[Federal Register Volume 85, Number 156 (Wednesday, August 12, 2020)]
[Rules and Regulations]
[Pages 49170-49220]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-14408]



[[Page 49169]]

Vol. 85

Wednesday,

No. 156

August 12, 2020

Part IV





 Environmental Protection Agency





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40 CFR Part 97





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Promulgation of Air Quality Implementation Plans; State of Texas; 
Regional Haze and Interstate Visibility Transport Federal 
Implementation Plan; Final Rule

  Federal Register / Vol. 85, No. 156 / Wednesday, August 12, 2020 / 
Rules and Regulations  

[[Page 49170]]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 97

[EPA-R06-OAR-2016-0611; FRL-10010-52-Region 6]


Promulgation of Air Quality Implementation Plans; State of Texas; 
Regional Haze and Interstate Visibility Transport Federal 
Implementation Plan

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: Pursuant to the federal Clean Air Act (CAA or Act), the 
Environmental Protection Agency (EPA) is finalizing its affirmation, 
with amendments, of an intrastate sulfur dioxide (SO2) 
trading program as an alternative to best available retrofit technology 
(BART) requirements for certain sources in Texas. This action finalizes 
the August 2018 proposed affirmation and November 2019 supplemental 
notice of proposed rulemaking (SNPRM) concerning certain aspects of a 
final rule published on October 17, 2017, partially approving the 2009 
Texas Regional Haze State Implementation Plan (SIP) submission and 
promulgating a Federal Implementation Plan (FIP) for Texas to address 
certain outstanding CAA regional haze requirements for the first 
implementation period.

DATES: This final rule is effective on September 11, 2020.

ADDRESSES: The EPA has established a docket for this action under 
Docket ID No. EPA-R06-OAR-2016-0611. All documents in the docket are 
listed on the http://www.regulations.gov website. Although listed in 
the index, some information is not publicly available, e.g., 
Confidential Business Information (CBI) or other information whose 
disclosure is restricted by statute therefore is not posted to 
regulations.gov. Certain other material, such as copyrighted material, 
is not placed on the internet and will be publicly available only in 
hard copy. Publicly available docket materials are available either 
electronically through http://www.regulations.gov or in hard copy at 
EPA Region 6, 1201 Elm Street, Suite 500, Dallas, Texas 75270.

FOR FURTHER INFORMATION CONTACT: Jennifer Huser, Air and Radiation 
Division, Environmental Protection Agency, Region 6, 1201 Elm Street, 
Suite 500, Dallas, Texas 75270, telephone 214-665-7347; email address 
Huser.Jennifer@epa.gov.

SUPPLEMENTARY INFORMATION: Throughout this document wherever ``we,'' 
``us,'' or ``our'' is used, we mean the EPA.

Table of Contents

I. Background
    A. Regional Haze
    B. Interstate Transport of Pollutants That Affect Visibility
    C. Previous Actions Related to Texas Regional Haze
    D. EPA's Denial of the Petition for Reconsideration of CSAPR as 
a BART Alternative and its Relationship to This Final Action
II. Our Proposed Actions
    A. Proposed Rule Affirming the October 2017 Final Action
    B. Supplemental Notice of Proposed Rulemaking
III. Summary of Our Final Decisions
    A. Regional Haze
    1. Amendments to the Texas SO2 Trading Program
    2. Analysis of Texas SO2 Trading Program as a BART 
Alternative
    3. PM BART
    4. Reasonable Progress
    B. Interstate Transport of Pollutants That Affect Visibility
IV. Summary and Responses to Significant Issues Raised by Commenters
    A. Texas SO2 Trading Program as a BART Alternative
    B. PM BART
    C. Appropriateness of the Texas SO2 Trading Program 
vs. Source-Specific BART FIP
    D. Statutory Requirements for FIP Promulgation and 
Implementation
    E. Timing of the Plan for the First Implementation Period
    F. Notice and Comment Requirements
    G. Subject-to-BART Determinations
    H. Visibility Transport
    I. Reasonable Progress
    J. Coleto Creek
    K. Assurance Provisions and the Variability Limit
    L. Venue
    M. Other
V. Final Action
    A. Regional Haze
    B. Interstate Visibility Transport
VI. Statutory and Executive Order Reviews

I. Background

A. Regional Haze

    Regional haze is visibility impairment that is produced by a 
multitude of sources and activities that are located across a broad 
geographic area. These sources--both human-caused (anthropogenic) and 
naturally occurring--emit or otherwise introduce into the atmosphere 
PM, including fine PM (PM2.5) (e.g., sulfates, nitrates, 
organic carbon (OC), elemental carbon (EC), and soil dust), or 
pollutants that are precursors to the formation of PM2.5 
(e.g., SO2, NOX, and, in some cases, ammonia 
(NH3) and volatile organic compounds (VOCs)). Fine-particle 
precursors react in the atmosphere to form PM2.5, which 
impairs visibility by scattering and absorbing light. Visibility 
impairment limits visual distance and reduces color, clarity, and 
contrast of view. Reducing PM2.5 and its precursor gases in 
the atmosphere is an effective method of improving visibility. 
PM2.5 can also cause serious health effects and mortality in 
humans and contributes to environmental effects, such as acid 
deposition and eutrophication.
    Data from the existing visibility monitoring network, the 
``Interagency Monitoring of Protected Visual Environments'' (IMPROVE) 
monitoring network, show that visibility impairment caused by air 
pollution occurs virtually all the time at most national parks and 
wilderness areas. In 1999, the average visual range \1\ in many 
mandatory Class I areas \2\ (i.e., national parks and memorial parks, 
wilderness areas, and international parks meeting certain size 
criteria) in the western United States was 100-150 kilometers, or about 
one-half to two-thirds of the visual range that would exist without 
anthropogenic air pollution. In most of the eastern Class I areas of 
the United States, the average visual range was less than 30 
kilometers, or about one-fifth of the visual range that would exist 
under estimated natural conditions.\3\ Since the promulgation of the 
original Regional Haze Rule in 1999, CAA programs have reduced 
emissions of haze-causing pollution, lessening visibility impairment 
and resulting in improved average visual ranges.\4\
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    \1\ Visual range is the greatest distance, in kilometers or 
miles, at which a dark object can be viewed against the sky.
    \2\ Areas designated as mandatory Class I Federal areas consist 
of National Parks exceeding 6,000 acres, wilderness areas and 
national memorial parks exceeding 5,000 acres, and all international 
parks that were in existence on August 7, 1977. 42 U.S.C. 7472(a). 
In accordance with section 169A of the CAA, EPA, in consultation 
with the Department of Interior, promulgated a list of 156 areas 
where visibility is identified as an important value. 44 FR 69122 
(November 30, 1979). The extent of a mandatory Class I area includes 
subsequent changes in boundaries, such as park expansions. 42 U.S.C. 
7472(a). Although states and tribes may designate as Class I 
additional areas which they consider to have visibility as an 
important value, the requirements of the visibility program set 
forth in section 169A of the CAA apply only to ``mandatory Class I 
Federal areas.'' Each mandatory Class I Federal area is the 
responsibility of a ``Federal Land Manager.'' 42 U.S.C. 7602(i). 
When we use the term ``Class I area'' in this action, we mean a 
``mandatory Class I Federal area.''
    \3\ 64 FR 35714 (July 1, 1999).
    \4\ An interactive ``story map'' depicting efforts and recent 
progress by EPA and states to improve visibility at national parks 
and wilderness areas may be visited at: http://arcg.is/29tAbS3.
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    In Section 169A of the 1977 Amendments to the CAA, Congress created 
a program for protecting visibility in the nation's national parks

[[Page 49171]]

and wilderness areas. This section of the CAA establishes as a national 
goal the prevention of any future, and the remedying of any existing, 
man-made impairment of visibility in 156 national parks and wilderness 
areas designated as mandatory Class I Federal areas. On December 2, 
1980, EPA promulgated regulations to address visibility impairment in 
Class I areas that is ``reasonably attributable'' to a single source or 
small group of sources, i.e., ``reasonably attributable visibility 
impairment.'' \5\ These regulations represented the first phase in 
addressing visibility impairment. EPA deferred action on regional haze 
that emanates from a variety of sources until monitoring, modeling, and 
scientific knowledge about the relationships between pollutants and 
visibility impairment were improved.
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    \5\ 45 FR 80084 (Dec. 2, 1980).
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    Congress added section 169B to the CAA in 1990 to address regional 
haze issues, and we promulgated regulations addressing regional haze in 
1999.\6\ The Regional Haze Rule revised the existing visibility 
regulations to integrate into the regulations provisions addressing 
regional haze impairment and established a comprehensive visibility 
protection program for Class I areas. EPA's focus, following 
congressional direction, continued to be on three important visibility-
impairing pollutants from relatively uncontrolled anthropogenic 
sources: Oxides of nitrogen (NOX), sulfur dioxide 
(SO2), and particulate matter (PM).\7\ The requirements for 
regional haze, found at 40 CFR 51.308 and 51.309, are included in our 
visibility protection regulations at 40 CFR 51.300-309. The requirement 
to submit a regional haze SIP applies to all 50 states, the District of 
Columbia, and the Virgin Islands (referred to collectively hereafter as 
``states''). States were required to submit their first SIP addressing 
regional haze visibility impairment no later than December 17, 2007.\8\
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    \6\ 64 FR 35714 (July 1, 1999), codified at 40 CFR part 51, 
subpart P (Regional Haze Rule).
    \7\ Id. 35715.
    \8\ See 40 CFR 51.308(b). EPA's regional haze regulations 
require subsequent updates to the regional haze SIPs. 40 CFR 
51.308(g)-(i).
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    Section 169A(b)(2)(A) of the CAA directs states to evaluate the use 
of retrofit controls at certain larger, often under-controlled, older 
stationary sources in order to address visibility impacts from these 
sources. Specifically, section 169A(b)(2)(A) of the CAA requires states 
to revise their SIPs to contain such measures as may be necessary to 
make reasonable progress toward the natural visibility goal, including 
a requirement that certain categories of existing major stationary 
sources \9\ built between 1962 and 1977 procure, install and operate 
best available retrofit technology (BART). Larger ``fossil-fuel fired 
steam electric plants'' are included among the statutory list of BART 
source categories at section 169A(g)(7). Under the Regional Haze Rule, 
states are directed to conduct BART determinations for ``BART-
eligible'' sources that may be anticipated to cause or contribute to 
any visibility impairment in a Class I area. The evaluation of BART for 
EGUs that are located at fossil-fuel-fired power plants having a 
generating capacity in excess of 750 megawatts must follow the 
``Guidelines for BART Determinations Under the Regional Haze Rule'' at 
appendix Y to 40 CFR part 51 (hereinafter referred to as the ``BART 
Guidelines''). States are required to identify the level of control 
representing BART after considering the five statutory factors set out 
in section 169A(g)(2).\10\ States must establish emission limits, a 
schedule of compliance, and other measures consistent with the BART 
determination process for each source subject-to-BART.
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    \9\ See 42 U.S.C. 7491(g)(7) (listing the set of ``major 
stationary sources'' potentially subject-to-BART).
    \10\ The State must take into consideration the five statutory 
factors: (1) The costs of compliance, (2) the energy and non-air 
quality environmental impacts of compliance, (3) any existing 
control technology in use at the source, (4) the remaining useful 
life of the source, and (5) the degree of visibility improvement 
which may reasonably be anticipated to result.
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    Rather than requiring source-specific BART controls, states also 
have the flexibility to adopt an emissions trading program or 
alternative program as long as the alternative provides greater 
reasonable progress towards improving visibility than BART. 40 CFR 
51.308(e)(2) specifies how a state must conduct the demonstration to 
show that an alternative program will achieve greater reasonable 
progress than the installation and operation of BART. 40 CFR 
51.308(e)(2)(i)(E) requires a determination under 40 CFR 51.308(e)(3) 
or otherwise based on the clear weight of evidence that the trading 
program or other alternative measure achieves greater reasonable 
progress than would be achieved through the installation and operation 
of BART at the covered sources. Specific criteria for determining if an 
alternative measure achieves greater reasonable progress than source-
specific BART are set out in 40 CFR 51.308(e)(3); however, as noted 
above, under 40 CFR 51.308(e)(2)(i)(E) states have the flexibility to 
develop their own criteria to establish greater reasonable progress 
based on the ``clear weight of the evidence.'' Finally, 40 CFR 
51.308(e)(4) provides that states whose sources participate in the 
Cross-State Air Pollution Rule (CSAPR) trading programs need not 
require the BART-eligible fossil fuel-fired steam electric plants 
subject to those programs to install, operate, and maintain BART for 
the pollutant covered by the CSAPR trading program.
    Regional haze requirements are generally implemented through the 
cooperative-federalism framework of section 110 of the Act, in which 
states are given the primary opportunity to meet the requirements 
through state implementation plans (SIPs). Under section 110(c) of the 
CAA, whenever we disapprove a mandatory SIP submission in whole or in 
part, or make a finding that a state has failed to make such a 
submission, we are required to promulgate a federal implementation plan 
(FIP) within two years unless the state corrects the deficiency and we 
approve the new SIP submittal.

B. Interstate Transport of Pollutants That Affect Visibility

    Section 110(a) of the CAA directs states to submit a SIP that 
provides for the implementation, maintenance, and enforcement of each 
NAAQS. This is commonly referred to as an ``infrastructure SIP.'' CAA 
section 110(a)(2)(D)(i)(II) requires that infrastructure SIPs contain 
adequate provisions to prohibit interference with measures required to 
protect visibility in other states. This is referred to as ``interstate 
visibility transport'' (or ``prong 4'' of the four requirements or 
``prongs'' found in section 110(a)(2)(D)(i)). Infrastructure SIPs are 
due to the EPA within three years after the promulgation of a new or 
revised NAAQS (or within such shorter period as we may prescribe). A 
state's failure to submit a complete, approvable infrastructure SIP, 
including one that meets the requirements for interstate visibility 
transport, creates an obligation for the EPA to address this 
requirement pursuant to section 110(c).

C. Previous Actions Related to Texas Regional Haze

    On March 31, 2009, Texas submitted a regional haze SIP (the 2009 
Regional Haze SIP) to the EPA that included reliance on Texas' 
participation in trading programs under the Clean Air Interstate Rule 
(CAIR) as an alternative to BART for SO2 and NOX 
emissions

[[Page 49172]]

from EGUs.\11\ This reliance was consistent with the EPA's 
regulations at the time that Texas developed its 2009 Regional Haze 
SIP.\12\ However, at the time that Texas submitted this SIP to the EPA, 
the D.C. Circuit had remanded CAIR (without vacatur).\13\ The court 
left CAIR and our CAIR FIPs in place in order to ``temporarily preserve 
the environmental values covered by CAIR'' until we could, by 
rulemaking, replace CAIR consistent with the court's opinion. The EPA 
promulgated the Cross-State Air Pollution Rule (CSAPR) to replace CAIR 
in 2011 \14\ (and revised it in 2012).\15\ CSAPR established FIP 
requirements for sources in a number of states, including Texas, to 
address the states' interstate transport obligation under CAA section 
110(a)(2)(D)(i)(I). CSAPR addresses interstate transport of fine 
particulate matter and ozone by requiring affected EGUs in these states 
to participate in one or more of the CSAPR trading programs, which 
establish emissions budgets that apply to the EGUs' collective annual 
emissions of SO2 and NOX, as well as emissions of 
NOX during ozone season.\16\
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    \11\ CAIR required certain states, including Texas, to reduce 
emissions of SO2 and NOX that significantly 
contribute to downwind nonattainment of the 1997 NAAQS for fine 
particulate matter and ozone. See 70 FR 25152 (May 12, 2005).
    \12\ See 70 FR 39104 (July 6, 2005).
    \13\ See North Carolina v. EPA, 531 F.3d 896 (D.C. Cir. 2008), 
as modified, 550 F.3d 1176 (D.C. Cir. 2008).
    \14\ 76 FR 48207 (Aug. 8, 2011).
    \15\ CSAPR was amended three times in 2011 and 2012 to add five 
states to the seasonal NOX program and to increase 
certain state budgets. 76 FR 80760 (December 27, 2011); 77 FR 10324 
(February 21, 2012); 77 FR 34830 (June 12, 2012).
    \16\ The ozone season for CSAPR purposes is May 1 through 
September 30.
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    Following issuance of CSAPR, the EPA determined that CSAPR would 
achieve greater reasonable progress towards improving visibility than 
would source-specific BART in CSAPR states (a determination often 
referred to as ``CSAPR Better-than-BART'').\17\ In the same action, we 
revised the Regional Haze Rule to allow states whose sources 
participate in the CSAPR trading programs to rely on such participation 
in lieu of requiring BART-eligible EGUs in the state to install BART 
controls as to the relevant pollutant.
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    \17\ 77 FR 33641 (June 7, 2012). This determination was recently 
upheld by the D.C. Circuit. See Util. Air Regulatory Grp. v. EPA, 
885 F.3d 714 (D.C. Cir. 2018).
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    In the same action that EPA determined that states could rely on 
CSAPR to address the BART requirements for EGUs, EPA issued a limited 
disapproval of a number of states' regional haze SIPs, including the 
2009 Regional Haze SIP submittal from Texas, due to the states' 
reliance on CAIR, which had been replaced by CSAPR.\18\ The EPA did not 
immediately promulgate a FIP to address those aspects of the 2009 
Regional Haze SIP submittal subject to the limited disapproval of 
Texas' regional haze SIP to allow more time for the EPA to assess the 
remaining elements of the 2009 Texas SIP submittal.
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    \18\ Id.
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    In December 2014, we proposed an action to address the remaining 
regional haze obligations for Texas.\19\ In that action, we proposed, 
among other things, to rely on our CSAPR FIP requiring Texas sources' 
participation in the CSAPR trading programs to satisfy the 
NOX and SO2 BART requirements for Texas' BART-
eligible EGUs; we also proposed to approve the portions of the 2009 
Regional Haze SIP addressing PM BART requirements for the state's EGUs. 
Before that rule was finalized, however, the D.C. Circuit issued a 
decision on a number of challenges to CSAPR, denying most claims, but 
remanding the CSAPR SO2 and/or seasonal NOX 
emissions budgets of several states to the EPA for reconsideration, 
including the Phase 2 SO2 and seasonal NOX 
budgets for Texas.\20\ Due to the uncertainty arising from the remand 
of Texas' CSAPR budgets, we did not finalize our December 2014 proposal 
to rely on CSAPR to satisfy the SO2 and NOX BART 
requirements for Texas EGUs.\21\ Additionally, because our proposed 
action on the PM BART provisions for EGUs was dependent on how 
SO2 and NOX BART were satisfied, we did not take 
final action on the PM BART elements of the 2009 Texas' Regional Haze 
SIP.\22\ In January 2016, we finalized action on the remaining aspects 
of the December 2014 proposal.\23\ This final action disapproved, among 
other things, Texas' Reasonable Progress Goals for the Big Bend and 
Guadalupe Mountains Class I areas in Texas, Texas's reasonable progress 
analysis and Texas's long-term strategy. EPA promulgated a FIP 
establishing a new long-term strategy that consisted of SO2 
emission limits for 15 coal-fired EGUs at eight power plants. That 
rulemaking was judicially challenged, however, and in July 2016, the 
Fifth Circuit granted the petitioners' motion to stay the rule pending 
review.\24\ On March 22, 2017, following the submittal of a request by 
the EPA for a voluntary remand of the parts of the rule under 
challenge, the Fifth Circuit Court of Appeals remanded the rule in its 
entirety.\25\
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    \19\ 79 FR 74818 (Dec. 16, 2014).
    \20\ EME Homer City Generation, L.P. v. EPA (EME Homer City II), 
795 F.3d 118, 132 (D.C. Cir. 2015).
    \21\ See 81 FR 296, 301-02 (Jan. 5, 2016).
    \22\ Id.
    \23\ 81 FR 296 (Jan. 5, 2016).
    \24\ Texas v. EPA, 829 F.3d 405 (5th Cir. 2016).
    \25\ Order, Texas v. EPA, 16-60118 (5th Cir. Mar. 22, 2017).
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    On October 26, 2016, the EPA finalized an update to CSAPR to 
address the interstate transport requirements of CAA section 
110(a)(2)(D)(i)(I) with respect to the 2008 ozone NAAQS (CSAPR 
Update).\26\ The EPA also responded to the D.C. Circuit's remand in EME 
Homer City II of certain CSAPR seasonal NOX budgets in that 
action. As to Texas, the EPA withdrew Texas' seasonal NOX 
budget finalized in CSAPR to address the 1997 ozone NAAQS. However, in 
that same action, the EPA promulgated a FIP with a revised seasonal 
NOX budget for Texas to address the 2008 ozone NAAQS.\27\ 
Accordingly, Texas sources remain subject to CSAPR seasonal 
NOX requirements.
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    \26\ 81 FR 74504 (Oct. 26, 2016).
    \27\ Id. 74524-25.
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    On November 10, 2016, in response to the D.C. Circuit's remand of 
Texas's CSAPR SO2 budget, we proposed to withdraw the FIP 
provisions that required EGUs in Texas to participate in the CSAPR 
trading programs for annual emissions of SO2 and 
NOX.\28\ We also proposed to reaffirm the EPA's 2012 
analytical demonstration that CSAPR provides greater reasonable 
progress than BART, despite changes in CSAPR's geographic scope to 
address the EME Homer City II remand, including removal of Texas' EGUs 
from the CSAPR trading program for SO2 emissions. On 
September 29, 2017, we finalized the withdrawal of the FIP provisions 
for annual emissions of SO2 and NOX for EGUs in 
Texas \29\ and affirmed our proposed finding that the EPA's 2012 
analytical demonstration remains valid and that participation in the 
CSAPR trading programs as they now exist meets the Regional Haze Rule's 
criteria for an alternative to BART. (We refer to this as the ``2017 
CSAPR Better-than-BART affirmation finding'' throughout this notice.) 
As discussed in Section I.D below, certain environmental organizations 
filed a petition for reconsideration of this finding in November 2017.
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    \28\ 81 FR 78954 (Nov. 10, 2016).
    \29\ 82 FR 45481 (Sept. 29, 2017). As explained above, Texas 
sources continue to be subject to the CSAPR Update FIP, under which 
they participate in a CSAPR trading program for ozone season 
NOX.
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    On January 4, 2017, we proposed a FIP to address the EGU BART

[[Page 49173]]

requirements for Texas' EGUs. With respect to NOX, we 
proposed to replace the 2009 Regional Haze SIP's reliance on CAIR with 
reliance on our CSAPR FIP to address the NOX BART 
requirements for EGUs.\30\ This portion of our proposal was based on 
the CSAPR Update and our separate November 10, 2016 proposed finding, 
described above, that the EPA's actions in response to the D.C. 
Circuit's remand would not adversely impact our 2012 demonstration that 
participation in the CSAPR trading programs meets the Regional Haze 
Rule's criteria for alternatives to BART. We noted that we could not 
finalize this portion of our proposed FIP to address the NOX 
BART requirements for EGUs unless and until we finalized our proposed 
finding that CSAPR was still better than BART.\31\ (This predicate 
finding was finalized on September 29, 2017, as described above.)
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    \30\ 82 FR 912, 914-15 (Jan. 4, 2017).
    \31\ Id. 915.
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    With respect to SO2, our January 4, 2017 proposed action 
addressing the BART requirements for Texas EGUs acknowledged that 
because Texas sources would no longer be participating in the CSAPR 
program for SO2, Texas would no longer be eligible to rely 
on participation in CSAPR as an alternative to source-specific EGU BART 
for SO2 under 40 CFR 51.308(e)(4). As a result, there were 
BART requirements that were left unfulfilled with respect to Texas's 
BART-eligible EGU emissions of SO2 that would need to be 
fulfilled by either an approved SIP or an EPA-issued FIP that satisfied 
the BART requirements under 40 CFR 51.308(e)(1) or constituted a viable 
BART alternative under 40 CFR 51.308(e)(2) for those emissions. EPA 
proposed to satisfy these requirements through a BART FIP, entailing 
the identification of BART-eligible EGU sources, screening to identify 
which BART-eligible sources are ``subject-to-BART'' (i.e., may 
reasonably be anticipated to cause or contribute to any impairment of 
visibility in any Class I area), and source-by-source determinations of 
SO2 BART controls as appropriate. For those EGU sources we 
proposed to find subject to BART, we proposed to promulgate source-
specific SO2 requirements. We proposed SO2 
emission limits on 29 EGUs located at 14 facilities.
    With respect to PM, in the January 2017 proposal, we proposed to 
disapprove the portion of the 2009 Regional Haze SIP that made BART 
determinations for PM from EGUs, on the grounds that the demonstration 
in the 2009 Texas Regional Haze SIP relied on underlying assumptions as 
to how the SO2 and NOX BART requirements for EGUs 
were being met that were no longer valid with the proposed source-
specific SO2 requirements.\32\ In place of these 
determinations, we proposed to promulgate source-specific PM BART 
requirements based on existing practices and control capabilities for 
those EGUs that we proposed to find subject to BART. Previously, we had 
proposed to approve the EGU BART determinations for PM in the 2009 
Texas Regional Haze SIP, and this proposal had never been 
withdrawn.\33\ At that time, CSAPR was an appropriate alternative for 
SO2 and NOX BART for EGUs. The 2009 Texas 
Regional Haze SIP included a pollutant-specific screening analysis for 
PM to demonstrate that Texas EGUs were not subject to BART for PM. In a 
2006 guidance document,\34\ the EPA stated that pollutant-specific 
screening can be appropriate where a state is relying on a BART 
alternative to address both NOX and SO2 BART. 
However, in the January 2017 proposal, we proposed to disapprove the PM 
BART determination since SO2 BART was no longer addressed by 
a BART alternative. For coal-fired units, we proposed PM BART limits 
consistent with PM emission limits in the Mercury and Air Toxics 
Standards (MATS) rule; for gas-fired units, we proposed PM BART would 
be satisfied by making burning pipeline-quality gas federally 
enforceable; and for oil-fired units, we proposed that fuel-content 
requirements for SO2 BART would also satisfy PM BART.\35\
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    \32\ In the 2009 Regional Haze Texas SIP, for EGU BART, Texas' 
BART-eligible EGUs' emissions of both SO2 and 
NOX were covered by participation in trading programs, 
which allowed Texas to conduct a screening analysis of the 
visibility impacts from PM emissions from such units in isolation. 
However, modeling on a pollutant-specific basis for PM is 
appropriate only in the narrow circumstance of reliance on BART 
alternatives to satisfy both NOX and SO2 BART. 
Due to the complexity and nonlinear nature of atmospheric chemistry 
and chemical transformation among pollutants, EPA has not 
recommended performing modeling on a pollutant-specific basis to 
determine whether a source is subject to BART, except in the unique 
situation described above. See discussion in Memorandum from Joseph 
Paisie to Kay Prince, ``Regional Haze Regulations and Guidelines for 
Best Available Retrofit Technology (BART) Determinations,'' July 19, 
2006.
    \33\ 79 FR 74817, 74853-54 (Dec. 16, 2014).
    \34\ See discussion in Memorandum from Joseph Paisie to Kay 
Prince, ``Regional Haze Regulations and Guidelines for Best 
Available Retrofit Technology (BART) Determinations,'' July 19, 
2006.
    \35\ 82 FR 936.
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    In our final action addressing BART for Texas published on October 
17, 2017, we finalized our January 2017 proposed determination that 
Texas' participation in CSAPR's trading program for ozone-season 
NOX qualifies as an alternative to source-specific 
NOX BART. We determined that the SO2 BART 
requirements for all BART-eligible coal-fired units and a number of 
BART-eligible gas- or gas/fuel oil-fired units are satisfied by a BART 
alternative for SO2--specifically, a new intrastate trading 
program that we established addressing emissions of SO2 from 
certain EGUs in Texas. The remaining BART-eligible EGUs not covered by 
the SO2 BART alternative were previously determined to be 
not subject to BART based on screening methods using model plants and 
CALPUFF \36\ modeling as described in our proposed rule and BART 
Screening technical support document (TSD).\37\ Finally, because both 
NOX and SO2 were now being addressed by a BART 
alternative, we approved the 2009 Regional Haze SIP's determination, 
based on a pollutant-specific screening analysis, that Texas' EGUs are 
not subject to BART for PM. With respect to visibility transport 
obligations, we determined that the BART alternative to address 
SO2 and Texas sources' participation in CSAPR's trading 
program for ozone-season NOX to address NOX BART 
at Texas' EGUs fully addresses Texas' obligations for six NAAQS.
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    \36\ CALPUFF (California Puff Model) is a multi-layer, multi-
species non-steady-state puff dispersion modeling system that 
simulates the effects of time- and space-varying meteorological 
conditions on pollutant transport, transformation, and removal. 
CALPUFF is intended for use in assessing pollutant impacts at 
distances greater than 50 kilometers to several hundreds of 
kilometers. It includes algorithms for calculating visibility 
effects from long range transport of pollutants and their impacts on 
Federal Class I areas. EPA previously approved the use of the 
CALPUFF model in BART related analyses (40 CFR part 51 Regional Haze 
Regulations and Guidelines for Best Available Retrofit Technology 
(BART) Determinations; Final Rule; 70 FR 39104--39172; July 6, 
2005). For instructions on how to download the appropriate model 
code and documentation that are available from Exponent (Model 
Developer/Owner) at no cost for download, see EPA's website: https://www.epa.gov/scram/air-quality-dispersion-modeling-preferred-and-recommended-models#calpuff.
    \37\ See document at docket identification number EPA-R06-OAR-
2016-0611-0005.
---------------------------------------------------------------------------

D. EPA's Denial of the Petition for Reconsideration of CSAPR as a BART 
Alternative and its Relationship to This Final Action

    As explained in the section above, on September 29, 2017, we 
finalized the withdrawal of the CSAPR FIP provisions for annual 
emissions of SO2 and NOX for EGUs in Texas.\38\ 
We also finalized our November 2016 proposed finding affirming that the 
EPA's 2012 analytical demonstration remains valid and that 
participation in the CSAPR

[[Page 49174]]

trading programs continues to meet the Regional Haze Rule's criteria 
for an alternative to BART. In our October 17, 2017, action 
promulgating the Texas intrastate SO2 trading program, we 
relied on that determination and the fact that the Texas program would 
achieve SO2 emission reductions similar to what CSAPR would 
have achieved in Texas to conclude that the Texas program satisfies the 
requirements for a BART alternative under 40 CFR 51.308(e)(2).\39\
---------------------------------------------------------------------------

    \38\ 82 FR 45481 (Sept. 29, 2017).
    \39\ 82 FR 48324, 48330, 48357 (Oct. 17, 2017).
---------------------------------------------------------------------------

    On November 28, 2017, Sierra Club and the National Parks 
Conservation Association submitted a petition for partial 
reconsideration of our September 2017 finding affirming that CSAPR 
continues to satisfy requirements as a BART alternative.\40\ Among 
other things, these petitioners alleged that our analysis was 
materially flawed and must be reconsidered to the extent that it rested 
on an assumption that EGU BART sources in Texas would be subject to 
source-specific BART controls for SO2 rather than the 
intrastate SO2 trading program.\41\ Petitioners alleged in 
particular that EPA's emissions shifting analysis accounted for 
potential increases in emissions in remaining CSAPR states of between 
22,300 to 53,000 tons by assuming these emissions would be offset by an 
estimated 127,300 tons of SO2 emission reductions in Texas 
due to source-specific BART controls.\42\ However, these petitioners 
alleged that this assumption was proven false when EPA promulgated the 
Texas intrastate trading program rather than source-specific BART.\43\ 
On this basis, among other things, petitioners sought mandatory 
reconsideration of the September 29, 2017 action under CAA section 
307(d)(7)(B).
---------------------------------------------------------------------------

    \40\ Sierra Club and National Parks Conservation Association, 
Petition for Partial Reconsideration of Interstate Transport of Fine 
Particulate Matter: Revision of Federal Implementation Plan 
Requirements for Texas; Final Rule; 82 FR 45,481 (Sept. 29, 2017); 
EPA-HQ-OAR-2016-0598; FRL-9968-46-OAR (Nov. 28, 2017).
    \41\ See, e.g., id. 6 (citing 82 FR 45494).
    \42\ Id. 13-14 (citing 82 FR 45493-94).
    \43\ Id.
---------------------------------------------------------------------------

    In a separate action, EPA is denying this petition for 
reconsideration.\44\ That action, and the basis for that action as it 
relates to the determination that CSAPR remains a valid BART 
alternative, are beyond the scope of this action. With the denial of 
the petition for reconsideration of our 2017 affirmation in that 
separate action, EPA has made a final determination that the objections 
raised by the petitioners on the 2017 affirmation of CSAPR as a BART 
alternative are not of central relevance.\45\ As such, there is no 
longer any outstanding question whether CSAPR is a satisfactory BART 
alternative. Therefore, as discussed in Section III.A.2 below, in this 
action EPA is finalizing its affirmation that it may rely on the CSAPR 
BART-alternative analysis as a part of its ``clear weight of the 
evidence'' demonstration that the Texas intrastate trading program 
achieves greater reasonable progress than BART.
---------------------------------------------------------------------------

    \44\ See U.S. EPA, Denial of Petition for Partial 
Reconsideration of ``Interstate Transport of Fine Particulate 
Matter: Revision of Federal Implementation Plan Requirements for 
Texas'' (82 FR 45481; Sept. 29, 2017) (EPA-HQ-OAR-2016-0598). A copy 
of the denial of petition letter sent to the petitioners and the 
denial of petition Notice of Availability (NOA) published in the 
Federal Register are available at Docket ID EPA-HQ-OAR-2016-0598.
    \45\ Id.
---------------------------------------------------------------------------

II. Our Proposed Actions

A. Proposed Rule Affirming the October 2017 Final Action

    On December 15, 2017, EPA received a petition for reconsideration 
of the October 2017 final rule addressing BART in Texas requesting that 
the Administrator reconsider certain aspects of the FIP related to the 
intrastate trading program promulgated to address the SO2 
BART requirement for Texas EGUs. In our April 30, 2018 letter in 
response to that petition, we stated that we believed that certain 
aspects of the federal plan could benefit from further public comment. 
Accordingly, in a notice published on August 27, 2018, we proposed to 
affirm certain aspects of our SIP approval and of the FIP, and we 
provided the public with an opportunity to comment on those aspects, as 
well as other specified related issues.\46\ Specifically, we took 
comment on the following elements, which effectively covered all of 
petitioners' central objections: (1) The proposal to affirm the October 
2017 FIP establishing an intrastate trading program addressing 
emissions of SO2 from certain EGUs in Texas as a BART 
alternative and the determination that this program satisfies the 
requirements for BART alternatives; (2) the proposal to affirm the 
finding that the BART alternatives in the October 2017 rulemaking to 
address SO2 and NOX BART at Texas' EGUs result in 
emission reductions adequate to satisfy the requirements of CAA section 
110(a)(2)(D)(i)(II) with respect to visibility for the following NAAQS: 
1997 8-hour ozone, 1997 PM2.5 (annual and 24-hour), 2006 
PM2.5 (24-hour), 2008 8-hour ozone, 2010 1-hour 
NO2, and 2010 1-hour SO2 NAAQS; and (3) the 
proposal to affirm our October 2017 approval of Texas' SIP 
determination that no sources are subject to BART for PM. The August 
2018 affirmation proposed rule also solicited comment on the specific 
issues of whether recent shutdowns of sources included in the trading 
program and the merger of two owners of affected EGUs should impact the 
allocation methodology for certain SO2 allowances. In 
addition to soliciting comment on the above elements and aforementioned 
specific issues, the August 2018 affirmation proposal also invited 
comment on additional issues that could inform our decision making with 
regard to the SO2 BART obligations for Texas. First, we 
sought input on whether SO2 BART would be better addressed 
through a source-by-source approach (source-specific BART), the October 
2017 SO2 trading program, or some other appropriate BART 
alternative. Second, EPA requested comment on whether a SIP-based 
program would serve Texas better than a FIP. Third, we requested public 
input on whether and how the SO2 trading program finalized 
in the October 2017 final rule addresses the long-term strategy and 
reasonable progress requirements for Texas.
---------------------------------------------------------------------------

    \46\ 83 FR 43586.
---------------------------------------------------------------------------

B. Supplemental Notice of Proposed Rulemaking

    In response to certain comments received during the public comment 
period for the August 2018 proposal to affirm the October 2017 FIP, we 
proposed revisions to the Texas SO2 Trading Program in a 
supplemental proposal published on November 14, 2019.\47\ In the 
supplemental proposal, we proposed to make four sets of amendments to 
the Texas SO2 Trading Program: (1) The addition of assurance 
provisions; (2) revisions to the Supplemental Allowance Pool allocation 
provisions; (3) termination of the opt-in provisions; and (4) revision 
of the allowance recordation provisions.
---------------------------------------------------------------------------

    \47\ 84 FR 61850.
---------------------------------------------------------------------------

    (1) Addition of Assurance Provisions. The Texas SO2 
Trading Program, as promulgated in October 2017, did not include an 
assurance level. In contrast to CSAPR, the Texas SO2 Trading 
Program does not allow for sources to purchase allowances from sources 
in other states. Therefore, the number of allowances available to the 
Texas sources under the SO2 trading program, as promulgated 
in October 2017, is limited by the total number of allowances allocated 
under the program. While this limits the average annual emissions under 
the program, we recognized that the potential use of

[[Page 49175]]

banked allowances and allowances allocated from the Supplemental 
Allowance Pool could allow for potentially significant year-to-year 
variability in emissions. In each of the CSAPR trading programs, EPA 
set an assurance level for each state in order to ensure that, despite 
the broad, interstate trading region, emissions reductions would be 
achieved appropriately in a geographically distributed way commensurate 
with states' ``good neighbor'' obligations as determined by EPA through 
its analysis under CAA section 110(a)(2)(D)(i)(I).\48\ In order to 
maintain consistency with the CSAPR program and to provide additional 
support for our determination that SO2 emissions under the 
Texas SO2 Trading Program will remain below the requisite 
level on an annual basis, the EPA proposed to add assurance provisions 
to the Texas SO2 Trading Program in the November 2019 
supplemental proposal, setting the assurance level by relying on the 
same analysis and methodology that were used to set assurance levels in 
the original CSAPR rulemaking while accounting for the fact that the 
Texas SO2 Trading Program is intrastate-only (i.e., does not 
permit interstate trading). EPA proposed to set an assurance level for 
the Texas SO2 Trading Program of 255,081 tons and proposed 
to impose a penalty surrender ratio of three allowances for each ton of 
emissions in any year in excess of the 255,081-ton assurance level.
---------------------------------------------------------------------------

    \48\ 76 FR 48208, 48265-66 (Aug. 8, 2011).
---------------------------------------------------------------------------

    EPA further proposed that this assurance level would strengthen our 
determination that the Texas program compares favorably to CSAPR in 
terms of stringency. EPA noted that its previous CSAPR Better-than-BART 
analysis relied on assuming annual SO2 emissions from Texas 
EGUs of 317,100 tons. For certain EGUs not covered by the Texas program 
but that would have been subject to CSAPR, EPA made a conservative 
estimate of 35,000 tons of annual emissions. Adding this to the 255,081 
ton assurance level produced an upper bound estimate of 290,081 tons of 
emissions, which EPA noted is below the 317,100 ton assumption used for 
CSAPR.\49\
---------------------------------------------------------------------------

    \49\ 84 FR 61850, 61853.
---------------------------------------------------------------------------

    (2) Revisions to the Supplemental Allowance Pool Allocation 
Provisions. 40 CFR 97.912 of the existing Texas SO2 Trading 
Program regulations establishes how allowances are allocated from the 
Supplemental Allowance Pool to sources (collections of participating 
units at a facility) that have reported total emissions for that 
control period exceeding the total amounts of allowances allocated to 
the participating units at the source for that control period (before 
any allocation from the Supplemental Allowance Pool). While all other 
sources required to participate in the trading program have flexibility 
to transfer allowances among multiple participating units under the 
same owner/operator when planning operations, Coleto Creek consists of 
only one coal-fired unit, and at the time of our October 2017 FIP, was 
the only coal-fired unit in Texas owned and operated by Dynegy. To 
provide this source additional flexibility, in the trading program as 
it was promulgated in October 2017, Coleto Creek was allocated its 
maximum supplemental allocation from the Supplemental Allowance Pool as 
long as there are sufficient allowances in the Supplemental Allowance 
Pool available for allocation, and its actual allocation would not be 
reduced in proportion with any reductions made to the supplemental 
allocations to other sources. In our August 2018 proposal, we noted 
that Dynegy has merged with Vistra, which owns other units that are 
subject to the trading program. In the August 2018 proposal, we 
solicited comment on eliminating this additional flexibility for Coleto 
Creek in light of the recent change in ownership, and we received no 
adverse comments on such a change. Therefore, in the November 2019 
supplemental proposal, we proposed to make this change to the 
regulations.\50\
---------------------------------------------------------------------------

    \50\ Id. 61855.
---------------------------------------------------------------------------

    Some comments on our August 2018 proposal also expressed the view 
that it would be more equitable to make allocations from the 
Supplemental Allowance Pool in proportion to each owner's total 
emissions in excess of the owner's total base allowance allocations 
instead of in proportion to each individual source's emissions in 
excess of the individual source's base allowance allocation. In the 
November 2019 supplemental proposal, EPA proposed to agree that this 
change would be equitable and noted that it would also be consistent 
with the rationale for proposing to eliminate the special flexibility 
in the existing regulations for Coleto Creek. Accordingly, EPA proposed 
to amend the Supplemental Allowance Pool allocation provisions to 
reflect this further change in the allocation methodology. EPA 
specifically requested comment on the proposed revisions to the 
Supplemental Allowance Pool allocation provisions.\51\
---------------------------------------------------------------------------

    \51\ Id.
---------------------------------------------------------------------------

    (3) Termination of the Opt-in Provisions. In response to a comment 
on the August 2018 proposal that asserted that the opt-in provisions 
weakened the functional equivalence of the Texas SO2 Trading 
Program to CSAPR, EPA proposed to terminate the opt-in provisions in 
the Texas SO2 Trading Program in the November 2019 
supplemental proposal. We noted that our proposal to terminate the opt-
in provisions is consistent with the supplemental proposal's overall 
objective of strengthening our finding that the Texas SO2 
Trading Program will result in SO2 emission levels from 
Texas EGUs that are similar to or less than the emission levels from 
Texas EGUs that would have been realized from participation in the 
SO2 trading program under CSAPR. EPA also specifically 
requested comment on the proposed termination of the opt-in provisions 
and solicited comment as to what other relevant provisions in the Texas 
SO2 Trading Program may offset the commenter's concerns with 
the opt-in provisions.\52\
---------------------------------------------------------------------------

    \52\ Id. 61855-56.
---------------------------------------------------------------------------

    (4) Revision of the Allowance Recordation Provisions. In the 
November 2019 supplemental proposal, we also proposed to amend the 
language in the recordation provisions such that the Administrator can 
delay recordation of Texas SO2 Trading Program allowances 
for the specified control periods only in the event that Texas submits 
a SIP revision and EPA takes final action to approve it. Under 40 CFR 
97.921(a) of the Texas SO2 Trading Program regulations as 
originally promulgated in October 2017, ``[t]he Administrator may delay 
recordation of Texas SO2 Trading Program allowances for the 
specified control periods if the State of Texas submits a SIP revision 
before the recordation deadline.'' Similarly, under Sec.  97.921(b), 
``[t]he Administrator may delay recordation of the Texas SO2 
Trading Program allowances for the applicable control periods if the 
State of Texas submits a SIP revision by May 1 of the year of the 
applicable recordation deadline under this paragraph.'' The revisions 
we proposed in the November 2019 supplemental proposal are necessary to 
ensure that the program remains fully operational unless it is replaced 
by a SIP revision that is approved by EPA as meeting the SO2 
BART requirements for the covered units. EPA specifically requested 
comment on the proposed revisions to the allowance recordation 
provisions.\53\
---------------------------------------------------------------------------

    \53\ Id. 61856.

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

[[Page 49176]]

    Finally, the EPA noted that the proposed revisions to the Texas 
SO2 Trading Program would strengthen the program in a manner 
that provides further support that it will achieve greater emission 
reductions than Texas had agreed to in consultations with other states 
in setting reasonable progress goals for Class I areas outside Texas 
for the first implementation period of the Regional Haze Rule. As a 
result, the EPA believed the proposed changes strengthened its 
conclusion that the Texas trading program, in conjunction with Texas' 
participation in the CSAPR ozone-season NOX trading program, 
satisfies interstate visibility transport obligations under section 
110(a)(2)(D)(i)(II) as to the six NAAQS identified above. The EPA 
solicited comment on this relationship.\54\
---------------------------------------------------------------------------

    \54\ Id. 61856-57.
---------------------------------------------------------------------------

III. Summary of Our Final Decisions

A. Regional Haze

    After carefully considering the comments we received on our August 
27, 2018 proposed rule and our November 14, 2019 supplemental proposal, 
we are taking final action to affirm our determination that our October 
2017 FIP that established an intrastate trading program addressing 
emissions of SO2 from certain EGUs in Texas, as amended in 
this final action as described in section III.A.1 below, satisfies the 
Regional Haze Rule requirements for a BART alternative under 40 CFR 
51.308(e)(2). We are taking final action to affirm our determination 
that the BART alternatives addressing SO2 BART, as amended 
in this final action, and NOX BART at Texas' EGUs are 
adequate to satisfy the interstate visibility transport requirements 
for six NAAQS. We are also taking final action to affirm our October 
2017 approval of Texas' SIP determination that no sources are subject 
to BART for PM. A discussion of the amendments to the Texas 
SO2 Trading Program we are finalizing in today's final 
action and explanation of how the trading program satisfies the 
regulatory requirements for BART alternatives are discussed below in 
sections III.A.1 and III.A.2, respectively. This final rule is 
promulgated pursuant to CAA section 307(d). This includes our 
affirmation of the several aspects of the FIP promulgating the Texas 
SO2 Trading Program, amendments to certain provisions of the 
FIP, which are 307(d)-listed actions, see 307(d)(1)(B). In addition, 
EPA exercises its discretion under 307(d)(1)(V) to treat the 
affirmation of our approval of parts of the 2009 Texas Regional Haze 
SIP as also an action subject to 307(d) requirements and procedural 
protections.

1. Amendments to the Texas SO2 Trading Program

    In response to certain comments we received during the public 
comment period for the August 2018 proposal to affirm the October 2017 
FIP, we proposed revisions to the Texas SO2 Trading Program 
in a supplemental proposal published on November 14, 2019.\55\ We 
proposed to make four sets of amendments to the Texas SO2 
Trading Program: (1) The addition of assurance provisions; (2) 
revisions to the Supplemental Allowance Pool allocation provisions; (3) 
termination of the opt-in provisions; and (4) revision of the allowance 
recordation provisions. We are finalizing these amendments to the Texas 
SO2 Trading Program, with certain modifications. We are also 
correcting a 2-ton error we made in the allowance allocation for El 
Paso Electric's Newman Plant due to a unit-identification error, 
thereby increasing the trading program budget from 238,393 tons to 
238,395 tons. The amendments we are finalizing in today's action 
strengthen the Texas SO2 Trading Program and increase its 
consistency with CSAPR. These amendments are discussed in the 
paragraphs that follow.
---------------------------------------------------------------------------

    \55\ 84 FR 61850 (Nov. 14, 2019).
---------------------------------------------------------------------------

    Addition of Assurance Provisions. In order to maintain consistency 
with the CSAPR program and to provide additional support for our 
determination that SO2 emissions under the Texas 
SO2 Trading Program will remain below the requisite level on 
an annual basis, we are taking final action to add assurance provisions 
to the Texas SO2 Trading Program. To set the assurance 
level, we are relying on the same analysis and methodology that were 
used to set assurance levels in the original CSAPR rulemaking while 
accounting for the fact that the Texas SO2 Trading Program 
is intrastate-only (i.e., does not permit interstate trading). As 
discussed in our supplemental proposal, EPA determined in the CSAPR 
rulemaking that, on a state-specific basis for Texas, the statistical 
percentage measure representing the maximum expected one-year deviation 
from the state's average annual fossil fuel consumption for electricity 
generation was seven percent.\56\ Applying that same percentage to the 
current Texas SO2 Trading Program budget, EPA is finalizing 
a variability limit for Texas at 16,688 tons, which is seven percent of 
the corrected trading budget of 238,395 tons. The assurance level we 
are finalizing is the sum of the budget and the variability limit, or 
255,083 tons, and we are making this assurance level effective 
beginning with the 2021 compliance period and for each period 
thereafter. We are also taking final action to amend the Texas 
SO2 Trading Program's regulations to impose a penalty 
surrender ratio of three allowances for each ton of emissions in any 
year in excess of the 255,083-ton assurance level. We are taking final 
action to impose the penalty proportionately to emissions from those 
groups of sources represented by a common designated representative 
that emit in excess of the groups' annual allocations of allowances. 
Thus, if the total emissions of all sources in the program in any year 
exceed the annual program budget by more than a variability limit of 
16,688 tons, the emissions over the assurance level will trigger a 
requirement for some sources to surrender three allowances for each ton 
of emissions over the assurance level, providing a strong disincentive 
against emissions exceeding the assurance level.
---------------------------------------------------------------------------

    \56\ Id. 61853.
---------------------------------------------------------------------------

    We are taking final action to add new provisions at multiple 
locations in the Texas SO2 Trading Program regulations at 40 
CFR part 97, subpart FFFFF (40 CFR 97.901 through 97.935) to add these 
assurance provisions. In Sec.  97.902, new definitions of several terms 
used in the assurance provisions (``assurance account,'' ``common 
designated representative,'' ``common designated representative's 
assurance level,'' and ``common designated representative's share'') 
are being added in this final action. New Sec.  97.906(c)(2) 
and(c)(3)(ii) set forth the central requirement of the assurance 
provisions--namely, that if SO2 emissions from all covered 
sources in 2021 or any subsequent year collectively exceed the 
program's assurance level, then the owners and operators of the groups 
of sources determined to be responsible for the collective exceedance 
would be required to surrender allowances totaling twice the amount of 
the exceedance by a specified deadline, in addition to the allowances 
surrendered to account for the sources' total emissions. New Sec.  
97.910(b) and (c) establish the variability limit that would be added 
to the trading program budget to determine the amount of the assurance 
level. New Sec.  97.920(b) provides for the establishment of assurance 
accounts, when appropriate, to hold the additional allowances to be 
surrendered. New Sec.  97.925 sets forth

[[Page 49177]]

additional procedures for EPA's administration of and sources' 
compliance with the assurance provisions. In addition to adding the 
provisions discussed above, in Sec. Sec.  97.906 and 97.920, we are 
also taking final action to renumber and update internal cross-
references to reflect the added and renumbered paragraphs. Finally, we 
are making revisions to existing language at Sec. Sec.  97.902 
(definitions of ``general account'' and ``Texas SO2 Trading 
Program allowance deduction''), 97.906(b)(2), 97.913(c), 97.926(b), 
97.928(b), and renumbered 97.906(c)(4)(ii) to integrate the new 
assurance provisions with various existing provisions of the Texas 
program regulations.
    As discussed in our November 2019 supplemental proposal, in 
addition to being consistent with the original CSAPR methodology for 
setting assurance levels, an assurance level set at 255,083 tons is 
appropriate for the Texas SO2 Trading Program because it 
provides further support for our October 2017 finding that the Texas 
SO2 Trading Program will result in SO2 emission 
levels from Texas EGUs that are similar to or less than the emission 
levels from Texas EGUs that would have been realized from participation 
in the SO2 trading program under CSAPR. Additionally, at an 
assurance level of 255,083 tons of emissions annually, EPA has high 
confidence that emissions will be below the amount assumed in the BART-
alternative sensitivity analysis utilized for the 2012 CSAPR Better-
than-BART determination (i.e., 317,100 tons), and thus visibility 
levels at Class I areas impacted by sources in Texas are anticipated to 
be at least as good as the levels projected in the 2012 analysis that 
assumed Texas would be in the larger CSAPR SO2 trading 
program.\57\
---------------------------------------------------------------------------

    \57\ Id.
---------------------------------------------------------------------------

    The language of the revisions to the Texas SO2 Trading 
Program regulations we are finalizing in this final rulemaking would 
generally parallel the analogous language from the CSAPR regulations at 
40 CFR part 97, subparts AAAAA through EEEEE, streamlined to reflect 
the Texas program's narrower applicability (i.e., specific units 
located only in Texas, excluding any new units built either in Texas or 
in Indian country within Texas' borders). The only substantive 
differences from the analogous CSAPR assurance provisions concern the 
approach used to impute allocation amounts--for use in apportioning 
responsibility for any collective exceedance of the assurance level--to 
any units that do not receive actual allowance allocations from the 
trading program budget. Under CSAPR, the only units potentially in this 
situation are new units that do not receive allowance allocations from 
the CSAPR new unit set-asides. The CSAPR regulations include a 
methodology for computing unit-specific imputed allocation amounts 
based on several data elements relating to the new units' design and 
potential operation.\58\ In contrast, under the Texas SO2 
Trading Program, the only units potentially in this situation would be 
existing units that have ceased operation for an extended period, 
thereby losing their allocations from the trading budget under Sec.  
97.911(a), and that subsequently resume operation.\59\ Because the 
Texas SO2 Trading Program regulations already identify the 
unit-specific allowance allocations that these units would formerly 
have received from the trading budget, the Texas SO2 Trading 
Program assurance provisions we are finalizing in this final rulemaking 
would use these previously established amounts for purposes of 
assurance provision calculations instead of requiring new imputed 
allocation amounts to be computed according to the more complex 
methodology in the CSAPR assurance provisions. The simpler approach we 
are finalizing for the Texas SO2 Trading Program assurance 
provisions appears at paragraph (2) of the new definition of ``common 
designated representative's assurance level'' we are finalizing in 
Sec.  97.902.
---------------------------------------------------------------------------

    \58\ See, e.g., paragraph (3) of the definition of ``common 
designated representative's share'' at 40 CFR 97.702.
    \59\ Although the owners and operators of a unit in this 
situation might receive an allocation of allowances from the 
Supplemental Allowance Pool under Sec.  97.912 based in part on the 
unit's emissions following resumption of operations, under the Texas 
program assurance provisions, any allocations of allowances from the 
Supplemental Allowance Pool would not be considered when 
apportioning responsibility for a collective exceedance of the 
assurance level.
---------------------------------------------------------------------------

    Revisions to the Supplemental Allowance Pool Allocation Provisions. 
All sources required to participate in the Texas SO2 Trading 
Program have the flexibility to transfer allowances among multiple 
participating units under the same owner/operator when planning 
operations. As discussed in section II.B of this final action, the 
October 2017 final rule included additional flexibility to transfer 
allowances for Coleto Creek, but given the subsequent merger of Dynegy 
with Vistra, which owns other units that are subject to the trading 
program, Coleto Creek now has the same flexibility as other sources 
required to participate in the trading program to transfer allowances 
among multiple participating units under the same ownership when 
planning operations. In light of this, we are taking final action to 
eliminate the additional flexibility originally offered under the 
trading program for Coleto Creek.
    We are also finalizing amendments to the methodology for allocating 
allowances from the Supplemental Allowance Pool such that allowance 
allocations are in proportion to each owner's total emissions in excess 
of the owner's total base allowance allocations instead of in 
proportion to each individual source's emissions in excess of the 
individual source's base allowance allocation. Comments we received on 
our August 2018 proposal and our November 2019 supplemental proposal 
generally indicated support for this change.\60\ We find that this 
change would make the methodology for allocating allowances more 
equitable and is also consistent with the rationale for eliminating the 
special flexibility in the existing regulations for Coleto Creek. For 
consistency with the new variability limit of 16,688 tons, we are also 
reducing the number of allowances that can be allocated from the 
Supplemental Allowance Pool in any year to 16,688 tons plus any 
allowances added to the pool in that year from retired units. The 
effect of this revision is that the total number of allowances that can 
be issued in any year, considering both initial allocations and 
allowances issued from the Supplemental Allowance Pool, will not exceed 
the program's assurance level of 255,083 tons. This revision to the 
Supplemental Allowance Pool provisions is consistent with and 
reinforces the disincentive created by the assurance provisions against 
emissions exceeding the assurance level.
---------------------------------------------------------------------------

    \60\ Supportive comments were submitted by most of the sources 
covered by the Texas SO2 Trading Program, except for LCRA 
who did not specifically comment on the reduction in the number of 
allowances that can be allocated from the Supplemental Allowance 
Pool. Supportive comments can be found in the docket for this action 
at Document IDs EPA-R06-OAR-2016-0611-0157, EPA-R06-OAR-2016-0611-
0127, EPA-R06-OAR-2016-0611-0163, EPA-R06-OAR-2016-0611-0156.
---------------------------------------------------------------------------

    To implement these modifications to the Supplemental Allowance 
Pool, we are finalizing several revisions to Sec. Sec.  97.911 and 
97.912. In Sec.  97.912, we are editing paragraph (a) to limit 
applicability of the current allocation methodology to the 2019 and 
2020 control periods, and we are adding a new paragraph (b) that sets 
forth the revised allocation methodology for the control periods in 
2021 and subsequent years. We are also renumbering two

[[Page 49178]]

existing paragraphs of the section to accommodate the new paragraph (b) 
and are updating internal cross-references to reflect the renumbering 
and to integrate the provisions of the revised allocation methodology 
with other existing provisions. We are adding new Sec.  97.912(b)(1) 
that addresses the revised allocation methodology and sets forth a 
procedure for assigning units into groups under common ownership called 
``affiliated ownership groups.'' Under the new procedure, the group 
assignments will remain constant unless and until revised by EPA to 
reflect an ownership transfer. The initial group assignments for all 
covered units are specified in a new column that we are adding to the 
existing allowance allocation table in Sec.  97.911(a)(1). Renumbered 
Sec.  97.912(d) is revised to reduce the cap on the number of 
allowances that can be allocated from the Supplemental Allowance Pool 
for any given control period starting in 2021 to 16,688 tons plus any 
allowances added to the pool in that year from retired units. Existing 
Sec.  97.912(a)(3)(ii)(B) is revised to add the same procedure included 
in new Sec.  97.912(b)(4)(i)(C) for adjusting allocation amounts up or 
down by one allowance as needed to address rounding errors. Finally, we 
are finalizing non-substantive revisions to Sec.  97.911(a)(2) and 
(c)(5) that clarify that allowances from the trading budget that are 
transferred to the Supplemental Allowance Pool are not necessarily 
``allocated under'' Sec.  97.912, but instead are made available for 
``potential allocation in accordance with'' Sec.  97.912.
    Termination of Opt-in Provisions. To address concerns that the opt-
in provisions weakened the functional equivalence of the Texas 
SO2 Trading Program to CSAPR and to be consistent with EPA's 
determination not to include opt-in provisions in the CSAPR trading 
programs on the basis that opt-in provisions would undermine 
achievement of the CSAPR program's emission reduction objectives, we 
are taking final action to terminate the opt-in provisions in the Texas 
SO2 Trading Program. As we discuss in the response to 
comments below, we find that this termination of the opt-in provisions 
will address concerns about the difficulty of distinguishing new 
emission reductions from reductions that opt-in sources would have made 
anyway, and the consequent likelihood that the amounts of allowances 
allocated to the sources would exceed their starting emissions levels 
and thus introduce ``extra'' allowances available to be traded to other 
sources. Our final action to terminate the opt-in provisions 
strengthens our finding that the Texas SO2 Trading Program 
will result in SO2 emission levels from Texas EGUs that are 
similar to or less than the emission levels from Texas EGUs that would 
have been realized from participation in the SO2 trading 
program under CSAPR.
    Because no units opted into the Texas SO2 Trading 
Program for the 2019 or 2020 control periods and opting in is not 
allowed for any future control period, we are implementing our final 
action to terminate the opt-in provisions by removing the provisions 
from the regulations in their entirety. Specifically, Sec. Sec.  
97.904(b), 97.911(b), and 97.921(d), which concerned the procedure for 
opting in, allowance allocations for opt-in units, and recordation for 
opt-in units, respectively, are being removed. In addition, conforming 
revisions to reflect removal of the opt-in provisions are being made to 
the existing provisions at Sec. Sec.  97.911(c)(5), 97.915(d), 
97.930(b), 97.934(d)(1), and renumbered Sec.  97.906(c)(3)(i).
    Revision of Allowance Recordation Provisions. We are taking final 
action to condition any exceptions to scheduled allowance recordation 
activities on Texas' submission and EPA's approval of a SIP revision, 
rather than just on Texas' submission of a SIP revision. This revision 
will ensure that the program remains fully operational unless it is 
replaced by a SIP revision that is approved by EPA as meeting the 
SO2 BART requirements for the covered units. To implement 
our final revision to the allowance recordation provisions, we are 
amending three paragraphs of Sec.  97.921. In Sec.  97.921(a), we are 
deleting without replacement the language providing for a possible 
delay of recordation activities scheduled for November 1, 2018; the 
language is moot because the recordation date has already passed. In 
Sec.  97.921(b), which governs future recordation of allowances 
allocated from the trading budget under Sec.  97.911(a), we are 
revising the existing language to provide that future recordation 
activities will take place as scheduled unless provided otherwise in 
EPA's approval of a SIP revision replacing the provisions of subpart 
FFFFF. We are also adding the same revised condition to Sec.  
97.921(c), which governs future recordation of allowances allocated 
from the Supplemental Allowance Pool under Sec.  97.912.
    Error Correction Adjusting the Allocation for El Paso Electric's 
Newman Plant. Our last amendment to the Texas SO2 Trading 
Program regulations in this action corrects a small error in the 
allowance allocations and budget established in the October 2017 FIP. 
In our October 2017 action, we determined that several units at El Paso 
Electric's Newman plant (ORIS 3456) should be included in the Texas 
SO2 Trading Program, including ``Newman unit 4.'' This 
``unit'' is actually a multi-unit combined cycle system consisting of 
two gas- and oil-fired combustion turbine units serving a common steam 
turbine-generator. The combustion turbine units are identified in the 
databases used for the CSAPR SO2 program as ``Newman unit 
**4'' and ``Newman unit **5.'' Both of these combustion turbine units 
are BART-eligible and both are properly included in the Texas 
SO2 Trading Program pursuant to the evaluation of ``Newman 
unit 4'' set forth in our October 2017 action.\61\ However, in 
establishing the allowance allocations and budgets in our October 2017 
action, while we correctly accounted for the 2-ton CSAPR allocation to 
Newman unit **4, we mistakenly omitted the 2-ton CSAPR allocation to 
Newman unit **5. We are correcting our omission in this action. 
Specifically, in Table 1 in Sec.  97.911(a)(1), we are relabeling the 
existing entry for ``Newman unit 4'' as ``Newman unit **4'' and adding 
a new entry for ``Newman unit **5'' with an additional 2-ton 
allocation, and in Sec.  97.910(a)(1), we are increasing the Texas 
SO2 Trading Program budget by 2 tons to 238,395 tons.\62\ We 
find that these corrections are entirely consistent with the 
methodology and rationale we set forth when establishing the 
allocations and budget in our October 2017 action. Because the 
otherwise applicable recordation deadlines for the allowances allocated 
to Newman unit **5 for the control periods from 2019 through 2024 will 
have already passed by the effective date of this action, new Sec.  
97.921(f) establishes December 31, 2020 as the delayed recordation 
deadline for these allocations. Finally, language is added to Sec.  
97.912(a)(1) and (2) clarifying that allocations under Sec.  97.911 are 
not considered in determining a source's eligibility to receive 
allocations from the Supplemental Allowance Pool unless the allocations 
have actually been recorded in the source's compliance account under 
Sec.  97.921.
---------------------------------------------------------------------------

    \61\ See 82 FR at 48354-57, where we identify ``Newman unit 4'' 
as a BART-eligible source and discuss our evaluation for determining 
the inclusion of units in the Texas SO2 Trading Program.
    \62\ Both Newman unit **4 and Newman unit **5 have participated 
in the Texas SO2 Trading Program since January 1, 2019. 
El Paso Electric has monitored and reported the SO2 
emissions for both units under the program.

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

[[Page 49179]]

2. Analysis of Texas SO2 Trading Program as a BART 
Alternative
    We are taking final action to affirm our October 17, 2017 final 
action promulgating the Texas SO2 Trading Program under 40 
CFR 52.2312 and subpart FFFFF of part 97 as a BART alternative, with 
the amendments discussed in Section III.A.1. We are affirming our 
determination that the Texas SO2 Trading Program, including 
the addition of the assurance provisions and other amendments to the 
program we are finalizing in this action, will result in future EGU 
emissions in Texas that will be less than the SO2 emission 
levels used in the 2012 Better-than-BART demonstration for Texas EGU 
emissions assuming CSAPR participation.\63\ Additionally, the aggregate 
visibility impact from Texas EGU emissions under the trading program 
will be similar to or less than what would have been realized from 
Texas participation in the CSAPR SO2 trading program.\64\ 
Further, on the basis of EPA's denial of a petition for reconsideration 
of the 2017 CSAPR Better-than-BART affirmation finding in a separate 
action,\65\ EPA can now affirm that it has fully accounted for the 
stringency of the Texas program in the CSAPR Better-than-BART analysis 
(including accounting for the effects of Texas no longer being a part 
of the interstate trading region of CSAPR). We are taking final action 
to affirm our determination that the Texas SO2 Trading 
Program satisfies the Regional Haze Rule requirements for BART 
alternatives, and therefore satisfies the SO2 BART 
requirements for the BART-eligible coal-fired EGUs and gas- and gas/
fuel oil-fired EGUs identified in the table below.
---------------------------------------------------------------------------

    \63\ 83 FR 43586, 43591 (Aug. 27, 2018).
    \64\ Id. 43592.
    \65\ See U.S. EPA, Denial of Petition for Partial 
Reconsideration of ``Interstate Transport of Fine Particulate 
Matter: Revision of Federal Implementation Plan Requirements for 
Texas'' (82 FR 45481; Sept. 29, 2017) (EPA-HQ-OAR-2016-0598). A copy 
of the denial of petition letter sent to the petitioners and the 
denial of petition Notice of Availability (NOA) published in the 
Federal Register are available at Docket ID EPA-HQ-OAR-2016-0598.

       Table 1--Texas EGUs Subject to the FIP SO2 Trading Program
------------------------------------------------------------------------
        Owner/operator                  Units            BART-eligible
------------------------------------------------------------------------
AEP...........................  Welsh Power Plant      Yes.
                                 Unit 1.
                                Welsh Power Plant      Yes.
                                 Unit 2.
                                Welsh Power Plant      No.
                                 Unit 3.
                                H W Pirkey Power       No.
                                 Plant Unit 1.
                                Wilkes Unit 1          Yes.
                                 [dagger].
                                Wilkes Unit 2          Yes.
                                 [dagger].
                                Wilkes Unit 3          Yes.
                                 [dagger].
CPS Energy....................  JT Deely Unit 1......  Yes.
                                JT Deely Unit 2......  Yes.
                                Sommers Unit 1         Yes.
                                 [dagger].
                                Sommers Unit 2         Yes.
                                 [dagger].
LCRA..........................  Fayette/Sam Seymour    Yes.
                                 Unit 1.
                                Fayette/Sam Seymour    Yes.
                                 Unit 2.
Vistra........................  Big Brown Unit 1.....  Yes.
                                Big Brown Unit 2.....  Yes.
                                Coleto Creek Unit 1..  Yes.
                                Martin Lake Unit 1...  Yes.
                                Martin Lake Unit 2...  Yes.
                                Martin Lake Unit 3...  Yes.
                                Monticello Unit 1....  Yes.
                                Monticello Unit 2....  Yes.
                                Monticello Unit 3....  Yes.
                                Sandow Unit 4........  No.
                                Stryker Unit ST2       Yes.
                                 [dagger].
                                Graham Unit 2          Yes.
                                 [dagger].
NRG...........................  Limestone Unit 1.....  No.
                                Limestone Unit 2.....  No.
                                WA Parish Unit WAP4    Yes.
                                 [dagger].
                                WA Parish Unit WAP5..  Yes.
                                WA Parish Unit WAP6..  Yes.
                                WA Parish Unit WAP7..  No.
Xcel..........................  Tolk Station Unit      No.
                                 171B.
                                Tolk Station Unit      No.
                                 172B.
                                Harrington Unit 061B.  Yes.
                                Harrington Unit 062B.  Yes.
                                Harrington Unit 063B.  No.
El Paso Electric..............  Newman Unit 2[dagger]  Yes.
                                Newman Unit 3          Yes.
                                 [dagger].
                                Newman Unit **4        Yes.
                                 [dagger].
                                Newman Unit **5        Yes.
                                 [dagger].
------------------------------------------------------------------------
[dagger] Gas-fired or gas/fuel oil-fired units.

    Under 40 CFR 51.308(e)(2), a State may opt to implement or require 
participation in an emissions trading program or other alternative 
measure rather than to require sources subject to BART to install, 
operate, and maintain BART. Among other things, such an emissions 
trading program or other alternative measure must achieve greater 
reasonable progress than would be achieved through the installation and 
operation of BART. In the paragraphs

[[Page 49180]]

that follow, we summarize the BART alternative requirements under Sec.  
51.308(e)(2) and explain how the Texas SO2 Trading Program 
satisfies each requirement.
    Section 51.308(e)(2)(i) requires a demonstration that the emissions 
trading program or other alternative measure will achieve greater 
reasonable progress than would have resulted from the installation and 
operation of BART at all sources subject to BART in the State and 
covered by the alternative program. This demonstration must be based on 
the criteria listed under Sec.  51.308(e)(2)(i)(A) through (E).
    Section 51.308(e)(2)(i)(A). As part of the demonstration that the 
emissions trading program or other alternative measure will achieve 
greater reasonable progress than BART, the Regional Haze Rule requires 
that a list of all BART-eligible sources within the state be provided. 
In our October 2017 final action, we finalized our list of all BART-
eligible sources in Texas,\66\ which serves to satisfy 
51.308(e)(2)(i)(A). As explained in our August 27, 2018 affirmation 
proposal,\67\ we did not reopen the identification of BART-eligible 
sources and thus did not request comment on this element.
---------------------------------------------------------------------------

    \66\ See 82 FR at 48356 (final action) and 82 FR at 918 
(proposed action).
    \67\ 83 FR at 43598.
---------------------------------------------------------------------------

    Section 51.308(e)(2)(i)(B). This provision requires that a list of 
all BART-eligible sources and all BART source categories covered by the 
alternative program be provided. The regulations do not require 
inclusion of every BART source category or every BART-eligible source 
within a BART source category in an alternative program, but each BART-
eligible source in the state must be subject to the requirements of the 
alternative program, have a federally enforceable emission limitation 
determined by the state and approved by EPA as meeting BART in 
accordance with section 302(c) or Sec.  51.308(e)(1), or be otherwise 
addressed under Sec.  51.308(e)(1) or (e)(4). Our October 2017 final 
action and our August 2018 affirmation proposal included a list of all 
EGUs covered by the trading program. We are finalizing our affirmation 
of the list of BART-eligible EGUs in Texas covered by the alternative 
program with one minor non-substantive change,\68\ satisfying the first 
requirement of 51.308(e)(2)(i)(B). Table 1 above lists all 
participating units and identification of BART-eligible participating 
units. All BART-eligible coal-fired units, some additional coal-fired 
EGUs, and some BART-eligible gas-fired and oil-and-gas-fired units are 
covered by the alternative program. This coverage and our determination 
in a previous final action that the BART-eligible gas-fired and oil-
and-gas-fired EGUs not covered by the program are not subject-to-BART 
for NOX, SO2 and PM satisfy the second 
requirement of 51.308(e)(2)(i)(B). We note that EPA's determination 
that these EGU units not covered by the program are not subject to BART 
was finalized in our October 2017 final action,\69\ and we did not 
reopen that determination in the August 2018 proposal.\70\
---------------------------------------------------------------------------

    \68\ As discussed in section III.A.2, ``Newman unit 4'' at the 
El Paso Electric Newman plant (ORIS 3456), which is included in the 
Texas SO2 Trading Program, is actually a multi-unit 
combined cycle system consisting of two gas- and oil-fired 
combustion turbine units (Newman unit **4 and Newman unit **5) 
serving a common steam turbine-generator. Both of these combustion 
turbine units are BART-eligible, and both are properly included in 
the Texas SO2 Trading Program. In this final action, we 
are not identifying any new units as BART-eligible, we are merely 
relabeling the already-identified BART-eligible ``Newman unit 4'' as 
its components: ``Newman unit **4'' and ``Newman unit **5.'' Thus, 
we do not consider this change to be substantive.
    \69\ 82 FR at 48328.
    \70\ 83 FR at 43598, footnote 80.
---------------------------------------------------------------------------

    Section 51.308(e)(2)(i)(C). This provision requires an analysis of 
the best system of continuous emission control technology available and 
associated emission reductions achievable for each source within the 
state subject to BART and covered by the alternative program. This 
analysis must be conducted by making a determination of BART for each 
source subject to BART and covered by the alternative program as 
provided for under Sec.  51.308(e)(1), unless the emissions trading 
program or other alternative measure has been designed to meet a 
requirement other than BART. In such a case, the state may determine 
the best system of continuous emission control technology and 
associated emission reductions for similar types of sources within a 
source category based on both source-specific and category-wide 
information, as appropriate. As discussed in our August 2018 proposal, 
we considered the question of whether, in applying this portion of the 
Regional Haze Rule, we should take as the baseline the application of 
source-specific BART at the covered sources.\71\ We have determined not 
to take this approach here, given that 51.308(e)(2)(i)(C) provides for 
an exception (which we are exercising) to the requirement for source-
specific BART determinations for the covered sources. The regulations 
allow for the BART ``benchmark'' to be set using ``category-wide'' 
information when the alternative measure ``has been designed to meet a 
requirement other than BART (such as the core requirement to have a 
long-term strategy to achieve the reasonable progress goals established 
by States).'' See 40 CFR 51.308(e)(2)(i)(C). As discussed below, 
category-wide information may include, for example, the use of 
``presumptive'' BART emission limits for a particular source category, 
such as coal-fired EGUs. The Texas SO2 Trading Program meets 
the conditions of the exception allowed under Sec.  51.308(e)(2)(i)(C), 
as discussed in sections III.B and V.B of this final notice, because it 
has been designed to meet Texas' interstate visibility transport 
requirements under CAA section 110(a)(2)(D)(i)(II). This BART 
alternative extends beyond all BART-eligible coal-fired units to 
include a number of additional coal-fired EGUs, and some BART-eligible 
gas-fired and oil-and-gas-fired units, capturing the majority of 
emissions from EGUs in the state, and is designed to provide the 
measures that are needed to address interstate visibility transport 
requirements for several NAAQS. This is because for all sources covered 
by the Texas SO2 Trading Program, those sources' CSAPR 
allocations for SO2 are incorporated into the BART 
alternative, and the Texas SO2 Trading Program ensures more 
emission reductions of SO2 than the level of emissions 
reductions relied upon by other states during consultation and assumed 
by other states in their own regional haze SIPs, including their 
reasonable progress goals for their Class I areas.
---------------------------------------------------------------------------

    \71\ 83 FR at 43599.
---------------------------------------------------------------------------

    As allowed under Sec.  51.308(e)(2)(i)(C), rather than using 
source-specific BART at the covered sources, we are relying on the 
determinations of BART and associated emission reductions for EGUs that 
were used in our 2012 determination that showed that CSAPR as finalized 
and amended in 2011 and 2012 achieves more reasonable progress than 
BART (``CSAPR Better-than-BART''). This analysis establishes by the 
clear weight of evidence that the Texas SO2 Trading Program, 
which is modeled on the CSAPR trading programs, will provide for 
greater reasonable progress than BART in Texas. These determinations of 
the best system of continuous emission control technology and 
associated emission reductions for EGUs that were used in our 2012 
CSAPR Better-than-BART demonstration were based largely on category-
wide information, including the use of ``presumptive'' BART limits.\72\ 
EPA finds that reliance on the category-wide BART analysis from the

[[Page 49181]]

2012 CSAPR Better-than-BART demonstration is appropriate here and that 
the BART determinations derived from that CSAPR Better-than-BART 
demonstration are an appropriate BART benchmark for comparison against 
the Texas SO2 Trading Program given that the Texas 
SO2 Trading Program is modeled on the CSAPR trading 
programs.
---------------------------------------------------------------------------

    \72\ 77 FR at 33649-50.
---------------------------------------------------------------------------

    We note that in our August 2018 proposal, we proposed to affirm our 
finding that the Texas SO2 trading program is also designed 
to be part of the long-term strategy needed to meet the reasonable 
progress requirements of the Regional Haze Rule, which remain 
outstanding after the remand of our January 2016 FIP addressing Texas' 
reasonable progress obligations by the Fifth Circuit Court of Appeals. 
After consideration of the comments we received addressing this issue 
during the public comment period for our August 2018 proposal, we are 
not finalizing our affirmation of the finding that the Texas 
SO2 trading program is also designed to be part of the long-
term strategy needed to meet the reasonable progress requirements of 
the Regional Haze Rule at this time. While the Texas SO2 
trading program certainly contributes to reasonable progress toward 
meeting the visibility goals of the regional haze program through 
enforceable reductions of a visibility pollutant from baseline emission 
levels, EPA has made clear that it intends to address the specific 
regulatory requirements for the long-term strategy for Texas through a 
separate action.\73\ However, this does not impact our determination 
that the Texas SO2 trading program satisfies the 
requirements of section 51.308(e)(2)(i)(C) given that the trading 
program is designed to provide the measures that are needed to address 
interstate visibility transport requirements for several NAAQS, and 
this sufficiently meets the criteria under Sec.  51.308(e)(2)(i)(C) 
allowing us to exercise the exception allowed under the provision. 
Thus, we have met the requirements of Sec.  51.308(e)(2)(i)(C).
---------------------------------------------------------------------------

    \73\ 83 FR at 43596 n.63.
---------------------------------------------------------------------------

    Section 51.308(e)(2)(i)(D). This provision requires an analysis of 
the projected emissions reductions achievable through the trading 
program or other alternative measure. Our analysis is that the Texas 
trading program will effectively limit the aggregate annual 
SO2 emissions of the covered EGUs to be no higher than the 
assurance level of 255,083 tons. The Texas SO2 Trading 
Program is an intrastate cap-and-trade program for listed covered 
sources in the State of Texas modeled after the EPA's CSAPR 
SO2 Group 2 Trading Program. Authorizations to emit 
SO2, known as allowances, are allocated to the affected 
units as listed in Table 1 above. As discussed elsewhere, the program 
includes a Supplemental Allowance Pool, as revised in this final 
action, with additional allowances that may be allocated to subject 
units and sources to provide compliance assistance. The average total 
annual allowance allocation for all covered sources is 238,395 tons, 
with an additional 10,000 tons allocated to the Supplemental Allowance 
Pool. In addition, while the Supplemental Allowance Pool may grow over 
time as unused supplemental allowances remain available and allocations 
from retired units are placed in the pool, the total number of 
allowances that can be allocated to sources in a control period from 
the supplemental pool beginning with the 2021 compliance period and for 
each period thereafter is limited to a maximum 16,688 tons plus the 
amount of any allowances placed in the pool that year from retired 
units and corrections. Therefore, the total annual average emissions 
for the covered sources will be less than or equal to 248,395 tons. 
Although there will be some year-to-year variability, that variability 
will be constrained by the addition of an assurance level in this final 
action. We are finalizing an assurance level of 255,083 tons per year 
for the Texas SO2 Trading Program, which, in light of the 
three-for-one penalty surrender ratio imposed on emissions exceeding 
that level, represents the highest annual SO2 emissions 
anticipated from units subject to the Texas program. In reality, there 
is no reasonable expectation that actual emissions would even approach 
this level in light of ongoing changes in the electric-generating 
sector in Texas.
    Further, the projected average SO2 emission reduction 
that will be achieved by the program in any given year, relative to any 
selected historical baseline year, would be the difference between the 
aggregate historical baseline emissions of the covered units and the 
average total annual allocation of 238,395 SO2 tons plus a 
Supplemental Allowance Pool budget of 10,000 tons, or 248,395. As 
detailed in our October 2017 final rule, for the purpose of this 
analysis, we selected 2014 as the baseline year.\74\ The aggregate 2014 
SO2 emissions of the covered EGUs were 309,298 tons per 
year, while the average total annual allocation for the covered EGUs is 
238,395 SO2 tons plus a Supplemental Allowance Pool budget 
of 10,000 tons, or 248,395 tons per year. Therefore, compared to 2014 
emissions, the Texas trading program is projected to achieve an average 
reduction of approximately 60,903 tons per year from the covered 
units.\75\ (We note that with the termination of the opt-in provisions 
in this final action, there is no need for this comparison to include 
consideration of the 2014 emissions from those units formerly eligible 
to opt into the trading program.)
---------------------------------------------------------------------------

    \74\ Texas sources were subject to the CSAPR SO2 
trading program in 2015 and 2016 but are no longer subject to that 
program. We therefore select 2014 as the appropriate most recent 
year for comparing the aggregate historical baseline emissions of 
the covered units to the average total annual allocation for 
purposes of estimating the SO2 emission reduction that 
will be achieved by the program.
    \75\ We note that for other types of alternative programs that 
might be adopted under 40 CFR 51.308(e)(2), the analysis of 
achievable emission reductions could be more complicated. For 
example, a program that involved economic incentives instead of 
allowances or that involved interstate allowance trading would 
present a more complex situation in which achievable emission 
reductions could not be calculated simply by comparing aggregate 
baseline emissions to aggregate allowances.
---------------------------------------------------------------------------

    We also note that the Regional Haze Rule provides that the baseline 
period for the first planning period is 2000-2004.\76\ The Texas 
SO2 Trading Program, with the assurance level we are 
finalizing in this action, achieves significantly lower emissions 
relative to the baseline period using 2002 as the baseline. As shown in 
Table 2, the total combined SO2 emissions from Texas EGUs 
participating in the Texas SO2 Trading Program were 515,526 
tons in 2002. The combined actual SO2 emissions from all 
Texas EGUs (both those in the Texas SO2 Trading Program and 
those not in the program) were 562,516 tons in 2002.\77\ By comparison, 
the Texas SO2 Trading Program budget is 238,395 
SO2 tons (plus a Supplemental Allowance Pool budget of 
10,000 tons). Thus for the covered units, the program achieves average 
annual emissions from the covered units of 248,395 tons. Compared with 
the 2002 baseline for these units, the program achieves 267,131 tons of 
reductions.
---------------------------------------------------------------------------

    \76\ See 40 CFR 51.308(d)(2)(i).
    \77\ See Excel spreadsheet file ``Texas EGU 2002 SO2 
Emissions.xlsx,'' which is available in the docket for this action.
---------------------------------------------------------------------------

    When we account for Texas units that were in CSAPR but not in the 
current program, we see a similar result using a conservative 
assumption about those units' emissions going forward. (As we explained 
in our supplemental proposal, our comparison of the Texas program to 
CSAPR should take account

[[Page 49182]]

of emissions from these units.\78\) For illustrative purposes, in this 
comparison we will also use the higher figure of the assurance level 
for the Texas program rather than the average annual allocation. When 
our conservative assumption of 35,000 tons as the future combined 
SO2 emissions for units that were in the CSAPR program but 
not covered by the Texas SO2 Trading Program is added to the 
highest annual SO2 emissions anticipated from units under 
the Texas SO2 Trading Program, 255,083 tons per year (i.e., 
the assurance level for the program), the total figure is 290,083 tons 
per year. A comparison of these figures reveals that the combined 
actual SO2 emissions from all Texas EGUs in 2002 during the 
baseline period (562,516 tons) were considerably higher than the 
highest annual SO2 emissions anticipated from all Texas EGUs 
anticipated from operation of the Texas SO2 Trading Program 
(290,083 tons), including the CSAPR units not included in that 
program--a difference of 272,433 tons. The emission reductions that are 
secured by the Trading Program contribute to improvements in visibility 
from the baseline period and are permanent and enforceable as part of 
the long-term strategy for the State of Texas.
---------------------------------------------------------------------------

    \78\ 84 FR at 61853.

   Table 2--2002 SO2 Emissions From Texas EGUs Subject to the FIP SO2
                        Trading Program [dagger]
------------------------------------------------------------------------
                                                         SO2  emissions
        Owner/operator                  Units                (tons)
------------------------------------------------------------------------
AEP...........................  Welsh Power Plant      12,259
                                 Unit 1.
                                Welsh Power Plant      11,937
                                 Unit 2.
                                Welsh Power Plant      11,584
                                 Unit 3.
                                H W Pirkey Power       19,476
                                 Plant Unit 1.
                                Wilkes Unit 1........  1
                                Wilkes Unit 2........  2
                                Wilkes Unit 3........  3
CPS Energy....................  J T Deely Unit 1.....  9,936
                                J T Deely Unit 2.....  11,577
                                Sommers Unit 1.......  1
                                Sommers Unit 2.......  2
LCRA..........................  Fayette/Sam Seymour    13,617
                                 Unit 1.
                                Fayette/Sam Seymour    16,401
                                 Unit 2.
Vistra........................  Coleto Creek Unit 1..  14,288
                                Big Brown Unit 1.....  43,413
                                Big Brown Unit 2.....  34,448
                                Martin Lake Unit 1...  24,837
                                Martin Lake Unit 2...  22,539
                                Martin Lake Unit 3...  19,023
                                Monticello Unit 1....  28,643
                                Monticello Unit 2....  34,700
                                Monticello Unit 3....  22,976
                                Sandow Unit 4........  23,330
                                Stryker ST2..........  43
                                Graham Unit 2........  23
NRG...........................  Limestone Unit 1.....  17,009
                                Limestone Unit 2.....  13,830
                                W A Parish Unit WAP4.  4
                                W A Parish Unit WAP5.  21,310
                                W A Parish Unit WAP6.  18,006
                                W A Parish Unit WAP7.  18,459
Xcel..........................  Tolk Station Unit      12,703
                                 171B.
                                Tolk Station Unit      12,171
                                 172B.
                                Harrington Station     9,197
                                 Unit 061B.
                                Harrington Station     8,927
                                 Unit 062B.
                                Harrington Station     8,844
                                 Unit 063B.
El Paso Electric..............  Newman Unit 2........  1
                                Newman Unit 3........  1
                                Newman Unit **4......  1
                                Newman Unit **5......  1
Total Combined 2002 SO2         .....................  515,526
 Emissions.
------------------------------------------------------------------------
[dagger] Based on 2002 Clean Air Markets Division (CAMD) data.

    Section 51.308(e)(2)(i)(E). This provision requires a 
determination, under the specific criteria laid out at 40 CFR 
51.308(e)(3) or otherwise based on the clear weight of evidence, that 
the trading program or other alternative measure achieves greater 
reasonable progress than would be achieved through the installation and 
operation of BART at the covered sources. The BART alternative EPA is 
taking final action to affirm here is supported by the clear weight of 
the evidence. Specifically, with respect to SO2 emissions 
from the covered BART-eligible units, because the Texas SO2 
trading program, as amended, is designed to ensure that emissions 
levels in each year under the trading program are similar to or less 
than what would have been realized from Texas EGUs from participation 
in the SO2 trading program under CSAPR, EPA can rely on the 
2012 and 2017 findings that CSAPR achieves greater

[[Page 49183]]

reasonable progress than BART as evidence that the Texas program 
achieves greater reasonable progress than BART, in the context of the 
continued operation of the CSAPR ozone-season NOX trading 
program (to which units in Texas remain subject) and the CSAPR annual 
NOX and SO2 trading programs.\79\ As used in our 
51.308(e)(2)(i)(D) analysis above and laid out in more detail below, a 
conservative estimate for the maximum total annual emissions from all 
EGUs in Texas that can be anticipated with the Texas program in place 
is 290,083 tons. As explained below, this is less than the maximum 
total annual emissions assumed for Texas under CSAPR in the CSAPR 
Better-than-BART analysis, which is 317,100 tons. Thus, we are relying 
on the demonstration in the 2012 and 2017 CSAPR Better-than-BART rules 
(as reaffirmed in the separate denial of petition for reconsideration 
of the 2017 rule) to show that the clear weight of evidence 
demonstrates that the Texas SO2 Trading Program, which is 
modeled on the CSAPR trading programs, provides for greater reasonable 
progress than BART in Texas.
---------------------------------------------------------------------------

    \79\ EPA's determination that Texas' participation in CSAPR for 
ozone-season NOX satisfies NOX BART for EGUs 
is final and we did not reopen that determination in our August 2018 
proposal or our November 2019 supplemental proposal.
---------------------------------------------------------------------------

    Because the Texas program is designed to achieve greater 
SO2 emission reductions than CSAPR in Texas, we are 
finalizing our affirmation that it is appropriate to continue to rely 
on the 2012 CSAPR Better-than-BART demonstration, which includes the 
treatment of Texas as a CSAPR state, as reaffirmed in September 2017 
(and again affirmed in EPA's denial of the November 28, 2017 petition 
for reconsideration, as discussed under section I.D of this final 
action \80\). That analysis compared CSAPR in Texas and elsewhere in 
the country to presumptive BART emission limits for the sources in 
Texas (as elsewhere) and is described in greater detail in our August 
2018 proposed affirmation. See 83 FR 43586, at 43594-95. While Texas is 
no longer in the CSAPR trading program for SO2 itself, we 
find that it is appropriate for us to continue relying here on the 
CSAPR Better-than-BART analysis for Texas given that the Texas 
SO2 Trading Program is specifically designed to mimic the 
CSAPR program and the amendments to the Texas trading program EPA is 
finalizing in this action allow EPA to affirm that the Texas program is 
similar to or more stringent than CSAPR in Texas. As such, the 
stringency of the Texas program is sufficient to allow for the 
continued use of the CSAPR Better-than-BART analysis for Texas.
---------------------------------------------------------------------------

    \80\ See U.S. EPA, Denial of Petition for Partial 
Reconsideration of ``Interstate Transport of Fine Particulate 
Matter: Revision of Federal Implementation Plan Requirements for 
Texas'' (82 FR 45481; Sept. 29, 2017) (EPA-HQ-OAR-2016-0598). A copy 
of the denial of petition letter sent to the petitioners and the 
denial of petition Notice of Availability (NOA) published in the 
Federal Register are available at Docket ID EPA-HQ-OAR-2016-0598.
---------------------------------------------------------------------------

    Although it is not within the scope of this action, EPA notes that 
the 2017 CSAPR Better-than-BART finding has been reaffirmed through the 
denial of a petition for reconsideration.\81\ In our response to the 
petition for reconsideration, EPA explains that it has fully accounted 
for the stringency of the Texas trading program as well as the 
potential for emission shifting back into the remaining CSAPR region 
with the removal of Texas into its own intrastate trading region.\82\ 
To the extent that this potential for emission shifting posed any 
concern that the CSAPR Better-than-BART analysis could not be relied 
upon by Texas or other states, this issue has been resolved through the 
analysis set forth in that denial.
---------------------------------------------------------------------------

    \81\ See U.S. EPA, Denial of Petition for Partial 
Reconsideration of ``Interstate Transport of Fine Particulate 
Matter: Revision of Federal Implementation Plan Requirements for 
Texas'' (82 FR 45481; Sept. 29, 2017) (EPA-HQ-OAR-2016-0598). A copy 
of the denial of petition letter sent to the petitioners and the 
denial of petition Notice of Availability (NOA) published in the 
Federal Register are available at Docket ID EPA-HQ-OAR-2016-0598.
    \82\ Id.
---------------------------------------------------------------------------

    We are finalizing our determination that anticipated maximum 
potential SO2 emissions in Texas under the Texas 
SO2 Trading Program BART alternative are less than the 
SO2 emission levels from Texas EGUs that were forecast in 
the CSAPR Better-than-BART demonstration assuming their participation 
in the CSAPR SO2 trading program.\83\ In our October 2017 
final rule and the August 2018 proposal to affirm that rule, we noted 
the results of the sensitivity analysis \84\ for the 2012 final ``CSAPR 
Better-than-BART'' rulemaking, namely that CSAPR was expected to 
provide for greater reasonable progress than BART nationwide even with 
potential SO2 emissions from Texas EGUs under CSAPR as high 
as 317,100 tons.\85\ In our October 2017 final rule and the August 2018 
proposal to affirm that rule, EPA used this benchmark (317,100 tons of 
SO2 emissions per year) to gauge whether the Texas 
SO2 Trading Program was sufficiently stringent for EPA to 
continue to rely on the BART-alternative analysis we conducted in the 
2012 ``CSAPR Better-than-BART'' rulemaking. In the August 2018 
proposal, EPA proposed to affirm that the weight of evidence supported 
the conclusion that the Texas SO2 Trading Program met the 
requirements of a BART alternative.\86\ Informed by comments we 
received on the August 2018 proposal, we issued a supplemental proposal 
in November 2019 that proposed to amend a number of provisions of the 
Texas SO2 Trading Program, including the addition of an 
assurance level. EPA's proposed analysis in November of 2019 
accompanying those amendments, updates in certain respects and replaces 
the analysis of the Texas program's stringency for purposes of 
determining the appropriateness of relying on the CSAPR Better-than-
BART findings for the Texas BART-alternative program.
---------------------------------------------------------------------------

    \83\ See Technical Support Document for Demonstration of the 
Transport Rule as a BART Alternative, Docket ID No. EPA-HQ-OAR-2011-
0729-0014 (December 2011), available in the docket for this action.
    \84\ See Sensitivity Analysis Accounting for Increases in Texas 
and Georgia Transport Rule State Emissions Budgets, Docket ID No. 
EPA-HQ-OAR-2011-0729-0323 (May 29, 2012), available in the docket 
for this action.
    \85\ 83 FR at 43595.
    \86\ 83 FR at 43602.
---------------------------------------------------------------------------

    As explained in the November 2019 supplemental proposal and in 
Section III.A.I above, an assurance level represents the total level of 
annual emissions above which units participating in the program will be 
penalized with a higher allowance surrender ratio than the one-to-one 
ratio that applies to emissions below the assurance level. The 
assurance level we proposed was determined by relying on the same 
analysis and methodology that were used to set assurance levels in the 
original CSAPR rulemaking.\87\ Using this methodology, EPA proposed a 
variability limit for Texas set at 16,688 tons, which is seven percent 
of the original trading budget of 238,393 tons. We are finalizing the 
variability limits set at 16,688 tons with no change from proposal and 
in light of the minor correction to the trading program budget, as 
discussed in section III.A.1, we are finalizing an assurance level of 
255,083 tons rather than the 255,081-ton assurance level we proposed in 
the November 2019 supplemental proposal. This 255,083-ton assurance 
level represents the highest annual SO2 emissions 
anticipated from units subject to the Texas program.
---------------------------------------------------------------------------

    \87\ See Power Sector Variability Final Rule TSD (July 2011), 
available at https://www.epa.gov/csapr/power-sector-variability-final-rule-tsd and in the docket for this action.

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[[Page 49184]]

    In addition to being consistent with the original CSAPR methodology 
for setting assurance levels, EPA also believes that an assurance level 
set at 255,083 tons is appropriate for the Texas SO2 Trading 
Program because it will strengthen the stringency of the Texas 
SO2 Trading Program in terms of ensuring that annual 
emissions from participating units will remain below that level. This 
allows EPA to project with confidence emissions under the Texas 
SO2 Trading Program for purposes of determining whether the 
trading program meets the requirements of a BART alternative.
    In the modeling conducted for the proposed CSAPR Better-than-BART 
determination in 2011, projected SO2 emissions from Texas' 
EGUs under CSAPR were 266,600 tons. Subsequent to performance of that 
modeling, the CSAPR SO2 budget for Texas was increased by 
50,517 tons. In the BART-alternative sensitivity analysis utilized for 
the final 2012 CSAPR Better-than-BART determination, EPA made the 
conservative assumption that SO2 emissions from Texas EGUs 
under CSAPR could potentially increase by the full amount of the Texas 
budget increase, or up to 317,100 tons per year (266,600 + 50,517). 
(While this level of emissions would have exceeded Texas' CSAPR budget, 
it would not have been in excess of Texas' amended assurance level 
under the CSAPR program of 347,476 tons. In any case, the figure was 
solely intended to represent a conservative assumption that all 
allowances allocated under Texas' amended CSAPR budget would be 
emitted.) In that BART-alternative sensitivity analysis, EPA 
demonstrated that CSAPR was expected to provide for greater reasonable 
progress than BART nationwide even with potential SO2 
emissions from Texas EGUs under CSAPR as high as 317,100 tons.\88\ By 
comparison, the Texas SO2 Trading Program has a budget of 
238,395 SO2 tons (plus 10,000 tons in the Supplemental 
Allowance Pool), and we are finalizing an assurance level of 255,083 
tons in this final action.
---------------------------------------------------------------------------

    \88\ 83 FR at 43595.
---------------------------------------------------------------------------

    In determining that the Texas program will perform at least as 
stringently as CSAPR would have, EPA also must account for the 
emissions from certain EGUs that would have been subject to CSAPR but 
are not included in the Texas program. Even with these emissions 
factored in, the Texas program is designed to ensure reductions similar 
to or greater than CSAPR. In our analysis in this final action, we are 
finalizing the more conservative emissions assumptions for these units 
provided in our November 2019 supplemental proposal. In our August 2018 
proposal, we had used an assumption that emissions from these units 
could be as high as 27,500 tons per year.\89\ As proposed in our 
November 2019 supplemental proposal,\90\ we are updating our analysis 
by adjusting this assumption to 35,000 tons per year. Given that Texas 
units that were in the CSAPR program but not covered by the Texas 
SO2 Trading Program had a combined maximum annual emission 
level of 34,129 tons over the past five years (2014-2018) and 
considering that several of these units have recently shut down or have 
been announced for shutdown in the near future,\91\ EPA regards this as 
a conservative assumption for emissions performance from these units. 
Even when this conservative figure is added to the highest annual 
SO2 emissions anticipated from units under the Texas 
program, 255,083 tons per year (i.e., the assurance level for the 
program), the total figure is 290,083 tons per year. This figure is 
still 27,017 tons below the 317,100 ton per year emissions level EPA 
had used in the CSAPR Better-than-BART analysis.
---------------------------------------------------------------------------

    \89\ 83 FR 43602.
    \90\ 84 FR at 61853.
    \91\ See ``Texas EGU SO2 emissions, 2014-2018.xlsx'', 
available in the docket for this action. Sandow Station units 5A and 
5B have been permanently retired. AEP has announced retirement of 
Oklaunion by September 2020. Gibbons Creek is currently not 
operating although it has not been officially retired.
---------------------------------------------------------------------------

    In addition to finding that the differences in source coverage 
between the two trading programs do not affect EPA's determination, we 
also find that the relative stringency of the Texas SO2 
Trading Program as compared to CSAPR is further demonstrated in the 
following points, as discussed in our August 27, 2018 affirmation 
proposal:
     This BART alternative includes all BART-eligible coal-
fired units in Texas, additional coal-fired EGUs, and some additional 
BART-eligible gas and gas/fuel oil-fired units.
     Covered sources under the Texas SO2 Trading 
Program we are taking final action to affirm represent 89% \92\ of all 
SO2 emissions from all Texas EGUs in both 2016 and 2017, and 
approximately 85% of CSAPR allocations for existing units in Texas.
---------------------------------------------------------------------------

    \92\ In 2016, EGUs included in the program emitted 218,292 tons 
of SO2, and other EGUs emitted 27,507 tons (11.2% of the 
total emitted by Texas EGUs). In 2017, sources included in the 
program emitted 245,871 tons of SO2, and other EGUs 
emitted 30,122 (10.9%).
---------------------------------------------------------------------------

     The remaining 11% (100 minus 89) of 2016 and 2017 
emissions from sources not covered by the Texas SO2 Trading 
Program come from gas units that rarely burn fuel oil or from coal-
fired units that on average are better controlled for SO2 
than the covered sources and generally are less relevant to visibility 
impairment. As such, any shifting of generation to non-covered sources, 
as might occur if a covered source were to reduce its operation in 
order to remain within its SO2 emissions allowance 
allocation, would result in fewer emissions to generate the same amount 
of electricity.
     Furthermore, the non-inclusion of a large number of gas-
fired units that rarely burn fuel oil reduces the amount of available 
allowances for such units that would typically and collectively be 
expected to use only a fraction of their CSAPR emissions allowances. 
Many of these sources typically emit at levels much lower than their 
allocation level.
     The BART alternative does not allow purchasing of 
allowances from out-of-state sources. Emission projections under CAIR 
and CSAPR showed that Texas sources were anticipated to purchase 
allowances from out-of-state sources.93 94
---------------------------------------------------------------------------

    \93\ See section 10 of the 2009 Texas Regional Haze SIP. Table 
10-7 shows CAIR 2018 emission projections of approximately 350,000 
tons SO2 emitted from Texas EGUs compared to CAIR budget 
for Texas of 225,000 tons. Thus, Texas was projected to purchase 
125,000 tons of allowances (350,000-225,000) from out-of-state 
sources. The SIP submittal can be found in www.regulations.gov, 
docket ID EPA-R06-OAR-2016-0611, document EPA-R06-OAR-2016-0611-
0002.
    \94\ For the projected annual SO2 emissions from 
Texas EGUs under CSAPR, see Technical Support Document for 
Demonstration of the Transport Rule as a BART Alternative, Docket ID 
No. EPA-HQ-OAR-2011- 0729-0014 (December 2011) (2011 CSAPR/BART 
Technical Support Document), available in the docket for this action 
at table 2-4.
---------------------------------------------------------------------------

    Based on our quantitative and qualitative assessment of the 
operation of the BART alternative as presented here, we are taking 
final action to affirm our determination that the Texas SO2 
Trading Program as amended in this final action through the addition of 
the 255,083-ton assurance level and other amendments discussed in 
section III.A.1, will result in annual emissions from the covered EGUs 
and other EGUs in Texas that are lower than what was required under 
Texas participation in CSAPR's SO2 trading program. Because 
this is the case, EPA can rely on the CSAPR Better-than-BART analysis 
to demonstrate, by the clear weight of the evidence, that the Texas 
SO2 Trading Program, in conjunction with continued 
implementation of CSAPR in other states, provides greater reasonable 
progress than BART. Accordingly, we are taking final action to affirm 
that the Texas SO2 Trading Program, as

[[Page 49185]]

amended in today's final action, satisfies the requirements for a BART 
alternative under 40 CFR 51.308(e)(2)(i)(E).
    Section 51.308(e)(2)(iii). This provision requires that the 
emission reductions from BART alternatives occur ``during the period of 
the first long-term strategy for regional haze.'' The Texas 
SO2 BART alternative was implemented beginning in January 
2019, and thus emission reductions needed to comply with the BART 
alternative were required to take place by the end of 2019. In our 
August 2018 proposal,\95\ we proposed to affirm our determination that 
for the purpose of evaluating Texas' BART alternative, the end of the 
period of the first long-term strategy for Texas is 2021, consistent 
with the requirement that states submit revisions to their long-term 
strategy to address the second planning period by July 31, 2021.\96\ We 
also proposed to affirm our determination that because the emission 
reductions from the Texas SO2 Trading Program will be 
realized prior to that date, the necessary emission reductions will 
take place within the period of Texas' first long-term strategy for 
regional haze. We received a comment raising the concern that this 
determination we proposed to affirm would be at odds with the national 
finding in the January 2017 action that our amendments there ``do not 
affect the development and review of state plans for the first 
implementation period. . . .'' 82 FR at 3080. After further review of 
our discussion in the January 2017 final rule making amendments to the 
Regional Haze Rule and consideration of the comments we received 
pertaining to this issue, we are not finalizing a position in this 
action that the first planning period has been extended to July 31, 
2021.
---------------------------------------------------------------------------

    \95\ 83 FR 43592.
    \96\ 40 CFR 51.308(f).
---------------------------------------------------------------------------

    Nonetheless, we are finalizing our determination that the Texas 
SO2 Trading Program satisfies the timing requirements of 
51.308(e)(2)(iii), because the level of emissions achieved by the 
covered Texas units was below the budget of the Texas program prior to 
the end of 2018 and the program took effect immediately at the 
beginning of 2019. This meets the requirement at (e)(2)(iii) that the 
emission reductions called for by the BART alternative occur before the 
end of the period for the first long-term strategy. As discussed in our 
November 2019 supplemental proposal, the combined SO2 
emissions from Texas EGUs participating in the intrastate trading 
program were 179,630 SO2 tons in 2018, which is well below 
the Texas SO2 Trading Program budget of 238,395 tons (as 
well as the assurance level of 255,083 tons we are finalizing in this 
action).\97\ Therefore, the emissions reductions secured under the 
Texas SO2 Trading Program occurred prior to the end of the 
period of the first long-term strategy for regional haze. EPA has 
previously proposed a view that where emission reductions required by a 
BART alternative are already achieved in practice during the first 
planning period, even though the enforceable requirement was not 
mandated until after the planning period, this can satisfy 40 CFR 
51.308(e)(2)(iii). This was our position in our action proposing to 
approve a SIP revision from the State of Arkansas establishing a BART-
alternative for the Domtar Ashdown Mill.\98\ There, we explained that 
even though the BART alternative emission limits for the Domtar Ashdown 
Mill became enforceable by the State on February 28, 2019, the SIP 
revision submitted by Arkansas provided adequate documentation 
demonstrating that the two subject-to-BART units at the Domtar Ashdown 
Mill have actually been operating at emission levels below the BART 
alternative emission limits since December 2016.\99\ Based on the 
documentation provided in the Arkansas SIP revision, we proposed to 
find that the subject-to-BART units at the Domtar Ashdown Mill satisfy 
the timing requirements of 40 CFR 51.308(e) that the necessary emission 
reductions associated with the BART alternative occur during the first 
long-term strategy for regional haze.\100\ Consistent with that 
proposed action, we do not interpret Sec.  51.308(e)(2)(iii) as 
requiring that all enforceable limits on annual emissions under the 
Texas SO2 Trading Program be in place by December 31, 2018, 
or that the Trading Program itself must be implemented by December 31, 
2018, if the emission levels called for by the BART alternative are 
achieved prior to that date and remain at or below that level until the 
alternative becomes enforceable (which in this case, is immediately 
following 2018). We are taking final action that the Trading Program 
satisfies the timing requirements of Sec.  51.308(e)(2)(iii).
---------------------------------------------------------------------------

    \97\ 84 FR 61853.
    \98\ See 85 FR 14847 (March 16, 2020).
    \99\ 85 FR 14861.
    \100\ 85 FR 14861.
---------------------------------------------------------------------------

    Section 51.308(e)(2)(iv). This provision requires a demonstration 
that the emission reductions resulting from the emissions trading 
program or other alternative measure will be surplus to those 
reductions resulting from measures adopted to meet requirements of the 
CAA as of the baseline date of the SIP. When promulgating this 
requirement in 1999, the EPA explained that emission reductions must be 
``surplus to other Federal requirements as of the baseline date of the 
SIP, that is, the date of the emission inventories on which the SIP 
relies.'' \101\ The baseline date for the 2009 Texas Regional Haze SIP 
emission inventory was previously established as 2002 during SIP 
planning stages for the first implementation period.\102\ The emission 
reductions secured under the Texas SO2 Trading Program are 
additional and will not result in double-counting of reductions from 
other Federal requirements since they will occur after the original 
2002 emission inventory. Thus, this BART alternative satisfies the 
requirements of Sec.  51.308(e)(2)(iv).
---------------------------------------------------------------------------

    \101\ See 64 FR 35714, 35742 (July 1, 1999); see also 70 FR 
39104, 39143 (July 6, 2005).
    \102\ See Memorandum from Lydia Wegman and Peter Tsirigotis, 
2002 Base Year Emission Inventory SIP Planning: 8-hr Ozone, 
PM2.5, and Regional Haze Programs, November 8, 2002.
---------------------------------------------------------------------------

    Section 51.308(e)(2)(vi). For plans that include an emissions 
trading program that establishes a cap on total annual emissions of 
SO2 or NOX from sources subject to the program, 
this provision requires the owners and operators of sources to hold 
allowances or authorizations to emit equal to emissions, and allows the 
owners and operators of sources and other entities to purchase, sell, 
and transfer allowances. The Texas SO2 Trading Program is 
modeled after the EPA's CSAPR SO2 Group 2 Trading Program, 
and we are taking final action to affirm that the Program satisfies the 
requirements of 51.308(e)(2)(vi). Similar to the CSAPR SO2 
Group 2 Trading Program, the Texas SO2 Trading Program sets 
an SO2 emission budget for affected units and sources in the 
State of Texas. Authorizations to emit SO2, known as 
allowances, are allocated to affected units. The Texas SO2 
Trading Program provides flexibility to affected units and sources by 
allowing units and sources to determine their own compliance path; this 
includes adding or operating control technologies, upgrading or 
improving controls, switching fuels, and using allowances. Sources can 
buy and sell allowances and bank (save) allowances for future use so 
long as each source holds enough allowances to account for its 
emissions of SO2 by the allowance transfer deadline shortly 
after the end of the compliance period.
    Section 51.308(e)(2)(vi)(A). This provision requires applicability 
provisions defining the sources subject to the program. The State (or 
EPA) must demonstrate that the applicability

[[Page 49186]]

provisions (including the size criteria for including sources in the 
program) are designed to prevent any significant potential shifting 
within the State of production and emissions from sources in the 
program to sources outside the program. The October 2017 final rule and 
the August 2018 proposal affirming that rule discuss the provisions of 
the Texas SO2 Trading Program that satisfy Sec.  
51.308(e)(2)(vi)(A).\103\ In this final action, we are making 
amendments to some of these provisions, as discussed in section 
III.A.1. We are terminating the opt-in provisions by removing sections 
97.904(b), 97.911(b), and 97.921(d) from the regulations, and we are 
making a minor correction to the Texas SO2 Trading Program 
to relabel ``Newman unit 4,'' which is already participating in the 
Texas SO2 Trading Program, as its components: ``Newman unit 
**4'' and ``Newman unit **5.'' We are taking final action to find that 
with these amendments, the Texas SO2 Trading Program 
continues to have applicability provisions that satisfy Sec.  
51.308(e)(2)(vi)(A).
---------------------------------------------------------------------------

    \103\ See 82 FR at 48360 and 83 FR at 43602.
---------------------------------------------------------------------------

    Section 51.308(e)(2)(vi)(B). This provision requires allowance 
provisions ensuring that the total value of allowances (in tons) issued 
each year under the program will not exceed the emissions cap (in tons) 
on total annual emissions from the sources in the program. 40 CFR 
Section 97.921 establishes how the Administrator will record the 
allowances for the Texas SO2 Trading Program and ensures 
that the Administrator will not record more allowances than are 
available under the program consistent with 40 CFR 51.308(e)(2)(vi)(B).
    Sections 51.308(e)(2)(vi)(C)-(E). The provisions of sections 
51.308(e)(2)(vi)(C)-(E) require monitoring provisions providing for 
consistent and accurate measurements of emissions from sources in the 
program to ensure that each allowance actually represents the same 
specified tonnage of emissions and that emissions are measured with 
similar accuracy at all sources in the program; recordkeeping 
provisions that ensure the enforceability of the emissions monitoring 
provisions and other program requirements; and reporting provisions 
requiring timely reporting of monitoring data with sufficient frequency 
to ensure the enforceability of the emissions monitoring provisions and 
other program requirements and the ability to audit the program. The 
monitoring, recordkeeping, and reporting provisions for the Texas 
SO2 Trading Program at 40 CFR 97.930-97.935 are consistent 
with those requirements in the CSAPR SO2 Group 2 Trading 
Program. The provisions in 40 CFR 97.930-97.935 require the subject 
units to comply with the monitoring, recordkeeping, and reporting 
requirements for SO2 emissions in 40 CFR part 75, thereby 
satisfying the requirements of 51.308(e)(2)(vi)(C)-(E).
    Section 51.308(e)(2)(vi)(F). This provision requires tracking 
system provisions which provide for a tracking system that is publicly 
available in a secure, centralized database to track in a consistent 
manner all allowances and emissions in the program. The EPA is 
implementing the Texas SO2 Trading Program using the 
Allowance Management System, which provides a consistent approach to 
implementation and tracking of allowances and emissions for the EPA, 
subject sources, and the public consistent with the requirements of 40 
CFR 51.308(e)(2)(vi)(F).
    Section 51.308(e)(2)(vi)(G). This provision requires authorized 
account representative provisions ensuring that the owners and 
operators of a source designate one individual who is authorized to 
represent the owners and operators in all matters pertaining to the 
trading program. The requirements at 40 CFR 97.913-97.918 for 
designated and alternate designated representatives are consistent with 
the requirements of 40 CFR 51.308(e)(2)(vi)(G) and are also consistent 
with the EPA's other trading programs under 40 CFR part 97.
    Section 51.308(e)(2)(vi)(H). This provision requires allowance 
transfer provisions providing procedures that allow timely transfer and 
recording of allowances, minimize administrative barriers to the 
operation of the allowance market, and ensure that such procedures 
apply uniformly to all sources and other potential participants in the 
allowance market. Allowance transfer provisions for the Texas 
SO2 Trading Program at 40 CFR 97.922 and 97.923 provide 
procedures that allow timely transfer and recording of allowances; 
these provisions will minimize administrative barriers to the operation 
of the allowance market and ensure that such procedures apply uniformly 
to all sources and other potential participants in the allowance 
market, consistent with 40 CFR 51.308(e)(2)(vi)(H).
    Section 51.308(e)(2)(vi)(I). This provision requires compliance 
provisions prohibiting a source from emitting a total tonnage of a 
pollutant that exceeds the tonnage value of its allowance holdings, 
including the methods and procedures for determining whether emissions 
exceed allowance holdings. The provision requires that such method and 
procedures apply consistently from source to source. Compliance 
provisions for the Texas SO2 Trading Program at 40 CFR 
97.924 prohibit a source from emitting a total tonnage of 
SO2 that exceeds the tonnage value of its SO2 
allowance holdings as required by 40 CFR 51.308(e)(2)(vi)(I).
    Section 51.308(e)(2)(vi)(J). This provision requires penalty 
provisions providing for mandatory allowance deductions for excess 
emissions that apply consistently from source to source. Additionally, 
the tonnage value of the allowances deducted must equal at least three 
times the tonnage of the excess emissions. The Texas SO2 
Trading Program includes automatic allowance surrender provisions at 40 
CFR 97.924(d) that apply consistently from source to source and the 
tonnage value of the allowances deducted shall equal at least three 
times the tonnage of the excess emissions, consistent with the penalty 
provisions at 40 CFR 51.308(e)(2)(vi)(J).
    Section 51.308(e)(2)(vi)(K). For a trading program that allows 
banking of allowances, this provision requires provisions clarifying 
any restrictions on the use of these banked allowances. The Texas 
SO2 Trading Program provides for banking of allowances under 
40 CFR 97.926; Texas SO2 Trading Program allowances are 
valid for compliance in the control period of issuance or may be banked 
for use in future control periods, consistent with 40 CFR 
51.308(e)(2)(vi)(K).
    Section 51.308(e)(2)(vi)(L). This provision requires program 
assessment provisions providing for periodic program evaluation to 
assess whether the program is accomplishing its goals and whether 
modifications to the program are needed to enhance performance of the 
program. The CAA and EPA's implementing regulations require 
comprehensive periodic revisions of implementation plans for regional 
haze under 40 CFR 51.308(f) and periodic review of the state's regional 
haze approach under 40 CFR 51.308(g) to evaluate progress towards the 
reasonable progress goals for Class I areas located within the state 
and Class I areas located outside the State affected by emissions from 
within the state. Because the Texas SO2 Trading Program is a 
BART-alternative and part of the long-term strategy for Texas' Regional 
Haze obligations, this program will be reviewed in each comprehensive 
periodic revision and progress report. We anticipate these revisions 
and progress reports will provide the information needed to assess 
program

[[Page 49187]]

performance, as required by 40 CFR 51.308(e)(2)(vi)(L).
    Based on the analysis presented here, EPA is taking final action to 
affirm our determination that the Texas SO2 Trading Program, 
as amended in this final action, meets the requirements of 40 CFR 
51.308(e)(2) as a BART alternative for SO2 to satisfy Texas' 
Regional Haze obligations.
3. PM BART
    We are taking final action to affirm our October 2017 approval of 
the portion of the Texas Regional Haze SIP that determined that PM BART 
emission limits are not required for any Texas EGUs. The majority of 
Texas' BART-eligible EGUs rely on BART alternatives for both 
SO2 and NOX emissions (or have otherwise been 
determined to be not subject to BART). We approved Texas' pollutant-
specific screening analysis for PM as appropriate and consistent with a 
2006 guidance document in which the EPA stated that pollutant-specific 
screening can be appropriate where a state is relying on a trading 
program as a BART alternative to address both NOX and 
SO2 BART.\104\ All of the BART-eligible sources 
participating in the SO2 intrastate trading program have 
visibility impacts from PM alone below the subject-to-BART threshold of 
0.5 deciviews (dv).105 106 Furthermore, the BART-eligible 
sources not participating in the intrastate trading program were 
screened out of BART for all visibility impairing pollutants. 
Therefore, we are finalizing our affirmation of our prior approval that 
no Texas EGUs are subject to PM BART and that PM BART emission limits 
are not required for any Texas EGUs under EPA's 2006 guidance.
---------------------------------------------------------------------------

    \104\ See discussion in Memorandum from Joseph Paisie to Kay 
Prince, ``Regional Haze Regulations and Guidelines for Best 
Available Retrofit Technology (BART) Determinations,'' July 19, 
2006.
    \105\ Our technical evaluation of Texas' PM screening approach 
in the 2009 Texas Regional Haze SIP submittal was originally 
presented in a December 16, 2014 proposal. See 79 FR 74817, 74848-49 
(Dec. 16, 2014). As noted in our August 2018 proposal, the basis of 
our affirmation of our approval of Texas' PM screening approach 
remains consistent with the technical evaluation we provided at the 
time. See 83 FR 43586, at 43593.
    \106\ Stryker Creek Unit ST2 is covered by CSAPR for 
NOX and by the SO2 trading program but was not 
included in the 2009 Regional Haze SIP. In our August 2018 proposal, 
we explained that based on our own evaluation in the January 2017 
proposal and October 2017 final rule, we determined that the 
visibility impact attributable to PM emissions from Stryker Creek 
Unit ST2 is a small fraction (roughly 1%) of the 0.786 dv aggregate 
impact of the unit's emissions from all pollutants. This is well 
below the subject-to-BART threshold of 0.5 dv. See 83 FR 43586, at 
43593.
---------------------------------------------------------------------------

4. Reasonable Progress
    This final action addressing the BART requirements is part of the 
long-term strategy for Texas and will contribute to making reasonable 
progress toward the goal of natural visibility conditions at Texas' and 
downwind Class I areas. However, the EPA is not determining at this 
time that this final action fully resolves the EPA's outstanding 
obligations with respect to reasonable progress that resulted from the 
Fifth Circuit's remand of our reasonable progress FIP.\107\ We intend 
to take a separate, future action to address the Fifth Circuit's 
remand.
---------------------------------------------------------------------------

    \107\ Order, Texas v. EPA, 16-60118 (5th Cir. Mar. 22, 2017).
---------------------------------------------------------------------------

B. Interstate Transport of Pollutants That Affect Visibility

    We are taking final action to affirm our finding that Texas' 
participation in CSAPR to satisfy NOX BART and our 
SO2 intrastate trading program, as amended in today's final 
action, fully addresses Texas' interstate visibility transport 
obligations for the following six NAAQS: (1) 1997 8-hour ozone; (2) 
1997 PM2.5 (annual and 24 hour); (3) 2006 PM2.5 
(24-hour); (4) 2008 8-hour ozone; (5) 2010 1-hour NO2; and 
(6) 2010 1-hour SO2. The basis for this final action is our 
determination in the October 2017 FIP that the regional haze measures 
in place for Texas are adequate to ensure that emissions from the State 
do not interfere with measures to protect visibility in nearby states, 
because the emission reductions are consistent with the level of 
emissions reductions relied upon by other states during interstate 
consultation under 40 CFR 51.308(d)(3)(i)-(iii) and when setting their 
reasonable progress goals.\108\ As discussed in our August 2018 
affirmation proposal, the 2009 Texas Regional Haze SIP relied on 
participation in CAIR to meet SO2 and NOX BART 
requirements for Texas EGUs. Under CAIR, Texas EGU sources were 
projected to emit approximately 350,000 tons of SO2 
annually.\109\ These are the 2018 EGU emission projections used by 
CENRAP for Texas that other states potentially impacted by emissions 
from Texas sources agreed upon during interstate consultation and 
relied on in their regional haze SIPs. In today's final action, we are 
finalizing four revisions to strengthen the Texas SO2 
Trading Program and increase its consistency with CSAPR, including the 
addition of an assurance level consistent with the 2012 CSAPR 
demonstration. As discussed elsewhere in today's final action, Texas 
EGU annual SO2 emissions for sources covered by the trading 
program will be constrained by the assurance level of 255,083 tons. 
Including an estimated 35,000 tons per year of emissions from units not 
covered by the Texas SO2 Trading Program yields 290,083 tons 
of SO2, which is well below the 350,000-ton emissions 
projection for 2018 for Texas sources under CAIR or the 317,100-ton 
emissions level assumed for Texas sources under CSAPR participation in 
the BART-alternative sensitivity analysis utilized for the 2012 CSAPR 
Better-than-BART determination. Additionally, the October 2017 FIP 
relies on CSAPR for ozone season NOX as an alternative to 
EGU BART for NOX, which exceeds the NOX emission 
reductions that would have been realized from Texas EGUs under CAIR and 
that other states relied upon during interstate consultation for the 
first planning period.\110\ Because the revisions to the Texas 
SO2 Trading Program we are finalizing in today's final 
action ensure emission reductions consistent with and below the 
emission levels relied upon by other states during interstate 
consultation, we find that these revisions provide further support for 
our earlier finding that the BART alternative in the October 2017 FIP 
results in emission reductions adequate to satisfy the requirements of 
CAA section 110(a)(2)(D)(i)(II) with respect to visibility for the six 
identified NAAQS.
---------------------------------------------------------------------------

    \108\ See 2009 Texas Regional Haze SIP, section 4.3 titled 
``Consultations On Class I Areas In Other States.'' The submittal 
can be found at www.regulations.gov, Docket ID EPA-R06-OAR-2016-
0611, Document ID EPA-R06-OAR-2016-0611-0002.
    \109\ See section 10 of the 2009 Texas Regional Haze SIP. Table 
10-7 shows that under CAIR, the 2018 emission from Texas EGUs were 
projected to be approximately 350,000 tons SO2. The SIP 
submittal can be found in www.regulations.gov, Docket ID EPA-R06-
OAR-2016-0611, Document ID EPA-R06-OAR-2016-0611-0002.
    \110\ Under CAIR, Texas had an annual 2009 CAIR Phase 1 budget 
of 181,017 tons of NOX and an annual 2015 CAIR Phase 2 
budget of 150,845 tons of NOX. See Section 11, Table 11-
15 of the 2009 Texas Regional Haze SIP. The SIP submittal can be 
found at www.regulations.gov, Docket ID EPA-R06-OAR-2016-0611, 
document ID EPA-R06-OAR-2016-0611-0002. The 2018 EGU emission 
projections for NOX used by CENRAP for Texas, which other 
states potentially impacted by emissions from Texas sources agreed 
upon during interstate consultation and relied on in their regional 
haze SIPs, were approximately 160,000 tons. In contrast, under the 
CSAPR ozone season NOX trading program, Texas' 2017 
NOX ozone season budget is 52,301 tons of NOX. 
See 81 FR 74504, 74508 (Oct. 26, 2016).
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IV. Summary and Responses to Significant Issues Raised by Commenters

    We received both written and oral comments at the public hearings 
we held in Austin and Dallas. We also

[[Page 49188]]

received written comments on the August 27, 2018 affirmation proposed 
action and the November 14, 2019 supplemental proposed action. The full 
text of comments received is included in the publicly posted docket 
associated with this action at www.regulations.gov. We reviewed all 
public comments that we received. Below we provide a summary of the 
most significant comments and our responses. A complete summary of all 
of the comments we received, and our responses thereto are contained in 
a separate document titled Response to Comments, which is found in the 
docket associated with this final action.

A. Texas SO2 Trading Program as a BART Alternative

    Comment: We received one comment asserting that in promulgating the 
Texas SO2 Trading Program as a BART alternative in our 
October 2017 FIP and in affirming the trading program in our August 
2018 proposal, EPA did not properly demonstrate that the trading 
program meets the requirements for an alternative to BART for 
SO2 because EPA did not compare the alternative to source-
specific BART in Texas. The commenter asserted that the Regional Haze 
Rule at 40 CFR 51.308(e)(2) specifies that BART and associated emission 
reductions achievable for each source within the State subject to BART 
and covered by the alternative program must be evaluated first for the 
purpose of comparing to the BART alternative and determining whether 
the alternative makes greater reasonable progress than BART. The 
commenter also noted that the Regional Haze Rule at Sec.  
51.308(e)(2)(i)(C) provides that the only exception to this requirement 
is when the emissions trading program or other alternative measure has 
been designed to meet a requirement other than BART and that in such 
cases, EPA may analyze BART for similar types of sources within a 
source category instead of on a source-specific basis. The commenter 
asserted that in promulgating the Texas SO2 Trading Program, 
EPA did not properly demonstrate that the trading program is better 
than BART and meets the requirements for an alternative to BART because 
EPA has not determined which units are subject to BART, and did not 
provide an analysis of BART at each source subject to BART and covered 
by the trading program to compare against the trading program. 
According to the commenter, even if presumptive BART levels were an 
appropriate assumption that is not outdated, EPA would still be 
required to compare the trading program directly to presumptive BART, 
which it has not done. The commenter also contended that EPA's approach 
of comparing the intrastate trading program to Texas' participation in 
the SO2 trading program under CSAPR is not appropriate 
because EPA withdrew Texas from the CSAPR program for SO2 
and thus CSAPR cannot lawfully be BART for SO2 for Texas 
EGUs.
    The commenter also disagreed with EPA's position that the trading 
program was designed to meet requirements other than BART, namely the 
interstate transport requirements and the long-term strategy 
provisions. The commenter asserted that even if the trading program had 
indeed been designed to meet requirements other than BART, this would 
still not authorize EPA to completely forego analyzing BART for the 
sources subject to BART and covered by the trading program.
    Response: As explained in our August 27, 2018 proposal, in addition 
to being a sufficient alternative to BART, the trading program is 
designed to secure reductions consistent with visibility transport 
requirements.\111\ As allowed by the requirements for a BART 
alternative in Sec.  51.308(e)(2)(i)(C), we are exercising the 
exception allowed when the alternative measure ``has been designed to 
meet a requirement other than BART (such as the core requirement to 
have a long-term strategy to achieve the reasonable progress goals 
established by States).'' See 40 CFR 51.308(e)(2)(i)(C). In such 
circumstances, BART and associated emission reductions may be analyzed 
for similar sources ``based on both source-specific and category-wide 
information, as appropriate.'' When promulgating the 2012 CSAPR Better-
than-BART rule, the EPA relied on an analysis of BART in CSAPR states 
and a demonstration showing that CSAPR would result in greater 
reasonable progress than BART under the test in 40 CFR 51.308(e)(3). In 
that analysis, EPA utilized simplified assumptions regarding 
``presumptive'' BART limits at BART-eligible sources. This analysis was 
conducted on a category-wide basis (all fossil fuel-fired EGUs). See 77 
FR 33642, 33649-50 (June 7, 2012). This analysis satisfied 
51.308(e)(2)(i)(C) because CSAPR was designed to meet the requirements 
of CAA section 110(a)(2)(D)(i)(I) (sometimes referred to as ``good 
neighbor'' obligations) for certain NAAQS pollutants. EPA finds that 
reliance on the category-wide BART analysis from the 2012 CSAPR Better-
than-BART demonstration is appropriate here, because, although the 
Texas program is not designed to meet good neighbor obligations under 
section 110(a)(2)(D)(i)(I), it is designed to meet separate CAA 
requirements for interstate visibility transport, as explained in 
section III.B above. This satisfies the condition in 51.308(e)(2)(i)(C) 
for using category-wide information such as presumptive BART limits in 
analyzing the Texas SO2 Trading Program. Thus, the BART 
determinations derived from that CSAPR Better-than-BART demonstration 
are an appropriate BART benchmark for comparison against the Texas 
SO2 Trading Program given that the Texas SO2 
Trading Program is modeled on the CSAPR trading programs. In this 
action, we are relying, in part, on that same 2012 CSAPR Better-than-
BART demonstration to show that the clear weight of evidence 
demonstrates that the Texas SO2 Trading Program, which is 
modeled on the CSAPR trading programs, will provide for greater 
reasonable progress than BART in Texas. Indeed, the anticipated maximum 
potential SO2 emissions in Texas under the Texas 
SO2 Trading Program BART alternative are less than the 
SO2 emission levels from Texas EGUs that were forecast in 
the demonstration for Texas EGU emissions assuming their participation 
in the CSAPR SO2 trading program. Under CSAPR, the total 
allocations for all existing EGUs in Texas were 279,740 SO2 
tons, the total state budget including the amounts of allowances set 
aside for potential allocation to new units was 294,471 tons, and the 
assurance level was 347,476 tons. The level of emissions assumed for 
Texas EGUs in the BART alternative sensitivity analysis utilized for 
the 2012 CSAPR Better-than-BART determination is 317,100 SO2 
tons.\112\ By comparison, the Texas SO2 Trading Program has 
a budget of 238,395 SO2 tons, and we are finalizing an 
assurance level of 255,083 tons in this action. In light of the three-

[[Page 49189]]

for-one penalty surrender ratio imposed on emissions exceeding the 
255,083-ton assurance level, the assurance level represents the highest 
annual SO2 emissions anticipated from units subject to the 
Texas program. In reality, in light of ongoing changes in the electric-
generating sector in Texas, there is a reasonable expectation that 
actual emissions under the Texas program would remain well below the 
assurance level. We are also finalizing a more conservative (i.e., 
higher) estimate of 35,000 annual SO2 tons as the projected 
emissions from Texas units that would have been in the CSAPR program 
but are not in the Texas SO2 Trading Program. This more 
conservative estimate is based on these units' maximum annual emission 
level of 34,129 tons over the past five years (2014-2018) and taking 
into consideration that several of these units have recently shut down 
or have been announced for shutdown in the near future.\113\ Adding 
that amount to the Texas SO2 Trading Program's assurance 
level of 255,083 tons yields 290,083 tons. Assuming this figure 
represents a firm upper bound on annual SO2 emissions from 
the relevant EGUs in Texas under the Texas SO2 Trading 
Program, this is less than the 317,100-ton figure EPA had demonstrated 
was acceptable in the original 2012 CSAPR Better-than-BART analysis.
---------------------------------------------------------------------------

    \111\ 83 FR 43586, at 43597.
    \112\ For the projected annual SO2 emissions from 
Texas EGUs, see Technical Support Document for Demonstration of the 
Transport Rule as a BART Alternative, Docket ID No. EPA-HQ-OAR-2011- 
0729-0014 (December 2011) (2011 CSAPR/BART Technical Support 
Document at Table 2-4,), available in the docket for this action. 
Certain CSAPR budgets were increased after promulgation of the CSAPR 
final rule (and the increases were addressed in the 2012 CSAPR/BART 
sensitivity analysis memo. See memo entitled ``Sensitivity Analysis 
Accounting for Increases in Texas and Georgia Transport Rule State 
Emissions Budgets,'' Docket ID No. EPA-HQ-OAR-2011-0729-0323 (May 
29, 2012), available in the docket for this action. The increase in 
the Texas SO2 budget was 50,517 tons which, when added to 
the Texas SO2 emissions projected in the CSAPR + BART-
elsewhere scenario of 266,600 tons, yields total potential 
SO2 emissions from Texas EGUs of approximately 317,100 
tons.
    \113\ 84 FR 61853.
---------------------------------------------------------------------------

    Comment: The commenter asserted that it was not appropriate for EPA 
to conclude that because CSAPR achieves greater reasonable progress 
than BART when averaged across all affected states that this 
necessarily means that CSAPR achieves greater reasonable progress than 
BART in Texas. The commenter asserted that the legal test that EPA used 
during the original ``CSAPR Better-than-BART'' rulemaking is 
fundamentally different than the test EPA must use in assessing whether 
the Texas SO2 Trading Program is better than BART. The 
commenter asserted that in making its determination that CSAPR achieves 
greater reasonable progress than BART under 40 CFR 51.308(e)(3), EPA 
was required to demonstrate that visibility does not decline in any 
Class I area and that there is an overall improvement in visibility, 
determined by comparing the average differences between BART and the 
alternative over all affected Class I areas. The commenter argued that 
since EPA averaged the visibility improvement from CSAPR over all the 
affected Class I areas in the eastern half of the country in the CSAPR 
Better-than-BART determination, Texas was able to take advantage of 
reductions from other states without having to reduce its 
SO2 emissions as much as it would have had to do under 
source-by-source BART. The commenter argued that in contrast to the 
CSAPR Better-than-BART determination, the legal test required under 
Sec. Sec.  51.308(e)(2)(i) and 51.308(e)(3) to demonstrate that the 
Texas SO2 Trading Program is better than BART cannot rest on 
improvements from CSAPR in other states. The commenter argued that EPA 
must instead demonstrate that the Texas SO2 Trading Program 
is better than BART in Texas alone by examining the visibility 
improvement at only the Class I areas affected by Texas sources.
    Response: We disagree that EPA must demonstrate that the Texas 
SO2 Trading Program is better than BART by examining 
visibility improvement at only Class I areas in Texas and Class I areas 
in other states affected by Texas sources. As explained in our proposal 
affirming the Texas SO2 Trading Program, the 2012 
demonstration that CSAPR, as finalized and amended in 2011 and 2012, 
meets the Regional Haze Rule's criteria for a demonstration of greater 
reasonable progress than BART is also the primary evidence that the 
Texas trading program achieves greater reasonable progress than 
BART.\114\ In the 2012 CSAPR Better-than-BART rule, the EPA relied on 
an analytic demonstration that included an air quality modeling study 
showing that CSAPR results in greater improvements in average 
visibility across all affected Class I areas as compared to adopting 
source-specific BART. Our finding with respect to the Texas program 
relies on the demonstration underlying our CSAPR Better-than-BART Rule 
and our 2017 CSAPR Better-than-BART affirmation (including the basis 
for our denial of a petition for reconsideration in the latter,\115\ as 
discussed in section I.D of the preamble). Thus, we find that given the 
particular circumstances in this case, we are not required to focus 
only on Class I areas in Texas and Class I areas in other states 
affected by Texas sources. Rather, we are assessing the Texas program 
in the context of the larger CSAPR Better-than-BART analysis. We find 
that due to the specific circumstances in this case, as described 
above, it is reasonable and appropriate to consider improvements in 
average visibility across all affected Class I areas in our assessment 
of the Texas SO2 Trading Program to demonstrate that it is 
better than BART. The amendments to the Texas SO2 Trading 
Program we are finalizing in this action ensure that EGU emissions 
under the Texas program will remain well below the amount assumed in 
the BART-alternative sensitivity analysis utilized for the 2012 CSAPR 
Better-than-BART determination (i.e., 317,100 tons), and thus 
visibility levels at Class I areas impacted by sources in Texas are 
anticipated to be at least as good as (and likely better than) the 
levels projected under Texas participation in the larger CSAPR 
SO2 trading program.
---------------------------------------------------------------------------

    \114\ 83 FR 43586, at 43599.
    \115\ See U.S. EPA, Denial of Petition for Partial 
Reconsideration of ``Interstate Transport of Fine Particulate 
Matter: Revision of Federal Implementation Plan Requirements for 
Texas'' (82 FR 45481; Sept. 29, 2017) (EPA-HQ-OAR-2016-0598). A copy 
of the denial of petition letter sent to the petitioners and the 
denial of petition Notice of Availability (NOA) published in the 
Federal Register are available at Docket ID EPA-HQ-OAR-2016-0598.
---------------------------------------------------------------------------

    Comment: We received one comment that asserted that EPA's reliance 
on CSAPR to design the Texas SO2 Trading Program as a BART 
alternative is not appropriate because in doing so, EPA did not account 
for new circumstances or update emissions and other data, which the 
commenter claimed EPA typically does when evaluating BART. The 
commenter asserted that if EPA had taken the same technical approach it 
has taken in other regional haze actions of using the most up-to-date 
data, this would have changed the allowance distribution of the Texas 
SO2 Trading Program. For instance, the commenter argued that 
in developing the Texas SO2 Trading Program, EPA should have 
taken into account the retirements of Welsh 2, Big Brown Units 1 and 2, 
Monticello Units 1, 2, and 3, and Sandow 4 and 5. Similarly, the 
commenter asserted the Texas SO2 Trading Program should have 
included rule provisions for properly dealing with the impending 
retirement of the two JT Deely units instead of the current method of 
addressing retired allowances, which the commenter claimed provides no 
incentive to reduce SO2 emissions. Additionally, the 
commenter noted that EPA assigned allocations under CSAPR on the basis 
of a unit's heat input from 2006-2010 and its emissions from 2003-2010 
utilizing a detailed ten-step approach based on the heat input and 
emissions from those periods. The commenter claimed that EPA should 
have re-applied the same allocation methodology it used for CSAPR using 
updated information, and that if EPA had done so, the allocations in 
many instances would have changed significantly. In support of this 
argument, the commenter performed this analysis using the same number 
of years as in the original CSAPR methodology but shifted the year 
ranges forward to include updated information.

[[Page 49190]]

The commenter asserted that two cases were analyzed. In the first case, 
the commenter did not remove retired units and used the original CSAPR 
methodology to revise the CSAPR allocations while using updated data. 
In this case, because none of the retired units were removed, the total 
allocations remained at 238,393 tons. However, the commenter asserted 
that because the emissions and heat inputs changed with the updated 
data, almost every unit's allocations changed, in some cases by more 
than 3,000 tons. In the second case, the commenter asserted that 
retired units were removed, but the JT Deely units were retained. The 
commenter asserted that because of the removal of retired units and 
because of the updated emissions and heat inputs, almost every unit's 
allocations changed, resulting in a reduction of allocations from 
238,393 tons to 176,332 tons. The commenter noted that these additional 
62,061 tons in unit allocations that resulted from EPA not using the 
most updated data in the allocation methodology and not removing 
retired units should not be moved into the Supplemental Allowance Pool 
as Section 97.911(a)(2) of the Texas SO2 Trading Program 
provides. The commenter argued that these allowances should never have 
been in the allowance pool in the first place. The commenter concluded 
that the analysis performed by the commenter demonstrates that if EPA 
had updated the emissions data and heat input data using the original 
CSAPR methodology and removed the retired units' allocations, the Texas 
SO2 Trading Program would not include excess allowances, 
which the commenter claimed disincentivizes SO2 emissions 
reductions.
    Response: As stated in responses to several other comments in this 
final action and in our Response to Comments document found in the 
docket for this action, we disagree that in developing a specific 
trading program, EPA must incorporate new design features, particularly 
when other legal and policy considerations weigh in favor of making the 
program similar in design to a specific previous program that does not 
include those design features. Likewise, EPA is not required to 
incorporate new design features that may be suggested by a commenter 
and is not required to update every data element used in the 
rulemaking. In this instance, the Texas SO2 Trading Program 
was designed to qualify as a BART alternative in light of EPA's 
previous determinations regarding permissible BART alternatives, and 
for that reason was designed to be as similar as possible to the CSAPR 
SO2 program. Both the amounts of the initial allocations to 
units under the Texas SO2 Trading Program and the treatment 
of the allocations to units that have been retired for at least five 
years are directly based on the analogous provisions in the CSAPR 
SO2 program. As discussed in response to another comment on 
the Texas SO2 Trading Program's Supplemental Allowance Pool, 
in those aspects of the overall allocation methodology where the Texas 
SO2 Trading Program allowance allocation provisions deviate 
from the CSAPR SO2 program allowance allocation provisions, 
the Texas SO2 Trading Program is generally more, not less, 
stringent.
    With respect to the commenter's point that the amount of the CSAPR 
SO2 program budget for Texas was initially determined based 
on our assessments of the state's interstate transport obligations at 
the time of the CSAPR rulemaking, we agree with the statement but do 
not consider the point relevant to this final action. The origins of 
the CSAPR budgets are immaterial to this action. Along with certain 
budget adjustments that were addressed through sensitivity analyses, 
the CSAPR budgets were used in our 2012 CSAPR Better-than-BART 
determination and therefore remain relevant for purposes of our 
determination in this action that the Texas SO2 Trading 
Program qualifies as a BART alternative in the context of the 2012 
CSAPR Better-than-BART determination.
    With respect to the commenter's identification of alternative 
possible distributions of allowances among the units covered by the 
program, we do not believe that altering the distribution of allowances 
while leaving the total number of allowances the same would change the 
stringency of the program, although it could address concerns regarding 
whether the distribution among the sources is equitable. As none of the 
sources covered by the program have raised equity concerns about the 
initial allocations, and given that we do not understand the commenter 
to be raising such concerns, we see no reason to redistribute the 
initial allocations. We address the comments regarding the stringency 
of the program cap elsewhere.
    With regard to the commenter's position that allowances allocated 
to units that retire should be eliminated from the budget instead of 
being reallocated, that is of course an option in designing a trading 
program, but it is not a requirement, and it is not a feature of the 
CSAPR SO2 program on which the Texas SO2 Trading 
Program was modeled. We were not required and did not find it necessary 
to take such an approach in the Texas SO2 Trading Program in 
order to ensure that the program qualifies as a BART alternative in the 
context of the 2012 and 2017 CSAPR Better-than-BART determinations.
    Comment: We received comments from the State and affected sources 
in support of our affirmation that the October 2017 Regional Haze FIP 
satisfies Texas' obligations for BART and in support of our 
determination that the intrastate SO2 trading program for 
certain EGUs in Texas is an appropriate BART alternative and satisfies 
all SO2 BART requirements. Several affected sources also 
provided comments in support of the October 2017 SO2 trading 
program over the adoption of a source-by-source approach to address the 
BART requirements for units subject to BART in Texas. One affected 
source asserted that the trading program will allow operational 
flexibility in complying with BART obligations and another affected 
source asserted that it is appropriate for EPA to respect Texas' 
preference to meet BART compliance through a BART alternative rather 
than source-specific BART.
    Response: We appreciate the commenter's support of our FIP that 
establishes an intrastate trading program that caps emissions of 
SO2 from certain EGUs in Texas and includes the 
determination that this program meets the requirements for an 
alternative to BART for SO2.
    Comment: We received one comment that argued that EPA's reliance on 
the CSAPR Better-than-BART demonstration is based on the false premise 
that the Texas SO2 Trading Program is functionally 
equivalent to CSAPR. The commenter asserted that the Texas 
SO2 Trading Program is not sufficiently similar to CSAPR for 
a comparison between Texas' overall emissions under the Texas 
SO2 Trading Program versus CSAPR to suffice for a weight of 
evidence determination. In support of the claim that the Texas 
SO2 Trading Program and CSAPR are not sufficiently similar, 
the commenter pointed to the exclusion from the Texas SO2 
Trading Program of a number of Texas EGUs that were covered under CSAPR 
and argued that EPA presented no real analysis of the visibility 
impacts of these excluded units. The commenter asserted that for some 
of these excluded units that have existing scrubbers or other types of 
SO2 control, such as Oklaunion, W.A. Parish 8, Oak Grove 
Units 1 and 2, Twin Oaks Units 1 and 2, and Sandy Creek, EPA should 
have

[[Page 49191]]

evaluated possible upgrades to existing SO2 controls.
    The commenter also argued that there are flaws in how EPA performed 
its Q/d analysis that constitute arbitrary deviations from EPA's Q/d 
testing methodology in past regional haze actions and claimed that the 
deviations were made in order to exclude certain units from the Texas 
SO2 Trading Program. For instance, the commenter asserted 
that EPA's decision to base the Q/d analysis on 2009 emissions was 
arbitrary and claimed that no rationale was provided for selecting that 
year of data other than EPA noting that it already had this emissions 
data available from a previous analysis. The commenter asserted that in 
contrast to the Q/d analysis EPA used to identify sources to include in 
the Texas SO2 Trading Program, in past regional haze 
actions, EPA has typically considered a 3-5 year range of data to 
account for data variability from year to year. The commenter also 
asserted that the Twin Oaks facility had a Q/d greater than EPA's 
stated threshold of 10 but it was nonetheless excluded on the basis 
that EPA estimated that the Q/d of each of its individual units were 
likely less than 10. The commenter claimed that EPA's decision to 
deviate from its approach is arbitrary and was made in order to exclude 
the Twin Oaks facility from the trading program. Similarly, the 
commenter asserted that EPA's decision to exclude Oklaunion from the 
trading program even though its Q/d was 85, which is much higher than 
the EPA's stated threshold of 10, is arbitrary. The commenter asserted 
that EPA's decision to exclude units that came online after 2009 on the 
basis that these units would be permitted and constructed using 
emission control technology determined under either BACT or LAER 
review, was inappropriate given that EPA made no comparison between the 
levels of control under BACT or LAER versus BART for these units. The 
commenter argued that this comparison was necessary given that, 
according to the commenter, BART has been demonstrably more stringent 
than either BACT or LAER. The commenter also asserted that the opt-in 
provision is yet another feature of the Texas SO2 Trading 
Program that makes the trading program not functionally equivalent to 
CSAPR, as EPA removed the opt-in provision in CSAPR.
    Response: We continue to believe that the Texas SO2 
Trading Program will achieve SO2 emission levels that are 
functionally equivalent to those that had been previously projected for 
Texas' participation in the original CSAPR program and that our 
reliance on the original CSAPR Better-than-BART determination for the 
clear weight of evidence demonstration required under Sec.  
51.308(e)(2)(i)(E) was thus appropriate in this case. What we mean by 
the phrase ``functionally equivalent'' is that while the two programs 
are not identical, the differences between the Texas SO2 
Trading Program and CSAPR are either not significant or work to 
demonstrate the relatively greater stringency of the Texas 
SO2 Trading Program as compared to CSAPR. As the commenter 
notes, in our August 27, 2018 proposal affirming the Texas 
SO2 Trading Program, we listed several points that help 
demonstrate the relative stringency of the Texas SO2 Trading 
Program as compared to CSAPR.\116\ These points are summarized below:
---------------------------------------------------------------------------

    \116\ 83 FR 43586, at 43591.
---------------------------------------------------------------------------

     Covered sources under the Texas SO2 Trading 
Program represent approximately 85% of CSAPR allocations for existing 
units in Texas. Covered sources under the Texas SO2 Trading 
Program represent 89% of all SO2 emissions from all Texas 
EGUs in both 2016 and 2017.
     The remaining 11% of 2016 and 2017 emissions from Texas 
EGUs not covered by the BART alternative come from gas units that 
rarely burn fuel oil or from coal-fired units that on average are 
better controlled for SO2 than the covered sources and 
generally are less relevant to visibility impairment.\117\ As a result, 
any shifting of generation to non-covered sources, as might occur if a 
covered source were to reduce its operation in order to remain within 
its SO2 emissions allowance allocation, is expected to 
result in fewer emissions to generate the same amount of electricity.
---------------------------------------------------------------------------

    \117\ Id.
---------------------------------------------------------------------------

     We also noted that the non-inclusion of a large number of 
gas-fired units that rarely burn fuel oil reduces the amount of 
available allowances for such units that would typically and 
collectively be expected to use only a fraction of their CSAPR 
allowance allocations. Many of these sources typically emit at levels 
much lower than their allocation level.
     Emissions projections under CAIR and CSAPR showed that 
Texas sources were anticipated to purchase allowances from out-of-state 
sources. In contrast to CSAPR, the Texas SO2 Trading Program 
does not allow purchasing of allowances from out-of-state sources. This 
will ensure that emissions reductions resulting from implementation of 
the Texas SO2 Trading Program will take place in Texas 
instead of a neighboring state. In this respect, implementation of the 
Texas SO2 Trading Program can be expected to result in 
greater visibility benefits at Texas Class I areas than CSAPR.
    Furthermore, in the final analysis for this action, we have updated 
our emissions assumptions to be even more conservative (i.e., we assume 
the potential for higher emissions) for units that were in the CSAPR 
program but not covered by the Texas SO2 Trading Program. In 
the August 2018 proposal, we had used an assumption that emissions from 
these units could be as high as 27,500 tons per year.\118\ However, in 
the updated analysis presented for comment in the November 2019 SNPRM, 
we adjusted this assumption to 35,000 tons per year. This number 
reflects emissions for the past five years (2014-2018), which EPA 
regards as a conservative assumption for emissions performance from 
these units. Even when this conservative figure is added to the highest 
annual emissions anticipated from units under the Texas program, 
255,083 tons per year (i.e., the assurance level for the program), the 
total figure is 290,083 tons per year. As EPA explains in section 
III.A.2 of the preamble for this action, that figure is still 27,019 
tons below the 317,100 ton per year emissions level for Texas that EPA 
assumed in the BART-alternative sensitivity analysis utilized for the 
2012 CSAPR Better-than BART determination.
---------------------------------------------------------------------------

    \118\ 83 FR 43586, at 43602.
---------------------------------------------------------------------------

    Based on the above points and the fact that the combination of (1) 
the source coverage for the Texas SO2 Trading Program, (2) 
the total allocations for EGUs covered by the program, and (3) recent 
and foreseeable emissions trends from those EGUs both covered and not 
covered by the program will result in future EGU emissions in Texas 
that are less than the SO2 emission levels forecast in the 
2012 Better-than-BART demonstration for Texas EGU emissions assuming 
CSAPR participation,\119\ it is not reasonable to expect that the Texas 
SO2 Trading Program would result in less visibility benefit 
in Texas Class I areas compared to Texas' participation in CSAPR. Thus, 
we continue to believe that we have sufficiently demonstrated that 
differences in source coverage between the Texas SO2 Trading 
Program as amended in this final action and CSAPR are either not 
significant or work to demonstrate the relative stringency of the Texas 
SO2 Trading Program as compared to CSAPR.
---------------------------------------------------------------------------

    \119\ 83 FR 43586, at 43591.
---------------------------------------------------------------------------

    Our decision to exclude from the Texas SO2 Trading 
Program certain units that were covered under CSAPR was not arbitrary 
as the commenter

[[Page 49192]]

contends, but rather was generally based on both the results of a Q/d 
analysis as well as the units' potential to impact visibility at Class 
I areas based on our consideration of certain circumstances specific to 
each unit. Based on our consideration of the above, we found it 
appropriate to exclude certain units that were previously covered under 
CSAPR from the Texas SO2 Trading Program. For example, some 
units are already operating SO2 controls and we thus do not 
consider the potential visibility impacts from these units to be 
significant relative to those coal-fired EGUs participating in the 
program, and we therefore excluded them from the Texas SO2 
Trading Program. In some cases, relatively new units that began 
operation after 2009 and have been permitted and constructed using 
emission control technology determined under either Best Available 
Control Technology (BACT) or Lowest Achievable Emission Rate (LAER) 
review, as applicable. As we explained in our proposal affirming the 
Texas SO2 Trading Program, because these newer units are 
already operating BACT or LAER controls, we do not consider the 
potential visibility impacts from these units to be significant 
relative to those coal-fired EGUs participating in the program. The 
commenter contends that in these cases, we should have compared the 
levels of control under BACT or LAER versus BART for these units 
because BART can in some cases be more stringent than either BACT or 
LAER. However, given the much greater anticipated visibility impact 
from uncontrolled coal-fired EGUs participating in the program, we 
continue to believe that it is reasonable for us to focus our efforts 
on these uncontrolled coal-fired EGUs while excluding the newer, 
already controlled EGUs from the Texas SO2 Trading Program.
    The commenter specifically identifies Oklaunion, W.A. Parish Unit 
8, Oak Grove Units 1 and 2, Sandy Creek Unit 1, and the Twin Oaks 
facility as units that were covered under CSAPR, but which were 
excluded from the Texas SO2 Trading Program. Although 
Oklaunion has a Q/d greater than 10, we ultimately excluded Oklaunion 
from the Texas SO2 Trading Program based on our 
consideration that the facility consists of one coal-fired unit that is 
not BART-eligible; annual emissions of SO2 in 2016 from this 
source were 1,530 tons, which is less than 1% of the total annual 
emissions for EGUs in the state; and annual SO2 emissions 
were only 933 tons in 2017. In short, the most recent emissions from 
this facility are small relative to other non-BART units included in 
the program.\120\ And as noted in our November 2019 supplemental 
proposal, American Electric Power announced in 2018 its plans to shut 
down the Oklaunion Power Plant by September 2020.\121\ With regard to 
W.A. Parish Unit 8, this unit is not BART-eligible, but is co-located 
with BART-eligible units. Although we decided to include most coal-
fired units that are not BART-eligible but are co-located with BART-
eligible EGUs in the Texas SO2 Trading Program to prevent 
any significant shifting of generation and SO2 emissions 
from participating sources to non-participating sources within the same 
facility, we decided not to include W.A. Parish Unit 8 because this 
unit has a scrubber installed that maintains an SO2 emission 
rate four to five times lower than the emission rate of the other coal-
fired units at the facility that are uncontrolled and are participating 
in the Texas SO2 Trading Program (Parish Units 5, 6, and 
7).\122\ Therefore, we expect that any shifting of generation from the 
participating units at the Parish facility to Parish Unit 8 would not 
present a problem, and instead would result in a decrease in overall 
emissions from the source. Similarly, with regard to Oak Grove Units 1 
and 2, and Sandy Creek Unit 1, these are relatively newer coal fired 
units that began operation in late 2009 or after, are not BART eligible 
and have scrubbers installed that maintain SO2 emission 
rates much lower than the uncontrolled units included in the 
program.\123\ Thus, we did not include Oak Grove Units 1 and 2, and 
Sandy Creek Unit 1 for participation in the Texas SO2 
Trading Program. Although the Twin Oaks facility was identified as 
having a Q/d greater than 10, we did not include it in the trading 
program based on its relatively low potential to impact visibility at 
Class I areas. For instance, the facility does not include any BART-
eligible EGUs; the Q/d for this facility is 14.2, which is 
significantly lower than that of other Texas facilities on our list 
with a Q/d value over 10; \124\ and the estimated Q/d for each 
individual unit (Units 1 and 2) is less than 10. Considering the above, 
we do not consider the potential visibility impacts from Twin Oaks 
Units 1 and 2 to be significant relative to the other coal-fired EGUs 
in Texas with Q/d's much greater than 10 and therefore did not include 
them in the program.\125\ We also note that annual SO2 
emissions from Twin Oaks Units 1 and 2 in 2017-2019, which are the 
three most recent years for which annual emissions data are available, 
have been well below the 2009 emissions level of 4,707 tons of 
SO2.\126\ Thus, we believe the results of the Q/d analysis 
as well as our consideration of unique circumstances specific to each 
unit are sufficient information to justify excluding certain units from 
the Texas SO2 Trading Program that were included under 
CSAPR, without necessitating a quantitative examination of the 
visibility impact of excluding these units.
---------------------------------------------------------------------------

    \120\ 83 FR 43597.
    \121\ See 84 FR at 61853, footnote 20.
    \122\ 83 FR 43596.
    \123\ Id. 43601.
    \124\ Id. FR 43596-97. As discussed in our August 2018 proposal, 
after identifying the BART-eligible sources included in the Texas 
SO2 Trading Program, we evaluated additional sources for 
potential inclusion in the trading program based on their potential 
to impact visibility at Class I areas. We used a Q/d value of 10 as 
a threshold for identification of facilities that may impact 
visibility at Class I areas and could be included in the trading 
program. We identified a total of 17 facilities in Texas with Q/d 
values greater than 10, some of which are not BART-eligible and had 
not already been identified for inclusion in the program. The Q/d 
values for these 17 facilities range from 14.2 (for Twin Oaks) to 
425.4 (for Monticello).
    \125\ Id. FR 43597.
    \126\ Annual SO2 emissions from Twin Oaks Units 1 and 
2 were 2,472 tons in 2017; 2,523 tons in 2018; and 2,408 tons in 
2019. See excel spreadsheet ``Twin Oaks- SO2 annual 
emissions_2009 and 2017-2019.xlsx,'' available in the docket for 
this action.
---------------------------------------------------------------------------

    With regard to the comment contending that we arbitrarily selected 
2009 as the emissions year in our Q/d analysis, we note that to 
identify facilities that may impact visibility at Class I areas in our 
October 2017 final rule, we relied on an already existing Q/d analysis 
that we prepared as part of the December 2014 proposal to address 
Texas' reasonable progress requirements, and which was based on 2009 
emissions.\127\ In that proposed action, we also reviewed 2010 and 2011 
emission data that became available as we were developing that proposed 
rule. We determined that the only EGU facility that was above the Q/d 
for 2010 and 2011 compared to the 2009 analysis was the Oak Grove 
facility, which came online in late 2009. As we discuss above, this is 
a new facility that is equipped with scrubbers and we determined it was 
not necessary to include them in the Trading Program. The Regional Haze 
Rule does not require us to select a range of years for the emissions 
data for our Q/d analysis

[[Page 49193]]

nor does it identify a particular year that must be used for the 
emissions data. We have the discretion to select the emissions data 
year as long as we provide a reasonable justification for our 
selection, as we have done in this case.\128\
---------------------------------------------------------------------------

    \127\ See the TX RH FIP TSD that accompanied our December 2014 
proposal to address reasonable progress requirements for Texas (79 
FR 74818 (Dec 16, 2014)), and the Excel file 
``2009statesum_Q_D.xlsx.'' These files are available in Docket ID 
EPA-R06-OAR-2014-0754, see Document ID EPA-R06-OAR-2014-0754-0007 
and EPA-R06-OAR-2014-0754-0007-05.
    \128\ 83 FR 43597.
---------------------------------------------------------------------------

    With regard to the comment regarding the opt-in provision, we 
appreciate the commenter's input on whether that provision differs from 
the provisions of the CSAPR SO2 program in a manner that 
could decrease the relative overall stringency of the Texas 
SO2 Trading Program. In our November 2019 supplemental 
proposal, we proposed to modify the regulations to terminate the opt-in 
provision, and we are adopting that proposed modification in this final 
action.
    Comment: One commenter asserted that the Texas SO2 
Trading Program is arbitrary, capricious, and unlawful because EPA did 
not follow its own policies and regulations in the ``clear weight of 
evidence'' approach taken under Sec.  51.308(e)(2)(i)(E) to demonstrate 
that the trading program achieves greater reasonable progress than 
BART. The commenter pointed to EPA's action on the Utah Regional Haze 
SIP, in which EPA stated that pursuant to the Regional Haze Rule 
requirements for a BART alternative, the clear weight-of-evidence test 
requires three steps that can generally be summarized as follows: (1) 
Use information and data that can inform the decision . . . ; (2) 
Evaluate the information and recognize the relative strengths and 
weaknesses of the metrics used, including assigning weights to each 
piece of information that indicate the degree to which it supports a 
finding that the alternative program will achieve greater visibility 
benefits; and (3) Collectively consider the weights assigned to the 
individual pieces of information and consider the total weight of all 
the information to determine whether the proposed BART alternative will 
clearly provide for greater reasonable progress than BART at the 
impacted Class I areas. The commenter asserted that in contrast to our 
evaluation of Utah's BART alternative, EPA did not follow the three-
step process for making a clear weight of the evidence demonstration 
under 40 CFR 51.308(e)(2) to demonstrate that the Texas SO2 
Trading Program achieves greater reasonable progress than BART. The 
commenter asserted that EPA should have identified, weighed and 
carefully considered certain information the commenter considers to be 
relevant and easily available to inform EPA's clear weight of evidence 
approach and decision regarding the Texas SO2 Trading 
Program, including EPA's January 2017 Texas BART proposal, recent 
emissions data, presumptive BART emission rates and emission 
reductions, the weaknesses of the outdated CSAPR evaluations, 
significant differences between the Texas SO2 Trading 
Program and CSAPR, and EPA's own previous evaluation when withdrawing 
Texas from CSAPR showing greater emission reductions under BART.
    The commenter further asserted that the clear weight of evidence 
demonstrates that the trading program will not make greater reasonable 
progress than BART based on EPA's prior determination that CSAPR would 
achieve lower emissions reductions than source-specific BART for Texas 
EGUs. The commenter cited to three prior rulemakings in which, 
according to the commenter, the EPA has concluded that CSAPR would 
achieve less reasonable progress than source-specific BART in Texas: 
(1) The January 2017 BART proposal; (2) the original CSAPR Better-than-
BART rulemaking; and (3) the 2017 rulemaking to remove Texas from 
CSAPR's SO2 trading program. The commenter asserted that 
since the Texas SO2 Trading Program is intended to mimic the 
effect of CSAPR, and CSAPR would achieve less reasonable progress than 
BART in Texas, it follows that the Texas SO2 Trading Program 
would also achieve less reasonable progress than BART, and therefore 
would not satisfy the requirements of the Regional Haze Rule at 40 CFR 
51.308(e)(2), (e)(2)(i)(E), and (e)(3).
    Response: EPA disagrees that we are applying a different standard 
for ``clear weight of evidence'' than we have in other cases. The 
specific circumstances of Texas as compared to Utah are readily 
distinguishable. Specifically, the Better-than-BART demonstration for 
our Texas SO2 Trading Program relies on the quantitative 
modeling, analyses and demonstrations supporting our June 2012 ``CSAPR 
Better-than-BART'' determination and September 2017 ``CSAPR Better-
than-BART affirmation finding'' (as recently reaffirmed by our denial 
of a petition for reconsideration on the latter). This analysis follows 
the two-part quantitative test of Sec.  51.308(e)(3), and in our weight 
of evidence approach, we rely on that technical analysis, as 
supplemented by additional evidence that the Texas intrastate trading 
program achieves at least the same amount of emission reductions as 
were projected for Texas in the CSAPR analysis (including accounting 
for potential shifting in emissions to CSAPR states with the removal of 
Texas from the program). The commenter attempts to elevate EPA's 
general guidance on conducting a clear weight of evidence analysis, set 
forth in a separate regional action, into a mandatory test that states 
or the agency must always adhere to. However, the evidence-based 
inquiry called for under Sec.  51.308(e)(2)(i)(E) is inherently fact-
specific, and EPA has set forth why information in this record supports 
its findings. The State of Utah, in a far different context, had 
attempted to show by a series of metrics (many of which were novel and 
unique to that SIP submittal) that a BART alternative achieved greater 
reasonable progress than BART, but the state failed to explain how it 
weighed these metrics, and EPA found that one of the most important 
metrics in that instance (visibility impact on the 98th percentile day) 
did not actually support the alternative.\129\ Here, rather than 
setting out a list of factors to evaluate, EPA is primarily relying on 
the CSAPR Better-than-BART analysis under the quantitative test of 
Sec.  51.308(e)(3) (in addition to showing that other Sec.  
51.308(e)(2) requirements are met), as explained elsewhere in the 
record.
---------------------------------------------------------------------------

    \129\ 81 FR at 43898.
---------------------------------------------------------------------------

    Comment: One commenter asserted that the Texas SO2 
Trading Program is not an adequate SO2 BART alternative 
because it is not a cap and trade program that might actually reduce 
SO2 emissions beyond the overall cap. Further, the commenter 
argues that the cap set by EPA in the trading program is too high and 
actually allows the participating units to increase their 
SO2 emissions. The commenter stated that in upholding EPA's 
authority to select an alternative to source-specific BART, the D.C. 
Circuit has held that the overriding requirement for each regional haze 
plan is that it make reasonable progress toward eliminating haze 
pollution. The commenter asserted that the Texas SO2 Trading 
Program does not satisfy this overriding requirement since, according 
to the commenter, it would not result in any progress because it does 
not require any emissions reductions relative to actual emissions from 
covered sources in 2015, 2016, and 2017. The commenter argued that the 
Texas SO2 Trading Program actually authorizes covered 
sources to increase emissions relative to actual emissions in 2015, 
2016, and 2017, and that it therefore does not achieve greater 
reasonable progress than source-specific BART and is not an appropriate 
BART alternative. The commenter also claimed that by

[[Page 49194]]

authorizing even higher emissions than seen in 2015-2017, the Texas 
SO2 Trading Program would likely further erode whatever 
gains were made post-2014. The commenter asserted that the Texas 
SO2 Trading Program authorizes sources to emit as much as 
293,104 SO2 tons considering that the Supplemental Allowance 
Pool may grow over time, which would equate to a 47,234 ton increase 
over 2017 emissions, and a 74,813 ton increase over 2016 emissions. The 
commenter argued that even if the potential growth in the Supplemental 
Allowance Pool (from an initial 10,000 tons to 54,711 tons) is ignored, 
and one uses 248,393 tons as the total number of allowances, the Texas 
SO2 Trading Program would still authorize an increase in 
emissions over actual emissions in 2015, 2016, and 2017. The commenter 
asserted that the Texas SO2 Trading Program would thus fail 
to require greater reasonable progress than BART and would actually 
authorize greater pollution than the status quo. Furthermore, the 
commenter asserted that source-specific BART is the only option EPA has 
proposed that is consistent with statutory requirements and goals. 
According to the commenter, the January 2017 source-specific BART 
proposal, or even presumptive BART, would reduce emissions and improve 
visibility far more than the Texas SO2 Trading Program, and 
should be finalized in place of the trading program.
    Additionally, the commenter argued that in EPA's determination that 
the Texas SO2 Trading Program will decrease SO2 
emissions relative to 2014 emission levels, EPA's selection of 2014 as 
the baseline year for determining whether the Texas SO2 
Trading Program would reduce emissions and improve visibility was 
arbitrary. The commenter asserted that EPA should have instead selected 
2017 as the baseline year because that is the most recent year for 
which annual emissions data is available and in which Texas sources 
were not part of CSAPR for SO2. The commenter claimed that 
the Texas SO2 Trading Program will result in no progress 
toward the goal of eliminating haze pollution and will therefore be in 
direct violation of the Clean Air Act's visibility mandate.
    Response: We do not agree that addressing Texas' SO2 
BART requirements through a source-specific BART FIP is the only option 
that meets the regulatory and statutory requirements. Our October 2017 
final rule fulfilled our mandatory duty to address the BART 
requirements for Texas EGUs through the promulgation of a FIP 
containing a BART alternative in the form of an intrastate trading 
program. The Texas SO2 Trading Program, as amended in this 
final action through the addition of the 255,083-ton assurance level 
and other amendments discussed in section III.A.1 of this final action, 
will result in annual emissions from the covered EGUs and other EGUs in 
Texas that are lower than what was required under Texas participation 
in CSAPR's SO2 trading program. Thus, the clear weight of 
evidence is that, overall, the Texas trading program (considered in the 
larger context of CSAPR) will provide greater reasonable progress than 
BART at the covered sources and satisfies the requirements for a BART 
alternative under 40 CFR 51.308(e)(2)(i)(E).
    The comment contending that we arbitrarily elected not to use 2017 
as the baseline emissions year for comparing the Texas SO2 
Trading Program to BART is incorrect. We considered 2014 as the 
appropriate most recent year for comparing the Texas SO2 
Trading Program to BART for the purposes of meeting the requirement of 
40 CFR 51.308(e)(2)(i)(D) given that Texas sources were subject to the 
CSAPR SO2 trading program in 2015 and 2016 but are no longer 
subject to that program.\130\ This analysis was included in our October 
2017 final rule, at a time when 2017 emissions data were not yet 
available. The Regional Haze Rule does not require us to select 2017 or 
any specific year as the baseline year for our assessment under 40 CFR 
51.308(e)(2)(i)(D) of emission reductions achievable by the trading 
program, and commenter establishes no basis why we should have been 
required to update this analysis in our August 2018 proposal to affirm 
the rule. Our BART alternative analysis for Texas relied on 2014 data 
to be consistent with the CSAPR Better-than-BART analysis given that we 
are relying on the demonstration in the 2012 CSAPR Better-than-BART 
rule (as affirmed in 2017) to show that the clear weight of evidence 
demonstrates that the Texas SO2 Trading Program, which is 
modeled on the CSAPR trading programs, will provide for greater 
reasonable progress than BART in Texas as required under 40 CFR 
51.308(e)(2)(i)(E).\131\ We have provided a reasonable explanation for 
our selection of 2014 as the historical baseline year for the purposes 
of meeting the requirement of 40 CFR 51.308(e)(2)(i)(D).
---------------------------------------------------------------------------

    \130\ 83 FR 43598.
    \131\ Note that the year 2014 is not relevant to the question of 
whether emissions achieved by the program are surplus to the 
baseline date for purposes of 40 CFR 51.308(e)(2)(iv). For purposes 
of meeting the requirements of 40 CFR 51.308(e)(2)(iv), the baseline 
date is 2000-2004.
---------------------------------------------------------------------------

    The commenter's suggestion that the Texas SO2 Trading 
Program should be structured to achieve additional emission reductions 
beyond the cap is effectively similar to other comments advocating for 
a lower cap or a more stringent program generally. As discussed 
elsewhere in this document, we continue to believe that the Texas 
SO2 Trading Program is sufficiently stringent to meet the 
requirements to qualify as a BART alternative in the context of the 
2012 CSAPR Better-than-BART rule and the 2017 CSAPR Better-than-BART 
affirmation finding. The comment contending that the Texas 
SO2 Trading Program authorizes sources to increase emissions 
relative to actual emissions in 2015, 2016, and 2017, and authorizes 
greater pollution than the status quo mischaracterizes the Texas 
SO2 Trading Program and reflects a misunderstanding of its 
purpose. First, we note that the Texas SO2 Trading Program 
will achieve an average reduction of at least 54,213 tons per year over 
the 2014 emissions, which is the difference between the aggregate 2014 
SO2 emissions of the covered Texas EGUs (309,296 tons per 
year) \132\ and the assurance level of 255,083 tons we are finalizing 
in this action. The assurance level represents the highest annual 
SO2 emissions anticipated from units subject to the Texas 
SO2 Trading Program in light of the three-for-one penalty 
surrender ratio imposed on emissions exceeding that level, and is 
therefore a conservatively high figure to compare against 2014 actual 
emissions levels. Second, and notwithstanding our position that we 
appropriately selected 2014 as the baseline year for the purpose of 
this analysis, we note that even if we had selected 2017 as the 
baseline year, we disagree that the Texas SO2 Trading 
Program would authorize greater pollution than the status quo given 
that the trading program now contains an assurance level limiting 
SO2 emissions from Texas EGUs participating in the trading 
program where no prior SO2 emission limits under the 
regional haze program existed for these sources. Therefore, we disagree 
that the Texas SO2 Trading Program authorizes greater 
pollution than the status quo even under the assumption of 2017 as the 
baseline year for comparison against the Texas SO2 Trading 
Program as the status quo ``authorizes'' much higher emissions (due to 
there being no enforceable program at all and the only limitations 
being the facilities' current permit limits), even if actual emissions

[[Page 49195]]

happened to be below that level. As discussed in section III.A.2 of 
this final action, we note that the Texas SO2 Trading 
Program with the added assurance level we are finalizing in this 
action, also achieves significantly lower emissions relative to the 
year 2002.\133\ These emission reductions that are secured by the 
Trading Program contribute to improvements in visibility from the 
baseline period for the first planning period and are permanent and 
enforceable as part of the long-term strategy for the State of Texas.
---------------------------------------------------------------------------

    \132\ 84 FR at 61854.
    \133\ The Regional Haze Rule provides that the baseline period 
for the first planning period is 2000-2004. See 40 CFR 
51.308(d)(2)(i).
---------------------------------------------------------------------------

    Further, the purpose of the program is not to achieve some 
particular quantum, much less a maximum quantum, of emission reductions 
as compared to some reference point for ``current'' emission levels. In 
fact, whether the Texas SO2 Trading Program allows for a 
potential increase in emissions from recent or current emission levels 
is not the relevant question under the BART alternative provisions of 
the Regional Haze Rule. In order to satisfy the BART alternative test 
of 40 CFR 51.308(e)(2)(i)(E), the alternative must, on the clear weight 
of evidence, achieve greater reasonable progress in visibility 
improvements than would be achieved through the installation and 
operation of BART at the covered sources. This test calls for a 
comparison in stringency between two regulatory regimes, BART and the 
BART alternative. The Texas SO2 Trading Program is modeled 
on and set at a stringency level comparable to CSAPR in Texas, such 
that the CSAPR Better-than-BART analysis may be relied upon in 
determining the adequacy of this program. As discussed in section 
III.A.2, we find that we have satisfied the BART alternative test of 40 
CFR 51.308(e)(2)(i)(E). Whether actual emissions may increase or 
decrease from some particular historical level under the program is 
immaterial so long as emissions remain below the level requisite to 
make the ``greater reasonable progress'' showing.
    To the extent the commenter is asserting that certain aspects of 
the program, such as allocations to retired units, the availability of 
banking, and allocations from the Supplemental Allowance Pool, pose a 
risk that the program will fail to achieve the emission levels assumed 
in our analysis, this theoretical concern is addressed by amendments to 
the program finalized in this action. To address concerns regarding 
potentially higher SO2 emissions in individual years from 
Texas EGUs participating in the trading program, on November 1, 2019, 
we signed a supplemental notice of proposed rulemaking that proposed to 
add assurance provisions to the Texas SO2 Trading Program. 
Under the assurance provisions, if the total emissions of the sources 
in the program in any year exceed the annual program budget by more 
than a variability limit of 16,688 tons, the emissions over that 
``assurance level'' will trigger a requirement for some sources to 
surrender three allowances for each ton of emissions, providing a 
strong disincentive against emissions exceeding the assurance level. We 
are finalizing that supplemental proposal in this action.\134\ As we 
explained in the supplemental proposal, the assurance level effectively 
moots any concerns regarding annual emission performance under the 
program by establishing a cap implemented via the penalty surrender 
ratio. This is because when a mass-based trading program includes a 
``cap'' on overall annual emissions, as the Texas SO2 
Trading Program now does with the addition of the assurance provisions, 
that overall ``cap'' on emissions set by the program (here, the 
assurance level) effectively determines the stringency of the program 
in each year. With the addition of an assurance level, the potential 
risk of an undue relaxation of the annual stringency in the program is 
minimized given that sources will remain strongly incentivized to keep 
annual emissions below the level at which the three-for-one surrender 
penalty is imposed. Thus, how allowances are allocated or banked within 
that cap does not affect the overall stringency of the program.\135\
---------------------------------------------------------------------------

    \134\ The final ``assurance level'' is 255,083 tons, which is 
the sum of the revised annual program budget of 238,395 tons plus 
the variability limit of 16,688 tons. As discussed in section 
III.A.1 of the preamble for this action, for consistency with the 
assurance provisions, EPA is also making revisions to the 
Supplemental Allowance Pool provisions that will limit the combined 
total quantity of allowances issued in any year from the program 
budget and the Supplemental Allowance Pool to this same level of 
255,083 tons.
    \135\ See 84 FR 61854.
---------------------------------------------------------------------------

    Comment: The commenter asserted that even a ``successful'' cap and 
trade program cannot avoid localized impacts to particular Class I 
Areas, much less to local communities most impacted by large pollution 
sources, and that the Trading Program is therefore not an adequate BART 
alternative.
    Response: The Regional Haze Rule does not require that a BART 
alternative achieve greater visibility improvements than BART at each 
particular Class I area, and only requires that a BART alternative does 
not result in declines in visibility compared to the baseline in any 
class I area. EPA's decision to authorize alternative measures, 
including emissions trading programs, subject to those requirements, in 
the original 1999 Regional Haze Rule is beyond the scope of this 
action. Further, the test EPA devised under 51.308(e)(3) for evaluating 
whether a BART alternative makes greater reasonable progress calls for 
an evaluation of whether there could be unacceptable localized 
visibility impacts under a BART alternative. In particular, the 
analysis asks whether visibility will decline in any class I area under 
the BART alternative as compared with the baseline scenario. This 
evaluation was done as part of the 2012 CSAPR Better-than-BART analytic 
demonstration, which was relied upon in developing the Texas 
SO2 Trading Program. That analysis showed no decline in 
visibility in any Class I area compared to the baseline emissions 
scenario.

B. PM BART

    Comment: We received one comment raising several objections to 
EPA's proposal to affirm approval of Texas' finding that no PM BART 
controls are necessary for EGUs based on Texas' pollutant-specific 
screening analysis for PM. The commenter asserted that the Regional 
Haze Rule and the BART Guidelines require that the BART screening 
analysis evaluate the impacts of all pollutants together, not just PM, 
and that a source-specific, five-factor analysis of PM BART must then 
be conducted for each EGU found to be subject to BART. The commenter 
asserted that Texas' pollutant-specific screening analysis did not meet 
these requirements and that EPA's proposed approval of Texas' finding 
that its sources are exempt from PM BART is thus inappropriate. The 
commenter also argued that EPA's proposal to affirm approval of Texas' 
pollutant-specific screening analysis for PM BART is arbitrary and 
capricious for several reasons, including the following: (1) Approval 
of Texas' screening approach is contrary to the plain language of the 
Clean Air Act; (2) Texas' screening approach is directly contrary to 
the agency's regional haze regulations and mandatory BART guidelines; 
(3) EPA's approval of a pollutant-specific screening approach 
arbitrarily departs from the agency's past practice; and (4) EPA failed 
to provide a rational explanation for proposing to approve Texas' 
application of a pollutant-specific screening analysis in this case.
    Specifically, the commenter claimed that approval of Texas' 
screening approach is contrary to the plain language of the Clean Air 
Act because

[[Page 49196]]

the commenter believes this effectively exempts sources from installing 
PM BART controls without going through the statutory exemption process 
Congress prescribed. The commenter asserted that Congress specifically 
provided that sources could be exempted from the BART requirements only 
if the Administrator determines that a source does not or will not, by 
itself or in combination with other sources, emit any air pollutant 
which may reasonably be anticipated to cause or contribute to a 
significant impairment of visibility in any Class I area, and that the 
FLMs must concur with any proposed exemption. The commenter argued that 
EPA has not demonstrated that any of the BART-eligible Texas EGUs meet 
the statutory requirements for an exemption and EPA has not obtained 
the concurrence of federal land managers for exempting sources for PM 
BART.
    The commenter asserted that Texas' screening approach is directly 
contrary to the agency's regional haze regulations and mandatory BART 
guidelines. The commenter asserted that the Regional Haze Rule and BART 
guidelines do not provide for any exemptions from a five-factor BART 
analysis for specific pollutant, with the exception of a de minimis 
exemption under Sec.  308(e)(1)(ii)(C) for sources that emit less than 
15 tons per year of particulate matter. The commenter argued that 
neither EPA nor Texas attempted to demonstrate that this de minimis 
exemption applies to any of Texas' EGUs.
    The commenter also argued that EPA's approval of a pollutant-
specific screening approach arbitrarily departs from the agency's past 
practice. Specifically, the commenter claimed that EPA has rejected 
similar pollutant-specific approaches to BART determinations in past 
regional haze actions. For instance, the commenter asserted that in a 
prior regional haze action where EPA partially disapproved the Arizona 
Regional Haze SIP (78 FR 46142 (July 30, 2013)), EPA stated that under 
the Regional Haze Rule, the determination of whether a source causes or 
contributes to visibility impairment is not made on a pollutant-by-
pollutant basis and that once a source is determined to be subject to 
BART, the Regional Haze Rule allows for the exemption of specific 
pollutants from a BART analysis only if they are below specified de 
minimis levels.
    The commenter also raised an objection to EPA's reliance on a 2006 
guidance document in proposing to approve Texas' application of a 
pollutant-specific screening analysis for PM BART. The commenter argued 
that the EPA's 2006 guidance document on which EPA based its proposed 
approval of Texas' pollutant-specific screening analysis was never 
subject to notice and comment and is therefore not binding. 
Furthermore, the commenter asserted that EPA did not explain how the 
2006 guidance document is applicable in this case given that the 
guidance document does not contain an analysis or rationale and does 
not cite or incorporate any technical justification for allowing the 
use of a pollutant-specific screening approach. The commenter also 
argued that the guidance document contemplates the use of a pollutant-
specific screening analysis in situations where a state is subject to 
both SO2 and NOX emission reductions under the 
Clean Air Interstate Rule, not CSAPR or some other trading program as 
in this case. The commenter also argued that reliance on the 2006 
guidance document is not appropriate in this case because Texas 
participates in CSAPR for ozone season NOX and is therefore 
not subject to annual NOX emission limits.
    The commenter also asserted that in its screening analysis, Texas 
did not provide a rationale or justification for its selection of 0.5 
dv as the threshold for contribution to visibility impairment. The 
commenter argued that EPA's BART Guidelines do not authorize states or 
EPA automatically to use a 0.5 dv contribution threshold, but instead 
provide that any threshold states use for determining whether a source 
contributes to visibility impairment should not be higher than 0.5 dv. 
The commenter claimed that given the number of Texas sources and the 
magnitude of their impact at affected Class I areas, a contribution 
threshold lower than 0.5 dv may be appropriate.
    Response: We are affirming our approval of Texas' pollutant-
specific PM screening analysis and determination that PM BART emission 
limits are not required for any Texas EGUs as in accordance with EPA 
guidance and the Regional Haze Rule. As we explained in our August 27, 
2018 affirmation proposal, in a 2006 EPA memorandum titled ``Regional 
Haze Regulations and Guidelines for Best Available Retrofit Technology 
(BART) Determinations,'' EPA stated that pollutant-specific screening 
can be appropriate where a state is relying on a trading program as a 
BART alternative to address both NOX and SO2 
BART.\136\ As discussed in the 2006 guidance, for EGU sources that are 
addressing the NOX and SO2 BART requirements by 
participation in a trading program as a BART alternative, such as CAIR, 
the state must still determine whether its BART-eligible EGUs are 
subject to review under BART for PM. In this situation, as this is the 
only determination that remains and because the task of predicting the 
impacts of PM on visibility is a relatively straight-forward exercise, 
unlike predicting the impacts of the non-linear reacting pollutants 
SO2 and NOX, a pollutant-specific basis to model 
only the impact of PM emissions on visibility is recommended to 
determine whether a source is subject to BART for PM. We note that the 
2006 memorandum is consistent with the BART Guidelines, which provide 
that a state ``may choose to perform an initial examination to 
determine whether a particular BART-eligible source or group of sources 
causes or contributes to visibility impairment in nearby Class I areas. 
If your analysis, or information submitted by the sources, shows that 
an individual source or group of sources (or certain pollutants from 
those sources) is not reasonably anticipated to cause or contribute to 
any visibility impairment in a Class I area, then you do not need to 
make BART determinations for that source or group of sources (or for 
certain pollutants from those sources).'' \137\ In sum, the 2006 EPA 
memorandum is consistent with the BART Guidelines and clearly states 
that a pollutant-specific analysis for PM emissions is an appropriate 
approach in certain carefully circumscribed circumstances, such as are 
present here.
---------------------------------------------------------------------------

    \136\ See discussion in Memorandum from Joseph Paisie to Kay 
Prince, ``Regional Haze Regulations and Guidelines for Best 
Available Retrofit Technology (BART) Determinations,'' July 19, 
2006. While the memorandum specifies that pollutant-specific 
screening is appropriate for states relying on CAIR, it is 
reasonable to infer that other trading programs, such as CSAPR and 
the Texas SO2 Trading Program, also qualify to use this 
approach.
    \137\ 40 CFR part 51 Appendix Y, Section III.
---------------------------------------------------------------------------

    While the commenter is correct that in our January 4, 2017 BART FIP 
proposal,\138\ we initially proposed to disapprove Texas' technical 
evaluation and determination in the 2009 Regional Haze SIP that PM BART 
emission limits are not required for any of Texas' EGUs, this was 
because Texas was not participating in CSAPR for SO2 or in 
any other SO2 emissions trading program or BART alternative 
at the time and thus did not meet the criteria described in our 2006 
guidance. In our October 2017 final action, we addressed the 
SO2 BART requirements for Texas EGUs under a BART 
alternative consisting of an intrastate trading program. Given that 
Texas is relying on participation in the CSAPR ozone season trading 
program for NOX to

[[Page 49197]]

satisfy NOX BART for Texas EGUs and is now also subject to a 
BART alternative consisting of an SO2 intrastate trading 
program to satisfy the SO2 BART requirements for Texas EGUs, 
Texas is relying on a trading program as a BART alternative to address 
both NOX and SO2 BART. Thus, pollutant-specific 
screening for PM as performed by Texas in its 2009 SIP submittal was 
appropriate, consistent with the BART Guidelines \139\ and the 2006 EPA 
memorandum.\140\
---------------------------------------------------------------------------

    \138\ 82 FR 912.
    \139\ 40 CFR part 51 Appendix Y, Section III.
    \140\ See Memorandum from Joseph Paisie to Kay Prince, 
``Regional Haze Regulations and Guidelines for Best Available 
Retrofit Technology (BART) Determinations,'' July 19, 2006.
---------------------------------------------------------------------------

    We disagree with the commenter's assertion that EPA's approval of a 
pollutant-specific screening approach arbitrarily departs from the 
agency's past practice. EPA has previously determined that this 
approach is appropriate for EGUs where a State relied on CAIR or CSAPR 
to satisfy the BART requirements for SO2 and NOX 
and has approved SIPs where the State required its BART-eligible EGUs 
to only evaluate PM emissions for determining whether they are subject 
to BART, and, if applicable, for performing a BART control assessment. 
We also note that in these analyses EPA approved a threshold of 0.5 dv 
for determining which sources were subject to BART.\141\
---------------------------------------------------------------------------

    \141\ See for example the approval of Regional haze SIPs for 
Georgia (77 FR 11452 for proposed rule and 77 FR 38501 for final 
rule), South Carolina (77 FR 11894 for proposed rule and 77 FR 38509 
for final rule), and Kentucky (76 FR 78194 for proposed rule and 77 
FR 19098 for final rule).
---------------------------------------------------------------------------

    With regard to the commenter's assertion that our approval of 
Texas' selection of 0.5 dv as the threshold for visibility impairment 
for PM was improper, as an initial matter, as explained in our August 
2018 proposal to affirm the October 2017 final rule promulgating the 
Texas SO2 Trading Program, we did not reopen the subject-to-
BART determinations for sources not covered by the trading program, 
which screened out of the BART program based on consideration of all 
visibility pollutants.\142\ With respect to the BART sources included 
in the trading program, EPA requested comment on its PM-specific 
screening analysis.\143\ EPA's basis for approving the 0.5 dv value for 
screening purposes was that EPA's BART Guidelines allow states 
conducting source-by-source BART determinations to exempt sources with 
visibility impacts as high as 0.5 dv.144 145 Further, the 
BART Guidelines provide that in setting a contribution threshold, 
states should ``consider the number of emissions sources affecting the 
Class I areas at issue and the magnitude of the individual sources' 
impacts.'' States have the discretion within the Clean Air Act, 
Regional Haze Rule, and BART Guidelines to set an appropriate 
contribution threshold and are free to use a threshold lower than 0.5 
dv if they conclude that the location of a large number of BART-
eligible sources in proximity of a Class I area justifies this 
approach. Texas did not determine in its 2009 Regional Haze SIP that 
there were circumstances in this case to justify the selection of a 
lower threshold. EPA continues to find that Texas was within its 
discretion to select a threshold of 0.5 dv in its BART screening 
analysis. In light of the above-referenced 2006 memorandum recognizing 
the availability of a pollutant-specific approach to BART where BART 
sources are already separately controlled for SO2 and 
NOX by one or more BART alternative trading programs, we are 
finalizing our proposed affirmation that no BART-eligible source in 
Texas is subject to BART for PM on a pollutant-specific basis. In 
finalizing an affirmation of our approval of Texas' determinations 
regarding PM BART, we offer one additional note. We originally proposed 
to approve Texas' screening approach in 2014,\146\ and our October 2017 
final action again relied on our technical evaluation in that proposal 
for the basis of our approval. We therefore incorporate by reference 
the technical evaluation regarding this issue from our 2014 proposal 
into the record for this action.\147\
---------------------------------------------------------------------------

    \142\ 83 FR 43598 n. 80.
    \143\ Id. 43592-93.
    \144\ 70 FR 39104, 39161 (July 6, 2005) and 40 CFR part 51 
Appendix Y, Section III.A.1.
    \145\ 82 FR at 48346 and 79 FR at 74848.
    \146\ See 79 FR 74817, 74848 (Dec. 16, 2014).
    \147\ 79 FR 74817, 74848.
---------------------------------------------------------------------------

    Comment: We received a comment asserting that the 2006 intra-agency 
memorandum on which EPA relies to propose approval of Texas' pollutant-
specific screening approach is inconsistent with the Clean Air Act and 
the Regional Haze Rule, and EPA's interpretation of its regulations is 
therefore not entitled to deference. Bowles v. Seminole Rock & Sand 
Co., 325 U.S. 410, 414 (1945) (agency interpretation of its regulation 
is not controlling where ``it is plainly erroneous or inconsistent with 
the regulation''); see also Auer v. Robbins, 519 U.S. 452, 461 (1997) 
(same). The commenter further asserted that courts have repeatedly 
criticized agency use of guidance documents in the form of interpretive 
rules and policy statements to reinterpret regulations, recognizing the 
potential problem that ``[l]aw is made, without notice and comment, 
without public participation, and without publication in the Federal 
Register or the Code of Federal Regulations.'' Decker v. Northwest 
Envtl. Def. Ctr., 133 S. Ct. 1326, 1341 (2013); Perez v. Mortgage 
Bankers Ass'n, 135 S. Ct. 1199, 1213-14 (Mar. 9, 2015); see also 
Appalachian Power Co. v. EPA, 208 F.3d 1015, 1020 (D.C. Cir. 2000) 
(criticizing agency use of guidance documents in the form of 
interpretive rules and policy statements, recognizing the potential 
problem that ``[l]aw is made, without notice and comment, without 
public participation, and without publication in the Federal Register 
or the Code of Federal Regulations.'').
    Response: EPA has the authority to develop and implement policies 
and guidance. EPA sometimes issues policy or guidance to encourage 
compliance with environmental requirements. Policy documents may 
represent EPA's official interpretation or view of specific issues. 
However, ultimately, EPA's actions with regards to guidance documents 
must be consistent with applicable statutory and regulatory 
requirements. The EPA disagrees that its reference to the 2006 guidance 
is inconsistent with the CAA or constitutes a legislative or 
interpretive rule, and we have reasonably relied, in part, on this 
guidance document in our approval of Texas' determination that no BART-
eligible sources in Texas are subject to BART for PM on a pollutant-
specific basis. As explained in response to similar comments above, 
application of pollutant-specific screening for PM is appropriate in 
Texas and is not inconsistent or at odds with either the CAA statute or 
applicable EPA regulations, for the reasons explained in response to 
those comments. We, therefore, disagree that our interpretation of the 
2006 memorandum here is inconsistent with the Clean Air Act regarding a 
pollutant-specific screening approach for PM BART.

C. Appropriateness of the Texas SO2 Trading Program vs. Source-Specific 
BART FIP

    Comment: One commenter raised objections to EPA's finalization of 
the October 17, 2017 final rule promulgating the Texas SO2 
Trading Program, asserting that EPA provided no rational basis for 
finalizing a FIP promulgating an intrastate trading program in place of 
the source-specific BART FIP proposal that was proposed by EPA in 
January 2017. The commenter asserted that the January 2017 BART FIP 
proposal was supported by detailed, source-specific analyses of the 
cost of

[[Page 49198]]

SO2 controls, the level of control achievable by different 
technologies, estimated emissions reductions, and projected visibility 
improvement from operation of such controls, and that this 
administrative record demonstrated that the 2017 BART FIP proposal 
meets the requirements of the Regional Haze Rule and CAA and should 
have been finalized by EPA.
    Response: While EPA proposed source-specific BART emission limits 
in the January 2017 proposal, under the notice and comment rulemaking 
process, EPA may decline to finalize a proposed rule or may finalize a 
rule with changes from proposal based on consideration of additional 
information received during the comment period. Additionally, EPA may 
also propose a rule and rationale that differs from its original 
proposal and does not have an obligation to finalize the initial 
proposed rule as is the case here. We also note that the Regional Haze 
Rule does not require source-specific BART determinations, as the 
regulations at 40 CFR 51.308(e)(2)-(5) allow states, or EPA if 
promulgating a FIP, to adopt a BART alternative in place of source-
specific BART provided that all applicable regulatory requirements 
related to the BART alternative are satisfied. EPA's obligations are to 
promulgate a final rule that meets the requirements of the CAA and the 
Regional Haze Rule, consider and respond to all relevant comments to 
the final rule, and provide a record of decision-making for its action 
that is not arbitrary and capricious. In this case, informed by 
comments we received during the public comment period for the January 
2017 proposal from the Texas Commission on Environmental Quality 
(TCEQ), the Public Utility Commission of Texas (PUC), Luminant, and 
American Electric Power (AEP), urging us to consider as a BART 
alternative the concept of emission caps using CSAPR allocations,\148\ 
and based on our independent determination that a BART alternative 
approach under 40 CFR 51.308(e)(2) would meet all statutory and 
regulatory requirements and thus be viable for Texas, we did not 
finalize the source-specific BART emission limits we had proposed and 
instead we addressed the SO2 BART requirement for Texas EGUs 
under a BART alternative consisting of an intrastate trading program in 
our October 2017 final rule. Having made the determination (in part 
through reliance on the analysis of CSAPR as a BART alternative as 
explained elsewhere in the record) that the BART-alternative program 
satisfies 40 CFR 51.308(e)(2) under the clear weight of evidence test 
of 40 CFR 51.308(e)(2)(i)(E), EPA need not further explain or justify 
the program based on a comparison of emission reductions, costs, or 
visibility improvements that may have been potentially achieved had EPA 
finalized the source-specific controls we proposed in January 2017. The 
statute and applicable regulations do not mandate that states, or EPA 
when it is promulgating a FIP, reach a particular conclusion or outcome 
regarding cost-effectiveness or emission reductions when applying the 
five-factor BART analysis, or in designing a BART-alternative program 
under 40 CFR 51.308(e).
---------------------------------------------------------------------------

    \148\ 82 FR 48324 at 48327.
---------------------------------------------------------------------------

    Comment: We received one comment asserting that EPA never 
identified any errors in the January 2017 BART FIP proposal and that 
EPA never responded to certain comments submitted on that proposal. The 
commenter claimed that EPA did not demonstrate that the intrastate 
trading program would achieve greater reasonable progress than the 
January 2017 source-specific BART proposal to justify finalizing the 
intrastate trading program in place of the source-specific BART FIP and 
that EPA cannot ignore the findings it previously made in the January 
2017 BART FIP proposal.
    Response: Under the notice and comment rulemaking process, EPA may 
decline to finalize a proposed rule or may finalize a rule with changes 
from the proposal based on consideration of additional information 
received during the comment period. As a general matter, EPA may 
publish a new proposed rule that supersedes a previously proposed rule 
in order to take into account newly available information or changes in 
circumstances that would affect the outcome of the final rule, with no 
obligation to finalize the originally proposed rule. EPA's obligations 
are to promulgate a final rule that meets the requirements of the Clean 
Air Act and the Regional Haze Rule, consider and respond to all 
relevant comments that are germane to the final rule, and provide a 
record of decision-making for its action that is not arbitrary and 
capricious. In this case, informed by comments we received during the 
public comment period for the January 2017 proposal, and based on our 
independent determination that this BART alternative approach under 40 
CFR 51.308(e)(2) would meet all regulatory requirements and thus be a 
viable approach for Texas, we addressed the SO2 BART 
requirement for Texas EGUs under a BART alternative consisting of an 
intrastate trading program in our October 2017 final rule instead of 
finalizing the source-specific BART emission limits we had proposed. In 
the October 2017 final rule, EPA considered and responded to all 
comments germane to the final rule and provided a record of decision-
making for the final action. We note that some of the comments we 
received on the January 2017 proposal raised specific issues related to 
the analyses for the source-specific BART emission limits we proposed, 
and those comments were no longer relevant once we determined not to 
promulgate the proposed source-specific BART emission limits in our 
final action. Therefore, a response to those comments was unnecessary. 
While in this case, EPA did not publish a new proposal before issuing 
the October 2017 final rule, we explained the basis for our 
finalization of the BART alternative in that final action, and we 
subsequently published a proposal in August 2018 to affirm our October 
2017 final rule and solicited comment on important aspects of the rule, 
as discussed in section II.A of this final action. Informed by comments 
we received on the August 2018 proposed rule, we issued a supplemental 
proposal that proposed changes to the Texas SO2 Trading 
Program, as discussed in section II.B of this final action. Having made 
the determination in the October 2017 final action, as further affirmed 
in today's final action, that the BART-alternative program, as amended 
in this final action, satisfies 40 CFR 51.308(e)(2) under the clear 
weight of evidence test of 40 CFR 51.308(e)(2)(i)(E), EPA need not 
further explain or justify the Texas SO2 Trading Program 
based on a comparison of emission reductions, costs, or visibility 
improvements that may have been potentially achieved had EPA finalized 
the source-specific controls we proposed in January 2017. Further, in 
response to the statement contending that EPA cannot ignore the 
findings it previously made in the January 2017 proposed rule, we note 
that those proposed source-specific BART analyses and control 
determinations do not constitute final findings or final Agency action, 
as they were proposed by EPA but not finalized.
    Comment: We received one comment asserting that the only 
justification EPA provided for finalizing the intrastate trading 
program in place of the source-specific BART FIP is that the state made 
this request during the public comment period for the January 2017 BART 
FIP proposal, and that this justification is inappropriate. The 
commenter claimed that while the CAA does establish a

[[Page 49199]]

cooperative state-federal framework, this does not justify EPA 
deferring to a State's expressed preferences without providing a valid 
justification.
    Response: This comment mischaracterizes the basis for our 
finalization of the Texas SO2 Trading Program in place of 
source-specific BART controls in the October 2017 final action. While 
we did explain in the October 2017 final action that we received 
comments during the public comment period for the January 2017 proposal 
from the Texas Commission on Environmental Quality (TCEQ), the Public 
Utility Commission of Texas (PUC), Luminant, and American Electric 
Power (AEP), urging us to consider as a BART alternative, the concept 
of emission caps using CSAPR allocations,\149\ this was not the sole 
basis for our finalization of the Texas SO2 Trading Program 
in place of source-specific BART controls. Our October 2017 final 
action promulgating the Texas SO2 Trading Program was 
informed by comments we received during the public comment period for 
the January 2017 proposal, and was based on our independent 
determination that a BART-alternative approach under 40 CFR 
51.308(e)(2) meets all statutory and regulatory requirements and is 
thus an appropriate approach for addressing the SO2 BART 
requirement for Texas EGUs. In addition to meeting all Clean Air Act 
and Regional Haze Rule requirements, we also explained in the October 
2017 final action that the Texas SO2 Trading Program would 
result in lower costs and added flexibility for affected sources 
compared to source-specific SO2 BART controls.
---------------------------------------------------------------------------

    \149\ 82 FR 48324 at 48327.
---------------------------------------------------------------------------

D. Statutory Requirements for FIP Promulgation and Implementation

    Comment: We received one comment asserting that the FIP 
promulgating the Texas SO2 Trading Program is arbitrary, 
capricious, and unlawful because it allows EPA to suspend key 
provisions of the intrastate trading program if Texas submits a SIP 
revision, without the need for EPA to approve the SIP before those key 
provisions of the trading program are suspended. Specifically, the 
commenter referred to a provision of the Texas SO2 Trading 
Program that provides that the ``Administrator may delay recordation of 
Texas SO2 Trading Program allowances for the specified 
control periods if the State of Texas submits a SIP revision before the 
recordation deadline.'' 40 CFR 97.921(a). Similarly, the trading 
program includes a provision that provides that the ``Administrator may 
delay recordation of the Texas SO2 Trading Program 
allowances for the applicable control periods if the State of Texas 
submits a SIP revision by May 1 of the year of the applicable 
recordation deadline under this paragraph.'' Id. Sec.  97.921(b). The 
commenter claimed that these provisions at 40 CFR 97.921(a) and (b) are 
arbitrary and capricious and otherwise unlawful because they are 
counter to the CAA's rulemaking requirements given that no provision of 
the CAA allows the submission of a SIP to suspend implementation of a 
FIP. The commenter also asserted that these provisions of the trading 
program violate the CAA and the Regional Haze Rule because suspension 
of the trading program would mean that there is no functioning BART 
alternative in place in the interim period between state submission of 
the SIP and EPA approval of that SIP. Furthermore, the commenter 
expressed concern that the Texas SO2 Trading Program does 
not include any provision that would resume the intrastate trading 
program if the submitted SIP was subsequently found to be deficient.
    Response: After considering this comment, we proposed in our 
November 2019 supplemental proposal to modify the Texas SO2 
Trading Program recordation provisions at 40 CFR 97.921 to make clear 
that submission of a SIP revision by the state does not cause any 
change in implementation of those provisions unless and until the SIP 
revision is approved by EPA. We are adopting that proposed modification 
in this final action. As explained in section III.A.1 of this final 
notice, we are taking final action to revise 40 CFR 97.921(a), (b), and 
(c) of the Texas SO2 Trading Program to condition any 
exceptions to scheduled allowance recordation activities on Texas' 
submission and EPA's approval of a SIP revision, rather than just on 
Texas' submission of a SIP revision. This revision will ensure that the 
program remains fully operational unless it is replaced by a SIP 
revision that is approved by EPA as meeting SO2 BART 
requirements for the covered BART-eligible units.

E. Timing of the Plan for the First Implementation Period

    Comment: We received a comment that asserted that the first 
planning period for regional haze ends in 2018 and given that the Texas 
SO2 Trading Program would not be implemented until the 
beginning of 2019, it followed that the Texas SO2 Trading 
Program and any other BART alternative for Texas would not meet the 
timing requirement for a BART alternative at 40 CFR 51.308(e)(2)(iii). 
The commenter also argued that EPA's position in the October 2017 final 
rule that the end of the first planning period of the first long-term 
strategy for Texas is 2021 and thus the Texas SO2 Trading 
Program meets the timing requirement for a BART alternative is 
unsupported and is inconsistent with EPA's prior statements identifying 
2018 as the close of the first planning period. The commenter asserted 
that EPA's position that the January 2017 revisions to the Regional 
Haze Rule extended the first planning period contradicts EPA's 
statements in the January 2017 rulemaking that the revisions to the 
Regional Haze Rule did not alter the requirements for the first 
planning period. Additionally, the commenter later asserted, in 
response to our supplemental proposal to add an assurance level to the 
Texas SO2 Trading Program, that EPA cannot guarantee the 
trading program will actually achieve emissions reductions until the 
addition of the assurance provisions becomes effective and that given 
that the limitations imposed by the assurance level would not be 
implemented until the 2021 compliance period, EPA cannot guarantee that 
emission reductions under the trading program will actually take place 
during the first planning period.
    A similar comment submitted by New Jersey asserted that the 2017 
Regional Haze Rule revisions extended the time to submit Regional Haze 
plan revisions for the second planning period from 2018 to 2021, but 
did not extend the date for implementation of BART requirements 
associated with the first planning period. New Jersey asserted that 
under the Regional Haze Rule, emission reductions needed in the first 
planning period are still due by December 31, 2018 and that allowing 
Texas to obtain the reductions by the end of 2019, as allowed under the 
Texas SO2 Trading Program, negates the intent of the CAA 
(specifically the 10-year planning period to assure incremental 
progress) and puts additional burden on other contributing states to 
maintain progress.
    Response: After reviewing the Agency's position in the January 2017 
final rule making amendments to the Regional Haze Rule, we are not 
finalizing a position in this action that the first planning period has 
been extended to July 31, 2021. We agree with the commenter that this 
position would be at odds with the national finding in the January 2017 
action that our amendments there ``do not affect the

[[Page 49200]]

development and review of state plans for the first implementation 
period . . . .'' 82 FR at 3080. Nonetheless, the Texas SO2 
Trading Program satisfies the requirement of 51.308(e)(2)(iii), 
because, as discussed in section III.A.2 above, the program ensures 
that emission reductions that were achieved prior to the end of 2018, 
sufficient to meet the requirements of the BART alternative, will be 
maintained through an enforceable program.
    Actual emission levels from the sources covered by the BART 
alternative were below the levels mandated by the alternative by the 
end of the first planning period. In the case of the Texas 
SO2 Trading Program, sources subject to the trading program 
were already emitting SO2 at levels below the program budget 
prior to December 31, 2018. As discussed in our November 2019 
supplemental proposal, the combined SO2 emissions from Texas 
EGUs participating in the intrastate trading program were 179,630 
SO2 tons in 2018, which is well below the Texas 
SO2 Trading Program budget of 238,395 tons (as well as the 
assurance level of 255,083 tons we are finalizing in this action).\150\ 
Therefore, the emissions reductions secured under the trading program 
occurred prior to the end of the period of the first long-term strategy 
for regional haze. With the trading program taking effect with the 
start of the 2019 calendar year, actual emissions were never allowed to 
exceed the amounts called for by the BART alternative. This issue is 
further discussed above in section III.A.2. We also note that we have 
never stated and do not agree that the existing Texas SO2 
Trading Program fails to ensure that all necessary emission reductions 
will occur by the end of the first planning period even without the 
addition of the assurance provisions. Our purpose in proposing to add 
the assurance provisions was merely to further ensure that the 
program's design is at least as stringent as the CSAPR SO2 
program as applied to Texas, not only on an average annual basis but 
also in individual years. Given that actual emission levels from the 
sources covered by the BART alternative were below the levels mandated 
by the alternative by the end of the first planning period, even before 
the addition of the assurance level, we are determining that the Texas 
SO2 Trading Program meets the timing requirement for a BART 
alternative at 40 CFR 51.308(e)(2)(iii).
---------------------------------------------------------------------------

    \150\ 84 FR 61853.
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F. Notice and Comment Requirements

    Comment: We received a comment that the FIP promulgating the Texas 
SO2 Trading Program did not follow the Clean Air Act's 
procedural requirements for promulgating a FIP. The commenter claimed 
that EPA promulgated the FIP without following the public notice and 
comment procedures set forth in 42 U.S.C. 7607(d)(1)(B), (d)(2)-(6), 
which the commenter contended violates the Clean Air Act. The commenter 
contended that the Clean Air Act's public notice and comment procedures 
at U.S.C. 7607(d)(3) require that EPA first publish in the Federal 
Register a proposed rule that includes a statement of basis and purpose 
and specifies a comment period. The commenter claimed that this 
statement of basis and purpose must include a summary of the factual 
data on which the proposed rule is based, the methodology used in 
obtaining and analyzing the data, and the major legal interpretations 
and policy considerations underlying the proposed rule, and that EPA 
must allow any person to submit comments as well as give interested 
persons an opportunity for the oral presentation of data, views, or 
arguments. The commenter asserted that these and other public 
participation requirements in Sec.  7607(d) build on those in the 
Administrative Procedure Act and are even more protective of the 
public's right to notice and comment. The commenter asserted that EPA's 
January 2017 proposed rule ``established'' source-specific 
SO2 emission limits that would have required the 
installation and operation of modern SO2 controls or 
upgraded controls for subject to BART Texas EGUs, and that in contrast 
to this, the Trading Program in the final rule consisted of an 
intrastate emissions trading program that was not presented in the 
proposal. The commenter contended that EPA did not follow the 
rulemaking procedures required by the CAA given that EPA never proposed 
the adoption of a trading program nor did it discuss that it might 
consider adopting an intrastate trading program for Texas in lieu of 
the source-specific retrofit controls proposed in the January 2017 
proposal. Additionally, the commenter asserted that the FIP 
promulgating the Texas SO2 Trading Program does not qualify 
as a logical outgrowth of the January 2017 proposal. The commenter 
contended that the logical outgrowth doctrine applies where a rule 
merely clarifies its proposal, or where the agency put commenters on 
notice that it was considering approaches different from the proposal. 
According to the commenter, the logical outgrowth doctrine does not 
apply in this case because (i) the intrastate trading scheme is 
different than the January 2017 BART proposal, and (ii) EPA did not 
provide notice that it was considering an intrastate trading program 
instead of source specific SO2 emission limits.
    Response: We explained in our October 17, 2017 final rule that 
during the comment period for our January 2017 proposed rule, we 
received a comment letter from the Texas Commission on Environmental 
Quality (TCEQ) and the Public Utility Commission of Texas (PUC),\151\ 
urging us to consider as a BART alternative the concept of emission 
caps using CSAPR allocations. We also received similar comments from 
Luminant and American Electric Power (AEP). Based on our consideration 
of these comments and our independent determination that a BART 
alternative approach under 40 CFR 51.308(e)(2) would meet all 
regulatory requirements and thus be a viable approach for Texas, we 
proceeded to address the SO2 BART requirement for Texas EGUs 
under a BART alternative consisting of an intrastate trading program in 
our October 2017 final rule. In response to a petition for 
reconsideration of the October 2017 final rule requesting that the 
Administrator reconsider certain aspects of the FIP related to the 
Texas SO2 Trading Program, we decided that the October 2017 
federal plan could benefit from further public comment.\152\ As a 
result, in our August 27, 2018 proposed rule, we proposed to affirm our 
October 2017 final rule that approved a portion of the 2009 Texas 
Regional Haze SIP and promulgated the intrastate trading program FIP. 
In doing so, we provided the public with an opportunity to comment on 
all centrally relevant aspects of our Texas SIP approval and of the FIP 
that promulgated the Texas SO2 Trading Program, including 
our proposal to affirm the October 2017 FIP establishing an intrastate 
trading program capping emissions of SO2 from certain EGUs 
in Texas as a BART alternative and our determination that this program 
satisfies the requirements for a BART alternative. We provided a 60-day 
public comment period that ended on October 26, 2018, and held a public 
hearing on September 26, 2018. Following that notice and comment 
opportunity, the EPA determined that certain additional changes to the 
program not included in the August 2018 proposal could be warranted. 
Therefore, we issued a

[[Page 49201]]

supplemental notice of proposed rulemaking on November 14, 2019, 
providing a 60-day comment period and a public hearing on December 9, 
2019. In the November 2019 supplemental proposal,\153\ we proposed to 
amend several provisions of the Texas SO2 Trading Program 
with the overall objective of strengthening our finding in the October 
2017 final rule,\154\ which we proposed to affirm in August 2018,\155\ 
that the Texas SO2 Trading Program will result in 
SO2 emission levels from Texas EGUs that are similar to or 
less than the emission levels from Texas EGUs that would have been 
realized had Texas continued to participate in the SO2 
trading program under CSAPR.\156\ The amendments to the Texas 
SO2 Trading Program we are finalizing in this action are 
designed to ensure that emission levels in each year under the 
intrastate trading program, and their aggregate impact on visibility, 
will be similar to or less than what would have been realized from 
Texas EGUs from participation in the SO2 trading program 
under CSAPR,\157\ thus providing further support to our determination 
that the trading program meets the requirements for a BART alternative. 
In finalizing our action affirming the intrastate trading program as 
amended in this final action, the EPA is addressing all in-scope 
comments we have received on both the August 2018 and November 2019 
proposal notices, including, as discussed elsewhere in this final 
action and in our separate Response to Comments document, comments 
regarding the lawfulness and basis for the intrastate trading program 
under the CAA and the Regional Haze Rule, and other related comments. 
Therefore, to the extent the commenter is alleging that the intrastate 
trading program in our October 2017 FIP was promulgated without 
following the public notice and comment procedures and public 
participation requirements set forth in 42 U.S.C. 7607(d), the agency 
has cured any such alleged procedural defect.
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    \151\ 82 FR 48324 at 48327.
    \152\ 83 FR 43586.
    \153\ 84 FR 61850, 61851.
    \154\ 82 FR 48324, 48329.
    \155\ 83 FR 43591.
    \156\ See 83 FR at 43599.
    \157\ 83 FR 43592.
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    Comment: We received one comment asserting that EPA cannot claim 
that the October 2017 trading program was a clarification of the 
January 2017 proposed rule. The commenter asserted that the Texas 
SO2 Trading Program finalized by EPA in the October 2017 
final rule differs in substance from the BART proposal, which the 
commenter claimed is evidenced by EPA's addition in the final action of 
dozens of pages of regulatory and explanatory text that was not 
included in the 2017 BART proposal.
    Response: We agree that our October 17, 2017 final rule that 
promulgated an intrastate trading program to address the SO2 
BART requirement for Texas EGUs cannot be characterized as merely a 
clarification of our January 4, 2017 proposed rule, nor has the Agency 
made this claim. Based on our consideration of comments we received on 
the January 2017 proposal urging us to consider as a BART alternative 
the concept of emission caps using CSAPR allocations, and based on our 
independent determination that a BART alternative approach under 40 CFR 
51.308(e)(2) would meet all regulatory requirements and thus be a 
viable approach for Texas, we proceeded to address the SO2 
BART requirement for Texas EGUs under a BART alternative consisting of 
an intrastate trading program in our October 2017 final rule. In that 
final rule, EPA considered and responded to all relevant comments 
germane to the final rule and provided a record of decision-making for 
the final action. We note that some of the comments we received on the 
January 2017 proposal raised specific issues related to our proposed 
analyses for the source-specific BART emission limits we proposed. 
Given that those source-specific emission limits were not part of our 
final action, providing substantive responses to such comments was not 
required as they were no longer relevant. As discussed in several 
places throughout this final action, in response to a petition for 
reconsideration of the October 2017 final rule requesting that the 
Administrator reconsider certain aspects of the FIP related to the 
Texas SO2 Trading Program, we provided an opportunity for 
further public comment on all centrally relevant aspects of the Trading 
Program in a proposal published on August 27, 2018, and provided an 
opportunity for public comment on proposed amendments to certain 
provisions of the Trading Program in a supplemental proposal published 
on November 14, 2019. The amendments to the Texas SO2 
Trading Program we are finalizing in this final action, which include 
minor changes from what we proposed in the November 2019 proposal, are 
designed to ensure that emission levels in each year under the 
intrastate trading program, and their aggregate impact on visibility, 
will be similar to or less than what would have been realized from 
Texas EGUs from participation in the SO2 trading program 
under CSAPR,\158\ thus providing further support to our determination 
that the Texas SO2 Trading Program meets the regulatory 
requirements for a BART alternative and is an appropriate approach for 
addressing Texas' SO2 BART obligations.
---------------------------------------------------------------------------

    \158\ 83 FR 43592.
---------------------------------------------------------------------------

    Comment: We received one comment contending that the Texas 
SO2 Trading Program cannot be characterized as a logical 
outgrowth of the December 2014 proposed rule given that the BART 
provisions in the December 2014 proposed rule were abandoned due to 
Homer City II, and that EPA otherwise took final action on that 
proposed rule in a final action published in January 2016. The 
commenter also asserted that further confirmation that the December 
2014 proposal was part of a different rulemaking process is provided by 
the fact that in the January 2017 BART proposal, EPA did not invite 
comments on the December 2014 proposal and also that EPA did not 
include the December 2014 proposal or any of the supporting technical 
analysis for the December 2014 proposal in the docket for the January 
2017 proposal on the date of the publication of the proposed rule, as 
required by the CAA at 42 U.S.C. 7607(d)(3).
    Response: This commenter is referring to our December 16, 2014 
proposed rule in which we proposed, among other things, to rely on our 
CSAPR FIP requiring Texas sources' participation in the CSAPR trading 
programs to satisfy the NOX and SO2 BART 
requirements for Texas' BART-eligible EGUs.\159\ Due to the uncertainty 
arising from the D.C. Circuit's remand of Texas' CSAPR budgets, when we 
finalized the December 2014 proposal in an action published in January 
2016, we did not finalize our proposal to rely on CSAPR to satisfy the 
SO2 and NOX BART requirements for Texas 
EGUs.\160\ We note that we did not attempt to characterize the Texas 
SO2 Trading Program as a logical outgrowth of the December 
2014 proposed rule. We agree that the December 2014 proposed rule was a 
part of a different rulemaking process, which is supported by the fact 
that we did not reference that proposed rule in developing the 
intrastate trading program that was finalized in October 2017. We also 
did not reference the December 2014 proposal in our August 2018 
proposal to affirm the October 2017 final rule.
---------------------------------------------------------------------------

    \159\ 79 FR 74818.
    \160\ See 81 FR 296, 301-02 (Jan. 5, 2016).
---------------------------------------------------------------------------

    Comment: We received a comment from environmental groups asserting 
that the fact that Texas state agencies and industry submitted comments 
in

[[Page 49202]]

support of a trading program does not make the October 2017 final rule 
promulgating the Texas SO2 Trading Program a ``logical 
outgrowth'' of EPA's 2014 proposal given that EPA did not provide 
notice to the public that it was proposing or even considering a 
trading program. The commenter asserted that the D.C. Circuit has 
``made clear that the fact that some commenters actually submitted 
comments addressing the final rule is of little significance. The 
agency must itself provide notice of a regulatory proposal,'' citing 
Ass'n of Private Sector Colls. v. Duncan, 681 F.3d 427, 462 (D.C. Cir. 
2012) (citation omitted) (internal quotation marks omitted). The same 
environmental groups asserted that they did not have an opportunity to 
comment on information that arose in the October 2017 final rule 
promulgating the Trading Program, including the consideration of a 
trading program as a BART alternative to satisfy BART, the specifics of 
EPA's intrastate trading program, or the rationale for adopting that 
program. The environmental groups asserted that while they submitted 
comments on BART alternatives in response to the comments submitted by 
industry--those comments were not based on, or responding to, any 
actual or implied proposal by EPA to adopt such an alternative. The 
environmental groups contended that their response to industry comments 
about industry's desire for a trading program is not a substitute for 
having notice and opportunity to comment on EPA's decision to 
promulgate a trading program.
    Response: We do not take the position that any comments on the 
January 2017 proposal could have or did provide a basis for treating 
the October 2017 final rule as a ``logical outgrowth'' of the December 
2014 proposal, so the premise of this comment is incorrect. 
Furthermore, the case cited by commenter is inapposite as it does not 
arise under the CAA. The CAA contemplates circumstances in which the 
Agency may finalize rules under section 307(d) that reflect changes 
from proposal that a commenter is unable to comment on. The appropriate 
remedy, when circumstances warrant, is administrative reconsideration, 
so that the agency is able to provide the public the opportunity to 
comment on those matters (or ``objections'') that are of ``central 
relevance'' to the outcome of the rule. See Wisconsin v. EPA, 938 F.3d 
303, 331-32 (D.C. Cir. 2019). The commenter's concerns regarding 
logical outgrowth have now been addressed by our August 27, 2018 
proposal that specifically solicited comment on all key aspects of the 
Texas SO2 Trading Program. We are finalizing that proposal 
with amendments to certain provisions of the Trading Program after 
considering and responding to all comments within scope that we 
received during the public comment periods for the August 2018 proposal 
and the November 2019 supplemental proposal.
    Comment: We received comments from environmental groups asserting 
that EPA did not provide responses to certain comments they submitted 
during the public comment period for our January 2017 proposal. Those 
particular comments submitted by the environmental groups were a 
reaction to comments submitted by industry to EPA--also during the 
public comment period for our January 2017 proposal--urging us to 
consider as a BART alternative the concept of emission caps using CSAPR 
allocations in place of source-specific SO2 BART controls. 
Specifically, the comments the environmental groups claim EPA did not 
respond to asserted that CSAPR is not better than BART. The commenters 
contended that EPA had an obligation to respond to those comments given 
EPA's reliance on CSAPR to justify the Texas SO2 Trading 
Program, and that in not providing a response, EPA violated the CAA's 
requirement that a rule ``be accompanied by a response to each of the 
significant comments, criticisms, and new data submitted in written or 
oral presentations during the comment period.'' 42 U.S.C. 
7607(d)(6)(B).
    Response: We provided responses in the October 2017 final rule to 
each of the in-scope significant comments, criticisms, and new data 
submitted in written or oral presentations during the comment period. 
We continue to hold the position that comments alleging that CSAPR is 
not better than BART were beyond the scope of our January 4, 2017 
proposed rule, and they are beyond the scope of our final action now. 
We continue to believe that such comments raise issues that are 
appropriately addressed in the record of the 2012 CSAPR Better-than-
BART rule \161\ and our 2017 affirmation of CSAPR Better-than-
BART.\162\ In this action, the EPA is relying on the conclusion reached 
in those actions, without reopening them or having any intention to 
reopen them, that CSAPR remains a valid BART-alternative, including 
after taking account of geographic changes in the scope of CSAPR's 
coverage since 2012. In particular, because the Texas SO2 
Trading Program, as amended in this final action, has been designed to 
achieve SO2 emission levels from Texas EGUs that are similar 
to or less than what would have been realized from Texas EGUs' 
participation in the CSAPR SO2 trading program, we are 
making the determination that the Texas SO2 Trading Program 
is an appropriate BART alternative for addressing Texas' SO2 
BART obligations. Because the Texas SO2 Trading Program will 
result in SO2 emissions from Texas EGUs similar to or less 
than emissions anticipated under CSAPR, this alternative is an 
appropriate approach for addressing Texas' SO2 BART 
obligations and, in the context of the operation of the CSAPR ozone-
season NOX trading program and the operation of the CSAPR 
annual NOX and SO2 trading programs, will achieve 
greater reasonable progress than BART towards restoring visibility, 
consistent with the June 2012 ``CSAPR Better-than-BART'' determination 
and September 2017 ``CSAPR Better-than-BART affirmation finding.'' As 
discussed in section I.D of this final action, EPA has denied a 
petition for reconsideration of the 2017 CSAPR Better-than-BART 
affirmation that was based in part on an objection that the Texas 
program is not of sufficient stringency to satisfy the analysis for 
CSAPR. Although our determination in that action is also beyond the 
scope of this action here, it means that EPA here can continue to rely 
on the CSAPR ``Better-than-BART'' finding in conducting its analysis of 
whether the Texas intrastate trading program satisfies the requirements 
of 40 CFR 51.308(e)(2).
---------------------------------------------------------------------------

    \161\ 77 FR 33641.
    \162\ 81 FR 74504.
---------------------------------------------------------------------------

    Comment: One commenter asserted that EPA's August 2018 proposal 
affirming the October 2017 final rule promulgating the Texas 
SO2 Trading Program and solicitation of comments on only 
some elements of the Texas SO2 Trading Program cannot cure 
the rule's procedural deficiencies in finalizing the trading program 
because the opportunity for public comment is both insufficient and too 
late. The commenter contended that based on case law, the purpose of 
notice and comment is to provide the public with an opportunity to 
influence agency rulemaking, citing U.S. Steel Corp. v. EPA, 595 F.2d 
207, 215 (5th Cir. 1979); Nat'l Tour Brokers Ass'n v. U.S., 591 F.2d 
896, 902 (D.C. Cir. 1978). The commenter claimed that this opportunity 
to influence agency rulemaking is meaningful only when rules remain in 
the formative stage and agencies are more likely to give real 
consideration to alternative ideas. Furthermore, the commenter asserted

[[Page 49203]]

that agencies do not provide an adequate opportunity to influence the 
rulemaking process when they solicit public comment on rules that they 
have already labeled as final, as in the case of the Texas 
SO2 Trading Program. The commenters stated that the October 
2017 FIP promulgating the Texas SO2 Trading Program remained 
in effect even while it was open to public comment, thus not providing 
the public with a meaningful opportunity to influence the trading 
program. Additionally, the commenter noted that EPA has not yet 
rescinded or withdrawn the FIP promulgating the Texas SO2 
Trading Program even though environmental groups filed a petition for 
reconsideration arguing that the Texas SO2 Trading Program 
did not follow notice and comment requirements. According to the 
commenters, in having the Texas SO2 Trading Program remain 
in effect, EPA has continued to violate the CAA's notice and comment 
provisions.
    The commenter asserted that the D.C. Circuit explained in Nat'l 
Tour Brokers Ass'n, 591 F.2d at 902, that agencies are likely to become 
more close-minded and defensive once they put their credibility on the 
line in the form of final rules. Furthermore, the commenter argued that 
agencies cannot cure notice and comment defects by merely soliciting 
comments after the promulgation of a final rule. The commenter asserted 
that when an agency seeks to save a rule that suffers from a notice and 
comment violation, that agency bears the burden of proving that the 
violation did not prejudice the public and that the absence of such 
prejudice must be clear for the violation to be considered ``harmless'' 
and the rule to be upheld. The commenter claimed that at this point, 
the only legal remedy is for EPA to withdraw the Texas SO2 
Trading Program and replace it with a FIP that satisfies the statutory 
and regulatory requirements.
    Response: In response to the petition for reconsideration 
referenced by the commenters, we decided that the October 2017 final 
rule could benefit from further public comment.\163\ As a result, in 
our August 2018 proposed rule, we proposed to affirm our FIP 
promulgating the Texas SO2 Trading Program and in doing so, 
we provided the public with an opportunity to comment on all centrally 
relevant aspects of the October 2017 final rule, including our 
promulgation of the Texas SO2 Trading Program and our 
determination that this program satisfies the requirements for a BART 
alternative.\164\ We disagree with the commenter that the opportunity 
for public comment provided by our August 27, 2018 proposed rule is 
insufficient and too late. While the October 2017 final rule remained 
in effect when we proposed the August 27, 2018 proposal, in that 
proposal we also sought input on whether SO2 BART would be 
better addressed through a source-by-source approach (source-specific 
BART), the October 2017 SO2 trading program, or some other 
appropriate BART alternative. We stated in the August 27, 2018 proposal 
that if we were to decide to act pursuant to any comments we receive, 
we may initiate a new rulemaking process with a new proposed rule.\165\ 
We provided a 60-day public comment period that ended on October 26, 
2018 and held a public hearing on September 26, 2018, to receive public 
comment on our August 27, 2018 proposed rule. As a result of comments 
received during that comment period, we subsequently published and took 
further comment on a supplemental proposal in November 2019 to make 
changes to certain provisions of the Texas SO2 Trading 
Program. Our November 2019 supplemental proposal and the amendments to 
the trading program we are finalizing in this action are evidence that 
our intent was to be open to further comment and that we ultimately 
gave real consideration and were influenced by the comments we 
received. Therefore, we disagree that we have not provided the public a 
fully adequate opportunity to influence the agency's rulemaking or that 
the public notice and opportunity to comment on our proposals was not 
meaningful.
---------------------------------------------------------------------------

    \163\ 83 FR 43586.
    \164\ 83 FR 43586 at 43590.
    \165\ 83 FR at 43587.
---------------------------------------------------------------------------

    In this respect, our actions are consistent with the requirements 
of the CAA under section 307(d). The CAA contemplates that in some 
circumstances the public may not be able to comment on important 
aspects of a final rule. The appropriate remedy is reconsideration to 
afford that opportunity for comment, and thus provide for 
administrative exhaustion prior to judicial review, with respect to all 
``centrally relevant'' objections to the final rule. The August 2018 
proposal afforded the opportunity to comment on all such objections 
with respect to the October 2017 final action.
    The CAA also contemplates that a final rule may remain in effect 
while the EPA undertakes that reconsideration. Even when the EPA is 
undertaking a mandatory reconsideration process under section 
307(d)(7)(B), the statute provides that the rule ``may be stayed'' 
(emphasis added) by the Administrator or a court for a period not to 
exceed three months. The fact that the Texas SO2 Trading 
Program remained in effect and went into operation during the pendency 
of the public notice and comment periods in this instance does not in 
any manner establish that the agency's notice and comment process on 
the August 2018 proposal to reaffirm the final rule is somehow infirm, 
or that any alleged defects in the procedure for the October 2017 final 
rule are somehow incurable.
    Further, the cases cited by commenter are inapposite because they 
were not subject to the provisions of CAA section 307(d). In U.S. Steel 
Corp. v. EPA, 595 F.2d 207 (5th Cir. 1979), for instance, the court 
reviewed EPA's designation of nonattainment areas under section 107 of 
the Act. Designations under section 107 are not amongst the enumerated 
actions in section 307(d) of the Act that are governed by the 
administrative rulemaking procedures of subsection (d), including the 
provision for mandatory reconsideration under section 307(d)(7)(B). 
Thus, the court in U.S. Steel Corp. was reviewing EPA's action under 
the Administrative Procedure Act. See 595 F.2d at 210. The Texas 
SO2 Trading Program is a federal implementation plan 
promulgated under section 110(c) of the CAA, and thus subject to 
section 307(d), pursuant to section 307(d)(1)(B). The court in U.S. 
Steel was not confronted with a circumstance in which the agency 
promulgated a final rule subject to the provisions of CAA section 
307(d) that was substantially different from the proposal, but then 
took the necessary steps to provide the opportunity for comment on all 
centrally relevant issues, consistent with the process contemplated in 
section 307(d)(7)(B). Thus, the U.S. Steel Corp. case cited by the 
commenter is not relevant to our final action on the Texas 
SO2 Trading Program here.
    Comment: One commenter expressed general concern that EPA proposed 
to affirm the October 2017 final rule that promulgated the Texas 
SO2 Trading Program in the August 2018 proposal without 
soliciting comments on certain sections of the final rule.
    Response: In response to a petition for reconsideration of the 
October 2017 final rule requesting that the Administrator reconsider 
certain aspects of the FIP related to the Texas SO2 Trading 
Program, we decided that important aspects of the October 2017 federal 
plan could benefit from further

[[Page 49204]]

public comment.\166\ Accordingly, in a notice published on August 27, 
2018, we proposed to affirm certain aspects of the October 2017 final 
rule, and thus opened for comment the following elements, which 
effectively covered all of the central objections in the petition for 
reconsideration: (1) The proposal to affirm the October 2017 FIP 
establishing an intrastate trading program addressing emissions of 
SO2 from certain EGUs in Texas as a BART alternative and the 
determination that this program satisfies the requirements for BART 
alternatives; (2) the proposal to affirm the finding that the BART 
alternatives in the October 2017 rulemaking to address SO2 
and NOX BART at Texas' EGUs result in emission reductions 
adequate to satisfy the requirements of CAA section 110(a)(2)(D)(i)(II) 
with respect to visibility for the following NAAQS: 1997 8-hour ozone, 
1997 PM2.5 (annual and 24-hour), 2006 PM2.5 (24-
hour), 2008 8-hour ozone, 2010 1-hour NO2, and 2010 1-hour 
SO2 NAAQS; and (3) the proposal to affirm our October 2017 
approval of Texas' SIP determination that no sources are subject to 
BART for PM. The August 2018 affirmation proposed rule also solicited 
comment on the specific issues of whether recent shutdowns of sources 
included in the trading program and the merger of two owners of 
affected EGUs should impact the allocation methodology for certain 
SO2 allowances. In addition to soliciting comment on the 
above elements and aforementioned specific issues, the August 2018 
affirmation proposal also invited comment on additional issues that 
could inform our decision making with regard to the SO2 BART 
obligations for Texas. First, we sought input on whether SO2 
BART would be better addressed through a source-by-source approach 
(source-specific BART), the October 2017 SO2 trading 
program, or some other appropriate BART alternative. Second, EPA 
requested comment on whether a SIP-based program would serve Texas 
better than a FIP. Third, we requested public input on whether and how 
the SO2 trading program finalized in the October 2017 final 
rule addresses the long-term strategy and reasonable progress 
requirements for Texas. We find that the issues that EPA enumerated for 
reconsideration and solicitation of public comment covered all 
centrally relevant aspects of the October 2017 rule. See 83 FR at 
43587. As noted by the commenter, we recognize that there were certain 
aspects of our October 2017 final rule that we did not reopen and thus 
did not solicit further comment on in our August 2018 proposal. We did 
not reopen or solicit comment on the following: our October 2017 final 
determination that CSAPR addresses the NOX BART requirements 
for EGUs in Texas; identification of BART-eligible sources; and our 
determination that the BART-eligible EGUs not participating in the 
Texas SO2 Trading Program were not causing or contributing 
to visibility impairment, and were therefore not subject to BART. We 
did not reopen and solicit further comment on these determinations made 
in the October 2017 final rule because these aspects of our final rule 
were finalized as proposed in the January 2017 proposal after carefully 
considering and responding to all comments within scope that we 
received during the public comment period.
---------------------------------------------------------------------------

    \166\ 83 FR 43586.
---------------------------------------------------------------------------

G. Subject-to-BART Determinations

    Comment: We received a comment from Lower Colorado River Authority 
(LCRA) stating their Fayette Power Plant Units 1 & 2 (FPP U1 & U2) are 
not subject to BART, contrary to the determination made by EPA in the 
January 2017 FIP proposal. The commenter asserted that EPA improperly 
used data from 2000-2004, which pre-dated the installation of wet flue 
gas desulfurization scrubbers at the units, to assess visibility 
impacts of FPP U1 & U2. Although the commenter did not request that EPA 
remove FPP U1 & U2 from the Texas SO2 Trading Program at 
this time, and actually expressed support of the Texas FIP and the 
inclusions of FPP U1 & U2 in the trading program, the commenter 
requested that EPA concur that the most currently available data must 
be used for visibility impact determinations under the regional haze 
program.
    Response: We appreciate LCRA's concerns regarding Fayette Power 
Plant Units 1 and 2, and we agree that Fayette Units 1 and 2 are 
currently equipped with high performing wet FGDs. We note that, as 
discussed in our October 2017 final rule and as affirmed in this 
rulemaking, we are not making a subject-to-BART determination for those 
sources covered by the Texas SO2 Trading Program. The 
relevant BART requirement for the participating BART-eligible units are 
encompassed by BART alternatives for NOX and SO2 
such that we did not deem it necessary to finalize subject-to-BART 
findings for these EGUs. In addition, we are affirming our approval of 
the determination in the 2009 Texas Regional Haze SIP that none of 
these sources are subject to BART for PM. Therefore, comments 
concerning the emissions utilized in our subject-to-BART modeling for 
the sources participating in the SO2 trading program are no 
longer relevant.

H. Visibility Transport

    Comment: One commenter asserted that EPA's reliance on the Texas 
SO2 Trading Program to satisfy section 110(a)(2)(D)(i)(II) 
is arbitrary and capricious both because the Texas SO2 
Trading Program itself is unlawful and because EPA's reliance on the 
Texas SO2 Trading Program here is based on EPA's claims that 
the Texas SO2 Trading Program reduces emissions as much as 
CAIR would have. According to the commenter, this is problematic 
because EPA cannot use CAIR, given that CAIR was invalidated years ago 
by the D.C. Circuit, citing North Carolina, 531 F.3d at 903, and has 
been replaced by CSAPR. Thus, the commenter contended that EPA cannot 
use CAIR as the benchmark for whether the interstate visibility 
transport requirements are met. The commenter also asserted that EPA 
disapproved Texas' regional haze plan precisely because it relied on 
CAIR and that it is arbitrary and capricious for EPA to now turn around 
and claim that interstate visibility transport requirements are 
satisfied because the emissions reductions in CAIR will be achieved.
    The commenter also asserted that EPA's new rationale of relying on 
the emission levels assumed in the CENRAP modeling as a basis for 
finding that Texas' emissions will not interfere with other states' 
visibility plans is not appropriate given that there is no 
demonstration provided to show that the emission assumptions used by 
CENRAP in its visibility modeling are in fact sufficient to assure that 
Texas emissions do not interfere with measures required to protect 
visibility in other states. The commenter also expressed concern that 
certain states, such as New Mexico and Colorado, impacted by Texas 
emissions are not members of CENRAP, and therefore, the CENRAP process 
could not have determined what emissions limits were necessary to 
satisfy Texas' visibility transport obligations with respect to New 
Mexico and Colorado.
    Response: First, we address comments regarding the Texas 
SO2 Trading Program as being unlawful, arbitrary, or 
capricious, elsewhere in this document. Second, the Texas 
SO2 Trading Program, as promulgated in October 2017 and with 
the amendments promulgated in this final rule, results in emission 
reductions that are adequate to satisfy Texas' visibility transport 
obligations under CAA section 110(a)(2)(D)(i)(II) for the following six 
NAAQS: (1) 1997 8-hour ozone; (2) 1997 PM2.5 (annual and

[[Page 49205]]

24 hour); (3) 2006 PM2.5 (24-hour); (4) 2008 8-hour ozone; 
(5) 2010 1-hour NO2; and (6) 2010 1-hour SO2. The 
2009 Texas Regional Haze SIP relied on participation in CAIR to meet 
the SO2 BART requirements for Texas EGUs, and this level of 
emissions reductions from Texas is what other states relied upon and 
assumed during interstate consultation and in the development of their 
long-term strategies and reasonable progress goals for their own Class 
I areas in their regional haze SIPs. As discussed in section III.B of 
this notice, Texas EGU sources were projected to emit approximately 
350,000 tons of SO2 annually under CAIR participation. By 
comparison, Texas EGUs are anticipated to emit no more than 
approximately 290,083 tons of SO2 annually under the Texas 
SO2 Trading Program (i.e., 255,083-ton assurance level + 
estimated 35,000 tons per year of emissions from units not covered by 
the Texas SO2 Trading Program), which is well below the 
350,000-ton emissions projection for Texas sources under CAIR and well 
below the maximum total annual SO2 emissions assumed for 
Texas under CSAPR (i.e., 317,000 tons) in the CSAPR Better-than-BART 
analysis. Thus, the Texas SO2 Trading Program as amended in 
this final action, ensures SO2 emission reductions from 
Texas that are consistent with, and indeed greater than, the level of 
emission reductions relied upon by other states during interstate 
consultation and thus this level of emissions reductions is adequate to 
satisfy the requirements of CAA section 110(a)(2)(D)(i)(II) with 
respect to visibility for the six identified NAAQS.\167\
---------------------------------------------------------------------------

    \167\ 83 FR 43605.
---------------------------------------------------------------------------

    The commenter makes the claim that CENRAP's modeling of emission 
assumptions does not necessarily demonstrate that those assumptions 
were in fact sufficient to assure non-interference by Texas' emissions 
with measures required to protect visibility in other states. We note 
that our 2013 infrastructure-SIP guidance addressing the interstate 
visibility transport requirements of the Act (also sometimes referred 
to as ``prong 4'') lays out two ways in which a state's infrastructure 
SIP submittal may satisfy these requirements.\168\ One way is through a 
state's confirmation in its infrastructure SIP submittal that it has an 
EPA-approved regional haze SIP in place. In the absence of a fully 
approved regional haze SIP, the second method to meet these 
requirements is a demonstration that emissions within a state's 
jurisdiction do not interfere with other states' plans to protect 
visibility. Such a demonstration should point to measures that limit 
visibility-impairing pollutants and ensure that the resulting 
reductions conform with any mutually agreed emission reductions under 
the relevant regional haze regional planning organization (RPO) 
process.\169\ Given that the emissions under the Texas SO2 
Trading Program--including the assurance provisions--are less than the 
level of Texas emissions reductions agreed upon by Texas and other 
states during consultation and assumed and relied upon in those other 
states' regional haze SIPs, we continue to find that the FIP is 
adequate to ensure that emissions from Texas do not interfere with 
measures to protect visibility in nearby states.
---------------------------------------------------------------------------

    \168\ See ``Guidance on Infrastructure State Implementation Plan 
(SIP) Elements under CAA sections 110(a)(1) and 110(a)(2)'' 
(September 13, 2013).
    \169\ See id. ``Guidance on Infrastructure State Implementation 
Plan (SIP) Elements under CAA sections 110(a)(1) and 110(a)(2),'' at 
34 (September 13, 2013). See also 76 FR 22036 (April 20, 2011) 
(containing EPA's approval of the visibility requirement of 
110(a)(2)(D)(i)(II) based on a demonstration by Colorado that did 
not rely on the Colorado Regional Haze SIP).
---------------------------------------------------------------------------

    The commenter also makes the claim that there is no rational basis 
for EPA's reliance on the emission levels assumed in CENRAP modeling as 
a basis for finding that Texas' emissions will not interfere with other 
states' visibility plans given that there are states whose visibility 
is impacted by Texas that are not members of CENRAP. Our basis for 
determining that the FIP is adequate to ensure that emissions from 
Texas do not interfere with measures to protect visibility in nearby 
states is that the emissions reductions secured under the Texas 
SO2 Trading Program are consistent with the level of 
emissions reductions relied upon by other states during consultation, 
which is not limited to consultation amongst CENRAP states.\170\ The 
Regional Haze Rule requires that ``Where a state has emissions that are 
reasonably anticipated to contribute to visibility impairment in any 
mandatory Class I Federal area located in another State or States, the 
State must consult with the other State(s) in order to develop 
coordinated emission management strategies.'' \171\ Clearly, this 
requirement applies regardless of whether the impacted states are 
members of the same regional planning organization (RPO) or not. Thus, 
Texas had an obligation to consult with states, both in and outside of 
CENRAP, whose Class I areas are potentially impacted by Texas 
emissions. As documented in the 2009 Texas Regional Haze SIP,\172\ 
Texas participated in inter-regional planning organization calls during 
the SIP development process for the first planning period. Texas also 
sent consultation letters to Oklahoma, Louisiana, Missouri, Arkansas, 
Colorado and New Mexico. Included with each letter was a discussion of 
the CENRAP Particulate Matter Source Apportionment Technology (PSAT) 
modeling determining the contribution from each Texas source area to 
visibility impairment at Class I areas in the given state. In the 2009 
SIP, Texas asserted that it participated fully in the analysis of this 
data, including estimation of the base period visibility impairment, 
natural visibility condition estimates, and 2018 projections based on 
current (at that time) and anticipated future state and federal 
controls. For states outside of CENRAP, Texas documented in its 2009 
SIP that Colorado's Department of Public Health and Environment 
confirmed in a letter dated June 24, 2008, that no further emissions 
reductions were requested of Texas at that time. Texas also documented 
that as of December 2008, shortly before its submission of the final 
SIP to EPA on March 19, 2009, New Mexico had not responded to Texas' 
letter to confirm whether or not New Mexico was expecting any 
additional emission reductions from Texas sources. Furthermore, New 
Mexico did not include in its Regional Haze SIP any additional emission 
reductions expected from Texas sources. The Texas emissions reductions 
that will result from the Texas SO2 Trading Program and 
Texas' participation in CSAPR for ozone season NOX are 
consistent with the level of Texas emissions reductions relied upon by 
other states both in and outside CENRAP during consultation with Texas.
---------------------------------------------------------------------------

    \170\ See CFR 51.308(d)(3)(i)-(iii) addressing the requirements 
for consultation with other states.
    \171\ 40 CFR 51.308(d)(3)(i).
    \172\ See 2009 Texas Regional Haze SIP, section 4.3 titled 
``Consultations On Class I Areas In Other States.'' The submittal 
can be found in Regulations.gov docket ID EPA-R06-OAR-2016-0611, 
document EPA-R06-OAR-2016-0611-0002.
---------------------------------------------------------------------------

    It is incorrect to claim that because CAIR was invalidated, EPA and 
the states can no longer use the anticipated emissions and reasonable 
progress goals established through the consultation process for the 
first planning period. Those goals may have been established in part 
based on expectations of emissions performance under CAIR, but the 
anticipated emissions reductions and the goals for regional haze 
purposes remain in effect (though we note that reasonable progress 
goals are not binding). Thus, this level of emissions

[[Page 49206]]

provides an appropriate benchmark for assessing whether states are 
adequately addressing interstate visibility transport (when such a 
demonstration is necessary). We note that this is different than 
situations in which states have attempted to rely on CAIR as a BART 
alternative despite the fact that CAIR is no longer in operation. Here, 
the fact that CAIR no longer exists and has been replaced by CSAPR does 
not impact the legitimacy of the level of emission reductions agreed 
upon through the consultation process among states, particularly given 
that CSAPR is generally more stringent than CAIR. And here, the Texas 
program is designed to be more stringent than CSAPR would have been for 
SO2 emissions in Texas. See section III.B where we provided 
detailed analysis of anticipated emissions under CAIR and the Texas 
program. Therefore, we find that Texas' visibility transport 
obligations under CAA section 110(a)(2)(D)(i)(II) for the six NAAQS 
listed above are satisfied.
    Comment: We received one comment asserting that since EPA has not 
made any determination of the trading program's visibility impacts on 
other states, we cannot make the claim that the Texas SO2 
Trading Program was designed to meet the CAA's visibility transport 
requirements. The commenter claimed that EPA cannot lawfully claim that 
the Texas SO2 Trading Program was designed to meet the 
visibility transport requirements of the CAA because the CAA's 
visibility good neighbor provision requires and authorizes EPA to 
prohibit only those upwind emissions that interfere with measures 
required to be included in the applicable implementation plan for any 
other State. The commenter cited 42 U.S.C. 7410(a)(2)(D)(i)(II), as 
well as E.P.A. v. EME Homer City Generation, L.P., 134 S.Ct. 1584, 1604 
(2014) and EME Homer City II, 795 F.3d at 127. The commenter asserted 
that if one applies to this case the Supreme Court's precedent 
interpreting the analogous good neighbor provision under Section 
7410(a)(2)(D)(i)(I), EPA is not required and does not have authority to 
regulate upwind emissions unless it first makes the predicate finding 
that those upwind emissions interfere with downwind visibility. The 
commenter further asserted that if the EPA makes that finding, even 
then it may only regulate upwind emissions up to the amounts of 
pollution that actually interfere with downwind visibility, again 
citing EPA v. EME Homer City Generation, L.P., 134 S.Ct. 1584, 1603 
(U.S. 2014) and EME Homer City II, 795 F.3d at 127. The commenter 
contended that in affirming its October 2017 final rule that 
promulgated the Texas SO2 Trading Program, EPA failed to 
make the predicate finding that emissions from Texas are interfering 
with downwind states' attainment of the NAAQS and that EPA, therefore, 
cannot properly claim that the Texas SO2 Trading Program was 
designed to meet the agency's good neighbor ``requirement'' to protect 
downwind visibility from ``interfere[nce].''
    Response: We disagree that the Texas SO2 Trading Program 
cannot be viewed as a program ``designed to meet a requirement other 
than BART'' for purposes of the BART alternative analysis under 40 CFR 
51.308(e)(2)(i)(C). As relevant to this comment, the Texas program is 
designed, among other things, to ensure reductions of SO2 
emissions from EGU sources in Texas that meet (and indeed are more 
stringent than) the reductions agreed to in the interstate consultation 
process for setting RPGs for Class I areas in other states. See section 
III.B of this notice, where we explain that the Texas SO2 
Trading Program as amended in today's final action ensures emission 
reductions in Texas that are adequate to satisfy the requirements of 
CAA section 110(a)(2)(D)(i)(II) with respect to visibility for six 
NAAQS.
    We disagree with the commenter that EPA has not made allegedly 
necessary predicate findings under prong 4 in order to claim that the 
Texas program is designed to meet prong 4 requirements. The commenter 
incorrectly attempts to import into the interstate visibility transport 
analysis under prong 4 the policy determinations, regulatory design, 
and associated case law of the ``good neighbor provision'' at 
110(a)(2)(D)(i)(I), related to addressing significant contribution to 
nonattainment and interference with maintenance of the NAAQS in other 
states, which we commonly refer to as prongs 1 and 2. Those precedents 
are not necessarily applicable given that the agency has long had a 
different framework for analysis under prong 4, with an entirely 
different set of policy guidance and administrative precedents. As 
explained above, our interpretation of section 110(a)(2)(D)(i)(II) with 
respect to visibility transport is that one of the pathways by which a 
state can meet its visibility transport obligations is through a 
demonstration that emissions within a state's jurisdiction do not 
interfere with other states' plans to protect visibility. EPA's 
September 13, 2013 guidance explains that such a demonstration should 
point to measures that limit visibility-impairing pollutants and ensure 
that the resulting reductions conform with any mutually agreed emission 
reductions under the relevant regional haze regional planning 
organization (RPO) process.\173\ This has been EPA's long-standing 
interpretation of how a state's visibility transport obligations can be 
satisfied, and we have since approved many SIPs and promulgated FIPs 
that address CAA section 110(a)(2)(D)(i)(II) with respect to visibility 
transport through this pathway. Texas participated in the CENRAP 
process in developing its SIP for the first planning period and relying 
on the technical work developed through that process, Texas identified 
states with Class I areas impacted by Texas emissions and those states 
agreed that they are being impacted by emissions from Texas sources. 
Furthermore, through the consultation process, Texas made a commitment 
to states with Class I areas impacted by emissions from Texas sources 
that it would implement CAIR to satisfy its BART requirements and those 
states agreed with Texas that anticipated emission reductions due to 
the implementation of CAIR would be sufficient to address Texas' 
impacts at their Class I areas. The impacted states relied on this 
level of emission reductions from Texas sources in developing their 
SIPs and establishing their RPGs. As discussed in section III.B. of 
this action, given that the revisions to the Texas SO2 
Trading Program we are finalizing in today's final action ensure 
emission reductions consistent with and below the emission levels 
agreed upon by all states during interstate consultation under 40 CFR 
51.308(d)(3)(i)-(iii) and relied upon by states impacted by Texas 
emissions, we find that these revisions provide further support for our 
earlier finding that the BART alternative in the October 2017 FIP 
results in emission reductions adequate to satisfy the requirements of 
CAA section 110(a)(2)(D)(i)(II) with respect to visibility for the six 
identified NAAQS.\174\
---------------------------------------------------------------------------

    \173\ See ``Guidance on Infrastructure State Implementation Plan 
(SIP) Elements under CAA sections 110(a)(1) and 110(a)(2),'' at 34 
(September 13, 2013). See also 76 FR 22036 (April 20, 2011) 
containing EPA's approval of the visibility requirement of 
110(a)(2)(D)(i)(II) based on a demonstration by Colorado that did 
not rely on the Colorado Regional Haze SIP.
    \174\ See 2009 Texas Regional Haze SIP, section 4.3 titled 
``Consultations On Class I Areas In Other States.'' The submittal 
can be found at www.regulations.gov, Docket ID EPA-R06-OAR-2016-
0611, Document ID EPA-R06-OAR-2016-0611-0002.
---------------------------------------------------------------------------

    Further, EPA has requisite FIP authority under CAA section 110(c) 
to address prong 4 for the six NAAQS for

[[Page 49207]]

Texas, given our disapproval of the state's prong 4 submittals. See 82 
FR at 48332. Thus, our position is that we have the obligation and 
authority to address Texas' interstate visibility transport 
obligations. With the emission levels established by the Texas 
SO2 Trading Program, as promulgated in October 2017 and 
amended by this final rule, we affirm our finding that the emission 
levels assumed in the CENRAP modeling are in fact sufficient to assure 
that Texas' emissions do not interfere with other states' visibility 
plans, and that Texas is achieving emission reductions that satisfy 
prong 4 obligations with respect to the six aforementioned NAAQS. For 
the reasons just discussed, we can also determine that the intrastate 
program is ``designed to meet a requirement other than BART'' for 
purposes of 51.308(e)(2)(i)(C).
    We also disagree with the comment that EPA does not have the 
authority to regulate Texas' emissions with respect to visibility 
without first making the finding that emissions from Texas are 
interfering with downwind states' attainment of the NAAQS. The 
visibility prong (or ``prong 4'') of CAA section 110(a)(2)(D)(i)(II) 
requires that the implementation plan submitted by a state contain 
adequate provisions prohibiting any source or other type of emissions 
activity within the State from emitting any air pollutant in amounts 
that will interfere with measures required to be included in the 
applicable implementation plan for any other state to protect 
visibility. Prong 4 is concerned with visibility and there is no 
requirement that EPA first make a finding that a state is interfering 
with downwind states' attainment of the NAAQS before approving a SIP or 
promulgating a FIP that addresses CAA section 110(a)(2)(D)(i)(II) with 
respect to visibility transport.
    While the commenter is correct that the regional planning process 
by which Texas and surrounding states developed their regional haze 
SIPs took place more than a decade ago and in the interim CAIR has been 
invalidated and replaced by CSAPR, given that the implementation of 
CAIR in Texas is what Texas committed to and what impacted states 
agreed with and relied upon in developing their own regional haze SIPs, 
we continue to find that it is appropriate to compare the emissions 
reductions anticipated from CAIR to the Texas SO2 Trading 
Program to determine whether the FIP is adequate to ensure that 
emissions from Texas do not interfere with measures to protect 
visibility in nearby states as required under CAA section 
110(a)(2)(D)(i)(II). We recognize that the process of taking action on 
certain SIPs related to regional haze for the first planning period and 
interstate visibility transport has taken longer than EPA originally 
anticipated when it first promulgated the Regional Haze Rule in 1999. 
Notwithstanding this delay, we do not believe it would be reasonable or 
practical at this time to require states with outstanding visibility 
transport obligations to revisit and/or update their emission reduction 
commitments to impacted states for the first implementation period. 
Such a process could potentially be time and resource intensive at a 
time when states are currently focusing their attention on developing 
regional haze implementation plans for the second implementation 
period. Thus, we do not believe it would not be reasonable or practical 
at this time to require Texas to revisit its emission reduction 
commitments to states with Class I areas impacted by Texas emissions 
for the first implementation period.
    We address other comments that EPA must analyze BART on a source-
by-source basis elsewhere in this document.

I. Reasonable Progress

    Comment: We received a comment asserting that the Texas 
SO2 Trading Program cannot possibly be designed to satisfy 
the reasonable progress requirements for several reasons. As an initial 
matter, the commenter claimed that EPA was attempting to bypass the 
source-specific analyses required under Sec.  51.308(e)(2)(i)(C) by 
simply asserting that the trading program was designed to be part of 
the long-term strategy to meet reasonable progress requirements. 
Additionally, the commenter asserted that EPA's claim that the Texas 
SO2 Trading Program is somehow designed to meet the 
reasonable progress requirements is contradicted by EPA's statement 
elsewhere in the August 2018 affirmation proposal that it is not taking 
action on the reasonable progress elements that the Fifth Circuit 
remanded to the agency. The commenter also claimed that setting aside 
this inconsistency, the Texas SO2 Trading Program cannot be 
designed to satisfy the reasonable progress requirements given that it 
makes no progress at all as the allowances available under the trading 
program exceed the covered sources' emissions in 2015, 2016, and 2017, 
and thus the Texas SO2 Trading Program will not reduce 
emissions or improve visibility. Furthermore, the commenter asserted 
that the Texas SO2 Trading Program cannot possibly be 
designed to satisfy the reasonable progress requirements because EPA 
did not consider the four statutory factors for reasonable progress. 
The commenter asserted that EPA must conduct a four-factor analysis of 
whether pollution controls are needed at individual sources--whether 
subject to BART or not--to make reasonable progress and that the Texas 
SO2 Trading Program and the Q/d analysis that helped inform 
the trading program cannot act as a substitute for a four-factor 
reasonable progress analysis given that there are no statutory or 
regulatory exemptions that authorize EPA to forego conducting a 
separate reasonable progress analysis or that authorize a reasonable 
progress alternative program comparable to a BART alternative.
    Response: As discussed in Section III.A.2 above, we are not 
finalizing a position that the Texas SO2 Trading Program is 
designed to meet reasonable progress requirements. While the program 
will contribute to meeting Texas' reasonable progress requirements, the 
necessary analysis, and potentially, emission controls, to fully 
address reasonable progress for Texas will take place in a separate, 
future action.

J. Coleto Creek

    Comment: We received comments in support of our proposed removal of 
the special provisions in the Supplemental Allowance Pool for Coleto 
Creek.\175\ We also received a comment stating that the Supplemental 
Allowance Pool's treatment of Coleto Creek is unlawful, arbitrary, and 
capricious because this provision would allow SO2 emissions 
to increase over time. Under Sec.  97.912(a)(3)(i), if Coleto Creek 
requires more allowances to be in compliance, those allowances will be 
provided up to the amount held in the Supplemental Allowance Pool. 
Because that pool's starting balance is 10,000 tons and given that 
Coleto Creek's 2016 SO2 emissions totaled 8,231 tons, Sec.  
97.912(a)(3)(i) would allow this unit to more than double its 2016 
SO2 emissions. Nothing in the Texas SO2 Trading 
Program would prevent Coleto Creek from increasing its SO2 
emissions to even higher levels, if and when the Supplemental Allowance 
Pool has accumulated allowances in excess of 10,000 tons.
---------------------------------------------------------------------------

    \175\ We note that TCEQ commented in support of removing the 
special provisions for Coleto Creek but suggested that implementing 
changes to the program is a potential concern given that the program 
began in January 2019. TCEQ encourages the EPA to discuss with 
program stakeholders appropriate timing for making a change to the 
Supplemental Allowance Pool. Our final rule sets the effective date 
of the rule changes for program year 2021.

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

[[Page 49208]]

    The commenter further asserts that because Vistra and Dynegy have 
merged, the rationale for having special provisions for Coleto Creek 
are longer true, with the combined Dynegy-Vistra company owning several 
units other than Coleto Creek covered by the Texas SO2 
Trading Program. Given that the factual basis for this provision 
concerning Coleto Creek is no longer true, the commenter suggests that 
EPA must eliminate 40 CFR 97.912(a)(3)(i).
    We also received comments suggesting that we should eliminate the 
additional flexibility afforded to Coleto Creek's owner in the 
Supplemental Allowance Pool of the SO2 trading program FIP 
because Coleto Creek is no longer an isolated unit in the program. 
Given the recent merger between Dynegy and Vistra Energy, which owns or 
operates several other Texas EGUs that are subject to the Texas 
intrastate trading program for SO2, Coleto Creek will now be 
part of a larger set of participating units under the same owner/
operator. Because Coleto Creek is no longer at a disadvantage as it was 
before, the flexibility afforded to Coleto Creek under the Supplemental 
Allowance Pool is no longer necessary. Vistra Energy will be able to 
transfer allowances among the multiple participating units should any 
one source require additional allowances during any control period 
greater than its allocation, including Coleto Creek. Eliminating the 
flexibility directly afforded to Coleto Creek under 40 CFR 97.912(a)(3) 
as a result of the merger will provide an equal opportunity among the 
participating sources for access to the Supplemental Allowance Pool.
    Response: When we finalized our Texas SO2 Trading 
Program FIP in October 2017, all sources required to participate in the 
trading program had the flexibility to transfer allowances among 
multiple participating units under the same owner/operator when 
planning operations, with the exception of Coleto Creek, which consists 
of only one coal-fired unit, and at the time of our October 2017 FIP, 
this was the only coal-fired unit in Texas owned and operated by 
Dynegy. In light of this, in our October 2017 FIP, we provided Coleto 
Creek with additional flexibility by allocating its maximum 
supplemental allocation from the Supplemental Allowance Pool as long as 
there were sufficient allowances in the Supplemental Allowance Pool 
available for allocation, and its actual allocation would not be 
reduced in proportion with any reductions made to the supplemental 
allocations to other sources. In our August 2018 proposal, we noted 
that Dynegy had merged with Vistra, which owns other units that are 
subject to the trading program. In the August 2018 proposal, we 
solicited comment on eliminating this additional flexibility for Coleto 
Creek in light of the recent change in ownership, and we received no 
adverse comments on such a change. Therefore, on November 14, 2019, we 
published a supplemental notice of proposed rulemaking that proposed to 
make this change to the regulations.\176\ After considering all 
comments we received on our supplemental proposal, we are finalizing 
the removal of the special provisions for Coleto Creek, thus making 
moot the comments concerning Coleto Creek's treatment under the 
Supplemental Allowance Pool.
---------------------------------------------------------------------------

    \176\ 84 FR 61850.
---------------------------------------------------------------------------

    We disagree with the commenter's additional statements that, aside 
from the treatment of Coleto Creek just discussed, the Supplemental 
Allowance Pool is arbitrary and capricious because it would allow 
emissions to increase over time. We have responded elsewhere to the 
commenter's similar assertion that the Supplemental Allowance Pool 
would ``inflate the cap'' in sections IV.A and IV.K of this final 
action.
    Comment: We also received comments from AEP, NRG Texas, SPS, and 
Vistra that side with eliminating the additional flexibility to Coleto 
Creek due to the recent change in ownership. The additional flexibility 
would give Coleto Creek priority for allocations from the Supplemental 
Allowance Pool. AEP states that retaining this flexibility would place 
Coleto Creek and its owner in a favorable position in comparison to 
other utilities operating in the ERCOT, which would unfairly impact 
other EGUs. NRG Texas similarly states this additional flexibility 
would significantly reduce the allowances available to other sources. 
SPS explains that eliminating the additional flexibility will ensure a 
more equitable distribution of allowances for EGUs needing compliance 
assistance. Vistra submitted comments on both the August 2018 proposal 
and the November 2019 supplemental proposal in support of eliminating 
the priority given in the October 2017 final rule to Coleto Creek for 
allocations from the Supplemental Allowance Pool given that this 
priority is no longer necessary in light of the facility's change in 
ownership.
    Response: As explained elsewhere in this document, in our August 
2018 proposal, we solicited comment on eliminating the additional 
flexibility for Coleto Creek in light of the recent change in 
ownership, and we received no adverse comments on such a change. 
Thereafter, on November 14, 2019, we published a supplemental notice of 
proposed rulemaking that proposed to make this change to the 
regulations.\177\ After considering all comments we received, we are 
finalizing the removal of the special provisions for Coleto Creek, thus 
addressing the comments concerning Coleto Creek's treatment under the 
Supplemental Allowance Pool.
---------------------------------------------------------------------------

    \177\ 84 FR 61850.
---------------------------------------------------------------------------

K. Assurance Provisions and the Variability Limit

    Comment: One commenter asserted that EPA's proposed assurance 
provisions are arbitrary and capricious. Assurance levels, like those 
established in CSAPR, are designed to account for year-to-year 
variability in each state's EGU emissions. EPA concluded that these 
emissions could vary from year to year due to normal fluctuations in 
electricity demand, weather, economic considerations, etc., and in an 
interstate trading program, state-level budgets would not necessarily 
ensure emissions outcomes commensurate with each state's good neighbor 
obligations. To address this issue, EPA added ``variability limits'', 
which provide additional headroom in the states' budgets. In CSAPR, 
these variability limits were based on the maximum historical 
percentage coal usage (heat input) variability during 2000-2010 
experienced by any CSAPR state. The state budget plus the variability 
limit equals the ``state assurance level.'' \178\
---------------------------------------------------------------------------

    \178\ See generally 76 FR 42866 (July 19, 2011).
---------------------------------------------------------------------------

    The commenter asserted that EPA states that the addition of an 
assurance limit was the result of comments that EPA's Texas 
SO2 Trading Program would (1) not provide any regulatory 
pressure on EGUs to reduce their emissions and would actually allow 
emissions to increase, and (2) would undermine the stringency of the 
program based on the availability of supplemental allowances, the 
issuance of allocations to already-retired units, the general method of 
allocating allowances, and the availability of unlimited allowance 
banking.\179\ The commenter asserted that to address these concerns, 
EPA proposed to add an assurance level using the same methodology the 
agency used in CSAPR. EPA claims, ``to the extent that commenters 
claimed the program would be inadequately stringent due to the 
allowance allocation methodology, including allocations to retired 
units, or

[[Page 49209]]

due to the Supplemental Allowance Pool or allowance banking, these 
concerns are effectively rendered moot by the addition of the assurance 
level.'' \180\ The commenter contends, however, that a cap on the Texas 
SO2 Trading Program does not mitigate the errors concerning 
EPA's rules governing its Supplemental Allowance Pool, banking, and 
related issues. Were that the case, EPA could simply promulgate any 
trading program rule it desired, using any reasoning or allocation 
methodology, as long as the end result equaled some desired total 
emissions goal.
---------------------------------------------------------------------------

    \179\ 84 FR at 61852.
    \180\ 84 FR at 61854.
---------------------------------------------------------------------------

    The commenter further asserts that none of the references pointing 
to the CSAPR Update Final Rule to support the notion that allocations 
to retired units and the availability of banking are important to 
ensure market stability provide any rationale or support for allocating 
emission credits to already retired EGUs. Allocating allowances to 
already retired units only serves to inflate the SO2 budget, 
thereby reducing the value of the allowances, which disincentivizes 
SO2 reduction. Moreover, the commenter asserts that the 
Texas SO2 Trading Program arbitrarily creates a windfall to 
operators that have independently chosen to cease operations or 
relinquish their permit rights to emit any pollution. Giving 
permanently-retired sources and their operators a free pass to emit 
more haze-causing pollution than they are legally allowed to emit under 
the Clean Air Act cannot comply with the Regional Haze Rule's 
requirement that any trading program ``achieve greater reasonable 
progress'' than source-specific BART. 40 CFR 51.308(e), (e)(2); see 
also 40 CFR 51.308(d)(vi). In a comment submitted following the 
supplemental proposal adding an assurance level to the Texas 
SO2 Trading Program, the commenter further emphasized that 
the agency proposed to give the owners of those already-retired sources 
an even bigger emissions ``variability'' cushion, effectively ensuring 
that those companies will have no incentive or need to reduce emissions 
at any other source. The commenter goes further stating that the 
assurance level and variability limit virtually ensure that certain 
utilities holding emission credits for already-retired sources will be 
allowed to continue polluting at the same or greater levels than 
before.
    Response: As an initial matter, this action does not reopen any 
aspect of the CSAPR regulations. However, in order to facilitate our 
response to comments on the proposed amendments to the Texas 
SO2 Trading Program, we first respond to the commenter's 
statements concerning the CSAPR programs as necessary to correct errors 
in the commenter's statements that may also implicate the commenter's 
statements concerning the Texas SO2 Trading Program. 
Contrary to the commenter's statements, the CSAPR variability limits do 
not ``provide headroom in'' or otherwise alter the CSAPR state budgets, 
which are fixed amounts for all years from 2017 forward. Rather, a 
state's CSAPR variability limit is a defined increment by which the 
state's total emissions in a given year may exceed the underlying fixed 
CSAPR state budget before any incremental emissions trigger 
requirements to surrender more than one allowance per ton of emissions. 
Also, the amounts of the CSAPR variability limits were determined based 
on an analysis of historical variability in states' consumption of all 
fossil fuels for electricity generation, not states' consumption of 
only coal for electricity generation.
    Turning to the substance of these comments, we continue to believe 
that the addition of assurance provisions to the Texas SO2 
Trading Program will provide further support for our determination that 
the Texas SO2 Trading Program is at least as stringent as 
the CSAPR SO2 trading program as applied to Texas and for 
that reason is sufficiently stringent to meet the requirements for a 
BART alternative under 40 CFR 51.308(e)(2). When promulgating the Texas 
SO2 Trading Program, we found that the average annual 
emissions authorized by the program's design would be similar to the 
emissions authorized under CSAPR and well below the 317,100 tons-per-
year benchmark established by the sensitivity analysis performed in the 
2012 ``CSAPR Better-than-BART'' rulemaking. In the supplemental 
proposal for this action, in response to comments raising concerns that 
the program as originally promulgated in fact might not constrain 
emissions in individual years as effectively as CSAPR, we reiterated 
these conclusions regarding the program's average annual emissions but 
also acknowledged that the program's design might not constrain 
emissions in individual years as effectively as CSAPR because of the 
lack of provisions comparable to CSAPR's ``assurance provisions.'' We 
therefore proposed and in this action are now finalizing the addition 
of assurance provisions to the Texas SO2 Trading Program in 
order to further ensure that the program's design is at least as 
stringent as the CSAPR SO2 program as applied to Texas, not 
only on an average annual basis but also in individual years.
    The commenter suggests that even where revisions to a trading 
program have been specifically designed to achieve a desired total 
emissions goal--in this instance, ensuring that statewide emissions 
levels in individual years do not exceed the 317,100 tons-per-year 
benchmark--the ability of the revisions to in fact achieve that goal is 
not the relevant criterion by which we should evaluate the 
appropriateness of the revisions, and that we should instead evaluate 
the revisions (and the program as a whole) based on whether or not the 
revised program also addresses other concerns raised by the commenter. 
We disagree with this suggestion. In noting the list of program design 
features that the commenter considers problematic, we did not endorse 
the full set of concerns that the commenter asserts these design 
features raise. Rather, we acknowledged the specific concern as to 
whether the program is or is not at least as stringent in individual 
years as the CSAPR SO2 trading program, and we proposed 
amendments to address that specific concern. While the commenter 
asserts that the identified design features raise additional concerns 
and believes that we should evaluate the program according to different 
criteria, we do not agree. We have addressed the commenter's assertions 
regarding the identified design features and additional evaluation 
criteria in response to other comments. In general, the commenter 
provides no cogent explanation why the addition of an assurance level 
(which effectively functions as a ``cap'' as their own language 
concedes) would not ensure emissions performance of the program on an 
annual basis below that level. Nor has the commenter explained why, if 
that is the case, the other objections they raise with respect to 
allocations or banking of allowances are of relevance to EPA's 
determination that the program achieves the necessary level of 
stringency for a BART alternative under 51.308(e)(2).
    The commenter's criticism of the discussion in the supplemental 
proposal concerning our general rationale for not immediately 
discontinuing allocations to retired units has no relevance to the 
proposed addition of assurance provisions to the Texas SO2 
Trading Program or any of the other proposed amendments in the 
supplemental proposal. We have addressed the commenter's assertions 
regarding the permissibility of allocating allowances

[[Page 49210]]

to retired units in response to other comments.
    Comment: One commenter asserts that EPA's calculation of its 
proposed variability limit uses out-of-date data, rather than the most 
recent data as used in CSAPR. In promulgating CSAPR, EPA's original 
stated reasoning for the need for a variability limit was to account 
for ``weather, economic activity, the portion of electric generation 
that is fossil fuel fired, and the length and number of outages at 
power generation units, which vary over time.'' \181\ The commenter 
asserts that in its supplemental proposal for its Texas SO2 
Trading Program, EPA simply adopts the variability for Texas (7%) that 
was calculated in the CSAPR rulemaking, instead of updating it to 
account for more recent data and the units that are actually 
participating in the Texas SO2 Trading Program. The CSAPR 
heat input data from 2000-2010 are now eight years out of date. Thus, 
this data set is no longer suitable for its originally intended 
purpose--to account for variations in weather, economic activity, etc., 
that influence electricity generation.
---------------------------------------------------------------------------

    \181\ See 76 FR 48,208, 48,265 (Aug. 8, 2011). EPA specifically 
notes that the factors that contribute to power sector variability 
change with time. Also, note that EPA updated its previous 
variability calculations, based on 2002-2008, in part to utilize the 
more recent data available to it. EPA should have taken the same 
approach in its supplemental proposal.
---------------------------------------------------------------------------

    The commenter asserts that EPA must, at a minimum, update the 
technical analysis underlying its variability limits, as the agency has 
done in other contexts, such as its recent update to CSAPR, for 
example, where EPA relied on updated Integrated Planning Model data to 
analyze the impact of the updated Transport Rule on the U.S. electric 
power sector, as well as its preliminary transport modeling data for 
the 2015 ozone NAAQS. In so doing, EPA recognized the many changes to 
the distribution and magnitude of electric sector emissions, including 
the significant expansion of renewable energy generation resources, 
recent EGU retirements and control additions, changes in the cost and 
efficacy of pollution control technologies, reductions in electricity 
demand, electric system transmission changes, and persistently low 
natural gas prices.\182\ In the supplemental proposal for its Texas 
SO2 Trading Program, EPA arbitrarily fails to acknowledge--
let alone address--the numerous changes to the electric sector since 
the agency adopted its CSAPR variability limits in 2011.\183\
---------------------------------------------------------------------------

    \182\ See generally Ex. 1, EPA, ``Documentation for EPA's Power 
Sector Modeling Platform v6--November 2018 Reference Case,'' 
available at https://www.epa.gov/airmarkets/documentation-epas-power-sector-modeling-platform-v6-november-2018-reference-case.
    \183\ Motor Vehicle Mfrs. Assn. of United States, Inc. v. State 
Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983) (``The agency must 
examine the relevant data and articulate a satisfactory explanation 
for its action including a `rational connection between the facts 
found and the choice made.' ''); Sierra Club v. EPA, 671 F.3d 955, 
967 (9th Cir. 2012) (``[I]f new information indicates to EPA that [a 
proposed rule] awaiting approval is inaccurate or not current, . . . 
EPA should properly evaluate the new information and may not simply 
ignore it without reasoned explanation of its choice.'').
---------------------------------------------------------------------------

    The commenter states that in addition, the obsoleteness of the heat 
input data aside, given the EGU retirements that have occurred since 
2010, that data set is much different than what would be calculated 
based on the units that would actually participate in EPA's Texas 
SO2 Trading Program. The commenter purported to illustrate 
this via a table comparing historical heat inputs from 2000-2010 for 
units under original CSAPR, units in the Texas trading program, and 
units in the Texas program minus retired units. Comparing the columns 
showing these heat inputs, commenter asserts that the magnitudes of the 
data sets indicate that despite being of the same years, they are 
composed of different units. In fact, the heat input data set composed 
of only the unretired units that would actually participate in the 
Texas SO2 trading program is approximately one third the 
size of the data set that EPA is basing its variability analysis on. In 
its continued strained attempt to justify its inadequate Texas 
SO2 trading program by comparison to CSAPR, commenter claims 
EPA ignores its earlier decision to base its variability calculation on 
only the units that actually participate in the trading program.
    Response: In the supplemental proposal, we proposed to adopt a 
variability limit of 7% for the Texas SO2 Trading Program, 
where the proposed limit was calculated based on the annual heat input 
values for Texas in the same overall data set used to calculate the 
analogous variability limit of 18% for the CSAPR SO2 
program. In most respects, the Texas SO2 Trading Program has 
been designed to replicate relevant aspects of the CSAPR SO2 
program. We do not dispute that the Texas electricity sector has 
evolved in the years since the CSAPR rulemaking and we agree with the 
general principle that the most current data of sufficient quality and 
representativeness should be used when conducting new rulemaking 
activities. However, we do not believe that acceptance of the general 
principle in favor of using more recent data when available necessarily 
requires that the principle be applied to every detail of a rulemaking, 
such as this one, that is being conducted with an overall purpose of 
closely replicating the structure of a previous rulemaking.
    Nevertheless, in order to assess the potential impacts of using 
more recent data instead of the CSAPR rulemaking data set specifically 
for purposes of establishing the amount of the variability limit for 
the Texas SO2 Trading Program, we have calculated what the 
variability limit would be if it were calculated using the more recent 
data set suggested by the commenter. In the following comment, the 
commenter states that this calculation would result in a variability 
limit of 2%, but as discussed in greater detail in our response to that 
comment, the commenter did not actually use the more recent data set 
and furthermore made a material error in the calculation procedure. 
When the calculation procedure is applied to the more recent data set 
and the procedural error is corrected, the result would be a higher 
variability limit than we proposed--specifically, 12% instead of 7%. 
Because neither this commenter nor any other commenter advocates using 
a variability limit higher than 7%, and some other commenters 
specifically support use of the variability limit and resulting 
assurance level calculated based on values for Texas in the data set 
used in the CSAPR rulemaking, we do not find it necessary to use an 
updated data set in this instance.
    Comment: We received a comment that disagreed with the 
computational methodology EPA used to calculate the variability limit 
of 7%, arguing that the limit should instead be 2%. The commenter 
purported to recalculate what a Texas SO2 Trading Program 
variability limit would be if it were based on EPA's original 
methodology used in CSAPR. The commenter purported to follow the CSAPR 
methodology and use up-to-date data and include only those units that 
are expected to be covered by the program.
    Response: In this proceeding, we did not seek comment on or reopen 
any aspect of the CSAPR regulations. However, in order to facilitate 
our response to comments on the proposed amendments to the Texas 
SO2 Trading Program, we are responding to the commenter's 
statements concerning the CSAPR programs as necessary to correct errors 
in the commenter's statements that may also implicate the commenter's 
statements concerning the Texas SO2 Trading Program.

[[Page 49211]]

    We disagree with the commenter's assertions that we made an error 
in the statistical procedure for calculating the variability limits 
used in the CSAPR trading programs and the variability limit proposed 
for the Texas SO2 Trading Program. In fact, the commenter 
made a mistake in the calculation of the variability limits. We have 
added to the docket for this action a spreadsheet that is a modified 
version of the spreadsheet the commenter submitted to the docket as 
Exhibit 3 to the comments on the supplemental proposal.\184\ See the 
spreadsheet and the Response to Comments document found in the docket 
associated with this final action for a detailed explanation of the 
calculation and discussion of how correction of one of the values in 
the spreadsheet submitted by the commenter yields values that confirm 
the correctness of our calculations.
---------------------------------------------------------------------------

    \184\ See ``EPA modified version of commenters Ex_3_-
_Recalculate_TX_SO2_Trading _Variability.xlsx,'' 
available in the docket for this action.
---------------------------------------------------------------------------

    The results of the calculations in this section confirm a CSAPR 
SO2 variability limit of 18%. The CSAPR SO2 5% 
variability limit asserted by the commenter results only from using the 
incorrect value of 11 for the ``size'' variable in the CONFIDENCE 
function.
    Comment: We received a comment stating that EPA's proposed 
assurance level is incorrect because the assurance level EPA borrows 
from CSAPR is simply the sum of the SO2 budget and the 
variability limit. Because the EPA incorrectly incorporated the Texas 
variability limit from CSAPR into its Texas SO2 trading 
program, and because EPA's trading budget of 238,393 tons itself is 
based on out-of-date and inappropriate data, consequently, EPA's 
calculation of its variability limit, which is simply a percentage of 
this budget, is flawed. The commenter argues that had EPA re-applied 
the original CSAPR allocation methodology using updated information, 
and removed retired units, it would have discovered that the individual 
allocations in many instances would have changed significantly and the 
overall budget would have been reduced significantly. The commenter 
asserts that the trading budget would have been reduced from 238,393 
tons to 176,332 tons. This represents a decrease of 62,061 tons or an 
approximately 26% change. Adding a 2% variability to the revised 
trading budget of 176,332 tons would result in an assurance limit of 
179,859 tons.
    Furthermore, the commenter asserts that even at this lower 
emissions level, the Texas SO2 Trading Program will not 
serve to place any regulatory pressure on Texas SO2 sources 
to reduce their emissions because the 2018 SO2 emissions of 
the participating non-retired units--which should be the only units 
participating in the program--total 157,119 tons. These emissions are 
already below the reduced assurance limit of 179,859 tons commenter 
calculated above.
    Finally, the commenter states that because the Texas SO2 
Trading Program does not provide for a declining cap over time, in 
comparison to actual source-by-source BART, even if corrected to remove 
retired units it merely preserves the status quo. As such, it violates 
the primary objective of the national goal of the visibility program, 
which is ``the prevention of any future, and the remedying of any 
existing, impairment of visibility in mandatory class I Federal areas 
which impairment results from manmade air pollution.''
    Response: We disagree with this comment. The commenter correctly 
notes that the proposed assurance level for the Texas SO2 
Trading Program is derived from the proposed 7% variability limit and 
the existing budget for the Texas SO2 Trading Program. Based 
on the commenter's beliefs that the variability limit should be 2% and 
that the existing budget is unlawfully high, the commenter asserts that 
the proposed assurance level is consequently also too high. We disagree 
both that the variability limit should be 2% and that the existing 
budget is unlawfully high. Accordingly, we also disagree with the 
commenter's resulting assertion that the proposed assurance level is 
too high. We have addressed the commenter's assertions regarding the 
proposed variability limit in response to other comments. As indicated 
in those responses, we continue to believe that 7% is an appropriate 
value to establish as the variability limit for the Texas 
SO2 Trading Program. Likewise, we have also addressed the 
commenter's assertions regarding the lawfulness of the existing budget 
for the Texas SO2 Trading Program in response to other 
comments, and the commenter offers no new criticism of the existing 
budget that was not already raised in those previous comments and 
addressed in our responses to those comments.

L. Venue

    Comment: We received a comment asserting that if EPA retains the 
intrastate trading program, the agency must publish a finding that the 
Texas SO2 Trading Program ``is based on a determination of 
nationwide scope or effect.'' 42 U.S.C. 7607(b)(1). The commenter 
asserted that such a finding is necessary because the Texas 
SO2 Trading Program is plainly based on such a determination 
and should be reviewed in the United States Court of Appeals for the 
District of Columbia. The commenter claimed that this is for two 
reasons. First, in comparing the Texas SO2 Trading Program 
to the Better-than-BART rule to satisfy the requirements of 40 CFR 
51.308(e), EPA reinterpreted an established and nationally applicable 
law. Second, the commenter claimed that EPA's unlawful interpretation 
of 40 CFR 51.308(e) amounts to a revision of a nationally applicable 
regulation. The commenter noted that in this comment, the commenter 
does not challenge CSAPR itself or EPA's CSAPR Better-than-BART 
determination, but is instead asserting that the Texas SO2 
Trading Program is based on those rules, which are nationally 
applicable and contain determinations of nationwide scope and effect. 
The commenter asserted that even if EPA does not publish a finding that 
the Texas SO2 Trading Program is based on a determination of 
nationwide scope or effect (and does not withdraw the FIP promulgating 
the Texas SO2 Trading Program), subsequent legal challenges 
will still be properly venued in the D.C. Circuit pursuant to 42 U.S.C. 
7607(b)(1).
    Response: To the extent commenter is asserting that this action is 
``nationally applicable'' for purposes of section 307(b), that claim is 
clearly incorrect. As the D.C. Circuit has recently explained, ``[t]he 
court need look only to the face of the agency action, not its 
practical effects, to determine whether an action is nationally 
applicable.'' \185\ On its face, this action is locally applicable 
because it applies in only a single state, Texas. This action has 
immediate, legal effect only for certain sources within Texas. 
Furthermore, EPA is not adopting a new interpretation of its 
regulations at 40 CFR 51.308(e)(2); nor is it correct to characterize 
EPA's application of those regulations as a revision necessitating 
national rulemaking.
---------------------------------------------------------------------------

    \185\ Sierra Club v. EPA, 926 F.3d 844, 849 (D.C. Cir. 2019) 
(citing Dalton Trucking, 808 F.3d 875, 881 (D.C. Cir. 2015) and Am. 
Road & Transp. Builders Ass'n v. EPA, 705 F.3d 453, 456 (D.C. Cir. 
2013)).
---------------------------------------------------------------------------

    EPA also disagrees that this action must be challenged in the D.C. 
Circuit under the ``nationwide scope or effect'' portion of the venue 
provision of CAA section 307(b). In general under section 307(b), an 
EPA action ``which is locally or regionally applicable'' may be filed 
``only in the United States Court of

[[Page 49212]]

Appeals'' covering that area.\186\ The only exception to this mandate 
is where the Administrator expressly finds that the locally or 
regionally applicable action is based on a determination of nationwide 
scope or effect and publishes such a finding. The requirement that the 
Administrator find and publish that an otherwise locally or regionally 
applicable action is based on a determination of nationwide scope or 
effect is an express statutory requirement for application of this 
venue exception; this exception is not being invoked by EPA in this 
action. EPA has made no finding in this action and is not publishing 
any finding that this action is based on a determination of nationwide 
scope or effect. The absence of either such a finding or publication of 
such a finding makes this venue exception in CAA section 307(b) 
inapplicable. Absent an express statement--and publication--that such a 
finding has been made, thus invoking the venue exception, there can be 
no application of that exception.\187\ CAA section 307 expressly 
provides the Agency full discretion to make its own determination of 
whether to invoke the exception in the Congressionally-dictated venue 
provision.\188\
---------------------------------------------------------------------------

    \186\ See 42 U.S.C. 7607(b)(1) (emphasis added).
    \187\ See, e.g., Lion Oil v. EPA, 792 F.3d 978, 984 n.1 (8th 
Cir. 2015) (even where EPA, unlike here, made the necessary finding, 
the court found no need to decide application of the venue exception 
absent publication of that finding); Texas v. EPA, 829 F.3d 405, 419 
(5th Cir. 2016) (``This finding is an independent, post hoc, 
conclusion by the agency about the nature of the determinations; the 
finding is not, itself, the determination.''). See also Dalton 
Trucking v. EPA, 808 F.3d 875 (D.C. Cir. 2015).
    \188\ See, e.g., Texas v. EPA, 829 F.3d at 419-20 (the venue 
exception ``gives the Administrator the discretion to move venue to 
the D.C. Circuit by publishing a finding declaring the 
Administrator's belief that the action is based on a determination 
of nationwide scope or effect.'') (emphasis added).
---------------------------------------------------------------------------

    Even assuming that a court could review the lack of such a finding, 
and lack of publication of such a finding, under the arbitrary and 
capricious standard,\189\ the EPA's decision not to do so is not 
unreasonable in this case. As an initial matter, this action does not 
apply to any sources other than those covered by the program in the 
State of Texas. By the same token, the applicability of the action does 
not span multiple federal judicial circuits. Further, EPA is not 
proposing or adopting a new or different interpretation of its 
regulations at 40 CFR 51.308(e)(2), nor is it correct to characterize 
EPA's application of those regulations as a revision necessitating 
national rulemaking. The commenter's characterization of EPA's analysis 
as conducting a novel comparison of the Texas program to CSAPR as a 
BART alternative is incorrect. In the final action, EPA is making no 
such interpretation that 51.308(e)(2) authorizes a comparison between 
two BART alternatives. Rather, in this final action, EPA has determined 
it is acceptable to continue to rely on the CSAPR-Better-than-BART 
analysis (which included Texas) under the unique, state-specific 
circumstances presented here: That the intrastate trading program in 
Texas achieves the same or better emissions outcomes as the CSAPR 
program would have. The CSAPR Better-than-BART analysis on which EPA is 
relying uses presumptive BART limits--in compliance with 
51.308(e)(2)(i)(C)--to demonstrate greater reasonable progress.
---------------------------------------------------------------------------

    \189\ Cf. Sierra Club v. EPA, 926 F.3d 844, 850 (D.C. Cir. 2019) 
(declining to resolve whether failure to make a finding is 
reviewable but concluding the absence of such a finding was not 
arbitrary and capricious under the facts of the case).
---------------------------------------------------------------------------

    Further, the application of the nationally applicable 2012 and 2017 
CSAPR findings in Texas is a ``locally or regionally applicable'' 
action; that application does not in itself make the lack of EPA 
invoking the exception unreasonable. While the 2012 finding was 
appropriately reviewed (and upheld) in the D.C. Circuit, and the 2017 
finding is currently being reviewed in the D.C. Circuit, see NPCA v. 
EPA, 17-1253 (D.C. Cir.), the application of those findings in Texas is 
merely one aspect of this ``locally or regionally applicable'' action. 
In any future action that may raise similar circumstances as Texas (and 
EPA is aware of no such situation at this time), EPA's determination 
whether to promulgate an intrastate trading program as a BART 
alternative would be based on a record and analysis specific to the 
sources in that state at that time. EPA has announced no national 
policy or interpretation that the decisions in this action are, or 
would necessarily be, applicable in any future action. Thus, EPA has 
not reinterpreted or revised its Regional Haze Rule regulations in this 
action, and it is inaccurate to characterize the mere application of 
regulations in a case-specific circumstance as a revision of those 
regulations. Under such circumstances, EPA's lack of a finding or 
publication of such a finding here is hardly unreasonable.
    Finally, we note that EPA did not make a finding in the October 17, 
2017 final action originally promulgating the Texas SO2 
Trading Program that such action was based on a determination of 
nationwide scope or effect. This action merely affirms the 2017 action 
with certain amendments. Petitioners seeking judicial review of that 
action correctly filed for review in the Fifth Circuit, see NPCA v. 
EPA, No. 17-60828 (5th Cir.), and that case is being held in abeyance 
pending the completion of this action. No petitions for review of the 
original FIP action were filed in the D.C. Circuit, nor would it have 
been appropriate to do so.

M. Other

    Comment: One commenter, while appreciative of the revisions made to 
the program by the EPA, expressed concern that without decreasing 
emissions assurance limitations or source-specific SO2 
limits, improved visibility in protected areas such as the Wichita 
Mountains National Wildlife Refuge and Guadalupe Mountains National 
Park will not come to fruition as a result of more concentrated 
emissions, even if they come from fewer sources.
    The commenter also expressed concern for potential impacts to local 
air quality. While SO2 emissions from individual sources may 
technically meet state-wide air quality targets, there remains a 
potential to negatively impact local air quality, damaging both 
visibility and human health. The commenter proposed two potential 
options that the EPA might consider. The first is to examine historic 
emissions by source and define new limits on a per-facility basis 
informed by historic emissions that met CSAPR for SO2. This 
would ensure that even if some facilities closed, those that remained 
operational would not be able to increase their SO2 
emissions. The second suggested option would be to implement emission 
limits that decline annually. Under a declining emissions-limit 
scenario, if plants did close, operational facilities would potentially 
still be able to emit more, but to a lesser extent than if the cap 
stayed constant. If all regulated facilities stayed open, each polluter 
would have to find additional methods to decrease SO2 
emissions, further improving visibility and human health.
    The commenter also expressed concern in consideration of units not 
participating in the program and their contribution to the total 
assurance provisions. The Texas SO2 Trading Program will 
allot 35,000 tons per year to non-participating sources, effectively 
increasing the assurance provision to 290,081 tons per year. While 
SO2 emissions in Texas have steadily declined, the Texas 
SO2 Trading Program would nearly allow emissions to return 
to 2014 levels. The commenter asserts that it is nonsensical to place a 
limit on SO2 emissions that does not pressure polluters to 
reduce emissions. Previously discussed comments argue

[[Page 49213]]

that unlike source-specific BART control requirements, the Texas 
SO2 Trading Program allows for emission to increase compared 
to recent emission levels. The state of Texas has clearly made great 
strides in decreasing sulfur emissions from coal-fired powerplants and 
the EPA has a responsibility to Texans and residents of neighboring 
states to maintain that progress, not reverse it.
    Response: We appreciate the commenter's concerns and suggestions. 
With regards to localized impacts, as previously discussed in response 
to other comments, the analysis EPA is relying on does not show 
visibility declines compared to the baseline in any Class I area under 
the BART alternative. Under the Regional Haze Rule, states are directed 
to conduct BART determinations for ``BART-eligible'' sources that may 
be anticipated to cause or contribute to any visibility impairment in a 
Class I area. States are required to identify the level of control 
representing BART after considering the five statutory factors set out 
in section 169A(g)(2) for each source subject-to-BART.\190\ However, 
the Regional Haze Rule also gives states the flexibility to adopt an 
emissions trading program or alternative program in place of requiring 
source-specific BART controls, as long as the alternative provides 
greater reasonable progress towards improving visibility than BART. As 
discussed in section I.A. of this final action, 40 CFR 51.308(e)(2) 
specifies how a state must conduct the demonstration to show that an 
alternative program will achieve greater reasonable progress than the 
installation and operation of BART. As discussed in section III.A.2, we 
are taking final action to affirm our determination that the Texas 
SO2 Trading Program, as amended in this final action, meets 
the requirements of 40 CFR 51.308(e)(2) as a BART alternative for 
SO2 to satisfy Texas' Regional Haze obligations. Comments on 
EPA's decision to authorize alternative measures, including emissions 
trading programs, in the original 1999 Regional Haze Rule are beyond 
the scope of this action.
---------------------------------------------------------------------------

    \190\ The State must take into consideration the five statutory 
factors: (1) The costs of compliance, (2) the energy and non-air 
quality environmental impacts of compliance, (3) any existing 
control technology in use at the source, (4) the remaining useful 
life of the source, and (5) the degree of visibility improvement 
which may reasonably be anticipated to result.
---------------------------------------------------------------------------

    The comment that we have ``allotted'' 35,000 tons to non-
participating units is incorrect. The Texas SO2 Trading 
Program only pertains to the particular set of EGUs specified in Table 
1 of this final rule. The estimate of emissions from non-participating 
units is used as a conservative assumption to allow for a comparison of 
SO2 emissions from EGUs in Texas under the Texas program 
with emissions under CSAPR.

V. Final Action

A. Regional Haze

    We are taking final action to affirm our October 2017 FIP that 
established the Texas SO2 intrastate trading program 
addressing emissions of SO2 from certain EGUs in Texas as a 
BART alternative, with certain amendments to the trading program. These 
amendments consist of (1) the addition of assurance provisions; (2) 
revisions to the Supplemental Allowance Pool allocation provisions, 
including amendments to the allocation methodology such that allowance 
allocations are in proportion to each owner's total emissions in excess 
of the owner's total base allowance allocations, elimination of the 
additional flexibility to transfer allowances originally offered under 
the trading program for Coleto Creek, and reduction in the number of 
allowances that can be allocated from the Supplemental Allowance Pool 
in any year to 16,688 tons plus any allowances added to the pool in 
that year from retired units; (3) termination of the opt-in provisions; 
and (4) revision of the allowance recordation provisions. We are also 
correcting a 2-ton error we made in the allowance allocation for El 
Paso Electric's Newman Plant due to a unit-identification error, 
thereby increasing the trading program budget from 238,393 tons to 
238,395 tons. We are taking final action to affirm our determination 
that the Texas SO2 intrastate trading program, as amended in 
this final rulemaking, satisfies the Regional Haze Rule requirements 
for BART alternatives at 40 CFR 51.308(e)(2). We are also taking final 
action to affirm our October 2017 approval of Texas' SIP determination 
that no Texas sources are subject to BART for PM.

B. Interstate Visibility Transport

    We are taking final action to affirm our finding that Texas' 
participation in CSAPR to satisfy NOX BART and our 
SO2 intrastate trading program, as amended in this final 
rulemaking, fully address Texas' interstate visibility transport 
obligations for the following six NAAQS: (1) 1997 8-hour ozone; (2) 
1997 PM2.5 (annual and 24 hour); (3) 2006 PM2.5 
(24-hour); (4) 2008 8-hour ozone; (5) 2010 1-hour NO2; and 
(6) 2010 1-hour SO2. Texas' SO2 emission 
reductions under the Texas SO2 intrastate trading program, 
as amended in today's final rulemaking, are consistent with the level 
of emission reductions relied upon by other states during Regional Haze 
consultation, and the intrastate trading program is therefore adequate 
to ensure that emissions from Texas do not interfere with measures to 
protect visibility in nearby states in accordance with CAA section 
110(a)(2)(D)(i)(II).

VI. 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 not a significant regulatory action and was 
therefore not submitted to the Office of Management and Budget (OMB) 
for review.

B. Executive Order 13771: Reducing Regulations and Controlling 
Regulatory Costs

    This action is not an Executive Order 13771 regulatory action 
because this action is not significant under Executive Order 12866.

C. Paperwork Reduction Act

    This action does not impose any new information collection burden 
under the PRA. The Office of Management and Budget (OMB) has previously 
approved the information collection activities contained in the 
existing Texas SO2 Trading Program regulations as part of 
the most recent information collection request (ICR) renewal for the 
CSAPR trading programs and has assigned OMB control number 2060-0667. 
The revisions approved in this action do not alter the information 
collection activities contained in the existing regulations.

D. Regulatory Flexibility Act

    I certify that this action will not have a significant impact on a 
substantial number of small entities. In making this determination, the 
impact of concern is any significant adverse economic impact on small 
entities. An agency may certify that a rule will not have a significant 
economic impact on a substantial number of small entities if the rule 
relieves regulatory burden, has no net burden or otherwise has a 
positive economic effect on the small entities subject to the rule. 
This rule does not impose any requirements or

[[Page 49214]]

create impacts on small entities. This FIP action under Section 110 of 
the CAA will not create any new requirement with which small entities 
must comply. Accordingly, it affords no opportunity for the EPA to 
fashion for small entities less burdensome compliance or reporting 
requirements or timetables or exemptions from all or part of the rule. 
We have therefore concluded that, this action will have no net 
regulatory burden for all directly regulated small entities.

E. 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.

F. 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.

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

    This rule does not have tribal implications, as specified in 
Executive Order 13175. It will not have substantial direct effects on 
tribal governments. Thus, Executive Order 13175 does not apply to this 
rule.

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

    Executive Order 13045: Protection of Children From Environmental 
Health Risks and Safety Risks \191\ applies to any rule that: (1) Is 
determined to be economically significant as defined under Executive 
Order 12866; and (2) concerns an environmental health or safety risk 
that we have reason to believe may have a disproportionate effect on 
children. EPA interprets E.O. 13045 as applying only to those 
regulatory actions that concern health or safety risks, such that the 
analysis required under Section 5-501 of the E.O. has the potential to 
influence the regulation. This action is not subject to Executive Order 
13045 because it is not economically significant as defined in 
Executive Order 12866, and because the EPA does not believe the 
environmental health or safety risks addressed by this action present a 
disproportionate risk to children. This action is not subject to E.O. 
13045 because it implements specific standards established by Congress 
in statutes. However, to the extent this rule will limit emissions of 
SO2, the rule will have a beneficial effect on children's 
health by reducing air pollution.
---------------------------------------------------------------------------

    \191\ 62 FR 19885 (Apr. 23, 1997).
---------------------------------------------------------------------------

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

    This action is not subject to Executive Order 13211 (66 FR 28355 
(May 22, 2001)), because it is not a significant regulatory action 
under Executive Order 12866.

J. National Technology Transfer and Advancement Act (NTTAA)

    This rulemaking does not involve technical standards.

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

    The EPA believes that this action does not have disproportionately 
high and adverse human health or environmental effects on minority 
populations, low-income populations and/or indigenous peoples, as 
specified in Executive Order 12898 (59 FR 7629, February 16, 1994). We 
have determined that this rule will not have disproportionately high 
and adverse human health or environmental effects on minority or low-
income populations because it increases the level of environmental 
protection for all affected populations without having any 
disproportionately high and adverse human health or environmental 
effects on any population, including any minority or low-income 
population. The rule limits emissions of SO2 from certain 
facilities in Texas.

L. Congressional Review Act (CRA)

    This rule is exempt from the CRA because it is a rule of particular 
applicability.

List of Subjects in 40 CFR Part 97

    Environmental protection, Administrative practice and procedure, 
Air pollution control, Incorporation by reference, Nitrogen dioxide, 
Reporting and recordkeeping requirements, Sulfur oxides.

Andrew Wheeler,
Administrator.

    For the reasons stated in the preamble, part 97 of chapter I of 
title 40 of the Code of Federal Regulations is amended as follows:

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

0
1. The authority citation for part 97 is revised to read as follows:

    Authority:  42 U.S.C. 7401, 7403, 7410, 7426, 7491, 7601, and 
7651, et seq.

Subpart FFFFF--TEXAS SO2 TRADING PROGRAM

0
2. Amend Sec.  97.902 by:
0
a. In the definitions of ``Acid Rain Program'', ``Allowance Management 
System'', and ``Allowance Management System account'', capitalizing the 
first three words;
0
b. Adding in alphabetical order a definition of ``Assurance account'';
0
c. In the definition of ``Authorized account representative'', 
capitalizing the word ``trading'' the first time it appears;
0
d. Adding in alphabetical order definitions of ``Common designated 
representative'', ``Common designated representative's assurance 
level'', and ``Common designated representative's share''; and
0
e. Revising the definitions of ``General account'' and ``Texas 
SO2 Trading Program allowance deduction''.
    The additions and revisions read as follows:


Sec.  97.902   Definitions.

* * * * *
    Assurance account means an Allowance Management System account, 
established by the Administrator under Sec.  97.925(b)(3) for certain 
owners and operators of a group of one or more Texas SO2 
Trading Program sources and units, in which are held Texas 
SO2 Trading Program allowances available for use for a 
control period in a given year in complying with the Texas 
SO2 Trading Program assurance provisions in accordance with 
Sec. Sec.  97.906 and 97.925.
* * * * *
    Common designated representative means, with regard to a control 
period in a given year, a designated representative where, as of April 
1 immediately after the allowance transfer deadline for such control 
period, the same natural person is authorized under Sec. Sec.  
97.913(a) and 97.915(a) as the designated representative for a group of 
one or more Texas SO2 Trading Program sources and units.
    Common designated representative's assurance level means, with 
regard to a specific common designated representative and control 
period in a given year for which the State assurance

[[Page 49215]]

level is exceeded as described in Sec.  97.906(c)(2)(iii):
    (1) The amount (rounded to the nearest allowance) equal to the sum 
of the total amount of Texas SO2 Trading Program allowances 
allocated for such control period under Sec.  97.911, or deemed to have 
been allocated under paragraph (2) of this definition, to the group of 
one or more Texas SO2 Trading Program units having the 
common designated representative for such control period multiplied by 
the sum for such control period of the Texas SO2 Trading 
Program budget under Sec.  97.910(a)(1) and the variability limit under 
Sec.  97.910(b) and divided by the sum of the total amount of Texas 
SO2 Trading Program allowances allocated for such control 
period under Sec.  97.911, or deemed to have been allocated under 
paragraph (2) of this definition, to all Texas SO2 Trading 
Program units;
    (2) Provided that, in the case of a Texas SO2 Trading 
Program unit that operates during, but has no amount of Texas 
SO2 Trading Program allowances allocated under Sec.  97.911 
for, such control period, the unit shall be treated, solely for 
purposes of this definition, as being allocated the amount of Texas 
SO2 Trading Program allowances shown for the unit in Sec.  
97.911(a)(1).
    Common designated representative's share means, with regard to a 
specific common designated representative for a control period in a 
given year and the total amount of SO2 emissions from all 
Texas SO2 Trading Program units during such control period, 
the total tonnage of SO2 emissions during such control 
period from the group of one or more Texas SO2 Trading 
Program units having the common designated representative for such 
control period.
* * * * *
    General account means an Allowance Management System account, 
established under this subpart, that is not a compliance account or an 
assurance account.
* * * * *
    Texas SO2 Trading Program allowance deduction or deduct Texas SO2 
Trading Program allowances means the permanent withdrawal of Texas 
SO2 Trading Program allowances by the Administrator from a 
compliance account (e. g., in order to account for compliance with the 
Texas SO2 Trading Program emissions limitation) or from an 
assurance account (e. g., in order to account for compliance with the 
assurance provisions under Sec. Sec.  97.906 and 97.925).
* * * * *


Sec.  97.904   [Amended]

0
3. Amend Sec.  97.904 by removing and reserving paragraph (b).

0
4. Amend Sec.  97.906 by:
0
a. In paragraph (b)(2), adding the words ``and assurance provisions'' 
after the words ``emissions limitation'';
0
b. Redesignating paragraphs (c)(2) through (6) as paragraphs (c)(3) 
through (7) and adding a new paragraph (c)(2);
0
c. Revising newly redesignated paragraph (c)(3); and
0
d. In newly redesignated paragraph (c)(4)(ii), removing the text 
``paragraph (c)(1)(ii)(A)'' and adding in its place the text 
``paragraphs (c)(1)(ii)(A) and (c)(2)(i) through (iii)''.
    The additions and revision read as follows:


Sec.  97.906   General provisions.

* * * * *
    (c) * * *
    (2) Texas SO2 Trading Program assurance provisions. (i) If total 
SO2 emissions during a control period in a given year from 
all Texas SO2 Trading Program units at Texas SO2 
Trading Program sources 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 SO2 emissions during such control period exceeds the 
common designated representative's assurance level for such control 
period, shall hold (in the assurance account established for the owners 
and operators of such group) Texas SO2 Trading Program 
allowances available for deduction for such control period under Sec.  
97.925(a) in an amount equal to two times the product (rounded to the 
nearest whole number), as determined by the Administrator in accordance 
with Sec.  97.925(b), of multiplying--
    (A) The quotient of the amount by which the common designated 
representative's share of such SO2 emissions exceeds the 
common designated representative's assurance level divided by the sum 
of the amounts, determined for all common designated representatives 
for such sources and units for such control period, by which each 
common designated representative's share of such SO2 
emissions exceeds the respective common designated representative's 
assurance level; and
    (B) The amount by which total SO2 emissions from all 
Texas SO2 Trading Program units at Texas SO2 
Trading Program sources for such control period exceed the State 
assurance level.
    (ii) The owners and operators shall hold the Texas SO2 
Trading Program allowances required under paragraph (c)(2)(i) of this 
section, as of midnight of November 1 (if it is a business day), or 
midnight of the first business day thereafter (if November 1 is not a 
business day), immediately after the year of such control period.
    (iii) Total SO2 emissions from all Texas SO2 
Trading Program units at Texas SO2 Trading Program sources 
during a control period in a given year exceed the State assurance 
level if such total SO2 emissions exceed the sum, for such 
control period, of the Texas SO2 Trading Program budget 
under Sec.  97.910(a)(1) and the variability limit under Sec.  
97.910(b).
    (iv) It shall not be a violation of this subpart or of the Clean 
Air Act if total SO2 emissions from all Texas SO2 
Trading Program units at Texas SO2 Trading Program sources 
during a control period exceed the State assurance level or if a common 
designated representative's share of total SO2 emissions 
from the Texas SO2 Trading Program units at Texas 
SO2 Trading Program sources during a control period exceeds 
the common designated representative's assurance level.
    (v) To the extent the owners and operators fail to hold Texas 
SO2 Trading Program allowances for a control period in a 
given year in accordance with paragraphs (c)(2)(i) through (iii) of 
this section,
    (A) The owners and operators shall pay any fine, penalty, or 
assessment or comply with any other remedy imposed under the Clean Air 
Act; and
    (B) Each Texas SO2 Trading Program allowance 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) Compliance periods. (i) A Texas SO2 Trading Program 
unit shall be subject to the requirements under paragraph (c)(1) of 
this section for the control period starting on January 1, 2019 and for 
each control period thereafter.
    (ii) A Texas SO2 Trading Program unit shall be subject 
to the requirements under paragraph (c)(2) of this section for the 
control period starting on January 1, 2021 and for each control period 
thereafter.
* * * * *

0
5. Amend Sec.  97.910 by:
0
a. Revising the section heading;

[[Page 49216]]

0
b. In paragraph (a)(1), removing ``238,393'' and adding in its place 
``238,395''; and
0
c. Adding paragraphs (b) and (c).
    The revision and additions read as follows:


Sec.  97.910   Texas SO2 Trading Program budget, Supplemental Allowance 
Pool budget, and variability limit.

* * * * *
    (b) The variability limit for the Texas SO2 Trading 
Program budget for the control periods in 2021 and thereafter is 16,688 
tons.
    (c) The Texas SO2 Trading Program budget in paragraph 
(a)(1) of this section does not include any tons in the Supplemental 
Allowance Pool budget in paragraph (a)(2) of this section or the 
variability limit in paragraph (b) of this section.

0
6. Amend Sec.  97.911 by:
0
a. Revising paragraph (a)(1);
0
b. In paragraph (a)(2), removing the text ``allocated under the Texas 
Supplemental Allowance Pool under 40 CFR 97.912.'' and adding in its 
place the text ``transferred to the Supplemental Allowance Pool for 
potential allocation in accordance with Sec.  97.912.'';
0
c. Removing and reserving paragraph (b);
0
d. In paragraph (c)(1), removing the text ``paragraph (a) or (b)'' and 
adding in its place the text ``paragraph (a)''; and
0
e. Revising paragraph (c)(5).
    The revisions read as follows:


Sec.  97.911   Texas SO2 Trading Program allowance allocations.

    (a)(1) Except as provided in paragraph (a)(2) of this section, 
Texas SO2 Trading Program allowances from the Texas 
SO2 Trading Program budget will be allocated, for the 
control periods in 2019 and each year thereafter, as provided in Table 
1 to this paragraph (a)(1):

                       Table 1 to Paragraph (a)(1)--Texas SO2 Trading Program Allocations
----------------------------------------------------------------------------------------------------------------
                                                                   Texas SO2
                                                                    trading
        Texas SO2 trading program units            ORIS code        program        Affiliated ownership group
                                                                  allocation
                                                                    (tons)
----------------------------------------------------------------------------------------------------------------
Big Brown Unit 1..............................            3497           8,473  Vistra Energy..
Big Brown Unit 2..............................            3497           8,559  Vistra Energy.
Coleto Creek Unit 1...........................            6178           9,057  Vistra Energy.
Fayette (Sam Seymour) Unit 1..................            6179           7,979  Lower Colorado River Authority/
                                                                                 City of Austin.
Fayette (Sam Seymour) Unit 2..................            6179           8,019  Lower Colorado River Authority/
                                                                                 City of Austin.
Graham Unit 2.................................            3490             226  Vistra Energy.
HW Pirkey Unit 1..............................            7902           8,882  American Electric Power.
Harrington Unit 061B..........................            6193           5,361  Xcel Energy.
Harrington Unit 062B..........................            6193           5,255  Xcel Energy.
Harrington Unit 063B..........................            6193           5,055  Xcel Energy.
JT Deely Unit 1...............................            6181           6,170  City of San Antonio.
JT Deely Unit 2...............................            6181           6,082  City of San Antonio.
Limestone Unit 1..............................             298          12,081  NRG Energy.
Limestone Unit 2..............................             298          12,293  NRG Energy.
Martin Lake Unit 1............................            6146          12,024  Vistra Energy.
Martin Lake Unit 2............................            6146          11,580  Vistra Energy.
Martin Lake Unit 3............................            6146          12,236  Vistra Energy.
Monticello Unit 1.............................            6147           8,598  Vistra Energy.
Monticello Unit 2.............................            6147           8,795  Vistra Energy.
Monticello Unit 3.............................            6147          12,216  Vistra Energy.
Newman Unit 2.................................            3456               1  El Paso Electric.
Newman Unit 3.................................            3456               1  El Paso Electric.
Newman Unit **4...............................            3456               2  El Paso Electric.
Newman Unit **5...............................            3456               2  El Paso Electric.
Sandow Unit 4.................................            6648           8,370  Vistra Energy.
Sommers Unit 1................................            3611              55  City of San Antonio.
Sommers Unit 2................................            3611               7  City of San Antonio.
Stryker Unit ST2..............................            3504             145  Vistra Energy.
Tolk Unit 171B................................            6194           6,900  Xcel Energy.
Tolk Unit 172B................................            6194           7,062  Xcel Energy.
WA Parish Unit WAP4...........................            3470               3  NRG Energy.
WA Parish Unit WAP5...........................            3470           9,580  NRG Energy.
WA Parish Unit WAP6...........................            3470           8,900  NRG Energy.
WA Parish Unit WAP7...........................            3470           7,653  NRG Energy.
Welsh Unit 1..................................            6139           6,496  American Electric Power.
Welsh Unit 2..................................            6139           7,050  American Electric Power.
Welsh Unit 3..................................            6139           7,208  American Electric Power.
Wilkes Unit 1.................................            3478              14  American Electric Power.
Wilkes Unit 2.................................            3478               2  American Electric Power.
Wilkes Unit 3.................................            3478               3  American Electric Power.
----------------------------------------------------------------------------------------------------------------

* * * * *
    (c) * * *
    (5) With regard to the Texas SO2 Trading Program 
allowances that are not recorded, or that are deducted as an incorrect 
allocation, in accordance with paragraphs (c)(2) and (3) of this 
section, the Administrator will transfer such Texas SO2 
Trading Program allowances to the Supplemental Allowance Pool for 
potential allocation in accordance with Sec.  97.912.

0
7. Amend Sec.  97.912 by:
0
a. In paragraph (a) introductory text, removing the text ``each control 
period in 2019 and thereafter,'' and adding in its place the text ``the 
control periods in 2019 and 2020,'';

[[Page 49217]]

0
b. In paragraph (a)(1), removing the text ``each subsequent February 
15,'' and adding in its place the text ``February 15, 2021,'', and 
removing the second period and adding in its place the text ``and 
recorded under Sec.  97.921.'';
0
c. In paragraph (a)(2), removing the period and adding in its place the 
text ``and recorded under Sec.  97.921.'';
0
d. In paragraph (a)(3)(ii)(A), removing the text ``paragraph (b)'' and 
adding in its place the text ``paragraph (d)'';
0
e. In paragraph (a)(3)(ii)(B), removing the text ``paragraph (b)'' 
wherever it appears and adding in its place the text ``paragraph (d)'', 
and adding a new sentence between the existing first and second 
sentences;
0
f. In paragraph (a)(3)(iii), removing the text ``paragraph (b)'' and 
adding in its place the text ``paragraph (d)'';
0
g. Redesignating paragraphs (a)(4) and (b) as paragraphs (c) and (d) 
and adding a new paragraph (b); and
0
h. Revising newly redesignated paragraph (d).
    The addition and revision read as follows:


Sec.  97.912   Texas SO2 Trading Program Supplemental Allowance Pool.

    (a) * * *
    (3) * * *
    (ii) * * *
    (B) * * * The Administrator will adjust the sources' allocations up 
or down by one allowance, starting with the largest allocation and 
continuing in descending order, as necessary to cause the sum of the 
sources' allocations to equal the total number of allowances in the 
Supplemental Allowance Pool available for allocation under paragraph 
(d) of this section that remain after any allocation under paragraph 
(a)(3)(i) of this section. * * *
* * * * *
    (b) For each control period in 2021 and thereafter, the 
Administrator will allocate Texas SO2 Trading Program 
allowances from the Texas SO2 Trading Program Supplemental 
Allowance Pool as follows:
    (1) For each control period, the Administrator will assign each 
Texas SO2 Trading Program unit to an affiliated ownership 
group reflecting the unit's ownership as of December 31 of the control 
period. The affiliated ownership group assignments for each control 
period will be as shown in Sec.  97.911(a)(1) except that the 
Administrator will revise the assignments, based on the information 
required to be submitted in accordance with Sec.  97.915(c) and any 
other information available to the Administrator, as necessary to 
reflect any ownership transfer resulting in a 50% or greater ownership 
share of a unit being held by a new owner that the Administrator 
determines is not affiliated with the previous holder of a 50% or 
greater ownership share of the unit.
    (2) No later than February 15, 2022 and each subsequent February 
15, the Administrator will review all the quarterly SO2 
emissions reports provided under Sec.  97.934(d) for each Texas 
SO2 Trading Program unit for the previous control period. 
The Administrator will identify each affiliated ownership group of 
Texas SO2 Trading Program units as of December 31 of such 
control period for which the total amount of emissions reported for the 
units in the group for that control period exceeds the total amount of 
allowances allocated to the units in the group for that control period 
under Sec.  97.911 and recorded under Sec.  97.921.
    (3) For each affiliated ownership group of Texas SO2 
Trading Program units identified under paragraph (b)(2) of this 
section, the Administrator will calculate the amount by which the total 
amount of reported emissions for that control period exceeds the total 
amount of allowances allocated for that control period under Sec.  
97.911 and recorded under Sec.  97.921.
    (4)(i) The Administrator will allocate and record allowances from 
the Supplemental Allowance Pool as follows:
    (A) If the total for all such affiliated ownership groups of the 
amounts calculated under paragraph (b)(3) of this section is less than 
or equal to the total number of allowances in the Supplemental 
Allowance Pool available for allocation under paragraph (d) of this 
section, then each such group's allocation of allowances from the 
Supplemental Allowance Pool shall equal to the amount calculated for 
the group under paragraph (b)(3) of this section.
    (B) If the total for all such affiliated ownership groups of the 
amounts calculated under paragraph (b)(3) of this section is greater 
than the total number of allowances in the Supplemental Allowance Pool 
available for allocation under paragraph (d) of this section, then the 
Administrator will calculate each such group's allocation of allowances 
from the Supplemental Allowance Pool by dividing the amount calculated 
under paragraph (b)(3) of this section for the group by the sum of the 
amounts calculated under paragraph (b)(3) of this section for all such 
groups, then multiplying by the number of allowances in the 
Supplemental Allowance Pool available for allocation under paragraph 
(d) of this section and rounding to the nearest allowance. The 
Administrator will adjust the groups' allocations up or down by one 
allowance, starting with the largest allocation and continuing in 
descending order, as necessary to cause the sum of the groups' 
allocations to equal the total number of allowances in the Supplemental 
Allowance Pool available for allocation under paragraph (d) of this 
section.
    (C) When an affiliated ownership group receives an allocation of 
allowances under paragraph (b)(4)(i)(A) or (B) of this section, each 
source in the group whose emissions during the control period for which 
allowances are being allocated exceed the amount of allowances 
allocated to the source under Sec.  97.911 and recorded under Sec.  
97.921 will receive a share of the group's allocation. The 
Administrator will compute each such source's share by dividing the 
amount of the source's emissions during the control period exceeding 
the source's allocation under Sec.  97.911 by the sum for all such 
sources of the amounts of the sources' emissions during the control 
period exceeding the sources' allocations under Sec.  97.911, then 
multiplying by the group's allocation under paragraph (b)(4)(i)(A) or 
(B) of this section and rounding to the nearest allowance. The 
Administrator will adjust the sources' allocations up or down by one 
allowance, starting with the largest allocation and continuing in 
descending order, as necessary to cause the sum of the sources' 
allocations to equal the group's allocation. The Administrator will 
then record the calculated allocations of allowances in the applicable 
sources' compliance accounts.
    (ii) Any unallocated allowances remaining in the Supplemental 
Allowance Pool after the allocations determined under paragraph 
(b)(4)(i) of this section will be maintained in the Supplemental 
Allowance Pool. These allowances will be available for allocation by 
the Administrator in subsequent control periods to the extent 
consistent with paragraph (d) of this section.
* * * * *
    (d) The total amount of allowances in the Supplemental Allowance 
Pool available for allocation for a control period is equal to the sum 
of the Supplemental Allowance Pool budget under Sec.  97.910(a)(2), any 
allowances from retired units pursuant to Sec.  97.911(a)(2) and from 
corrections pursuant to Sec.  97.911(c)(5), and any allowances 
maintained in the Supplemental Allowance Pool pursuant to paragraph 
(a)(3)(iii) or (b)(4)(ii) of this

[[Page 49218]]

section, provided that if the number of allowances in the Supplemental 
Allowance Pool exceeds the applicable limit for the control period 
under paragraph (d)(1) or (d)(2) of this section, then the 
Administrator may only allocate allowances up to such applicable limit.
    (1) For the control periods in 2019 and 2020, the total amount of 
allowances allocated from the Supplemental Allowance Pool for a control 
period may not exceed by more than 44,711 tons the sum of the 
Supplemental Allowance Pool budget under Sec.  97.910(a)(2) and any 
portion of the Texas SO2 Trading Program budget under Sec.  
97.910(a)(1) not otherwise allocated for that control period under 
Sec.  97.911(a)(1).
    (2) For each control period in 2021 and thereafter, the total 
amount of allowances allocated from the Supplemental Allowance Pool for 
a control period may not exceed the sum of the variability limit under 
Sec.  97.910(b) and any portion of the Texas SO2 Trading 
Program budget under Sec.  97.910(a)(1) not otherwise allocated for 
that control period under Sec.  97.911(a)(1).

0
8. Amend Sec.  97.913 by revising paragraph (c) to read as follows:


Sec.  97.913   Authorization of designated representative and alternate 
designated representative.

* * * * *
    (c) Except in this section, Sec.  97.902, and Sec. Sec.  97.914 
through 97.918, whenever the term ``designated representative'' (as 
distinguished from the term ``common designated representative'') is 
used in this subpart, the term shall be construed to include the 
designated representative or any alternate designated representative.


Sec.  97.915  [Amended]

0
9. Amend Sec.  97.915 paragraph (d) introductory text and paragraph 
(d)(1) by removing the text ``(see Sec.  97.904(b))''.

0
10. Amend Sec.  97.920 by:
0
a. Revising the section heading;
0
b. Redesignating paragraphs (b) through (d) as paragraphs (c) through 
(e) and adding a new paragraph (b);
0
c. In newly redesignated paragraph (c)(2)(i) introductory text, 
removing the text ``paragraph (b)(1)'' and adding in its place the text 
``paragraph (c)(1)'';
0
d. In newly redesignated paragraph (c)(2)(ii), removing the text 
``paragraph (b)(5)'' and adding in its place the text ``paragraph 
(c)(5)'';
0
e. In newly redesignated paragraphs (c)(3)(i) and (ii), removing the 
text ``paragraph (b)(1)'' and adding in its place the text ``paragraph 
(c)(1)'';
0
f. In newly redesignated paragraph (c)(4)(i), removing the text 
``paragraph (b)(1)'' wherever it appears and adding in its place the 
text ``paragraph (c)(1)'';
0
g. In newly redesignated paragraph (c)(4)(ii), removing the text 
``paragraph (b)(4)(i)'' and adding in its place the text ``paragraph 
(c)(4)(i)'';
0
h. In newly redesignated paragraph (c)(5)(iii) introductory text and 
paragraph (c)(5)(iii)(C), removing the text ``paragraph (b)(5)(i)'' and 
adding in its place the text ``paragraph (c)(5)(i)'';
0
i. In newly redesignated paragraph (c)(5)(iii)(D), removing the text 
``97.920(b)(5)(iv)'' and adding in its place the text 
``97.920(c)(5)(iv)'';
0
j. In newly redesignated paragraph (c)(5)(iii)(E), removing the text 
``97.920(b)(5)(iv),'' and adding in its place the text 
``97.920(c)(5)(iv),'', and removing the text ``97.920(b)(5)'' and 
adding in its place the text ``97.920(c)(5)'';
0
k. In newly redesignated paragraph (c)(5)(iv), removing the text 
``paragraph (b)(5)(iii)'' and adding in its place the text ``paragraph 
(c)(5)(iii)'';
0
l. In newly redesignated paragraph (c)(5)(v), removing the text 
``paragraph (b)(5)(iii)(D)'' and adding in its place the text 
``paragraph (c)(5)(iii)(D)'', and removing the text ``paragraph 
(b)(5)(iv)'' and adding in its place the text ``paragraph (c)(5)(iv)'';
0
m. In newly redesignated paragraph (d), removing the text ``paragraphs 
(a) and (b)'' and adding in its place the text ``paragraphs (a), (b), 
and (c)''; and
0
n. In newly redesignated paragraph (e), removing the text ``paragraphs 
(b)(2)(ii) and (b)(5)'' and adding in its place the text ``paragraphs 
(c)(2)(ii) and (c)(5)''.
    The revision and addition read as follows:


Sec.  97.920   Establishment of compliance accounts, assurance 
accounts, and general accounts.

* * * * *
    (b) Assurance accounts. The Administrator will establish assurance 
accounts for certain owners and operators and States in accordance with 
Sec.  97.925(b)(3).
* * * * *

0
11. Amend Sec.  97.921 by:
0
a. In paragraph (a), removing the second sentence;
0
b. Revising paragraphs (b) and (c);
0
c. Removing and reserving paragraph (d); and
0
d. Adding paragraph (f).
    The revisions and addition read as follows:


Sec.  97.921   Recordation of Texas SO2 Trading Program allowance 
allocations.

* * * * *
    (b) By July 1, 2019, the Administrator will record in each Texas 
SO2 Trading Program source's compliance account the Texas 
SO2 Trading Program allowances allocated to the Texas 
SO2 Trading Program units at the source in accordance with 
Sec.  97.911(a) for the control period in the fourth year after the 
year of the applicable recordation deadline under this paragraph, 
unless provided otherwise in the Administrator's approval of a SIP 
revision replacing the provisions of this subpart.
    (c) By February 15, 2020, and February 15 of each year thereafter, 
the Administrator will record in each Texas SO2 Trading 
Program source's compliance account the allowances allocated from the 
Texas SO2 Trading Program Supplemental Allowance Pool in 
accordance with Sec.  97.912 for the control period in the year of the 
applicable recordation deadline under this paragraph, unless provided 
otherwise in the Administrator's approval of a SIP revision replacing 
the provisions of this subpart.
* * * * *
    (f) Notwithstanding paragraphs (a) and (b) of this section, with 
respect to the Texas SO2 Trading Program allowances 
allocated to Newman Unit **5 in accordance with Sec.  97.911(a) for the 
control periods in 2019, 2020, 2021, 2022, 2023, and 2024, the 
Administrator will record the allowances in the source's compliance 
account by December 31, 2020, unless provided otherwise in the 
Administrator's approval of a SIP revision replacing the provisions of 
this subpart.

0
12. Add Sec.  97.925 to read as follows:


Sec.  97.925  Compliance with Texas SO2 Trading Program assurance 
provisions.

    (a) Availability for deduction. Texas SO2 Trading 
Program allowances are available to be deducted for compliance with the 
Texas SO2 Trading Program assurance provisions for a control 
period in a given year by the owners and operators of a group of one or 
more Texas SO2 Trading Program sources and units only if the 
Texas SO2 Trading Program allowances:
    (1) Were allocated for a control period in a prior year or the 
control period in the given year or in the immediately following year; 
and
    (2) Are held in the assurance account, established by the 
Administrator for such owners and operators of such group of Texas 
SO2 Trading Program sources and units under paragraph (b)(3) 
of this section, as of the deadline established in paragraph (b)(4) of 
this section.

[[Page 49219]]

    (b) Deductions for compliance. The Administrator will deduct Texas 
SO2 Trading Program allowances available under paragraph (a) 
of this section for compliance with the Texas SO2 Trading 
Program assurance provisions for a control period in a given year in 
accordance with the following procedures:
    (1) By June 1, 2022 and June 1 of each year thereafter, the 
Administrator will:
    (i) Calculate the total SO2 emissions from all Texas 
SO2 Trading Program units at Texas SO2 Trading 
Program sources during the control period in the year before the year 
of this calculation deadline and the amount, if any, by which such 
total SO2 emissions exceed the State assurance level as 
described in Sec.  97.906(c)(2)(iii).
    (ii) [Reserved]
    (2) If the calculations under paragraph (b)(1)(i) of this section 
indicate that the total SO2 emissions from all Texas 
SO2 Trading Program units at Texas SO2 Trading 
Program sources during such control period exceed the State assurance 
level as described in Sec.  97.906(c)(2)(iii):
    (i) [Reserved]
    (ii) By August 1 immediately after the deadline for the 
calculations under paragraph (b)(1)(i) of this section, the 
Administrator will calculate, for such control period and each common 
designated representative for such control period for a group of one or 
more Texas SO2 Trading Program sources and units, the common 
designated representative's share of the total SO2 emissions 
from all Texas SO2 Trading Program units at Texas 
SO2 Trading Program sources, the common designated 
representative's assurance level, and the amount (if any) of Texas 
SO2 Trading Program allowances that the owners and operators 
of such group of sources and units must hold in accordance with the 
calculation formula in Sec.  97.906(c)(2)(i). By each such August 1, 
the Administrator will promulgate a notice of data availability of the 
results of the calculations under this paragraph and paragraph 
(b)(1)(i) of this section, including separate calculations of the 
SO2 emissions from each Texas SO2 Trading Program 
source.
    (iii) The Administrator will provide an opportunity for submission 
of objections to the calculations referenced by the notice of data 
availability required in paragraph (b)(2)(ii) of this section.
    (A) Objections shall be submitted by the deadline specified in such 
notice and shall be limited to addressing whether the calculations 
referenced in the notice required under paragraph (b)(2)(ii) of this 
section are in accordance with Sec.  97.906(c)(2)(iii), Sec. Sec.  
97.906(b) and 97.930 through 97.935, the definitions of ``common 
designated representative'', ``common designated representative's 
assurance level'', and ``common designated representative's share'' in 
Sec.  97.902, and the calculation formula in Sec.  97.906(c)(2)(i).
    (B) The Administrator will adjust the calculations to the extent 
necessary to ensure that they are in accordance with the provisions 
referenced in paragraph (b)(2)(iii)(A) of this section. By October 1 
immediately after the promulgation of such notice, the Administrator 
will promulgate a notice of data availability of the calculations 
incorporating any adjustments that the Administrator determines to be 
necessary and the reasons for accepting or rejecting any objections 
submitted in accordance with paragraph (b)(2)(iii)(A) of this section.
    (3) The Administrator will establish one assurance account for each 
set of owners and operators referenced, in the notice of data 
availability required under paragraph (b)(2)(iii)(B) of this section, 
as all of the owners and operators of a group of Texas SO2 
Trading Program sources and units having a common designated 
representative for such control period and as being required to hold 
Texas SO2 Trading Program allowances.
    (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 Texas SO2 
Trading Program sources and Texas SO2 Trading Program units 
under paragraph (b)(3) of this section a total amount of Texas 
SO2 Trading Program allowances, available for deduction 
under paragraph (a) of this section, equal to the amount such owners 
and operators are required to hold with regard to such sources and 
units as calculated by the Administrator and referenced in such notice.
    (ii) Notwithstanding the allowance-holding deadline specified in 
paragraph (b)(4)(i) of this section, if November 1 is not a business 
day, then such allowance-holding deadline shall be midnight of the 
first business day thereafter.
    (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.  97.923, of Texas 
SO2 Trading Program 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 Texas SO2 
Trading Program sources and Texas SO2 Trading Program units 
established under paragraph (b)(3) of this section, the amount of Texas 
SO2 Trading Program allowances available under paragraph (a) 
of this section that the owners and operators are required to hold with 
regard to such sources and units 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 
amounts of Texas SO2 Trading Program allowances that the 
owners and operators are required to hold in accordance with Sec.  
97.906(c)(2)(i) for such control period shall continue to be such 
amounts 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 amounts of Texas 
SO2 Trading Program allowances that owners and operators are 
required to hold in accordance with the calculation formula in Sec.  
97.906(c)(2)(i) for such control period with regard to the Texas 
SO2 Trading Program sources and Texas SO2 Trading 
Program units 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) [Reserved]
    (iii) If the revised data are used to recalculate, in accordance 
with paragraph (b)(6)(i) of this section, the amount of Texas 
SO2 Trading Program allowances that the owners and operators 
are required to hold for such control period with regard to the Texas

[[Page 49220]]

SO2 Trading Program sources and Texas SO2 Trading 
Program units involved--
    (A) Where the amount of Texas SO2 Trading Program 
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 the additional amount of Texas SO2 Trading 
Program allowances in the assurance account established by the 
Administrator for the appropriate Texas SO2 Trading Program 
sources and Texas SO2 Trading Program units under paragraph 
(b)(3) of this section. The owners' and operators' failure to hold such 
additional amount, 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 amount, as required, as of the new deadline shall 
be a violation of the Clean Air Act. Each Texas SO2 Trading 
Program allowance 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.
    (B) For the owners and operators for which the amount of Texas 
SO2 Trading Program 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 Texas SO2 Trading Program 
allowances were transferred by such owners and operators for such 
control period to the assurance account established by the 
Administrator for the appropriate Texas SO2 Trading Program 
sources and Texas SO2 Trading Program units under paragraph 
(b)(3) of this section, a total amount of the Texas SO2 
Trading Program allowances held in such assurance account equal to the 
amount of the decrease. If Texas SO2 Trading Program 
allowances were transferred to such assurance account from more than 
one account, the amount of Texas SO2 Trading Program 
allowances recorded in each such transferor account will be in 
proportion to the percentage of the total amount of Texas 
SO2 Trading Program allowances transferred to such assurance 
account for such control period from such transferor account.
    (C) Each Texas SO2 Trading Program allowance held under 
paragraph (b)(6)(iii)(A) of this section as a result of recalculation 
of requirements under the Texas SO2 Trading Program 
assurance provisions for such control period must be a Texas 
SO2 Trading Program allowance allocated for a control period 
in a year before or the year immediately following, or in the same year 
as, the year of such control period.


Sec.  97.926   [Amended]

0
13. Amend Sec.  97.926 paragraph (b) by adding the text ``Sec.  
97.925,''after the text ``Sec.  97.924,''.


Sec.  97.928   [Amended]

0
14. Amend Sec.  97.928 paragraph (b) by removing the text ``a 
compliance account,'' and adding in its place the text ``a compliance 
account or an assurance account,''.


Sec.  97.930   [Amended]

0
15. Amend Sec.  97.930 by:
0
a. In paragraph (b) introductory text, removing the colon and adding in 
its place the text ``January 1, 2019.'';
0
b. Removing and reserving paragraphs (b)(1) and (2); and
0
c. In paragraph (b)(3) introductory text, removing the text ``the 
applicable deadline under paragraph (b)(1) or (2) of this section'' and 
adding in its place the text ``January 1, 2019''.


Sec.  97.931  [Amended]

0
16. In Sec.  97.931 amend paragraph (d)(3) introductory text by 
removing in the last sentence the word ``with'' after the text ``is 
replaced by''.


Sec.  97.934   [Amended]

0
17. Amend Sec.  97.934 by:
0
a. In paragraph (d)(1) introductory text, removing the text ``the later 
of:'' and adding in its place the text ``the calendar quarter covering 
January 1, 2019 through March 31, 2019.''; and
0
b. Removing paragraphs (d)(1)(i) and (ii).

[FR Doc. 2020-14408 Filed 8-11-20; 8:45 am]
BILLING CODE 6560-50-P


