with the reduced exposure to ozone and PM2.5 and 
co-benefits of decreased emissions of CO2, but was unable to 
monetize the co-benefits associated with reducing exposure to mercury, 
carbon monoxide, and NO2, as well as ecosystem effects and 
visibility impairment. In addition, there are expected to be 
unquantified health and welfare impacts associated with changes in 
hydrogen chloride. Specifically, the EPA estimated combinations of 
health benefits at discount rates of 3 percent and 7 percent (as 
recommended by the EPA's Guidelines for Preparing Economic Analyses 
[U.S. EPA, 2014] and OMB's Circular A-4 [OMB, 2003]) and climate co-
benefits at discount rates of 5 percent, 3 percent, 2.5 percent, and 3 
percent (95th percentile) (as recommended by the interagency working 
group). The EPA estimates the monetized ozone-related benefits \121\ of 
the proposal to be $490 million to $790 million (2011$) in 2017 and the 
PM2.5-related co-benefits \122\ of the proposal to be $190 
million to $430 million (2011$) using a 3% discount rate and $170 
million to $380 million (2011$) using a 7% discount rate. Further, the 
EPA estimates CO2-related co-benefits of $6.5 to $66 million 
(2011$). Additional details on this analysis are provided in the RIA 
for this proposal. Tables X.A-

[[Page 75760]]

1, X.A-2, and X.A-3 summarize the quantified human health and climate 
benefits and the costs of the proposal and the more and less stringent 
control alternatives.
---------------------------------------------------------------------------

    \121\ The ozone-related health benefits range is based on 
applying different adult mortality functions (i.e., Smith et al. 
(2009) and Zanobetti and Schwartz (2008)).
    \122\ The PM2.5-related health co-benefits range is 
based on applying different adult mortality functions (i.e., Krewski 
et al. (2009) and Lepeule et al. (2012)).

 Table X.A-1--Estimated Health Benefits of Projected 2017 Emissions Reductions for the Proposal and More or Less
                                             Stringent Alternatives
                                             [Millions of 2011$] \1\
----------------------------------------------------------------------------------------------------------------
                                            Proposal               More stringent            Less stringent
----------------------------------------------------------------------------------------------------------------
NOX (as ozone)....................  $490 to $790............  $500 to $820............  $140 to $220
NOX (as PM2.5)
    3% Discount Rate..............  $190 to $430............  $190 to $440............  $49 to $110.
    7% Discount Rate..............  $170 to $380............  $170 to $390............  $45 to $100.
Total
    3% Discount Rate..............  $670 to $1,200..........  $690 to $1,300..........  $190 to $340.
    7% Discount Rate..............  $650 to $1,200..........  $670 to $1,200..........  $180 to $330.
----------------------------------------------------------------------------------------------------------------
\1\ The health benefits range is based on adult mortality functions (e.g., from Krewski et al. (2009) with Smith
  et al. (2009) to Lepeule et al. (2012) with Zanobetti and Schwartz (2008)).


 Table X.A-2--Estimated Global Climate Co-Benefits of CO2 Reductions for the Proposal and More or Less Stringent
                                                  Alternatives
                                             [Millions of 2011$] \1\
----------------------------------------------------------------------------------------------------------------
                 Discount rate and statistic                       Proposal      More stringent   Less stringent
----------------------------------------------------------------------------------------------------------------
5% (average).................................................             $6.5             $6.5             $7.6
3% (average).................................................             23               23               27
2.5% (average)...............................................             35               35               41
3% (95th percentile).........................................             66               66               78
----------------------------------------------------------------------------------------------------------------
\1\ The social cost of carbon (SC-CO2) values are dollar-year and emissions-year specific. SC-CO2 values
  represent only a partial accounting of climate impacts.

    The EPA combined this information to perform a benefit-cost 
analysis for this proposal (shown in table VIII.6 and for the more and 
less stringent alternatives--shown in the RIA in the docket for this 
proposed rule).

 Table X.A-3--Total Costs, Total Monetized Benefits, and Net Benefits of
                      the Proposal in 2017 for U.S.
                           [Millions of 2011$]
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Climate Co-Benefits....................  $23.
Air Quality Health Benefits............  $670 to $1200.
Total Benefits.........................  $700 to $1200.
Annualized Costs.......................  $93.
Compliance Costs.......................  $10.
Net Benefits...........................  $600 to $1100.
Non-Monetized Benefits.................  Non-monetized climate benefits.
                                         Reductions in exposure to
                                          ambient NO2 and SO2.
                                         Reductions in mercury
                                          deposition.
                                         Ecosystem benefits assoc. with
                                          reductions in emissions of
                                          NOX, SO2, and PM.
                                         Visibility impairment.
------------------------------------------------------------------------

    There are additional important benefits that the EPA could not 
monetize. Due to current data and modeling limitations, our estimates 
of the co-benefits from reducing CO2 emissions do not 
include important impacts like ocean acidification or potential tipping 
points in natural or managed ecosystems. Unquantified benefits also 
include climate co-benefits from reducing emissions of non-
CO2 GHGs (e.g., nitrous oxide and methane) and co-benefits 
from reducing direct exposure to SO2, NOX, and 
hazardous air pollution (e.g., mercury), as well as from reducing 
ecosystem effects and visibility impairment. Based upon the foregoing 
discussion, it remains clear that the benefits of this proposed action 
are substantial, and far exceed the costs. Additional details on 
benefits, costs, and net benefits estimates are provided in the RIA for 
this proposal.

B. Paperwork Reduction Act (PRA)

    The information collection activities in this proposed rule have 
been submitted for approval to the Office of Management and Budget 
(OMB) under the Paperwork Reduction Act (PRA), 44 U.S.C. 3501 et seq. 
The Information Collection Request (ICR) document that the EPA prepared 
has been assigned EPA ICR number 2391.04. You can find a copy of the 
ICR in the docket for this proposed rule, and it is briefly summarized 
here.
    The information generated by information collection activities 
under CSAPR is used by the EPA to ensure that affected facilities 
comply with the emission limits and other requirements. Records and 
reports are necessary to enable EPA or states to identify affected 
facilities that may not be in compliance

[[Page 75761]]

with the requirements. The recordkeeping requirements require only the 
specific information needed to determine compliance. These 
recordkeeping and reporting requirements are established pursuant to 
CAA sections 110(a)(2)(D) and (c) and 301(a) (42 U.S.C. 7410(a)(2)(D) 
and (c) and 7601(a)) and are specifically authorized by CAA section 114 
(42 U.S.C. 7414). Reported data may also be used for other regulatory 
and programmatic purposes. All information submitted to the EPA for 
which a claim of confidentiality is made will be safeguarded according 
to EPA policies in 40 CFR part 2, subpart B, Confidentiality of 
Business Information.
    All of the EGUs that would be subject to changed information 
collection requirements under this proposed rule are already subject to 
information collection requirements under CSAPR. Most of these EGUs 
also are already subject to information collection requirements under 
the Acid Rain Program (ARP) established under Title IV of the 1990 
Clean Air Act Amendments. Both CSAPR and the ARP have existing approved 
ICRs: EPA ICR Number 2391.03/OMB Control Number 2060-0667 (CSAPR) and 
EPA ICR Number 1633.16/OMB Control Number 2060-0258 (ARP). The burden 
and costs of the information collection requirements covered under the 
CSAPR ICR are estimated as incremental to the information collection 
requirements covered under the ARP ICR. Most of the information used to 
estimate burden and costs in this ICR was developed for the existing 
CSAPR and ARP ICRs.
    This proposed rule would change the universe of sources subject to 
certain information collection requirements under CSAPR but would not 
change the substance of any CSAPR information collection requirements. 
The burden and costs associated with the proposed changes in the 
reporting universe are estimated as reductions from the burden and 
costs under the existing CSAPR ICR. (This proposed rule would not 
change any source's information collection requirements with respect to 
the ARP.) The EPA intends to incorporate the burden and costs 
associated with the proposed changes in the reporting universe under 
this rulemaking into the next renewal of the CSAPR ICR.
    Respondents/affected entities: Entities potentially affected by 
this proposed action are EGUs in the states of Florida, Kansas, and 
South Carolina that meet the applicability criteria for the CSAPR 
NOX Ozone-Season Trading Program in 40 CFR 97.404.
    Respondent's obligation to respond: Mandatory (sections 110(a) and 
301(a) of the Clean Air Act).
    Estimated number of respondents: 116 sources in Florida, Kansas, 
and South Carolina with one or more EGUs.
    Frequency of response: Quarterly, occasionally.
    Total estimated burden: Reduction of 14,064 hours (per year). 
Burden is defined at 5 CFR 1320.3(b).
    Total estimated cost: Reduction of $1,472,047 (per year), includes 
reduction of $450,951 operation and maintenance costs.
    The burden and cost estimates above reflect the reduction in burden 
and cost for Florida sources with EGUs that would no longer be required 
to report NOX mass emissions and heat input data for the 
ozone season to the EPA under the proposed rule and that are not 
subject to similar information collection requirements under the Acid 
Rain Program. Because these EGUs would no longer need to collect 
NOX emissions or heat input data under 40 CFR part 75, the 
estimates above also reflect the reduction in burden and cost to 
collect and quality assure these data and to maintain the associated 
monitoring equipment.
    The EPA estimates that the proposed rule would cause no change in 
information collection burden or cost for EGUs in Kansas that would be 
required to report NOX mass emissions and heat input data 
for the ozone season to the EPA or for EGUs in South Carolina that 
would no longer be required to report NOX emissions and heat 
input data for the ozone season to the EPA. The EGUs in both Kansas and 
South Carolina already are and would remain subject to requirements to 
report NOX mass emissions and heat input data for the entire 
year to the EPA under the CSAPR NOX Annual Trading Program, 
and the requirements related to ozone season reporting are a subset of 
the requirements related to annual reporting. Similarly, the EPA 
estimates that the proposed rule would cause no change in information 
collection burden or cost for EGUs in Florida that are subject to the 
Acid Rain Program because of the close similarity between the 
information collection requirements under CSAPR and under the Acid Rain 
Program.
    More information on the ICR analysis is included in the docket for 
this rule.
    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 the 
EPA's regulations in 40 CFR are listed in 40 CFR part 9.
    Submit your comments on the Agency's need for this information, the 
accuracy of the provided burden estimates and any suggested methods for 
minimizing respondent burden to the EPA using the docket identified at 
the beginning of this proposed rule. You may also send your ICR-related 
comments to OMB's Office of Information and Regulatory Affairs via 
email to oria_submissions@omb.eop.gov, Attention: Desk Officer for the 
EPA. Because OMB is required to make a decision concerning the ICR 
between 30 and 60 days after receipt, OMB must receive comments no 
later than January 4, 2016. The EPA will respond to any ICR-related 
comments in the final rule. The information collection requirements in 
the proposed rule have been submitted for approval to OMB under the 
PRA. The information collection requirements are not enforceable until 
OMB approves them. The information collection activities in this 
proposed rule include monitoring and the maintenance of records.

E. Regulatory Flexibility Act (RFA)

    I certify that this action will not have a significant economic 
impact on a substantial number of small entities under the RFA. The 
small entities subject to the requirements of this action are small 
businesses, small organizations, and small governmental jurisdictions.
    The EPA has lessened the impacts for small entities by excluding 
all units smaller than 25 MWe. This exclusion, in addition to the 
exemptions for cogeneration units and solid waste incineration units, 
eliminates the burden of higher costs for a substantial number of small 
entities located in the 23 states for which the EPA is proposing FIPs.
    Within these states, the EPA identified a total of 318 potentially 
affected EGUs (i.e., greater than 25 MWe) warranting examination in its 
RFA analysis. Of these, EPA identified 16 potentially affected EGUs 
that are owned by 7 entities that met the Small Business 
Administration's criteria for identifying small entities. The EPA 
estimated the annualized net compliance cost to these 7 small entities 
to be approximately -$38.3 million in 2017, or savings of $38.3 
million. The fact that the net compliance costs for all entities are 
actually net savings does not mean that each small entity would benefit 
from the proposal to update CSAPR. The net savings are driven by 
entities that are able to increase their revenues by increasing 
generation. Of the 7 small entities considered in this analysis, 1 
entity may experience

[[Page 75762]]

compliance costs greater than 1 or 3 percent of generation revenues in 
2017. Since this entity is not projected to operate in the base case, 
we are unable to compare the estimated compliance costs to base case 
generation revenues. However, we note that this entity is located in a 
cost of service market, where typically we expect entities should be 
able to recover all of their costs of complying with the proposal.
    EPA has concluded that there is no significant economic impact on a 
substantial number of small entities (No SISNOSE) for this rule. 
Details of this analysis are presented in the RIA, which is in the 
public docket.

F. Unfunded Mandates Reform Act (UMRA)

    This action does not contain an unfunded mandate of $100 million or 
more as described in UMRA, 2 U.S.C. 1531-1538, and does not 
significantly or uniquely affect small governments. However, the EPA 
analyzed the economic impacts of the proposal on government entities. 
According to EPA's analysis, the total net economic impact on 
government owned entities (state- and municipality-owned utilities and 
subdivisions) is expected to be negative (i.e., cost savings) in 2014. 
Note that we expect the proposal to potentially have an impact on only 
one category of government-owned entities (municipality-owned 
entities). This analysis does not examine potential indirect economic 
impacts associated with the proposal, such as employment effects in 
industries providing fuel and pollution control equipment, or the 
potential effects of electricity price increases on government 
entities. For more information on the estimated impact on government 
entities, refer to the RIA, which is in the public docket.

E. Executive Order 13132: Federalism

    This action 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.

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

    This action has tribal implications. However, it will neither 
impose substantial direct compliance costs on federally recognized 
tribal governments, nor preempt tribal law.
    This action proposes to implement EGU NOX ozone season 
emissions reductions in 23 eastern states. However, at this time, none 
of the existing or planned EGUs affected by this proposed rule are 
owned by tribes or located in Indian country. This action may have 
tribal implications if a new affected EGU is built in Indian country. 
Additionally, tribes have a vested interest in how this proposed rule 
would affect air quality.
    In developing CSAPR, which was promulgated on July 6, 2011 to 
address interstate transport of ozone pollution under the 1997 ozone 
NAAQS,\123\ the EPA consulted with tribal officials under the EPA 
Policy on Consultation and Coordination with Indian Tribes early in the 
process of developing that regulation to permit them to have meaningful 
and timely input into its development. A summary of that consultation 
is provided in 76 FR 48346 (August 8, 2011).
---------------------------------------------------------------------------

    \123\ CSAPR also addressed interstate transport of fine 
particulate matter (PM2.5) under the 1997 and 2006 
PM2.5 NAAQS.
---------------------------------------------------------------------------

    EPA received comments from several tribal commenters regarding the 
availability of CSAPR allowance allocations to new units in Indian 
country. EPA responded to these comments by instituting Indian country 
new unit set-asides in the final CSAPR. In order to protect tribal 
sovereignty, these set-asides are managed and distributed by the 
federal government regardless of whether CSAPR in the adjoining or 
surrounding state is implemented through a FIP or SIP. While there are 
no existing affected EGUs in Indian country covered by this proposal, 
the Indian country set-asides will ensure that any future new units 
built in Indian country will be able to obtain the necessary 
allowances. This proposal maintains the Indian country new unit set-
aside and adjusts the amounts of allowances in each set-aside according 
to the same methodology of the original CSAPR rule.
    The EPA has informed tribes of our development of this proposal 
through a National Tribal Air Association--EPA air policy conference 
call (January 29, 2015). The EPA plans to further consult with tribal 
officials under the EPA Policy on Consultation and Coordination with 
Indian Tribes early in the process of developing this regulation to 
permit them to have meaningful and timely input into its development. 
The EPA will facilitate this consultation before finalizing this 
proposed rule.
    As required by section 7(a), the EPA's Tribal Consultation Official 
has certified that the requirements of the executive order have been 
met in a meaningful and timely manner. A copy of the certification is 
included in the docket for this action.

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

    The EPA interprets Executive Order 13045 (62 FR 19885, April 23, 
1997) as applying to those regulatory actions that concern health or 
safety risks, such that the analysis required under section 5-501 of 
the Order has the potential to influence the regulation. This action is 
not subject to Executive Order 13045 because it does not involve 
decisions on environmental health or safety risks that may 
disproportionately affect children. The EPA believes that the ozone-
related benefits, PM2.5-related co-benefits, and 
CO2-related co-benefits would further improve children's 
health.

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

    This action, which is a significant regulatory action under 
Executive Order 12866, is likely to have a significant effect on the 
supply, distribution, or use of energy. The EPA notes that one aspect 
of this proposal that may affect energy supply, disposition or use is 
the EPA's proposing and taking comment on a range of options with 
respect to use of 2015 vintage and 2016 vintage CSAPR NOX 
ozone-season allowances for compliance with 2017 and later ozone season 
requirements. The EPA has prepared a Statement of Energy Effects for 
the proposed regulatory control alternative as follows. We estimate a 
much less than 1 percent change in retail electricity prices on average 
across the contiguous U.S. in 2017, and a much less than 1 percent 
reduction in coal-fired electricity generation in 2017 as a result of 
this rule. The EPA projects that utility power sector delivered natural 
gas prices will change by less than 1 percent in 2017. For more 
information on the estimated energy effects, refer to the RIA, which is 
in the public docket.

I. National Technology Transfer and Advancement Act (NTTAA)

    This rulemaking does not involve technical standards.

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

    The EPA believes the human health or environmental risk addressed 
by this action will not have potential disproportionately high and 
adverse human health or environmental effects

[[Page 75763]]

on minority, low-income or indigenous populations.
    The EPA notes that this action proposes to update CSAPR to reduce 
interstate ozone transport with respect to the 2008 ozone NAAQS. This 
proposed rule uses EPA's authority in CAA section 110(a)(2)(d) to 
reduce (nitrogen oxides) NOX pollution that significantly 
contributes to downwind ozone nonattainment or maintenance areas. As a 
result, the proposed rule will reduce exposures to ozone in the most-
contaminated areas (i.e., areas that are not meeting the 2008 ozone 
National Ambient Air Quality Standards (NAAQS)). In addition, this 
proposed rule separately identifies both nonattainment areas and 
maintenance areas. This requirement reduces the likelihood that areas 
close to the level of the standard will exceed the current health-based 
standards in the future. The EPA proposes to implement these emission 
reductions using the CSAPR EGU NOX ozone-season emissions 
trading program with assurance provisions.
    EPA recognizes that many environmental justice communities have 
voiced concerns in the past about emission trading and the potential 
for any emission increases in any location. The EPA believes that CSAPR 
mitigated these concerns and that this proposal, which applies the 
CSAPR framework to reduce interstate ozone pollution and implement 
these reductions, will also minimize community concerns. The EPA seeks 
comment from communities on this proposal.
    Ozone pollution from power plants have both local and regional 
components: Part of the pollution in a given location--even in 
locations near emission sources--is due to emissions from nearby 
sources and part is due to emissions that travel hundreds of miles and 
mix with emissions from other sources.
    It is important to note that the section of the Clean Air Act 
providing authority for this proposed rule, section 110(a)(2)(D), 
unlike some other provisions, does not dictate levels of control for 
particular facilities. CSAPR allows sources to trade allowances with 
other sources in the same or different states while firmly constraining 
any emissions shifting that may occur by requiring a strict emission 
ceiling in each state (the assurance level). In addition, assurance 
provisions in the existing CSAPR regulations that will remain in place 
under this proposal outline the allowance surrender penalties for 
failing to meet the assurance level; there are additional allowance 
penalties as well as financial penalties for failing to hold an 
adequate number of allowances to cover emissions.
    This approach reduces EGU emissions in each state that 
significantly contribute to downwind nonattainment or maintenance 
areas, while allowing power companies to adjust generation as needed 
and ensure that the country's electricity needs will continue to be 
met. EPA maintains that the existence of these assurance provisions, 
including the penalties imposed when triggered, will ensure that state 
emissions will stay below the level of the budget plus variability 
limit.
    In addition, all sources must hold enough allowances to cover their 
emissions. Therefore, if a source emits more than its allocation in a 
given year, either another source must have used less than its 
allocation and be willing to sell some of its excess allowances, or the 
source itself had emitted less than its allocation in one or more 
previous years (i.e., banked allowances for future use).
    In summary, the CSAPR minimizes community concerns about localized 
hot spots and reduces ambient concentrations of pollution where they 
are most needed by sensitive and vulnerable populations by: Considering 
the science of ozone transport to set strict state emissions budgets to 
reduce significant contributions to ozone nonattainment and maintenance 
(i.e., the most polluted) areas; implementing air quality-assured 
trading; requiring any emissions above the level of the allocations to 
be offset by emission decreases; and imposing strict penalties for 
sources that contribute to a state's exceedance of its budget plus 
variability limit. In addition, it is important to note that nothing in 
this proposed rule allows sources to violate their title V permit or 
any other federal, state, or local emissions or air quality 
requirements.
    In addition, it is important to note that CAA section 110(a)(2)(d), 
which addresses transport of criteria pollutants between states, is 
only one of many provisions of the CAA that provide EPA, states, and 
local governments with authorities to reduce exposure to ozone in 
communities. These legal authorities work together to reduce exposure 
to these pollutants in communities, including for minority, low-income, 
and tribal populations, and provide substantial health benefits to both 
the general public and sensitive sub-populations.
    The EPA has informed communities of our development of this 
proposal through an Environmental Justice community call (January 28, 
2015) and a National Tribal Air Association--EPA air policy conference 
call (January 29, 2015). The EPA plans to further consult with 
communities early in the process of developing this regulation to 
permit them to have meaningful and timely input into its development. 
The EPA will facilitate this engagement before finalizing this proposed 
rule.

K. Determinations Under Section 307(b)(1) and (d)

    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.''
    The EPA proposes to find that any final action related to this 
rulemaking is ``nationally applicable'' or of ``nationwide scope and 
effect'' within the meaning of section 307(b)(1). Through this 
rulemaking action, the EPA interprets section 110 of the CAA, a 
provision which has nationwide applicability. In addition, the proposed 
rule would apply to 23 States. The proposed rule is also based on a 
common core of factual findings and analyses concerning the transport 
of pollutants between the different states subject to it. For these 
reasons, the Administrator proposes to determine that any final action 
related to the proposed rule is of nationwide scope and effect for 
purposes of section 307(b)(1). Thus, pursuant to section 307(b) any 
petitions for review of any final actions regarding the rulemaking 
would be filed in the Court of Appeals for the District of Columbia 
Circuit within 60 days from the date any final action is published in 
the Federal Register.
    In addition, pursuant to sections 307(d)(1)(C) and 307(d)(1)(V) of 
the CAA, the Administrator proposes to determine that this action is 
subject to the provisions of section 307(d). CAA section 307(d)(1)(B) 
provides that section 307(d) applies to, among other things, to ``the 
promulgation or revision of an implementation plan by the Administrator 
under CAA section 110(c).'' 42 U.S.C. 7407(d)(1)(B). Under section 
307(d)(1)(V), the provisions of section 307(d) also apply to ``such 
other actions as the Administrator may

[[Page 75764]]

determine.'' 42 U.S.C. 7407(d)(1)(V). The Agency has complied with 
procedural requirements of CAA section 307(d) during the course of this 
rulemaking.

List of Subjects in 40 CFR Parts 52, 78, and 97.

    Environmental protection, Administrative practice and procedure, 
Air pollution control, Electric power plants, Incorporation by 
reference, Nitrogen oxides, Reporting and recordkeeping requirements.

    Dated: November 16, 2015.
Gina McCarthy,
Administrator.
    For the reasons stated in the preamble, parts 52, 78, and 97 of 
chapter I of title 40 of the Code of Federal Regulations are proposed 
to be amended as follows:

PART 52--APPROVAL AND PROMULGATION OF IMPLEMENTATION PLANS

0
1. The authority citation for part 52 continues to read as follows:

    Authority: 42 U.S.C. 7401 et seq.


Sec. Sec.  52.38, 52.39, 52.54, 52.55, 52.184, 52.540, 52.584, 52.585, 
52.731, 52.732, 52.789, 52.790, 52.840, 52.841, 52.882, 52.883, 52.940, 
52.941, 52.984, 52.1084, 52.1085, 52.1186, 52.1187, 52.1240, 52.1241, 
52.1284, 52.1326, 52.1327, 52.1428, 52.1429, 52.1584, 52.1585, 52.1684, 
52.1685, 52.1784, 52.1785, 52.1882, 52.1883, 52.1930, 52.2040, 52.2041, 
52.2140, 52.2141, 52.2240, 52.2241, 52.2283, 52.2284, 52.2440, 52.2441, 
52.2540, 52.2541, 52.2587, and 52.2588  [Amended]

0
2. Sections 52.38, 52.39, 52.54, 52.55, 52.184, 52.540, 52.584, 52.585, 
52.731, 52.732, 52.789, 52.790, 52.840, 52.841, 52.882, 52.883, 52.940, 
52.941, 52.984, 52.1084, 52.1085, 52.1186, 52.1187, 52.1240, 52.1241, 
52.1284, 52.1326, 52.1327, 52.1428, 52.1429, 52.1584, 52.1585, 52.1684, 
52.1685, 52.1784, 52.1785, 52.1882, 52.1883, 52.1930, 52.2040, 52.2041, 
52.2140, 52.2141, 52.2240, 52.2241, 52.2283, 52.2284, 52.2440, 52.2441, 
52.2540, 52.2541, 52.2587, and 52.2588 are amended by removing ``TR 
Federal Implementation Plan'' wherever it appears and adding in its 
place ``CSAPR Federal Implementation Plan'', by removing ``TR 
NOX'' wherever it appears and adding in its place ``CSAPR 
NOX'', and by removing ``TR SO2'' wherever it 
appears and adding in its place ``CSAPR SO2''.


Sec. Sec.  52.540, 52.840, 52.841, 52.882, 52.883, 52.984, 52.1186, 
52.1187, 52.1240, 52.1241, 52.1284, 52.1428, 52.1429, 52.1684, 52.1685, 
52.1784, 52.1785, 52.2140, 52.2141, 52.2283, 52.2284, 52.2587, and 
52.2588  [Amended]

0
3. Sections 52.540, 52.840, 52.841, 52.882, 52.883, 52.984, 52.1186, 
52.1187, 52.1240, 52.1241, 52.1284, 52.1428, 52.1429, 52.1684, 52.1685, 
52.1784, 52.1785, 52.2140, 52.2141, 52.2283, 52.2284, 52.2587, and 
52.2588 are amended by removing ``correcting in part the SIP's 
deficiency that is the basis for the CSAPR Federal Implementation 
Plan'' wherever it appears and adding in its place ``correcting the 
SIP's deficiency that is the basis for the CSAPR Federal Implementation 
Plan''.

Subpart A--General Provisions


Sec.  52.36  [Amended]

0
4. Section 52.36 is amended in paragraph (e)(1)(i) by removing 
``paragraphs (a) through (e)'' and adding in its place ``paragraphs (a) 
through (c)''.
0
5. Section 52.38 is amended by:
0
a. Revising the section heading;
0
b. In paragraph (a)(2), by removing ``the sources in the following 
States'' and adding in its place ``sources in each of the following 
States'';
0
c. In paragraph (a)(3)(ii), by adding ``the'' before ``CSAPR 
NOX Annual trading budget'';
0
d. In paragraph (a)(3)(v)(A), by removing ``paragraph'' and adding in 
its place ``paragraphs'';
0
e. In the table in paragraph (a)(4)(i)(B), by removing ``annual'' and 
adding in its place ``Annual'', and by removing ``administrator'' and 
adding in its place ``the Administrator'';
0
f. In paragraph (a)(4)(ii), by removing ``for the first control 
period'' and adding in its place ``applicable to the first control 
period'';
0
g. In paragraph (a)(5) introductory text, by removing ``in whole or in 
part, as appropriate,'', and by removing ``paragraphs (a)(1) through 
(4) of this section'' and adding in its place ``paragraphs (a)(1) 
through (4) of this section with regard to sources in the State but not 
sources in any Indian country within the borders of the State'';
0
h. In the table in paragraph (a)(5)(i)(B), by removing ``annual'' and 
adding in its place ``Annual'', and by removing ``administrator'' and 
adding in its place ``the Administrator'';
0
i. In paragraph (a)(5)(iv), by adding after ``97.412(b)'' the words 
``of this chapter'';
0
j. In paragraph (a)(5)(v), by removing ``97.425, and'' and adding in 
its place ``and 97.425 of this chapter and'', and by adding after 
``other provisions'' the words ``of subpart AAAAA of part 97 of this 
chapter'';
0
k. In paragraph (a)(5)(vi), by removing ``paragraphs (a)(5)(i) and 
(ii)'' and adding in its place ``paragraph (a)(5)(i)'';
0
l. In paragraph (a)(6), by removing ``in whole or in part, as 
appropriate,'', by removing ``described in paragraphs (a)(1) through 
(5)'' and adding in its place ``set forth in paragraphs (a)(1) through 
(4)'', and by removing ``the sources'' and adding in its place 
``sources'';
0
m. In paragraph (a)(7), by removing ``a State'' and adding in its place 
``the State'';
0
n. In paragraph (b)(1), by adding ``subpart BBBBB of'' before ``part 
97'';
0
o. Revising paragraph (b)(2);
0
p. Redesignating paragraph (b)(3) as paragraph (b)(3)(i); in 
redesignated paragraph (b)(3)(i), by further redesignating paragraphs 
(i) through (v) as paragraphs (A) through (E); and in redesignated 
paragraph (b)(3)(i)(E), by further redesignating paragraphs (A) and (B) 
as paragraphs (1) and (2);
0
q. In newly redesignated paragraph (b)(3)(i) introductory text, by 
removing ``paragraph (b)(2)'' and adding in its place ``paragraph 
(b)(2)(i) or (ii)'';
0
r. In newly redesignated paragraph (b)(3)(i)(B), by adding ``the'' 
before ``CSAPR NOX Ozone Season trading budget'';
0
s. In newly redesignated paragraph (b)(3)(i)(E)(1), by removing 
``paragraph (b)(3)(i) through (iv)'' and adding in its place 
``paragraphs (b)(3)(i)(A) through (D)'';
0
t. In newly redesignated paragraph (b)(3)(i)(E)(2), by removing 
``paragraph (b)(3)(v)(A)'' and adding in its place ``paragraph 
(b)(3)(i)(E)(1)'';
0
u. Adding a new paragraph (b)(3)(ii);
0
v. In paragraph (b)(4) introductory text, by removing ``paragraph 
(b)(2)'' and adding in its place ``paragraph (b)(2)(ii) or (iii)'';
0
w. In paragraph (b)(4)(i), by removing ``Sec. Sec.  '' and adding in 
its place ``Sec.  '', by adding after ``chapter'' the words ``with 
regard to the State'', and by removing ``whenever'' and adding in its 
place ``wherever'';
0
x. Revising paragraph (b)(4)(ii) introductory text;
0
y. In paragraph (b)(4)(ii)(B), by revising the table;
0
z. In paragraph (b)(5) introductory text, by removing ``paragraph 
(b)(2)'' and adding in its place ``paragraph (b)(2)(ii) or (iii)'', by 
removing ``in whole or in part, as appropriate,'', and by removing 
``paragraphs (b)(1) through (4) of this section'' and adding in its 
place ``paragraphs (b)(1) through (4) of this section with regard to 
sources in the State but not sources in any Indian country within the 
borders of the State'';
0
aa. In paragraph (b)(5)(i), by removing ``Sec. Sec.  '' and adding in 
its place ``Sec.  '', by

[[Page 75765]]

adding after ``chapter'' the words ``with regard to the State'', and by 
removing ``whenever'' and adding in its place ``wherever'';
0
bb. Revising paragraph (b)(5)(ii) introductory text;
0
cc. In paragraph (b)(5)(ii)(B), by removing ``auction of CSAPR'' and 
adding in its place ``auctions of CSAPR'', and by revising the table;
0
dd. In paragraph (b)(5)(ii)(C), by removing ``any control period'' and 
adding in its place ``any such control period'';
0
ee. In paragraph (b)(5)(iii), by adding a comma after ``May adopt'';
0
ff. In paragraph (b)(5)(v), by adding after ``97.512(b)'' the words 
``of this chapter'';
0
gg. In paragraph (b)(5)(vi), by removing ``97.525, and'' and adding in 
its place ``and 97.525 of this chapter and'', and by adding after 
``other provisions'' the words ``of subpart BBBBB of part 97 of this 
chapter'';
0
hh. In paragraph (b)(5)(vii), by removing ``paragraph (b)(5)(i) through 
(v)'' and adding in its place ``paragraph (b)(5)(i) or (ii) of this 
section and paragraphs (b)(5)(iii) through (v)'', by removing 
``paragraphs (5)(ii)(B) and (C)'' and adding in its place ``paragraphs 
(b)(5)(ii)(B) and (C)'', and by removing ``paragraphs (b)(5)(ii) and 
(iii)'' and adding in its place ``paragraph (b)(5)(i) or (ii)'';
0
ii. In paragraph (b)(6), by removing ``in whole or in part, as 
appropriate,'', and by removing ``paragraphs (b)(1) through (5)'' and 
adding in its place ``paragraphs (b)(1) through (4)''; and
0
jj. In paragraph (b)(7), by removing ``a State'' and adding in its 
place ``the State''.
    The additions and revisions read as follows:


Sec.  52.38  What are the requirements of the Federal Implementation 
Plans (FIPs) for the Cross-State Air Pollution Rule (CSAPR) relating to 
emissions of nitrogen oxides?

* * * * *
    (b) * * *
    (2) The provisions of subpart BBBBB of part 97 of this chapter 
apply to sources in each of the following States and Indian country 
located within the borders of such States with regard to emissions in 
the following years:
    (i) With regard to emissions in 2015 and 2016 only, Florida and 
South Carolina;
    (ii) With regard to emissions in 2015 and each subsequent year, 
Alabama, Arkansas, Georgia, Illinois, Indiana, Iowa, Kentucky, 
Louisiana, Maryland, Michigan, Mississippi, Missouri, New Jersey, New 
York, North Carolina, Ohio, Oklahoma, Pennsylvania, Tennessee, Texas, 
Virginia, West Virginia, and Wisconsin; and
    (iii) With regard to emissions in 2017 and each subsequent year, 
Kansas.
    (3) * * *
    (ii) Notwithstanding the provisions of paragraph (b)(1) of this 
section, a State other than Georgia listed in paragraph (b)(2)(ii) or 
(iii) of this section may adopt and include in a SIP revision, and the 
Administrator will approve, as CSAPR NOX Ozone Season 
allowance allocation provisions replacing the provisions in Sec.  
97.511(a) of this chapter with regard to the State and the control 
period in 2018, a list of CSAPR NOX Ozone Season units and 
the amount of CSAPR NOX Ozone Season allowances allocated to 
each unit on such list, provided that the list of units and allocations 
meets the following requirements:
    (A) All of the units on the list must be units that are in the 
State and commenced commercial operation before January 1, 2015;
    (B) The total amount of CSAPR NOX Ozone Season allowance 
allocations on the list must not exceed the amount, under Sec.  
97.510(a) of this chapter for the State and the control period in 2018, 
of the CSAPR NOX Ozone Season trading budget minus the sum 
of the new unit set-aside and Indian country new unit set-aside;
    (C) The list must be submitted electronically in a format specified 
by the Administrator; and
    (D) The SIP revision must not provide for any change in the units 
and allocations on the list after approval of the SIP revision by the 
Administrator and must not provide for any change in any allocation 
determined and recorded by the Administrator under subpart BBBBB of 
part 97 of this chapter;
    (E) Provided that:
    (1) By November 15, 2016, the State must notify the Administrator 
electronically in a format specified by the Administrator of the 
State's intent to submit to the Administrator a complete SIP revision 
meeting the requirements of paragraphs (b)(3)(ii)(A) through (D) of 
this section by April 1, 2017; and
    (2) The State must submit to the Administrator a complete SIP 
revision described in paragraph (b)(3)(ii)(E)(1) of this section by 
April 1, 2017.
    (4) * * *
    (ii) The State may adopt, as CSAPR NOX Ozone Season 
allowance allocation or auction provisions replacing the provisions in 
Sec. Sec.  97.511(a) and (b)(1) and 97.512(a) of this chapter with 
regard to the State and the control period in 2017 or any subsequent 
year or, for Kansas, 2019 or any subsequent year, any methodology under 
which the State or the permitting authority allocates or auctions CSAPR 
NOX Ozone Season allowances and may adopt, in addition to 
the definitions in Sec.  97.502 of this chapter, one or more 
definitions that shall apply only to terms as used in the adopted CSAPR 
NOX Ozone Season allowance allocation or auction provisions, 
if such methodology--
* * * * *
    (B) * * *

------------------------------------------------------------------------
  Year of the control period for which      Deadline for submission of
 CSAPR NOX Ozone Season allowances are    allocations or auction results
         allocated or auctioned                to the Administrator
------------------------------------------------------------------------
2017...................................  November 1, 2016.
2018...................................  November 1, 2016.
2019...................................  June 1, 2018.
2020...................................  June 1, 2018.
2021...................................  June 1, 2019.
2022...................................  June 1, 2019.
2023 and any year thereafter...........  June 1 of the fourth year
                                          before the year of the control
                                          period.
------------------------------------------------------------------------

* * * * *
    (5) * * *
    (ii) May adopt, as CSAPR NOX Ozone Season allowance 
allocation provisions replacing the provisions in Sec. Sec.  97.511(a) 
and (b)(1) and 97.512(a) of this chapter with regard to the State and 
the control period in 2019 or any subsequent year or, for Georgia, 2017 
or any subsequent year, any methodology under which the State or the 
permitting authority allocates or auctions CSAPR NOX Ozone 
Season allowances and that--
* * * * *
    (B) * * *

[[Page 75766]]



------------------------------------------------------------------------
  Year of the control period for which      Deadline for submission of
 CSAPR NOX Ozone Season allowances are    allocations or auction results
         allocated or auctioned                to the Administrator
------------------------------------------------------------------------
2017...................................  November 1, 2016.
2018...................................  November 1, 2016.
2019...................................  June 1, 2018.
2020...................................  June 1, 2018.
2021...................................  June 1, 2019.
2022...................................  June 1, 2019.
2023 and any year thereafter...........  June 1 of the fourth year
                                          before the year of the control
                                          period.
------------------------------------------------------------------------

* * * * *


Sec.  52.39  What are the requirements of the Federal Implementation 
Plans (FIPs) for the Cross-State Air Pollution Rule (CSAPR) relating to 
emissions of sulfur dioxide?

0
6. Section 52.39 is amended by:
0
a. Revising the section heading as set forth above;
0
b. In paragraph (d)(2), by adding ``the'' before ``CSAPR SO2 
Group 1 trading budget'';
0
c. In paragraph (d)(5)(i), by removing ``paragraph (d)(1) through (4)'' 
and adding in its place ``paragraphs (d)(1) through (4)'';
0
d. In paragraph (e)(1) introductory text, by adding after ``with regard 
to'' the words ``the State and'';
0
e. In paragraph (e)(1)(ii), by removing ``auction of CSAPR'' and adding 
in its place ``auctions of CSAPR'', and by removing in the table 
``administrator'' and adding in its place ``the Administrator'';
0
f. In paragraph (f) introductory text, by removing ``in whole or in 
part, as appropriate,'', and by removing ``paragraphs (a), (b), (d), 
and (e) of this section'' and adding in its place ``paragraphs (a), 
(b), (d), and (e) of this section with regard to sources in the State 
but not sources in any Indian country within the borders of the 
State'';
0
g. In paragraph (f)(1) introductory text, by adding after ``with regard 
to'' the words ``the State and'', and by removing ``and any subsequent 
year'' and adding in its place ``or any subsequent year'';
0
h. In paragraph (f)(1)(i), by removing ``for such control period'' and 
adding in its place ``for any such control period'';
0
i. In paragraph (f)(1)(ii), by removing ``auction of CSAPR'' and adding 
in its place ``auctions of CSAPR'', and by removing in the table 
``administrator'' and adding in its place ``the Administrator'';
0
j. In paragraph (f)(1)(iv), by removing ``paragraphs (f)(2)(ii) and 
(iii)'' and adding in its place ``paragraphs (f)(1)(ii) and (iii)'';
0
k. In paragraph (f)(4), by adding after ``97.612(b)'' the words ``of 
this chapter'';
0
l. In paragraph (f)(5), by removing ``97.625, and'' and adding in its 
place ``and 97.625 of this chapter and'', and by adding after ``other 
provisions'' the words ``of subpart CCCCC of part 97 of this chapter'';
0
m. In paragraph (f)(6), by removing ``hold an auction under paragraph 
(f)(1)(ii) and (iii)'' and adding in its place ``hold an auction under 
paragraph (f)(1)'';
0
n. In paragraph (g) introductory text, by adding after ``with regard 
to'' the words ``the State and'';
0
o. In paragraph (g)(2), by adding ``the'' before ``CSAPR SO2 
Group 2 trading budget'';
0
p. In paragraph (g)(5)(i), by removing ``paragraph (g)(1) through (4)'' 
and adding in its place ``paragraphs (g)(1) through (4)'';
0
q. In paragraph (h)(1) introductory text, by adding after ``with regard 
to'' the words ``the State and'', and by removing ``and any subsequent 
year'' and adding in its place ``or any subsequent year'';
0
r. In paragraph (h)(1)(ii), by removing ``auction of CSAPR'' and adding 
in its place ``auctions of CSAPR'', and by removing in the table 
``administrator'' and adding in its place ``the Administrator'';
0
s. In paragraph (h)(2), by removing ``hold an auction under paragraph 
(h)(1)(ii) and (iii)'' and adding in its place ``hold an auction under 
paragraph (h)(1)'';
0
t. In paragraph (i) introductory text, by removing ``in whole or in 
part, as appropriate,'', and by removing ``paragraphs (a), (c), (g), 
and (h) of this section'' and adding in its place ``paragraphs (a), 
(c), (g), and (h) of this section with regard to sources in the State 
but not sources in any Indian country within the borders of the 
State'';
0
u. In paragraph (i)(1) introductory text, by adding after ``with regard 
to'' the words ``the State and'', and by removing ``and any subsequent 
year'' and adding in its place ``or any subsequent year'';
0
v. In paragraph (i)(1)(ii), by removing ``auction of CSAPR'' and adding 
in its place ``auctions of CSAPR'', and by removing in the table 
``administrator'' and adding in its place ``the Administrator'';
0
w. In paragraph (i)(4), by adding after ``97.712(b)'' the words ``of 
this chapter'';
0
x. In paragraph (i)(5), by removing ``97.725, and'' and adding in its 
place ``and 97.725 of this chapter and'', and by adding after ``other 
provisions'' the words ``of subpart DDDDD of part 97 of this chapter'';
0
y. In paragraph (i)(6), by removing ``hold an auction under paragraphs 
(i)(1)(ii) and (iii)'' and adding in its place ``hold an auction under 
paragraph (i)(1)'';
0
z. In paragraph (j), by removing ``in whole or in part, as 
appropriate,'', by adding after ``CSAPR Federal Implementation Plan'' 
the words ``set forth in paragraphs (a), (b), (d), and (e) of this 
section or paragraphs (a), (c), (g), and (h) of this section, as 
applicable'', and by removing ``paragraph (b) and (c)'' and adding in 
its place ``paragraph (b) or (c)''; and
0
aa. In paragraph (k), by removing ``a State'' and adding in its place 
``the State''.

Subpart B--Alabama


Sec.  52.54  [Amended]

0
7. Section 52.54 is amended in paragraph (b)(2) by removing ``the'' 
before ``Alabama's SIP revision''.

Subpart K--Florida

0
8. Section 52.540 is amended by adding paragraph (c) to read as 
follows:


Sec.  52.540  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of nitrogen oxides?

* * * * *
    (c) Notwithstanding paragraph (a) of this section, no source or 
unit located in the State of Florida or Indian country within the 
borders of the State shall be required under paragraph (a) of this 
section to comply with the requirements set forth under the CSAPR 
NOX Ozone Season Trading Program in subpart BBBBB of part 97 
of this chapter with regard to emissions after 2016.

Subpart R--Kansas

0
9. Section 52.882 is amended by revising paragraph (b) to read as 
follows:

[[Page 75767]]

Sec.  52.882  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of nitrogen oxides?

* * * * *
    (b)(1) The owner and operator of each source and each unit located 
in the State of Kansas and Indian country within the borders of the 
State and for which requirements are set forth under the CSAPR 
NOX Ozone Season Trading Program in subpart BBBBB of part 97 
of this chapter must comply with such requirements. The obligation to 
comply with such requirements with regard to sources and units in the 
State will be eliminated by the promulgation of an approval by the 
Administrator of a revision to Kansas' State Implementation Plan (SIP) 
as correcting the SIP's deficiency that is the basis for the CSAPR 
Federal Implementation Plan under Sec.  52.38(b), except to the extent 
the Administrator's approval is partial or conditional. The obligation 
to comply with such requirements with regard to sources and units 
located in Indian country within the borders of the State will not be 
eliminated by the promulgation of an approval by the Administrator of a 
revision to Kansas' SIP.
    (2) Notwithstanding the provisions of paragraph (b)(1) of this 
section, if, at the time of the approval of Kansas' SIP revision 
described in paragraph (b)(1) of this section, the Administrator has 
already started recording any allocations of CSAPR NOX Ozone 
Season allowances under subpart BBBBB of part 97 of this chapter to 
units in the State for a control period in any year, the provisions of 
subpart BBBBB of part 97 of this chapter authorizing the Administrator 
to complete the allocation and recordation of CSAPR NOX 
Ozone Season allowances to units in the State for each such control 
period shall continue to apply, unless provided otherwise by such 
approval of the State's SIP revision.

Subpart X--Michigan


Sec.  52.1187  [Amended]

0
10. Section 52.1187 is amended in paragraph (c)(2) by removing 
``Maryland's SIP revision'' and adding in its place ``Michigan's SIP 
revision''.

Subpart PP--South Carolina

0
11. Section 52.2140 is amended by adding paragraph (b)(3) to read as 
follows:


Sec.  52.2140  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of nitrogen oxides?

* * * * *
    (b) * * *
    (3) Notwithstanding paragraph (b)(1) of this section, no source or 
unit located in the State of South Carolina or Indian country within 
the borders of the State shall be required under paragraph (b)(1) of 
this section to comply with the requirements set forth under the CSAPR 
NOX Ozone Season Trading Program in subpart BBBBB of part 97 
of this chapter with regard to emissions after 2016.

PART 78--APPEAL PROCEDURES

0
12. The authority citation for part 78 continues to read as follows:

    Authority: 42 U.S.C. 7401, 7403, 7410, 7411, 7426, 7601, and 
7651, et seq.


Sec. Sec.  78.1 and 78.4  [Amended]

0
13. Sections 78.1 and 78.4 are amended by removing ``TR 
NOX'' wherever it appears and adding in its place ``CSAPR 
NOX'', and by removing ``TR SO2'' wherever it 
appears and adding in its place ``CSAPR SO2''.
0
14. Section 78.1 is amended by:
0
a. In paragraph (a)(1), by adding after ``part 97 of this chapter'' the 
words ``or State regulations approved under Sec.  52.38(a)(4) or (5) or 
(b)(4) or (5) of this chapter or Sec.  52.39(e), (f), (h), or (i) of 
this chapter'', and by adding a new third sentence at the end of the 
paragraph;
0
b. Adding paragraph (b)(14)(viii); and
0
c. In paragraphs (b)(16)(ii), (iii), and (v), by removing 
``SO2 Group 1'' and adding in its place ``SO2 
Group 2''.
    The additions read as follows:


Sec.  78.1  Purpose and scope.

    (a)(1) * * * All references in paragraph (b) of this section and in 
Sec.  78.3 to subpart AAAAA of part 97 of this chapter, subpart BBBBB 
of part 97 of this chapter, subpart CCCCC of part 97 of this chapter, 
and subpart DDDDD of part 97 of this chapter shall be read to include 
the comparable provisions in State regulations approved under Sec.  
52.38(a)(4) or (5) of this chapter, Sec.  52.38(b)(4) or (5) of this 
chapter, Sec.  52.39(e) or (f) of this chapter, and Sec.  52.39(h) or 
(i) of this chapter, respectively.
* * * * *
    (b) * * *
    (14) * * *
    (viii) The determination of the tonnage equivalent of a CSAPR 
NOX Ozone Season allowance under Sec.  97.524(f) of this 
chapter.
* * * * *


Sec.  78.4  [Amended]

0
15. Section 78.4 is amended in paragraph (a)(1)(i) by removing ``a 
affected'' and adding in its place ``an affected'', by adding ``or'' 
before ``CSAPR SO2 Group 2 unit'', and by removing ``, or a 
unit for which a TR opt-in application is submitted and not 
withdrawn''.

PART 97--FEDERAL NOX BUDGET TRADING PROGRAM, CAIR NOX AND SO2 
TRADING PROGRAMS, AND CSAPR NOX AND SO2 TRADING PROGRAMS

0
16. The heading of part 97 is revised to read as set forth above.
0
17. The authority citation for part 97 continues to read as follows:

    Authority: 42 U.S.C. 7401, 7403, 7410, 7426, 7601, and 7651, et 
seq.


Sec. Sec.  97.401 through 97.735  [Amended]

0
18. Sections 97.401 through 97.735 are amended by removing ``Transport 
Rule (TR)'' wherever it appears and adding in its place ``Cross-State 
Air Pollution Rule (CSAPR)'', by removing ``TR NOX'' 
wherever it appears and adding in its place ``CSAPR NOX'', 
and by removing ``TR SO2'' wherever it appears and adding in 
its place ``CSAPR SO2''.

Subpart AAAAA--CSAPR NOX Annual Trading Program

0
19. The heading of subpart AAAAA of part 97 is revised to read as set 
forth above.


Sec.  97.402  [Amended]

0
20. Section 97.402 is amended by:
0
a. Relocating all definitions beginning with ``CSAPR'' to their 
alphabetical locations in the list of definitions;
0
b. In the definition of ``Cogeneration system'', by removing ``steam 
turbine generator'' and adding in its place ``generator'';
0
c. In the definition of ``Commence commercial operation'', in paragraph 
(2) introductory text, by adding after ``defined in'' the word ``the'';
0
d. In the definition of ``CSAPR NOX Annual allowances held or hold TR 
NO4 Annual allowances'', by removing ``TR NO4'' and adding in its place 
``CSAPR NOX'';
0
e. In the definition of ``CSAPR SO2 Group 2 Trading Program'', by 
removing ``52.39(a)'' and adding in its place ``Sec.  52.39(a)'';
0
f. In the definition of ``Fossil fuel'', by removing ``Sec. Sec.  '' 
and adding in its place Sec.  '';
0
g. In the definition of ``Owner'', by removing the paragraph designator 
``3)'' and adding in its place the paragraph designator ``(3)''; and

[[Page 75768]]

0
h. In the definition of ``Sequential use of energy'', in paragraph (2), 
by adding after ``from'' the word ``a''.


Sec.  97.404  [Amended]

0
21. Section 97.404 is amended by:
0
a. In paragraph (b)(2)(ii), by removing ``paragraph (b)(1)(i)'' and 
adding in its place ``paragraph (b)(2)(i)''; and
0
b. Italicizing the headings of paragraphs (c)(1) and (2).


Sec.  97.406  [Amended]

0
22. Section 97.406 is amended by:
0
a. Italicizing the headings of paragraphs (c)(1) and (2) and (c)(4) 
through (7); and
0
b. In the heading of paragraph (c)(4), by adding ``CSAPR NOX 
Annual'' before ``allowances.''


Sec.  97.410  State NOX Annual trading budgets, new unit set-asides, 
Indian country new unit set-asides, and variability limits.

0
23. Section 97.410 is amended by:
0
a. Revising the heading as set forth above;
0
b. Removing ``NOX annual trading budget'' wherever it 
appears and adding in its place ``NOX Annual trading 
budget'';
0
c. Removing ``NOX annual new unit set-aside'' wherever it 
appears and adding in its place ``new unit set-aside'';
0
d. Removing ``NOX annual Indian country new unit set-aside'' 
wherever it appears and adding in its place ``Indian country new unit 
set-aside'';
0
e. Removing ``NOX annual variability limit'' wherever it 
appears and adding in its place ``variability limit'';
0
f. In paragraph (a) introductory text, by removing ``new unit-set 
aside'' and adding in its place ``new unit set-aside'';
0
g. Adding and reserving paragraphs (a)(11)(vi) and (a)(16)(vi); and
0
h. In paragraph (c), by adding after ``Each'' the word ``State'', by 
removing ``identified'', and by removing ``set aside'' wherever it 
appears and adding in its place ``set-aside''.


Sec.  97.411  [Amended]

0
24. Section 97.411 is amended by:
0
a. Italicizing the headings of paragraphs (b)(1) and (2);
0
b. In paragraphs (b)(1)(iii) and (b)(2)(iii), by adding after 
``November 30 of'' the word ``the'';
0
c. In paragraph (c)(1)(ii), by removing ``Sec.  52.38(a)(3), (4), or 
(5)'' and adding in its place ``Sec.  52.38(a)(4) or (5)'';
0
d. In paragraph (c)(5)(i)(B), by adding after ``Sec.  52.38(a)(4) or 
(5)'' the words ``of this chapter'';
0
e. In paragraph (c)(5)(ii) introductory text, by removing ``of this 
paragraph'' and adding in its place ``of this section'';
0
f. In paragraph (c)(5)(ii)(B), by adding after ``Sec.  52.38(a)(4) or 
(5)'' the words ``of this chapter''; and
0
g. In paragraph (c)(5)(iii), by removing ``of this paragraph'' and 
adding in its place ``of this section''.


Sec.  97.412  [Amended]

0
25. Section 97.412 is amended by:
0
a. In paragraph (a)(2), by removing ``Sec. Sec.  '' and adding in its 
place ``Sec.  '';
0
b. In paragraph (a)(4)(i), by removing ``paragraph (a)(1)(i) through 
(iii)'' and adding in its place ``paragraphs (a)(1)(i) through (iii)'';
0
c. In paragraph (a)(4)(ii), by adding after ``paragraph (a)(4)(i)'' the 
words ``of this section'';
0
d. In paragraph (a)(9)(i), by adding after ``November 30 of'' the word 
``the'';
0
e. In paragraph (b)(4)(ii), by adding after ``paragraph (b)(4)(i)'' the 
words ``of this section'';
0
f. In paragraph (b)(9)(i), by adding after ``November 30 of'' the word 
``the''; and
0
g. In paragraph (b)(10)(ii), by adding after ``Sec.  52.38(a)(4) or 
(5)'' the words ``of this chapter''.


Sec.  97.421  [Amended]

0
26. Section 97.421 is amended by:
0
a. In paragraphs (c), (d), and (e), by removing ``period'' and adding 
in its place ``periods''; and
0
b. In paragraph (j), by removing ``the date'' and adding in its place 
``the date 15 days after the date''.


Sec.  97.425  [Amended]

0
27. Section 97.425 is amended by:
0
a. In paragraph (b)(2)(iii) introductory text, by removing ``paragraph 
(b)(1)(i)'' and adding in its place ``paragraph (b)(1)(ii)'';
0
b. In paragraph (b)(2)(iii)(B), by adding ``the calculations 
incorporating'' before ``any adjustments'';
0
c. In paragraph (b)(4)(i), by removing ``the'' before ``them''; and
0
d. In paragraph (b)(6)(iii)(B), by removing after ``appropriate'' the 
word ``at''.


Sec.  97.426  [Amended]

0
28. Section 97.426 is amended in paragraph (b) by removing ``97.427, or 
97.428'' and adding in its place ``Sec.  97.427, or Sec.  97.428''.


Sec.  97.428  [Amended]

0
29. Section 97.428 is amended in paragraph (b) by removing ``paragraph 
(a)(1)'' and adding in its place ``paragraph (a)''.


Sec.  97.430  [Amended]

0
30. Section 97.430 is amended by:
0
a. In paragraph (b) introductory text, by adding after ``operator'' the 
words ``of a CSAPR NOX Annual unit'', by adding ``the later 
of'' before ``the following dates'' each time it appears, and by 
removing the final period and adding in its place a colon;
0
b. Removing paragraphs (b)(1) and (b)(2) introductory text;
0
c. Redesignating paragraphs (b)(2)(i) and (ii) as paragraphs (b)(1) and 
(2);
0
d. In newly redesignated paragraph (b)(2), by removing the final 
semicolon and adding in its place a period;
0
e. In paragraph (b)(3) introductory text, by removing ``Sec. Sec.  '' 
and adding in its place ``Sec.  ''; and
0
f. In paragraph (b)(3)(iii), by adding after ``Sec.  75.66'' the words 
``of this chapter''.


Sec.  97.431  [Amended]

0
31. Section 97.431 is amended by:
0
a. Italicizing the headings of paragraphs (d)(1) through (3), (d)(3)(i) 
through (iv), (d)(3)(iv)(A) through (D), and (d)(3)(v); and
0
b. In paragraph (d)(3) introductory text, by removing ``Sec. Sec.  '' 
and adding in its place ``Sec.  ''.


Sec.  97.434  [Amended]

0
32. Section 97.434 is amended by:
0
a. In paragraph (b), by adding ``the'' before ``requirements'';
0
b. In paragraph (d)(1) introductory text, by removing ``the CSAPR'' and 
adding in its place ``a CSAPR'', and by adding ``the later of'' before 
the final colon;
0
c. In paragraph (d)(1)(i), by removing ``For a unit that commences 
commercial operation before July 1, 2014, the'' and adding in its place 
``The''; and
0
d. In paragraph (d)(1)(ii), by removing ``For a unit that commences 
commercial operation on or after July 1, 2014, the'' and adding in its 
place ``The'', and by removing ``, unless that quarter is the third or 
fourth quarter of 2014, in which case reporting shall commence in the 
quarter covering January 1, 2015 through March 31, 2015''.

Subpart BBBBB--CSAPR NOX Ozone Season Trading Program

0
33. The heading of subpart BBBBB of part 97 is revised to read as set 
forth above.
0
34. Section 97.502 is amended by:
0
a. Relocating all definitions beginning with ``CSAPR'' to their 
alphabetical locations in the list of definitions;
0
b. In the definition of ``Cogeneration system'', by removing ``steam 
turbine generator'' and adding in its place ``generator'';
0
c. In the definition of ``Commence commercial operation'', in paragraph 
(2) introductory text, by adding after ``defined in'' the word ``the'';

[[Page 75769]]

0
d. Revising the definitions of ``CSAPR NOX Ozone Season allowance'' and 
``CSAPR NOX Ozone Season emissions limitation'';
0
e. In the definitions of ``CSAPR SO2 Group 1 Trading Program'' and 
``CSAPR SO2 Group 2 Trading Program'', by removing ``52.39(a)'' and 
adding in in its place ``Sec.  52.39(a)'';
0
f. In the definition of ``Fossil fuel'', by removing ``Sec. Sec. '' and 
adding in its place Sec. '';
0
g. In the definition of ``Sequential use of energy'', in paragraph (2), 
by adding after ``from'' the word ``a''; and
0
h. Adding, in alphabetical order, a definition of ``Tonnage 
equivalent.''
    The additions and revisions read as follows:


Sec.  97.502  Definitions.

* * * * *
    CSAPR NOX Ozone Season allowance means a limited authorization 
under the CSAPR NOX Ozone Season Trading Program issued and 
allocated or auctioned to a CSAPR NOX Ozone Season unit in a 
State (or Indian country within the borders of such State) by the 
Administrator under this subpart, or by the State or permitting 
authority under a SIP revision approved by the Administrator under 
Sec.  52.38(b)(3), (4), or (5) of this chapter, to emit either:
    (1) One ton of NOX in the State (or Indian country 
located within the borders of such State) during a control period of 
the specified calendar year for which the authorization is allocated or 
auctioned; or
    (2) As determined under Sec.  97.524(f), up to one ton of 
NOX in another State (or Indian country located within the 
borders of another State) or during a control period after the 
specified calendar year for which the authorization is allocated or 
auctioned.
* * * * *
    CSAPR NOX Ozone Season emissions limitation means, for a CSAPR 
NOX Ozone Season source, the tonnage of NOX 
emissions authorized in a control period in a given year by the tonnage 
equivalent of CSAPR NOX Ozone Season allowances available 
for deduction for the source under Sec.  97.524(a) for such control 
period.
* * * * *
    Tonnage equivalent means, with regard to a specific individual 
CSAPR NOX Ozone Season allowance held or deducted for an 
identified purpose, the portion of one ton represented by the CSAPR 
NOX Ozone Season allowance as determined under Sec.  
97.524(f) or, with regard to a specific group of CSAPR NOX 
Ozone Season allowances held or deducted for a common identified 
purpose, the unrounded sum of the tonnage equivalents of the individual 
CSAPR NOX Ozone Season allowances comprising the group.
* * * * *


Sec.  97.504  [Amended]

0
35. Section 97.504 is amended by:
0
a. In paragraph (b)(2)(ii), by removing ``paragraph (b)(1)(i)'' and 
adding in its place ``paragraph (b)(2)(i)'', and by removing ``TR 
NOX'' and adding in its place ``CSAPR NOX''; and
0
b. Italicizing the headings of paragraphs (c)(1) and (2).
0
36. Section 97.506 is amended by:
0
a. Italicizing the headings of paragraphs (c), (c)(1) and (2), and 
(c)(4) through (7);
0
b. Revising paragraphs (c)(1)(i), (c)(2)(i) introductory text, and 
(c)(2)(v)(B);
0
c. Redesignating paragraph (c)(3)(i) as paragraph (c)(3)(i)(A), and 
revising it;
0
d. Adding paragraph (c)(3)(i)(B);
0
e. In the heading of paragraph (c)(4), by adding ``CSAPR NOX 
Ozone Season'' before ``allowances''; and
0
f. Revising paragraph (c)(6) introductory text.
    The revisions and additions read as follows:


Sec.  97.506  Standard requirements.

* * * * *
    (c) * * *
    (1) * * *
    (i) As of the allowance transfer deadline for a control period in a 
given year, the owners and operators of each CSAPR NOX Ozone 
Season source and each CSAPR NOX Ozone Season unit at the 
source shall hold, in the source's compliance account, CSAPR 
NOX Ozone Season allowances available for deduction for such 
control period under Sec.  97.524(a) with a tonnage equivalent not less 
than the tons of total NOX emissions for such control period 
from all CSAPR NOX Ozone Season units at the source.
* * * * *
    (2) * * *
    (i) If total NOX emissions during a control period in a 
given year from all CSAPR NOX Ozone Season units at CSAPR 
NOX Ozone Season sources in a State (and Indian country 
within the borders of such State) exceed the State assurance level, 
then the owners and operators of such sources and units in each group 
of one or more sources and units having a common designated 
representative for such control period, where the common designated 
representative's share of such NOX emissions during such 
control period exceeds the common designated representative's assurance 
level for the State and such control period, shall hold (in the 
assurance account established for the owners and operators of such 
group) CSAPR NOX Ozone Season allowances available for 
deduction for such control period under Sec.  97.525(a) with a tonnage 
equivalent not less than two times the product (rounded to the nearest 
whole number), as determined by the Administrator in accordance with 
Sec.  97.525(b), of multiplying--
* * * * *
    (v) * * *
    (B) Each ton of the tonnage equivalent of CSAPR NOX 
Ozone Season allowances that the owners and operators fail to hold for 
such control period in accordance with paragraphs (c)(2)(i) through 
(iii) of this section and each day of such control period shall 
constitute a separate violation of this subpart and the Clean Air Act.
    (3) * * *
    (i)(A) Except as provided in paragraph (c)(3)(i)(B) of this 
section, a CSAPR NOX Ozone Season unit shall be subject to 
the requirements under paragraph (c)(1) of this section for the control 
period starting on the later of May 1, 2015 or the deadline for meeting 
the unit's monitor certification requirements under Sec.  97.530(b) and 
for each control period thereafter.
    (B) A CSAPR NOX Ozone Season unit in the State of Kansas 
(or Indian country within the borders of the State) that is not a CSAPR 
NOX Ozone Season unit in another State (or Indian country 
within the borders of another State) during any portion of a control 
period in 2015 or 2016 shall be subject to the requirements under 
paragraph (c)(1) of this section for the control period starting on the 
later of May 1, 2017 or the deadline for meeting the unit's monitor 
certification requirements under Sec.  97.530(b) and for each control 
period thereafter.
* * * * *
    (6) Limited authorization. A CSAPR NOX; Ozone Season 
allowance is a limited authorization to emit up to one ton of 
NOX; during the control period in one year as determined 
under Sec.  97.524(f). Such authorization is limited in its use and 
duration as follows:
* * * * *
0
37. Section 97.510 is revised to read as follows:


Sec.  97.510  State NOX Ozone Season trading budgets, new unit set-
asides, Indian country new unit set-asides, and variability limits.

    (a) The State NOX Ozone Season trading budgets, new unit 
set-asides, and Indian country new unit set-asides

[[Page 75770]]

for allocations of CSAPR NOX Ozone Season allowances for the 
control periods in 2015 and thereafter are as follows:
    (1) Alabama. (i) The NOX Ozone Season trading budget for 
2015 and 2016 is 31,746 tons.
    (ii) The new unit set-aside for 2015 and 2016 is 635 tons.
    (iii) [Reserved]
    (iv) The NOX Ozone Season trading budget for 2017 and 
thereafter is 9,979 tons.
    (v) The new unit set-aside for 2017 and thereafter is 205 tons.
    (vi) [Reserved]
    (2) Arkansas. (i) The NOX Ozone Season trading budget 
for 2015 and 2016 is 15,110 tons.
    (ii) The new unit set-aside for 2015 and 2016 is 756 tons.
    (iii) [Reserved]
    (iv) The NOX Ozone Season trading budget for 2017 and 
thereafter is 6,949 tons.
    (v) The new unit set-aside for 2017 and thereafter is 141 tons.
    (vi) [Reserved]
    (3) Florida. (i) The NOX Ozone Season trading budget for 
2015 and 2016 is 28,644 tons.
    (ii) The new unit set-aside for 2015 and 2016 is 544 tons.
    (iii) The Indian country new unit set-aside for 2015 and 2016 is 29 
tons.
    (iv) [Reserved]
    (v) [Reserved]
    (vi) [Reserved]
    (4) Georgia. (i) The NOX Ozone Season trading budget for 
2015 and 2016 is 27,944 tons.
    (ii) The new unit set-aside for 2015 and 2016 is 559 tons.
    (iii) [Reserved]
    (iv) The NOX Ozone Season trading budget for 2017 and 
thereafter is 24,041 tons.
    (v) The new unit set-aside for 2017 and thereafter is 481 tons.
    (vi) [Reserved]
    (5) Illinois. (i) The NOX Ozone Season trading budget 
for 2015 and 2016 is 21,208 tons.
    (ii) The new unit set-aside for 2015 and 2016 is 1,697 tons.
    (iii) [Reserved]
    (iv) The NOX Ozone Season trading budget for 2017 and 
thereafter is 12,078 tons.
    (v) The new unit set-aside for 2017 and thereafter is 591 tons.
    (vi) [Reserved]
    (6) Indiana. (i) The NOX Ozone Season trading budget for 
2015 and 2016 is 46,876 tons.
    (ii) The new unit set-aside for 2015 and 2016 is 1,406 tons.
    (iii) [Reserved]
    (iv) The NOX Ozone Season trading budget for 2017 and 
thereafter is 28,284 tons.
    (v) The new unit set-aside for 2017 and thereafter is 565 tons.
    (vi) [Reserved]
    (7) Iowa. (i) The NOX Ozone Season trading budget for 
2015 and 2016 is 16,532 tons.
    (ii) The new unit set-aside for 2015 and 2016 is 314 tons.
    (iii) The Indian country new unit set-aside for 2015 and 2016 is 17 
tons.
    (iv) The NOX Ozone Season trading budget for 2017 and 
thereafter is 8,351 tons.
    (v) The new unit set-aside for 2017 and thereafter is 411 tons.
    (vi) The Indian country new unit set-aside for 2017 and thereafter 
is 8 tons.
    (8) Kansas. (i) [Reserved]
    (ii) [Reserved]
    (iii) [Reserved]
    (iv) The NOX Ozone Season trading budget for 2017 and 
thereafter is 9,272 tons.
    (v) The new unit set-aside for 2017 and thereafter is 272 tons.
    (vi) The Indian country new unit set-aside for 2017 and thereafter 
is 9 tons.
    (9) Kentucky. (i) The NOX Ozone Season trading budget 
for 2015 and 2016 is 36,167 tons.
    (ii) The new unit set-aside for 2015 and 2016 is 1,447 tons.
    (iii) [Reserved]
    (iv) The NOX Ozone Season trading budget for 2017 and 
thereafter is 21,519 tons.
    (v) The new unit set-aside for 2017 and thereafter is 647 tons.
    (vi) [Reserved]
    (10) Louisiana. (i) The NOX Ozone Season trading budget 
for 2015 and 2016 is 18,115 tons.
    (ii) The new unit set-aside for 2015 and 2016 is 344 tons.
    (iii) The Indian country new unit set-aside for 2015 and 2016 is 18 
tons.
    (iv) The NOX Ozone Season trading budget for 2017 and 
thereafter is 15,807 tons.
    (v) The new unit set-aside for 2017 and thereafter is 612 tons.
    (vi) The Indian country new unit set-aside for 2017 and thereafter 
is 16 tons.
    (11) Maryland. (i) The NOX Ozone Season trading budget 
for 2015 and 2016 is 7,179 tons.
    (ii) The new unit set-aside for 2015 and 2016 is 144 tons.
    (iii) [Reserved]
    (iv) The NOX Ozone Season trading budget for 2017 and 
thereafter is 4,026 tons.
    (v) The new unit set-aside for 2017 and thereafter is 485 tons.
    (vi) [Reserved]
    (12) Michigan. (i) The NOX Ozone Season trading budget 
for 2015 and 2016 is 28,041 tons.
    (ii) The new unit set-aside for 2015 and 2016 is 533 tons.
    (iii) The Indian country new unit set-aside for 2015 and 2016 is 28 
tons.
    (iv) The NOX Ozone Season trading budget for 2017 and 
thereafter is 19,115 tons.
    (v) The new unit set-aside for 2017 and thereafter is 363 tons.
    (vi) The Indian country new unit set-aside for 2017 and thereafter 
is 19 tons.
    (13) Mississippi. (i) The NOX Ozone Season trading 
budget for 2015 and 2016 is 12,429 tons.
    (ii) The new unit set-aside for 2015 and 2016 is 237 tons.
    (iii) The Indian country new unit set-aside for 2015 and 2016 is 12 
tons.
    (iv) The NOX Ozone Season trading budget for 2017 and 
thereafter is 5,910 tons.
    (v) The new unit set-aside for 2017 and thereafter is 584 tons.
    (vi) The Indian country new unit set-aside for 2017 and thereafter 
is 6 tons.
    (14) Missouri. (i) The NOX Ozone Season trading budget 
for 2015 and 2016 is 22,788 tons.
    (ii) The new unit set-aside for 2015 is 684 tons and for 2016 is 
1,367 tons.
    (iii) [Reserved]
    (iv) The NOX Ozone Season trading budget for 2017 and 
thereafter is 15,323 tons.
    (v) The new unit set-aside for 2017 and thereafter is 314 tons.
    (vi) [Reserved]
    (15) New Jersey. (i) The NOX Ozone Season trading budget 
for 2015 and 2016 is 4,128 tons.
    (ii) The new unit set-aside for 2015 and 2016 is 83 tons.
    (iii) [Reserved]
    (iv) The NOX Ozone Season trading budget for 2017 and 
thereafter is 2,015 tons.
    (v) The new unit set-aside for 2017 and thereafter is 1,151 tons.
    (vi) [Reserved]
    (16) New York. (i) The NOX Ozone Season trading budget 
for 2015 and 2016 is 10,369 tons.
    (ii) The new unit set-aside for 2015 and 2016 is 197 tons.
    (iii) The Indian country new unit set-aside for 2015 and 2016 is 10 
tons.
    (iv) The NOX Ozone Season trading budget for 2017 and 
thereafter is 4,450 tons.
    (v) The new unit set-aside for 2017 and thereafter is 89 tons.
    (vi) The Indian country new unit set-aside for 2017 and thereafter 
is 4 tons.
    (17) North Carolina. (i) The NOX Ozone Season trading 
budget for 2015 and 2016 is 22,168 tons.
    (ii) The new unit set-aside for 2015 and 2016 is 1,308 tons.
    (iii) The Indian country new unit set-aside for 2015 and 2016 is 22 
tons.
    (iv) The NOX Ozone Season trading budget for 2017 and 
thereafter is 12,275 tons.

[[Page 75771]]

    (v) The new unit set-aside for 2017 and thereafter is 236 tons.
    (vi) The Indian country new unit set-aside for 2017 and thereafter 
is 12 tons.
    (18) Ohio. (i) The NOX Ozone Season trading budget for 
2015 and 2016 is 41,284 tons.
    (ii) The new unit set-aside for 2015 and 2016 is 826 tons.
    (iii) [Reserved]
    (iv) The NOX Ozone Season trading budget for 2017 and 
thereafter is 16,660 tons.
    (v) The new unit set-aside for 2017 and thereafter is 337 tons.
    (vi) [Reserved]
    (19) Oklahoma. (i) The NOX Ozone Season trading budget 
for 2015 is 36,567 tons and for 2016 is 22,694 tons.
    (ii) The new unit set-aside for 2015 is 731 tons and for 2016 is 
454 tons.
    (iii) [Reserved]
    (iv) The NOX Ozone Season trading budget for 2017 and 
thereafter is 16,215 tons.
    (v) The new unit set-aside for 2017 and thereafter is 309 tons.
    (vi) The Indian country new unit set-aside for 2017 and thereafter 
is 16 tons.
    (20) Pennsylvania. (i) The NOX Ozone Season trading 
budget for 2015 and 2016 is 52,201 tons.
    (ii) The new unit set-aside for 2015 and 2016 is 1,044 tons.
    (iii) [Reserved]
    (iv) The NOX Ozone Season trading budget for 2017 and 
thereafter is 14,387 tons.
    (v) The new unit set-aside for 2017 and thereafter is 1,017 tons.
    (vi) [Reserved]
    (21) South Carolina. (i) The NOX Ozone Season trading 
budget for 2015 and 2016 is 13,909 tons.
    (ii) The new unit set-aside for 2015 and 2016 is 264 tons.
    (iii) The Indian country new unit set-aside for 2015 and 2016 is 14 
tons.
    (iv) [Reserved]
    (v) [Reserved]
    (vi) [Reserved]
    (22) Tennessee. (i) The NOX Ozone Season trading budget 
for 2015 and 2016 is 14,908 tons.
    (ii) The new unit set-aside for 2015 and 2016 is 298 tons.
    (iii) [Reserved]
    (iv) The NOX Ozone Season trading budget for 2017 and 
thereafter is 5,481 tons.
    (v) The new unit set-aside for 2017 and thereafter is 109 tons.
    (vi) [Reserved]
    (23) Texas. (i) The NOX Ozone Season trading budget for 
2015 and 2016 is 65,560 tons.
    (ii) The new unit set-aside for 2015 and 2016 is 2,556 tons.
    (iii) The Indian country new unit set-aside for 2015 and 2016 is 66 
tons.
    (iv) The NOX Ozone Season trading budget for 2017 and 
thereafter is 58,002 tons.
    (v) The new unit set-aside for 2017 and thereafter is 2,852 tons.
    (vi) The Indian country new unit set-aside for 2017 and thereafter 
is 58 tons.
    (24) Virginia. (i) The NOX Ozone Season trading budget 
for 2015 and 2016 is 14,452 tons.
    (ii) The new unit set-aside for 2015 and 2016 is 723 tons.
    (iii) [Reserved]
    (iv) The NOX Ozone Season trading budget for 2017 and 
thereafter is 6,818 tons.
    (v) The new unit set-aside for 2017 and thereafter is 1,844 tons.
    (vi) [Reserved]
    (25) West Virginia. (i) The NOX Ozone Season trading 
budget for 2015 and 2016 is 25,283 tons.
    (ii) The new unit set-aside for 2015 and 2016 is 1,264 tons.
    (iii) [Reserved]
    (iv) The NOX Ozone Season trading budget for 2017 and 
thereafter is 13,390 tons.
    (v) The new unit set-aside for 2017 and thereafter is 268 tons.
    (vi) [Reserved]
    (26) Wisconsin. (i) The NOX Ozone Season trading budget 
for 2015 and 2016 is 14,784 tons.
    (ii) The new unit set-aside for 2015 and 2016 is 872 tons.
    (iii) The Indian country new unit set-aside for 2015 and 2016 is 15 
tons.
    (iv) The NOX Ozone Season trading budget for 2017 and 
thereafter is 5,561 tons.
    (v) The new unit set-aside for 2017 and thereafter is 115 tons.
    (vi) The Indian country new unit set-aside for 2017 and thereafter 
is 6 tons.
    (b) The States' variability limits for the State NOX 
Ozone Season trading budgets for the control periods in 2017 and 
thereafter are as follows:
    (1) The variability limit for Alabama is 2,096 tons.
    (2) The variability limit for Arkansas is 1,459 tons.
    (3) [Reserved]
    (4) The variability limit for Georgia is 5,049 tons.
    (5) The variability limit for Illinois is 2,536 tons.
    (6) The variability limit for Indiana is 5,940 tons.
    (7) The variability limit for Iowa is 1,754 tons.
    (8) The variability limit for Kansas is 1,947 tons.
    (9) The variability limit for Kentucky is 4,519 tons.
    (10) The variability limit for Louisiana is 3,319 tons.
    (11) The variability limit for Maryland is 845 tons.
    (12) The variability limit for Michigan is 4,014 tons.
    (13) The variability limit for Mississippi is 1,241 tons.
    (14) The variability limit for Missouri is 3,218 tons.
    (15) The variability limit for New Jersey is 423 tons.
    (16) The variability limit for New York is 935 tons.
    (17) The variability limit for North Carolina is 2,578 tons.
    (18) The variability limit for Ohio is 3,499 tons.
    (19) The variability limit for Oklahoma is 3,405 tons.
    (20) The variability limit for Pennsylvania is 3,021 tons.
    (21) [Reserved]
    (22) The variability limit for Tennessee is 1,151 tons.
    (23) The variability limit for Texas is 12,180 tons.
    (24) The variability limit for Virginia is 1,432 tons.
    (25) The variability limit for West Virginia is 2,812 tons.
    (26) The variability limit for Wisconsin is 1,168 tons.
    (c) Each State NOX Ozone Season trading budget in this 
section includes any tons in a new unit set-aside or Indian country new 
unit set-aside, but does not include any tons in a variability limit.
0
38. Section 97.511 is amended by:
0
a. Italicizing the headings of paragraphs (b)(1) and (2);
0
b. In paragraphs (b)(1)(iii) and (b)(2)(iii), by adding after ``August 
31 of'' the word ``the'';
0
c. In paragraph (b)(2)(iv)(B), by adding a paragraph break after the 
end of the second sentence and before the paragraph designator ``(v)'' 
for the following paragraph (b)(2)(v);
0
d. In paragraph (c)(1)(ii), by removing ``Sec.  52.38(b)(3), (4), or 
(5)'' and adding in its place ``Sec.  52.38(b)(4) or (5)'', and by 
removing ``January 1'' and adding in its place ``May 1'';
0
e. Revising paragraph (c)(3);
0
f. In paragraph (c)(5)(i)(B), by adding after ``Sec.  52.38(b)(4) or 
(5)'' the words ``of this chapter'';
0
g. In paragraph (c)(5)(ii) introductory text, by removing ``of this 
paragraph'' and adding in its place ``of this section'';
0
h. In paragraph (c)(5)(ii)(B), by adding after ``Sec.  52.38(b)(4) or 
(5)'' the words ``of this chapter''; and
0
i. In paragraph (c)(5)(iii), by removing ``of this paragraph'' and 
adding in its place ``of this section''.
    The revisions read as follows:


Sec.  97.511  Timing requirements for CSAPR NOX Ozone Season allowance 
allocations.

* * * * *

[[Page 75772]]

    (c) * * *
    (3) If the Administrator already recorded such CSAPR NOX 
Ozone Season allowances under Sec.  97.521 and if the Administrator 
makes the determination under paragraph (c)(1) of this section before 
making deductions for the source that includes such recipient under 
Sec.  97.524(b) for such control period, then the Administrator will 
deduct from the account in which such CSAPR NOX Ozone Season 
allowances were recorded CSAPR NOX Ozone Season allowances 
allocated for the same or a prior control period until the tonnage 
equivalent of the CSAPR NOX Ozone Season allowances deducted 
under this paragraph equals or exceeds the tonnage equivalent of such 
already recorded CSAPR NOX Ozone Season allowances, making 
all such deductions in whole CSAPR NOX Ozone Season 
allowances. The authorized account representative shall ensure that 
there are CSAPR NOX Ozone Season allowances in such account 
with a tonnage equivalent sufficient for completion of the deduction.
* * * * *
0
39. Section 97.512 is amended by:
0
a. Revising paragraph (a) introductory text;
0
b. In paragraph (a)(4)(i), by removing ``paragraph (a)(1)(i) through 
(iii)'' and adding in its place ``paragraphs (a)(1)(i) through (iii)'';
0
c. In paragraph (a)(2), by removing ``Sec. Sec.  '' and adding in its 
place ``Sec.  '';
0
d. In paragraph (a)(4)(ii), by adding after ``paragraph (a)(4)(i)'' the 
words ``of this section'';
0
e. In paragraph (a)(9)(i), by adding after ``August 31 of'' the word 
``the'';
0
f. Revising paragraph (b) introductory text;
0
g. In paragraph (b)(4)(ii), by adding after ``paragraph (b)(4)(i)'' the 
words ``of this section'';
0
h. In paragraph (b)(9)(i), by adding after ``August 31 of'' the word 
``the''; and
0
i. In paragraph (b)(10)(ii), by adding after ``Sec.  52.38(b)(4) or 
(5)'' the words ``of this chapter''.
    The revisions read as follows:


Sec.  97.512  CSAPR NOX Ozone Season allowance allocations to new 
units.

    (a) For each control period in 2015 and thereafter and for the 
CSAPR NOX Ozone Season units in each State for which a new 
unit set-aside is set forth in Sec.  97.510 for that control period, 
the Administrator will allocate CSAPR NOX Ozone Season 
allowances to the CSAPR NOX Ozone Season units as follows:
* * * * *
    (b) For each control period in 2015 and thereafter and for the 
CSAPR NOX Ozone Season units located in Indian country 
within the borders of each State for which an Indian country new unit 
set-aside is set forth in Sec.  97.510 for that control period, the 
Administrator will allocate CSAPR NOX Ozone Season 
allowances to the CSAPR NOX Ozone Season units as follows:
* * * * *
0
40. Section 97.521 is amended by:
0
a. In paragraph (b) introductory text, by removing ``Sec.  
52.38(b)(3)(i) through (iv)'' and adding in its place ``Sec.  
52.38(b)(3)(i)(A) through (D)'';
0
b. Redesignating paragraph (c) as paragraph (c)(1), and revising it;
0
c. Adding paragraph (c)(2);
0
d. Revising paragraphs (d) and (e); and
0
e. In paragraph (j), by removing ``the date'' and adding in its place 
``the date 15 days after the date''.
    The revisions read as follows:


Sec.  97.521  Recordation of CSAPR NOX Ozone Season allowance 
allocations and auction results.

* * * * *
    (c)(1) By December 1, 2016, the Administrator will record in each 
CSAPR NOX Ozone Season source's compliance account the CSAPR 
NOX Ozone Season allowances allocated to the CSAPR 
NOX Ozone Season units at the source, or in each appropriate 
Allowance Management System account the CSAPR NOX Ozone 
Season allowances auctioned to CSAPR NOX Ozone Season units, 
in accordance with Sec.  97.511(a), or with a SIP revision approved 
under Sec.  52.38(b)(4) or (5) of this chapter, for the control period 
in 2017 or, for such sources in Georgia, the control periods in 2017 
and 2018.
    (2) For the CSAPR NOX Ozone Season sources not in 
Georgia, by December 1, 2016, the Administrator will record in each 
such source's compliance account the CSAPR NOX Ozone Season 
allowances allocated to the CSAPR NOX Ozone Season units at 
the source in accordance with Sec.  97.511(a) for the control period in 
2018, unless the State in which the source is located notifies the 
Administrator in writing by November 15, 2016 of the State's intent to 
submit to the Administrator a complete SIP revision by April 1, 2017 
meeting the requirements of Sec.  52.38(b)(3)(ii)(A) through (D) of 
this chapter.
    (A) If the State does not submit to the Administrator by April 1, 
2017 such complete SIP revision, the Administrator will record by April 
15, 2017 in each CSAPR NOX Ozone Season source's compliance 
account the CSAPR NOX Ozone Season allowances allocated to 
the CSAPR NOX Ozone Season units at the source in accordance 
with Sec.  97.511(a) for the control period in 2018.
    (B) If the State submits to the Administrator by April 1, 2017 and 
the Administrator approves by October 1, 2017 such complete SIP 
revision, the Administrator will record by October 1, 2017 in each 
CSAPR NOX Ozone Season source's compliance account the CSAPR 
NOX Ozone Season allowances allocated to the CSAPR 
NOX Ozone Season units at the source as provided in such 
approved, complete SIP revision for the control period in 2018.
    (C) If the State submits to the Administrator by April 1, 2017 and 
the Administrator does not approve by October 1, 2017 such complete SIP 
revision, the Administrator will record by October 1, 2017 in each 
CSAPR NOX Ozone Season source's compliance account the CSAPR 
NOX Ozone Season allowances allocated to the CSAPR 
NOX Ozone Season units at the source in accordance with 
Sec.  97.511(a) for the control period in 2018.
    (d) By July 1, 2018, the Administrator will record in each CSAPR 
NOX Ozone Season source's compliance account the CSAPR 
NOX Ozone Season allowances allocated to the CSAPR 
NOX Ozone Season units at the source, or in each appropriate 
Allowance Management System account the CSAPR NOX Ozone 
Season allowances auctioned to CSAPR NOX Ozone Season units, 
in accordance with Sec.  97.511(a), or with a SIP revision approved 
under Sec.  52.38(b)(4) or (5) of this chapter, for the control periods 
in 2019 and 2020.
    (e) By July 1, 2019, the Administrator will record in each CSAPR 
NOX Ozone Season source's compliance account the CSAPR 
NOX Ozone Season allowances allocated to the CSAPR 
NOX Ozone Season units at the source, or in each appropriate 
Allowance Management System account the CSAPR NOX Ozone 
Season allowances auctioned to CSAPR NOX Ozone Season units, 
in accordance with Sec.  97.511(a), or with a SIP revision approved 
under Sec.  52.38(b)(4) or (5) of this chapter, for the control periods 
in 2021 and 2022.
* * * * *
0
41. Section 97.524 is amended by:
0
a. Revising paragraphs (b) introductory text, (b)(1), (c)(2) 
introductory text, and (c)(2)(i) and (ii);
0
b. Adding paragraphs (c)(2)(iii) through (v);
0
c. Revising paragraph (d); and
0
d. Adding paragraph (f).
    The revisions and additions read as follows:


Sec.  97.524  Compliance with CSAPR NOX Ozone Season emissions 
limitation.

* * * * *

[[Page 75773]]

    (b) Deductions for compliance. After the recordation, in accordance 
with Sec.  97.523, of CSAPR NOX Ozone Season allowance 
transfers submitted by the allowance transfer deadline for a control 
period in a given year, the Administrator will deduct from each 
source's compliance account CSAPR NOX Ozone Season 
allowances available under paragraph (a) of this section in order to 
determine whether the source meets the CSAPR NOX Ozone 
Season emissions limitation for such control period, making all such 
deductions in whole CSAPR NOX Ozone Season allowances, as 
follows:
    (1) Until the tonnage equivalent of the CSAPR NOX Ozone 
Season allowances deducted equals or exceeds the number of tons of 
total NOX emissions from all CSAPR NOX Ozone 
Season units at the source for such control period; or
* * * * *
    (c) * * *
    (2) Default order of deductions. The Administrator will deduct 
CSAPR NOX Ozone Season allowances under paragraph (b) or (d) 
of this section from the source's compliance account in accordance with 
a complete request under paragraph (c)(1) of this section or, in the 
absence of such request or in the case of identification of an 
insufficient amount of CSAPR NOX Ozone Season allowances in 
such request, in the following order:
    (i) Any CSAPR NOX Ozone Season allowances determined 
under paragraph (f)(1) of this section to have a tonnage equivalent of 
one ton per allowance that were allocated or auctioned from the 
NOX Ozone Season trading budget for the State within whose 
borders the source is located to the units at the source and were not 
transferred out of the compliance account, in the order of recordation;
    (ii) Any CSAPR NOX Ozone Season allowances determined 
under paragraph (f)(1) of this section to have a tonnage equivalent of 
one ton per allowance that were not allocated or auctioned from the 
NOX Ozone Season trading budget for the State within whose 
borders the source is located to any unit at the source and were 
transferred to and recorded in the compliance account pursuant to this 
subpart, in the order of recordation;
    (iii) Any CSAPR NOX Ozone Season allowances determined 
under paragraph (f)(2) of this section to have a tonnage equivalent of 
four tenths of one ton per allowance, in the order of recordation;
    (iv) Any CSAPR NOX Ozone Season allowances determined 
under paragraph (f)(3) of this section to have a tonnage equivalent of 
one fourth of one ton per allowance that were allocated or auctioned 
from the NOX Ozone Season trading budget for the State 
within whose borders the source is located to the units at the source 
and were not transferred out of the compliance account, in the order of 
recordation; and
    (v) Any CSAPR NOX Ozone Season allowances determined 
under paragraph (f)(3) of this section to have a tonnage equivalent of 
one fourth of one ton per allowance that were not allocated or 
auctioned from the NOX Ozone Season trading budget for the 
State within whose borders the source is located to any unit at the 
source and were transferred to and recorded in the compliance account 
pursuant to this subpart, in the order of recordation.
    (d) Deductions for excess emissions. After making the deductions 
for compliance under paragraph (b) of this section for a control period 
in a year in which the CSAPR NOX Ozone Season source has 
excess emissions, the Administrator will deduct from the source's 
compliance account CSAPR NOX Ozone Season allowances 
allocated for a control period in a prior year or the control period in 
the year of the excess emissions or in the immediately following year, 
making all such deductions in whole CSAPR NOX Ozone Season 
allowances, until the tonnage equivalent of the CSAPR NOX 
Ozone Season allowances deducted under this paragraph equals or exceeds 
two times the number of tons of the source's excess emissions.
* * * * *
    (f) Tonnage equivalents of CSAPR NOX Ozone Season allowances. Where 
a determination is needed of the tonnage equivalent of a CSAPR 
NOX Ozone Season allowance held or deducted under any 
provision of Sec.  97.506(c), Sec.  97.511(c), Sec.  97.524, Sec.  
97.525, Sec.  97.527, or Sec.  97.528 relating to the holding or 
deduction of CSAPR NOX Ozone Season allowances, the 
Administrator will make the determination as follows, provided that 
notwithstanding any such determination the CSAPR NOX Ozone 
Season allowance remains subject to the limitations in Sec.  
97.506(c)(6):
    (1) Except as provided under paragraph (f)(2) or (f)(3) of this 
section, the tonnage equivalent of each CSAPR NOX Ozone 
Season allowance shall be one ton per allowance.
    (2) Where a CSAPR NOX Ozone Season allowance has been 
allocated or auctioned for a control period in 2017 or a subsequent 
year from the NOX Ozone Season trading budget for Georgia, 
and where the CSAPR NOX Ozone Season allowance is held or 
deducted for any purpose related to emissions from a CSAPR 
NOX Ozone Season unit in another State (or Indian country 
within the borders of another State) or for the purpose of correcting 
an allocation or recordation error affecting a CSAPR NOX 
Ozone Season unit in another State (or Indian country within the 
borders of another State), the tonnage equivalent of the CSAPR 
NOX Ozone Season allowance shall be four tenths of one ton 
per allowance.
    (3) Where a CSAPR NOX Ozone Season allowance has been 
allocated or auctioned for a control period in 2015 or 2016, and where 
the CSAPR NOX Ozone Season allowance is held or deducted for 
any purpose related to emissions from a CSAPR NOX Ozone 
Season unit in any State except Georgia (or Indian country within the 
borders of such a State) in a control period in 2017 or a subsequent 
year or for the purpose of correcting an allocation or recordation 
error affecting a CSAPR NOX Ozone Season unit in any State 
except Georgia (or Indian country within the borders of such a State) 
for a control period in 2017 or a subsequent year, the tonnage 
equivalent of the CSAPR NOX Ozone Season allowance shall be 
one fourth of one ton per allowance.
    (4) The Administrator will determine the year of the compliance 
period for which a CSAPR NOX Ozone Season allowance was 
allocated or auctioned and the State from whose NOX Ozone 
Season trading budget the CSAPR NOX Ozone Season allowance 
was allocated or auctioned based on the records maintained in the 
Allowance Management System.
0
42. Section 97.525 is amended by:
0
a. Revising paragraphs (b) introductory text and (b)(2)(ii);
0
b. In paragraph (b)(2)(iii) introductory text, by removing ``paragraph 
(b)(1)(i)'' and adding in its place ``paragraph (b)(1)(ii)'';
0
c. In paragraph (b)(2)(iii)(B), by adding ``the calculations 
incorporating'' before ``any adjustments''; and
0
d. Revising paragraphs (b)(4)(i), (b)(5), (b)(6) introductory text, 
(b)(6)(i) and (ii), (b)(6)(iii) introductory text, and (b)(6)(iii)(A) 
and (B).
    The revisions read as follows:


Sec.  97.525  Compliance with CSAPR NOX Ozone Season assurance 
provisions.

* * * * *
    (b) Deductions for compliance. The Administrator will deduct CSAPR 
NOX Ozone Season allowances available under paragraph (a) of 
this section for compliance with the CSAPR NOX Ozone Season 
assurance provisions for a State for a control period in a given year 
in accordance with the following

[[Page 75774]]

procedures, making all such deductions in whole CSAPR NOX 
Ozone Season allowances:
* * * * *
    (2) * * *
    (ii) By August 1 immediately after the promulgation of such notice, 
the Administrator will calculate, for each such State (and Indian 
country within the borders of such State) and such control period and 
each common designated representative for such control period for a 
group of one or more CSAPR NOX Ozone Season sources and 
units in the State (and Indian country within the borders of such 
State), the common designated representative's share of the total 
NOX emissions from all CSAPR NOX Ozone Season 
units at CSAPR NOX Ozone Season sources in the State (and 
Indian country within the borders of such State), the common designated 
representative's assurance level, and the tonnage equivalent (if any) 
of CSAPR NOX Ozone Season allowances that the owners and 
operators of such group of sources and units must hold in accordance 
with the calculation formula in Sec.  97.506(c)(2)(i) and will 
promulgate a notice of data availability of the results of these 
calculations.
* * * * *
    (4) * * *
    (i) As of midnight of November 1 immediately after the promulgation 
of each notice of data availability required in paragraph 
(b)(2)(iii)(B) of this section, the owners and operators described in 
paragraph (b)(3) of this section shall hold in the assurance account 
established for them and for the appropriate CSAPR NOX Ozone 
Season sources, CSAPR NOX Ozone Season units, and State (and 
Indian country within the borders of such State) under paragraph (b)(3) 
of this section CSAPR NOX Ozone Season allowances, available 
for deduction under paragraph (a) of this section, with a total tonnage 
equivalent not less than the tonnage equivalent such owners and 
operators are required to hold with regard to such sources, units and 
State (and Indian country within the borders of such State) as 
calculated by the Administrator and referenced in such notice.
* * * * *
    (5) After November 1 (or the date described in paragraph (b)(4)(ii) 
of this section) immediately after the promulgation of each notice of 
data availability required in paragraph (b)(2)(iii)(B) of this section 
and after the recordation, in accordance with Sec.  97.523, of CSAPR 
NOX Ozone Season allowance transfers submitted by midnight 
of such date, the Administrator will determine whether the owners and 
operators described in paragraph (b)(3) of this section hold, in the 
assurance account for the appropriate CSAPR NOX Ozone Season 
sources, CSAPR NOX Ozone Season units, and State (and Indian 
country within the borders of such State) established under paragraph 
(b)(3) of this section, CSAPR NOX Ozone Season allowances 
available under paragraph (a) of this section with the tonnage 
equivalent that the owners and operators are required to hold with 
regard to such sources, units, and State (and Indian country within the 
borders of such State) as calculated by the Administrator and 
referenced in the notice required in paragraph (b)(2)(iii)(B) of this 
section.
    (6) Notwithstanding any other provision of this subpart and any 
revision, made by or submitted to the Administrator after the 
promulgation of the notice of data availability required in paragraph 
(b)(2)(iii)(B) of this section for a control period in a given year, of 
any data used in making the calculations referenced in such notice, the 
tonnage equivalents of CSAPR NOX Ozone Season allowances 
that the owners and operators are required to hold in accordance with 
Sec.  97.506(c)(2)(i) for such control period shall continue to be such 
tonnage equivalents as calculated by the Administrator and referenced 
in such notice required in paragraph (b)(2)(iii)(B) of this section, 
except as follows:
    (i) If any such data are revised by the Administrator as a result 
of a decision in or settlement of litigation concerning such data on 
appeal under part 78 of this chapter of such notice, or on appeal under 
section 307 of the Clean Air Act of a decision rendered under part 78 
of this chapter on appeal of such notice, then the Administrator will 
use the data as so revised to recalculate the tonnage equivalents of 
CSAPR NOX Ozone Season allowances that owners and operators 
are required to hold in accordance with the calculation formula in 
Sec.  97.506(c)(2)(i) for such control period with regard to the CSAPR 
NOX Ozone Season sources, CSAPR NOX Ozone Season 
units, and State (and Indian country within the borders of such State) 
involved, provided that such litigation under part 78 of this chapter, 
or the proceeding under part 78 of this chapter that resulted in the 
decision appealed in such litigation under section 307 of the Clean Air 
Act, was initiated no later than 30 days after promulgation of such 
notice required in paragraph (b)(2)(iii)(B) of this section.
    (ii) If any such data are revised by the owners and operators of a 
CSAPR NOX Ozone Season source and CSAPR NOX Ozone 
Season unit whose designated representative submitted such data under 
paragraph (b)(2)(i) of this section, as a result of a decision in or 
settlement of litigation concerning such submission, then the 
Administrator will use the data as so revised to recalculate the 
tonnage equivalents of CSAPR NOX Ozone Season allowances 
that owners and operators are required to hold in accordance with the 
calculation formula in Sec.  97.506(c)(2)(i) for such control period 
with regard to the CSAPR NOX Ozone Season sources, CSAPR 
NOX Ozone Season units, and State (and Indian country within 
the borders of such State) involved, provided that such litigation was 
initiated no later than 30 days after promulgation of such notice 
required in paragraph (b)(2)(iii)(B) of this section.
    (iii) If the revised data are used to recalculate, in accordance 
with paragraphs (b)(6)(i) and (ii) of this section, the tonnage 
equivalent of CSAPR NOX Ozone Season allowances that the 
owners and operators are required to hold for such control period with 
regard to the CSAPR NOX Ozone Season sources, CSAPR 
NOX Ozone Season units, and State (and Indian country within 
the borders of such State) involved--
    (A) Where the tonnage equivalent of CSAPR NOX Ozone 
Season allowances that the owners and operators are required to hold 
increases as a result of the use of all such revised data, the 
Administrator will establish a new, reasonable deadline on which the 
owners and operators shall hold CSAPR NOX Ozone Season 
allowances with the additional tonnage equivalent in the assurance 
account established by the Administrator for the appropriate CSAPR 
NOX Ozone Season sources, CSAPR NOX Ozone Season 
units, and State (and Indian country within the borders of such State) 
under paragraph (b)(3) of this section. The owners' and operators' 
failure to hold such additional tonnage equivalent, as required, before 
the new deadline shall not be a violation of the Clean Air Act. The 
owners' and operators' failure to hold such additional tonnage 
equivalent, as required, as of the new deadline shall be a violation of 
the Clean Air Act. Each ton of the tonnage equivalent of CSAPR 
NOX Ozone Season allowances that the owners and operators 
fail to hold as required as of the new deadline, and each day in such 
control period, shall be a separate violation of the Clean Air Act.

[[Page 75775]]

    (B) For the owners and operators for which the tonnage equivalent 
of CSAPR NOX Ozone Season allowances required to be held 
decreases as a result of the use of all such revised data, the 
Administrator will record, in all accounts from which CSAPR 
NOX Ozone Season allowances were transferred by such owners 
and operators for such control period to the assurance account 
established by the Administrator for the appropriate CSAPR 
NOX Ozone Season sources, CSAPR NOX Ozone Season 
units, and State (and Indian country within the borders of such State) 
under paragraph (b)(3) of this section, a total amount of the CSAPR 
NOX Ozone Season allowances held in such assurance account 
that the Administrator determines may be transferred from such 
assurance account without causing the tonnage equivalent of the CSAPR 
NOX Ozone Season allowances held by such owners and 
operators in such assurance account to fall below the tonnage 
equivalent required to be held by such owners and operators in such 
assurance account, making any transfers in whole CSAPR NOX 
Ozone Season allowances. If CSAPR NOX Ozone Season 
allowances were transferred to such assurance account from more than 
one account, the tonnage equivalent of CSAPR NOX Ozone 
Season allowances recorded in each such transferor account will be in 
proportion to the percentage of the total tonnage equivalent of CSAPR 
NOX Ozone Season allowances transferred to such assurance 
account for such control period from such transferor account.
* * * * *


Sec.  97.528  [Amended]

0
43. Section 97.528 is amended in paragraph (b) by removing ``paragraph 
(a)(1)'' and adding in its place ``paragraph (a)''.
0
44. Section 97.530 is amended by:
0
a. Revising paragraphs (b) introductory text and (b)(1) through (3);
0
b. In paragraph (b)(4) introductory text, by removing ``Sec. Sec.  '' 
and adding in its place ``Sec.  ''; and
0
c. In paragraph (b)(4)(iii), by adding after ``Sec.  75.66'' the words 
``of this chapter''.
    The revisions read as follows:


Sec.  97.530  General monitoring, recordkeeping, and reporting 
requirements.

* * * * *
    (b) Compliance deadlines. Except as provided in paragraph (e) of 
this section, the owner or operator of a CSAPR NOX Ozone 
Season unit shall meet the monitoring system certification and other 
requirements of paragraphs (a)(1) and (2) of this section on or before 
the latest of the following dates and shall record, report, and 
quality-assure the data from the monitoring systems under paragraph 
(a)(1) of this section on and after the latest of the following dates:
    (1)(i) For a unit other than a unit described in paragraph 
(b)(1)(ii) of this section, May 1, 2015; or
    (ii) For a unit in the State of Kansas (or Indian country within 
the borders of the State) that is not a CSAPR NOX Ozone 
Season unit in another State (or Indian country within the borders of 
another State) during any portion of a control period in 2015 or 2016, 
May 1, 2017;
    (2) 180 calendar days after the date on which the unit commences 
commercial operation; or
    (3) Where data for the unit is reported on a control period basis 
under Sec.  97.534(d)(2)(ii)(B), and where the compliance date under 
paragraph (b)(2) of this section is not in a month from May through 
September, May 1 immediately after the compliance date under paragraph 
(b)(2) of this section.
* * * * *


Sec.  97.531  [Amended]

0
45. Section 97.531 is amended by:
0
a. Italicizing the headings of paragraphs (d)(1) through (3), (d)(3)(i) 
through (iv), (d)(3)(iv)(A) through (D), and (d)(3)(v);
0
b. In paragraph (d)(3) introductory text, by removing ``Sec. Sec.  '' 
and adding in its place ``Sec.  ''; and
0
c. Redesignating paragraphs (d)(3)(v)(A)(1) through (5) as paragraphs 
(d)(3)(v)(A)(1) through (5).
0
46. Section 97.534 is amended by:
0
a. In paragraph (b), by adding ``the'' before ``requirements'';
0
b. Revising paragraphs (d)(1) and (2);
0
c. Redesignating paragraph (d)(6) as paragraph (d)(5)(ii); and
0
d. In paragraph (e)(3), by removing ``paragraph (d)(2)(ii)'' and adding 
in its place ``paragraph (d)(2)(ii)(B)''.
    The revisions read as follows:


Sec.  97.534  Recordkeeping and reporting.

* * * * *
    (d) * * *
    (1) The designated representative shall report the NOX 
mass emissions data and heat input data for a CSAPR NOX 
Ozone Season unit, in an electronic quarterly report in a format 
prescribed by the Administrator, for each calendar quarter indicated 
under paragraph (d)(2) of this section beginning with the latest of:
    (i)(A) For a unit other than a unit described in paragraph 
(d)(1)(i)(B) of this section, the calendar quarter covering May 1, 2015 
through June 30, 2015; or
    (B) For a unit in the State of Kansas (or Indian country within the 
borders of the State) that is not a CSAPR NOX Ozone Season 
unit in another State (or Indian country within the borders of another 
State) during any portion of a control period in 2015 or 2016, the 
calendar quarter covering May 1, 2017 through June 30, 2017;
    (ii) The calendar quarter corresponding to the earlier of the date 
of provisional certification or the applicable deadline for initial 
certification under Sec.  97.530(b); or
    (iii) For a unit that reports on a control period basis under 
paragraph (d)(2)(ii)(B) of this section, if the calendar quarter under 
paragraph (d)(1)(ii) of this section does not include a month from May 
through September, the calendar quarter covering May 1 through June 30 
immediately after the calendar quarter under paragraph (d)(1)(ii) of 
this section.
    (2)(i) If a CSAPR NOX Ozone Season unit is subject to 
the Acid Rain Program or a CSAPR NOX Annual emissions 
limitation or if the owner or operator of such unit chooses to report 
on an annual basis under this subpart, then the designated 
representative shall meet the requirements of subpart H of part 75 of 
this chapter (concerning monitoring of NOX mass emissions) 
for such unit for the entire year and report the NOX mass 
emissions data and heat input data for such unit for the entire year.
    (ii) If a CSAPR NOX Ozone Season unit is not subject to 
the Acid Rain Program or a CSAPR NOX Annual emissions 
limitation, then the designated representative shall either:
    (A) Meet the requirements of subpart H of part 75 of this chapter 
for such unit for the entire year and report the NOX mass 
emissions data and heat input data for such unit for the entire year in 
accordance with paragraph (d)(2)(i) of this section; or
    (B) Meet the requirements of subpart H of part 75 of this chapter 
(including the requirements in Sec.  75.74(c) of this chapter) for such 
unit for the control period and report the NOX mass 
emissions data and heat input data (including the data described in 
Sec.  75.74(c)(6) of this chapter) for such unit only for the control 
period of each year.
* * * * *

Subpart CCCCC--CSAPR SO2 Group 1 Trading Program

0
47. The heading of subpart CCCCC of part 97 is revised to read as set 
forth above.

[[Page 75776]]

Sec.  97.602  [Amended]

0
48. Section 97.602 is amended by:
0
a. Relocating all definitions beginning with ``CSAPR'' to their 
alphabetical locations in the list of definitions;
0
b. In the definition of ``Cogeneration system'', by removing ``steam 
turbine generator'' and adding in its place ``generator'';
0
c. In the definition of ``Commence commercial operation'', in paragraph 
(2) introductory text, by adding after ``defined in'' the word ``the'';
0
d. In the definition of ``Fossil fuel'', by removing ``Sec. Sec.  '' 
and adding in its place Sec.  ''; and
0
e. In the definition of ``Sequential use of energy'', in paragraph (2), 
by adding after ``from'' the word ``a''.


Sec.  97.604  [Amended]

0
49. Section 97.604 is amended by:
0
a. In paragraph (b)(2)(ii), by removing ``paragraph (b)(1)(i)'' and 
adding in its place ``paragraph (b)(2)(i)''; and
0
b. Italicizing the headings of paragraphs (c)(1) and (2).


Sec.  97.606  [Amended]

0
50. Section 97.606 is amended by:
0
a. Italicizing the headings of paragraphs (c)(1) and (2) and (c)(4) 
through (7);
0
b. In the heading of paragraph (c)(4), by adding ``CSAPR SO2 
Group 1'' before ``allowances''; and
0
c. In paragraph (d)(2), by removing ``subpart H'' and adding in its 
place ``subpart B''.


Sec.  97.610  State SO2 Group 1 trading budgets, new unit 
set-asides, Indian country new unit set-asides, and variability limits.

0
51. Section 97.610 is amended by:
0
a. Revising the heading as set forth above;
0
b. Removing ``SO2 trading budget'' wherever it appears and 
adding in its place ``SO2 Group 1 trading budget'';
0
c. Removing ``SO2 new unit set-aside'' wherever it appears 
and adding in its place ``new unit set-aside'';
0
d. Removing ``SO2 Indian country new unit set-aside'' 
wherever it appears and adding in its place ``Indian country new unit 
set-aside'';
0
e. Removing ``SO2 variability limit'' wherever it appears 
and adding in its place ``variability limit'';
0
f. In paragraph (a) introductory text, by adding ``Group 1'' before 
``trading budgets'', and by removing ``new unit-set aside'' and adding 
in its place ``new unit set-aside'';
0
g. Adding and reserving paragraphs (a)(2)(vi) and (a)(11)(vi); and
0
h. In paragraph (c), by adding after ``Each'' the word ``State'', and 
by removing ``set aside'' wherever it appears and adding in its place 
``set-aside''.


Sec.  97.611  [Amended]

0
52. Section 97.611 is amended by:
0
a. Italicizing the headings of paragraphs (b)(1) and (2);
0
b. In paragraphs (b)(1)(iii) and (b)(2)(iii), by adding after 
``November 30 of'' the word ``the'';
0
c. In paragraph (c)(1)(ii), by removing ``Sec.  52.39(d), (e), or (f)'' 
and adding in its place ``Sec.  52.39(e) or (f)'';
0
d. In paragraph (c)(5)(i)(B), by adding after ``Sec.  52.39(e) or (f)'' 
the words ``of this chapter'';
0
e. In paragraph (c)(5)(ii) introductory text, by removing ``of this 
paragraph'' and adding in its place ``of this section'';
0
f. In paragraph (c)(5)(ii)(B), by adding after ``Sec.  52.39(e) or 
(f)'' the words ``of this chapter''; and
0
g. In paragraph (c)(5)(iii), by removing ``of this paragraph'' and 
adding in its place ``of this section''.


Sec.  97.612  [Amended]

0
53. Section 97.612 is amended by:
0
a. In paragraph (a)(2), by removing ``Sec. Sec.  '' and adding in its 
place ``Sec.  '';
0
b. In paragraph (a)(4)(i), by removing ``paragraph (a)(1)(i) through 
(iii)'' and adding in its place ``paragraphs (a)(1)(i) through (iii)'';
0
c. In paragraph (a)(4)(ii), by adding after ``paragraph (a)(4)(i)'' the 
words ``of this section'';
0
d. In paragraph (a)(9)(i), by adding after ``November 30 of'' the word 
``the'';
0
e. In paragraph (b)(4)(ii), by adding after ``paragraph (b)(4)(i)'' the 
words ``of this section'';
0
f. In paragraph (b)(9)(i), by adding after ``November 30 of'' the word 
``the'';
0
g. In paragraph (b)(10)(ii), by removing ``Sec.  52.39(d), (e), or 
(f)'' and by adding in its place ``Sec.  52.39(e) or (f)''; and
0
h. In paragraph (b)(11), by adding after ``paragraphs (b)(9), (10) and 
(12)'' the words ``of this section''.


Sec.  97.621  [Amended]

0
54. Section 97.621 is amended by:
0
a. In paragraphs (c), (d), and (e), by removing ``period'' and adding 
in its place ``periods'';
0
b. In paragraphs (f) and (g), by removing ``Sec.  52.39(e) and (f)'' 
and adding in its place ``Sec.  52.39(e) or (f)''; and
0
c. In paragraph (j), by removing ``the date'' and adding in its place 
``the date 15 days after the date''.


Sec.  97.625  [Amended]

0
55. Section 97.625 is amended by:
0
a. In paragraph (b)(2)(iii) introductory text, by removing ``paragraph 
(b)(1)(i)'' and adding in its place ``paragraph (b)(1)(ii)''; and
0
b. In paragraph (b)(2)(iii)(B), by adding ``the calculations 
incorporating'' before ``any adjustments''.


Sec.  97.628  [Amended]

0
56. Section 97.628 is amended in paragraph (b) by removing ``paragraph 
(a)(1)'' and adding in its place ``paragraph (a)''.


Sec.  97.630  [Amended]

0
57. Section 97.630 is amended by:
0
a. In paragraph (b) introductory text, by adding after ``operator'' the 
words ``of a CSAPR SO2 Group 1 unit'', by adding ``the later 
of'' before ``the following dates'' each time it appears, and by 
removing the final period and adding in its place a colon;
0
b. Removing paragraphs (b)(1) and (b)(2) introductory text;
0
c. Redesignating paragraphs (b)(2)(i) and (ii) as paragraphs (b)(1) and 
(2);
0
d. In newly redesignated paragraph (b)(2), by removing the final 
semicolon and adding in its place a period;
0
e. In paragraph (b)(3) introductory text, by removing ``Sec. Sec.  '' 
and adding in its place ``Sec.  ''; and
0
f. In paragraph (b)(3)(iii), by adding after ``Sec.  75.66'' the words 
``of this chapter''.


Sec.  97.631  [Amended]

0
58. Section 97.631 is amended by:
0
a. Italicizing the headings of paragraphs (d)(1) through (3), (d)(3)(i) 
through (iv), (d)(3)(iv)(A) through (D), and (d)(3)(v);
0
b. In paragraph (d)(3) introductory text, by removing ``Sec. Sec.  '' 
and adding in its place ``Sec.  ''; and
0
c. Redesignating paragraphs (d)(3)(v)(A)(1) through (3) as paragraphs 
(d)(3)(v)(A)(1) through (3).


Sec.  97.634  [Amended]

0
59. Section 97.634 is amended by:
0
a. In paragraph (b) by adding ``the'' before ``requirements'';
0
b. In paragraph (d)(1) introductory text, by removing ``the CSAPR'' and 
adding in its place ``a CSAPR'', and by adding ``the later of'' before 
the final colon;
0
c. In paragraph (d)(1)(i), by removing ``For a unit that commences 
commercial operation before July 1, 2014, the'' and adding in its place 
``The''; and
0
d. In paragraph (d)(1)(ii), by removing ``For a unit that commences 
commercial operation on or after July 1, 2014, the'' and adding in its 
place ``The'', and by removing ``, unless that quarter is the third or 
fourth quarter of 2014, in which case reporting shall commence in the 
quarter covering January 1, 2015 through March 31, 2015''.

[[Page 75777]]

Subpart DDDDD--CSAPR SO2 Group 2 Trading Program

0
60. The heading of subpart DDDDD of part 97 is revised to read as set 
forth above.


Sec.  97.702  [Amended]

0
61. Section 97.702 is amended by:
0
a. Relocating all definitions beginning with ``CSAPR'' to their 
alphabetical locations in the list of definitions;
0
b. In the definition of ``Cogeneration system'', by removing ``steam 
turbine generator'' and adding in its place ``generator'';
0
c. In the definition of ``Commence commercial operation'', in paragraph 
(2) introductory text, by adding after ``defined in'' the word ``the'';
0
d. In the definition of ``Fossil fuel'', by removing ``Sec. Sec.  '' 
and adding in its place ``Sec.  ''; and
0
e. In the definition of ``Sequential use of energy'', in paragraph (2), 
by adding after ``from'' the word ``a''.


Sec.  97.704  [Amended]

0
62. Section 97.704 is amended by:
0
a. In paragraph (b)(2)(ii), by removing ``paragraph (b)(1)(i)'' and 
adding in its place ``paragraph (b)(2)(i)''; and
0
b. Italicizing the headings of paragraphs (c)(1) and (2).


Sec.  97.706  [Amended]

0
63. Section 97.706 is amended by:
0
a. Italicizing the headings of paragraphs (c)(1) and (2) and (c)(4) 
through (7);
0
b. In the heading of paragraph (c)(4), by adding ``CSAPR SO2 
Group 2'' before ``allowances''; and
0
c. In paragraph (d)(2), by removing ``subpart H'' and adding in its 
place ``subpart B''.


Sec.  97.710  State SO2 Group 2 trading budgets, new unit set-asides, 
Indian country new unit set-asides, and variability limits.

0
64. Section 97.710 is amended by:
0
a. Revising the heading as set forth above;
0
b. Removing ``SO2 trading budget'' wherever it appears and 
adding in its place ``SO2 Group 2 trading budget'';
0
c. Removing ``SO2 new unit set-aside'' wherever it appears 
and adding in its place ``new unit set-aside'';
0
d. Removing ``SO2 Indian country new unit set-aside'' 
wherever it appears and adding in its place ``Indian country new unit 
set-aside'';
0
e. Removing ``SO2 variability limit'' wherever it appears 
and adding in its place ``variability limit'';
0
f. In paragraph (a) introductory text, by adding ``Group 2'' before 
``trading budgets'', and by removing ``new unit-set aside'' and adding 
in its place ``new unit set-aside''; and
0
g. In paragraph (c), by adding after ``Each'' the word ``State'', by 
removing ``identified under'' and adding in its place ``in'', by 
removing ``excludes'' and adding in its place ``does not include'', and 
by removing ``set aside'' wherever it appears and adding in its place 
``set-aside''.


Sec.  97.711  [Amended]

0
65. Section 97.711 is amended by:
0
a. Italicizing the headings of paragraphs (b)(1) and (2);
0
b. In paragraphs (b)(1)(iii) and (b)(2)(iii), by adding after 
``November 30 of'' the word ``the'';
0
c. In paragraph (c)(1) introductory text, by adding after ``approved'' 
each time it appears the word ``under'';
0
d. In paragraph (c)(1)(ii), by removing ``Sec.  52.39(g), (h), or (i)'' 
and adding in its place ``Sec.  52.39(h) or (i)'';
0
e. In paragraph (c)(5)(i)(B), by adding after ``Sec.  52.39(h) or (i)'' 
the words ``of this chapter'';
0
f. In paragraph (c)(5)(ii) introductory text, by removing ``of this 
paragraph'' and adding in its place ``of this section'';
0
g. In paragraph (c)(5)(ii)(B), by adding after ``Sec.  52.39(h) or 
(i)'' the words ``of this chapter''; and
0
h. In paragraph (c)(5)(iii), by removing ``of this paragraph'' and 
adding in its place ``of this section''.


Sec.  97.712  [Amended]

0
66. Section 97.712 is amended by:
0
a. In paragraph (a)(2), by removing ``Sec. Sec.  '' and adding in its 
place ``Sec.  '';
0
b. In paragraph (a)(4)(i), by removing ``paragraph (a)(1)(i) through 
(iii)'' and adding in its place ``paragraphs (a)(1)(i) through (iii)'';
0
c. In paragraph (a)(4)(ii), by adding after ``paragraph (a)(4)(i)'' the 
words ``of this section'';
0
d. In paragraph (a)(9)(i), by adding after ``November 30 of'' the word 
``the'';
0
e. In paragraph (b)(4)(ii), by adding after ``paragraph (b)(4)(i)'' the 
words ``of this section'';
0
f. In paragraph (b)(9)(i), by adding after ``November 30 of'' the word 
``the''; and
0
g. In paragraph (b)(10)(ii), by removing ``Sec.  52.39(g), (h), or 
(i)'' and by adding in its place ``Sec.  52.39(h) or (i)''.


Sec.  97.721  [Amended]

0
67. Section 97.721 is amended by:
0
a. In paragraphs (c), (d), and (e), by removing ``period'' and adding 
in its place ``periods''';
0
b. In paragraphs (f) and (g), by removing ``Sec.  52.39(h) and (i)'' 
and adding in its place ``Sec.  52.39(h) or (i)''; and
0
c. In paragraph (j), by removing ``the date'' and adding in its place 
``the date 15 days after the date'', and by removing the comma before 
``described''.


Sec.  97.725  [Amended]

0
68. Section 97.725 is amended by:
0
a. In paragraph (b)(2)(iii) introductory text, by removing ``paragraph 
(b)(1)(i)'' and adding in its place ``paragraph (b)(1)(ii)'';
0
b. In paragraph (b)(2)(iii)(B), by adding ``the calculations 
incorporating'' before ``any adjustments''; and
0
c. In paragraph (b)(6)(iii)(B), by removing after ``appropriate'' the 
word ``at''.


Sec.  97.728  [Amended]

0
69. Section 97.728 is amended in paragraph (b) by removing ``paragraph 
(a)(1)'' and adding in its place ``paragraph (a)''.


Sec.  97.730  [Amended]

0
70. Section 97.730 is amended by:
0
a. Italicizing the heading of paragraph (a);
0
b. In paragraph (b) introductory text, by adding after ``operator'' the 
words ``of a CSAPR SO2 Group 2 unit'', by adding ``the later 
of'' before ``the following dates'' each time it appears, and by 
removing the final period and adding in its place a colon;
0
c. Removing paragraphs (b)(1) and (b)(2) introductory text;
0
d. Redesignating paragraphs (b)(2)(i) and (ii) as paragraphs (b)(1) and 
(2);
0
e. In newly redesignated paragraph (b)(2), by removing the final 
semicolon and adding in its place a period;
0
f. In paragraph (b)(3) introductory text, by removing ``Sec. Sec.  '' 
and adding in its place ``Sec.  ''; and
0
g. In paragraph (b)(3)(iii), by adding after ``Sec.  75.66'' the words 
``of this chapter''.


Sec.  97.731  [Amended]

0
71. Section 97.731 is amended by:
0
a. Italicizing the headings of paragraphs (d)(1) through (3), (d)(3)(i) 
through (iv), (d)(3)(iv)(A) through (D), and (d)(3)(v);
0
b. In paragraph (d)(3) introductory text, by removing ``Sec. Sec.  '' 
and adding in its place ``Sec.  ''; and
0
c. Redesignating paragraphs (d)(3)(v)(A)(1) through (3) as paragraphs 
(d)(3)(v)(A)(1) through (3).


Sec.  97.734  [Amended]

0
72. Section 97.734 is amended by:
0
a. In paragraph (b) by adding ``the'' before ``requirements'';
0
b. In paragraph (d)(1) introductory text, by removing ``the CSAPR'' and 
adding in its place ``a CSAPR'', and by adding ``the later of'' before 
the final colon;

[[Page 75778]]

0
c. In paragraph (d)(1)(i), by removing ``For a unit that commences 
commercial operation before July 1, 2014, the'' and adding in its place 
``The''; and
0
d. In paragraph (d)(1)(ii), by removing ``For a unit that commences 
commercial operation on or after July 1, 2014, the'' and adding in its 
place ``The'', and by removing ``, unless that quarter is the third or 
fourth quarter of 2014, in which case reporting shall commence in the 
quarter covering January 1, 2015 through March 31, 2015''.

[FR Doc. 2015-29796 Filed 12-2-15; 8:45 am]
BILLING CODE 6560-50-P


