[Federal Register Volume 76, Number 5 (Friday, January 7, 2011)]
[Proposed Rules]
[Pages 1109-1121]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-109]
[[Page 1109]]
=======================================================================
-----------------------------------------------------------------------
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Parts 51, 52, 72, 78, and 97
[EPA-HQ-OAR-2009-0491; FRL-9249-6]
RIN 2060-AP50
Notice of Data Availability for Federal Implementation Plans To
Reduce Interstate Transport of Fine Particulate Matter and Ozone:
Request for Comment on Alternative Allocations, Calculation of
Assurance Provision Allowance Surrender Requirements, New-Unit
Allocations in Indian Country, and Allocations by States
AGENCY: Environmental Protection Agency (EPA).
ACTION: Notice of data availability (NODA) for the proposed Transport
Rule and request for comment.
-----------------------------------------------------------------------
SUMMARY: EPA has supplemented the Transport Rule docket with additional
information relevant to the rulemaking, including unit-level
SO2 Group 1 and Group 2, NOX annual, and
NOX ozone season allowances for existing units calculated
using two alternative methodologies and data supporting those
calculations. This NODA requests public comment on these two
alternative allocation methodologies for existing units, on the unit-
level allocations calculated using those alternative methodologies, on
the data supporting the calculations, and on any resulting implications
for the proposed assurance provisions. This NODA also requests comment
on information about: An alternative approach to calculation of
assurance provision allowance surrender requirements; allocations for
new units locating in Indian country in the proposed Transport Rule
region in the future; and provisions for states to submit State
Implementation Plans providing for State allocation of allowances in
the proposed Transport Rule trading programs.
DATES: Comments on this NODA must be received on or before February 7,
2011.
Please refer to SUPPLEMENTARY INFORMATION for additional
information on submitting comments.
ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-
OAR-2009-0491, by one of the following methods:
http://www.regulations.gov. Follow the online instructions
for submitting comments. Attention Docket ID No. EPA-HQ-OAR-2009-0491.
Fax: (202) 566-9744. Attention Docket ID No. EPA-HQ-OAR-
2009-0491.
Mail: EPA Docket Center, EPA West (Air Docket), Attention
Docket ID No. EPA-HQ-OAR-2009-0491, U.S. Environmental Protection
Agency, Mailcode: 2822T, 1200 Pennsylvania Avenue, NW., Washington, DC
20460. Please include 2 copies. In addition, please mail a copy of your
comments on the information collection provisions to the Office of
Information and Regulatory Affairs, Office of Management and Budget
(OMB), Attn: Desk Officer for EPA, 725 17th Street, NW., Washington, DC
20503.
Hand Delivery: U.S. Environmental Protection Agency, EPA
West (Air Docket), 1301 Constitution Avenue, NW., Room 3334,
Washington, DC 20004, Attention Docket ID No. EPA-HQ-OAR-2009-0491.
Such deliveries are only accepted during the Docket's normal hours of
operation, and special arrangements should be made for deliveries of
boxed information.
Instructions: Direct your comments to Docket ID No. EPA-HQ-OAR-
2009-0491. EPA's policy is that all comments received will be included
in the public docket without change and may be made available online at
http://www.regulations.gov, including any personal information
provided, unless the comment includes information claimed to be
Confidential Business Information (CBI) or other information whose
disclosure is restricted by statute. Do not submit information that you
consider to be CBI or otherwise protected through http://www.regulations.gov or e-mail. The http://www.regulations.gov Web site
is an ``anonymous access'' system, which means EPA will not know your
identity or contact information unless you provide it in the body of
your comment. If you send an e-mail comment directly to EPA without
going through http://www.regulations.gov, your e-mail address will be
automatically captured and included as part of the comment that is
placed in the public docket and made available on the Internet. If you
submit an electronic comment, EPA recommends that you include your name
and other contact information in the body of your comment and with any
disk or CD-ROM you submit. If EPA cannot read your comment due to
technical difficulties and cannot contact you for clarification, EPA
may not be able to consider your comment. Electronic files should avoid
the use of special characters, avoid any form of encryption, and be
free of any defects or viruses. For additional information about EPA's
public docket, visit the EPA Docket Center homepage at http://www.epa.gov/epahome/dockets.htm.
Docket: All documents in the docket are listed in the http://www.regulations.gov index. Although listed in the index, some
information is not publicly available, e.g., CBI or other information
whose disclosure is restricted by statute. Certain other material, such
as copyrighted material, will be publicly available only in hard copy.
Publicly available docket materials are available either electronically
in http://www.regulations.gov or in hard copy at the Air and Radiation
Docket and Information Center, EPA/DC, EPA East Building, Room 3334,
1301 Constitution Ave., NW., Washington, DC. The Public Reading Room is
open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding
legal holidays. The telephone number for the Public Reading Room is
(202) 566-1744, and the telephone number for the Air Docket is (202)
566-1742.
FOR FURTHER INFORMATION CONTACT: For questions regarding this Notice of
Data Availability and the additional allocations information placed in
the docket contact Brian Fisher, Clean Air Markets Division, USEPA
Headquarters, Ariel Rios Building, 1200 Pennsylvania Avenue, NW., Mail
Code: 6204J, Washington, DC 20460; telephone number: (202) 343-9633;
fax number: (202) 343-2359; e-mail [email protected].
SUPPLEMENTARY INFORMATION: Detailed background information describing
the proposed rulemaking may be found in a previously published notice:
Federal Implementation Plans to Reduce Interstate Transport of Fine
Particulate Matter and Ozone (proposed Transport Rule); Proposed Rule,
75 FR 45210; August 2, 2010.
The information placed in the docket is also available for public
review on the Web site for this rulemaking at http://www.epa.gov/airtransport/. If additional relevant supporting information becomes
available in the future, EPA will place this information in the docket
and make it available for public review on this Web site. This NODA
does not extend the comment period for the proposed Transport Rule,
which ended on October 1, 2010. This NODA also does not extend the
comment period for the two NODAs supporting the proposed Transport Rule
that were previously published in the Federal Register. The comment
period for the NODA published September 1, 2010 closed on October 15,
2010. The comment period for the NODA published October 27, 2010 closed
on November 26, 2010.
[[Page 1110]]
I. Additional Information on Submitting Comments
A. How can I help EPA ensure that my comments are reviewed quickly?
To expedite review of your comments by Agency staff, you are
encouraged to send a separate copy of your comments, in addition to the
copy you submit to the official docket, to Brian Fisher, Clean Air
Markets Division, USEPA Headquarters, Ariel Rios Building, 1200
Pennsylvania Avenue, NW., Mail Code: 6204J, Washington, DC 20460;
telephone number: (202) 343-9633; fax number: (202) 343 2359; e-mail
address [email protected].
B. What should I consider as I prepare my comments for EPA?
1. Submitting CBI. Do not submit this information to EPA through
EDOCKET, regulations.gov or e-mail. Clearly mark the part or all of the
information that you claim to be CBI. For CBI information in a disk or
CD ROM that you mail to EPA, mark the outside of the disk or CD ROM as
CBI and then identify electronically within the disk or CD ROM the
specific information that is claimed as CBI. In addition to one
complete version of the comment that includes information claimed as
CBI, a copy of the comment that does not contain the information
claimed as CBI must be submitted for inclusion in the public docket.
Information so marked will not be disclosed except in accordance with
procedures set forth in 40 CFR part 2. Send or deliver information
identified as CBI only to the following address: Gene Sun, Clean Air
Markets Division, USEPA Headquarters, Ariel Rios Building, 1200
Pennsylvania Avenue, NW., Mail Code: 6204J, Washington, DC 20460;
telephone number: (202) 343-9119; fax number: (202) 343-2359.
2. Tips for Preparing Your Comments. When submitting comments,
remember to: i. Identify the NODA by docket number and other
identifying information (subject heading, Federal Register date and
page number).
ii. Follow directions--The Agency may ask you to respond to
specific questions or organize comments by referencing a Code of
Federal Regulations (CFR) part or section number.
iii. Explain your comments, why you agree or disagree; suggest
alternatives and substitute language for your requested changes.
iv. Describe any assumptions and provide any technical information
and/or data that you used.
v. If you estimate potential costs or burdens, explain how you
arrived at your estimate in sufficient detail to allow for it to be
reproduced.
vi. Provide specific examples to illustrate your concerns, and
suggest alternatives.
vii. Explain your views as clearly as possible, avoiding the use of
profanity or personal threats.
viii. Make sure to submit your comments by the comment period
deadline identified.
II. Web Site for Rulemaking Information
The EPA has previously established a Web site for the proposed
rulemaking at http://www.epa.gov/airtransport. The Web site includes
the proposed rulemaking actions and other related information that the
public may find useful in addition to a link to this NODA.
III. What is this Notice of Data Availability?
In the Transport Rule Notice of Proposed Rulemaking (NPR), EPA
proposed that, until states submit and the Administrator approves State
Implementation Plans (SIPs), Transport Rule Federal Implementation
Plans (FIPs) would provide backstops to prohibit emissions in upwind
states that significantly contribute to nonattainment or interfere with
maintenance of certain National Ambient Air Quality Standards (NAAQS)
in downwind states in compliance with section 110(a)(2)(D)(i)(I) of the
Clean Air Act (CAA). This Notice of Data Availability (NODA) provides
an opportunity for public comment on five issues related to the
proposed Transport Rule and on data relevant to those issues. The
relevant data has been placed in the rulemaking docket (Docket ID No.
EPA-HQ-OAR-2009-0491) and on the Web at http://www.epa.gov/airtransport. Specifically, EPA is providing an opportunity for
additional public comment on two methodologies for allocating
allowances under the remedy proposed by EPA in the proposed Transport
Rule and on supplemental data and information concerning the two
allocation methodologies. EPA is also providing an opportunity for
comment on: The implications of the alternative allocation
methodologies for the proposed assurance provisions; an alternative
approach to calculation of assurance provision allowance surrender
requirements at the designated representative (DR) level; a methodology
for allocating allowances to new units that choose to locate in Indian
country in the Transport Rule region; and possible options for states
wishing to submit State Implementation Plans (SIPs) providing for State
allocation of allowances in the proposed Transport Rule trading
programs.
The first issue on which EPA is soliciting comment relates to
allowance allocations under the proposed limited interstate trading
remedy. In the Transport Rule NPR, EPA proposed FIPs with a limited
interstate trading remedy and requested comment on alternative remedies
including intrastate trading and direct control. To implement the
proposed limited interstate trading remedy, EPA would, among other
things, require sources to hold emissions allowances equal to their
emissions of certain air pollutants during each compliance period.
Because EPA proposed FIPs in the Transport Rule, EPA also proposed a
methodology for distributing (allocating) the allowances to individual
existing units based on a combination of adjusted historic and
projected emissions data and requested comment on possible alternative
allocation methodologies.
This NODA describes two specific alternative allocation
methodologies that would potentially be used to allocate allowances
under FIPs in the final Transport Rule. These alternatives rely largely
on historic heat input data to determine unit-level allocations. The
NODA provides the underlying data, calculations, and resulting unit-
level allocations obtained when each alternative is applied to the
State budgets in the proposed Transport Rule. These alternative
allocation methodologies could be used to implement the proposed
interstate trading remedy or the intrastate trading remedy set forth in
the proposed Transport Rule. In developing the final Transport Rule,
EPA will consider these alternative allocation methodologies, as well
as the allocation methodologies presented in the proposed Transport
Rule. Further, issuance of this NODA does not preclude EPA from
finalizing any of the remedies in the Transport Rule proposal,
including limited interstate trading, intrastate trading, or direct
control.
EPA received numerous public comments on the methodology in the
proposed Transport Rule for allocating SO2 Group 1,
SO2 Group 2, NOX annual, and NOX ozone
season allowances to existing units. Many commenters suggested
alternative allocation approaches. A number of commenters requested
that EPA publish allocations and underlying data for any potential
alternative allocation methodologies before issuing a final Transport
Rule. The public comments received are available in the docket for the
Transport
[[Page 1111]]
Rule (Docket ID No. EPA-HQ-OAR-2009-0491).
This NODA describes the two alternative allocation methodologies
for existing units. Classification of units as existing units is
discussed in section IV in this NODA. Units that are not classified as
existing units would receive allocations of allowances based on the
provisions for new unit allocations in the proposed Transport Rule.
Note that the proposed Transport Rule does not discuss allocations to
new units in Indian country; see section VII in this NODA for
information on a potential allocation methodology for such units.
The alternative methodologies for existing unit allocations
described in this NODA emerge from comments that EPA received during
the comment period on the proposed Transport Rule. This NODA explains
the two alternative allocation methodologies and identifies the unit-
level data that serve as inputs for these alternative methodologies and
the resulting existing-unit-level allocations obtained when the
methodologies are applied to the State budgets provided in the
proposal. Section V in this NODA lays out key issues that EPA
encourages commenters to consider when submitting comments on the
alternative allocation methodologies.
The unit-level allocations in this NODA are based on State
emissions budgets in the proposed Transport Rule. It is important to
note that final State budgets may differ from the proposed budgets
because EPA is still in the process of updating its emissions
inventories and modeling in response to public comments, including
comments on the Integrated Planning Model (IPM). The final budgets will
be based on the updated inventories and modeling. Thus, unit-level
allocations in this NODA provide an indication of the proportional
share of a State's budget that would be allocated to individual
existing units if the alternative methodologies would be used. Any
final allocations in the final Transport Rule would be based on the
final State budgets and allocation methodology employed in the final
rule. Because the unit-level allocations in the proposed Transport Rule
and the unit-level allocations in this NODA are based on the same State
budgets (i.e., the budgets in the proposed Transport Rule), this
approach allows commenters to compare how the allocation methodologies
impact the distribution of allowances within a state.
This NODA only provides illustrative allocations to potential
existing Transport Rule units. For purposes of this NODA, potential
existing Transport Rule units are units that potentially meet the
applicability criteria in the Transport Rule NPR (proposed Sec. Sec.
97.404, 97.504, 97.604, and 97.704) and began commercial operation
prior to January 1, 2009. Any unit that meets the proposed
applicability criteria and began commercial operation on or after
January 1, 2009 would be considered a new unit and receive allocations
through the new unit set-aside described in the Transport Rule NPR
because the unit would not have a full year of baseline data available
at the time the Agency anticipates determining allocations to existing
units. Such a new unit would not be reflected in the list of potential
existing units for which illustrative allocations are presented in this
NODA.
This NODA presents allocations based on the existing-unit portions
of the state budgets under the proposed Transport Rule. In the
proposal, the existing-unit portion of a state budget would be
calculated as 97% of the total state budget in order to allot 3% to the
new unit set-aside. EPA recognizes that the revised classification of
units as existing units presented with these alternative allocation
methodologies might affect the methodology used in the proposal that
would establish the size of the new unit set-aside. EPA will consider
comments submitted during this NODA's comment period when finalizing
FIP allocations in the final Transport Rule and will address the issue
of any effect of the finalized allocation methodology on the size of
the new unit set-aside.
This NODA also requests public comment on four other issues.
Specifically, the NODA requests comment on: an alternative approach to
the calculation of assurance provision allowance surrender requirements
(calculation at the DR level); the implications that the alternative
allocation methods might have for the proposed assurance provisions;
allocations to any new units that choose to locate in Indian country in
a proposed Transport Rule state; and provisions for a state to
participate in the Transport Rule trading programs through submission
of a SIP (referred to as a full SIP) or to determine unit-level
allocations under a FIP through submission of a SIP revision addressing
only allocations (referred to as an abbreviated SIP).
EPA has placed in the docket for the proposed Transport Rule
(Docket ID No. EPA-HQ-OAR-2009-0491) additional information relevant to
the rulemaking, including illustrative unit-level allocations based on
the state budgets provided in the Transport Rule proposal and
supporting data discussed in this NODA. The information placed in the
docket is also available for public review on the Web site for this
rulemaking at http://www.epa.gov/airtransport.
It is also important to note that EPA is neither proposing any
changes to nor accepting comment on the approach that will be used to
identify each state's significant contribution and interference with
maintenance and each state's emissions budget. EPA took comment on this
approach and the resulting state budgets in the proposed Transport
Rule. EPA also took comment on related modeling and emissions
inventories in two subsequent NODAs (75 FR 53613; September 1, 2010,
and 75 FR 66055; October 27, 2010).
For example, EPA is accepting comment on the alternative allowance
allocation methodologies presented in this NODA, but not on whether EPA
should use a remedy that requires the allocation of allowances. The
allowances that are allocated to individual units are a tool that would
be used to implement two of the remedies discussed in the proposed
Transport Rule--the proposed limited interstate trading remedy and the
alternative intrastate trading remedy; the allocation methodologies
detailed in this NODA are simply variations on approaches for
distributing those allowances to individual units.
Similarly, while EPA is accepting comment on discrete issues
relating to implementation of the assurance provisions, EPA is not
accepting comments on the need to have assurance provisions. The EPA
took comment on this in the proposed Transport Rule and is now only
requesting comment on discrete implementation issues concerning the
assurance provisions. In particular, EPA is requesting comment on the
implications that the alternative allocations methods might have for
the assurance provisions and on the alternative of calculating
assurance provision surrender on a DR-by-DR, rather than an owner-by-
owner basis. This latter alternative of implementing the assurance
provisions on a DR-by-DR basis is simply a variation in implementation
of the proposed assurance provisions.
In summary, this NODA provides the public with the opportunity to
comment on:
a. The two alternative allocation methodologies (described in
section V in this NODA), including the major components of each
alternative (e.g., the
[[Page 1112]]
baseline period and formulas to be used in calculating allocations);
b. The underlying unit-level data and resulting allowance
allocations for the alternative allocation methodologies based on the
proposal's state budgets; and
c. The list of units used in applying the alternative allocation
methodologies, including the classification of ``existing'' units.
This NODA also provides the public with the opportunity to comment
on:
The alternative of implementing the proposed assurance
provisions on a DR-by-DR, rather than owner-by-owner basis (section VI
in this NODA);
The implications that the alternative allocation
methodologies might have concerning the proposed assurance provisions
of the Transport Rule and the reasonableness of using the proposed
assurance provisions with these alternative allocation methodologies;
Information regarding unit-level allowance allocations for
any new units that choose to locate in Indian country in the proposed
Transport Rule region in the future (section VII in this NODA); and
Information regarding provisions for a state in the
proposed Transport Rule region to participate in the Transport Rule
trading programs through submission of a full SIP or to determine the
unit-level allocations under a FIP through submission of an abbreviated
SIP addressing only allocations (section VIII in this NODA).
During the comment period for this NODA, EPA will accept comments
only on the issues explicitly addressed in this NODA. EPA is not
requesting, and will not consider, comments on other aspects of the
proposed Transport Rule (such as determinations concerning states'
significant contribution and interference with maintenance and state
budgets). EPA is not extending the comment period of the proposed
Transport Rule, which closed on October 1, 2010. EPA also is not
extending the comment period of the NODA published September 1, 2010,
which closed on October 15, 2010, or the comment period of the NODA
published on October 27, 2010, which closed on November 26, 2010.
IV. What are the sources of data in this NODA?
A. List of Potential Existing Transport Rule Units
Under the proposed Transport Rule, a covered Transport Rule unit is
generally any stationary, fossil-fuel-fired boiler or stationary,
fossil-fuel-fired combustion turbine located in a proposed Transport
Rule state and serving at any time, since the later of November 15,
1990 or the start-up of the unit's combustion device, a generator with
a nameplate capacity greater than 25 MWe producing electricity for
sale. The proposed Transport Rule would exclude certain cogeneration
units and solid waste incineration units from being covered Transport
Rule units.
This NODA provides for comment on unit-level allocations (based on
the budgets in the proposed Transport Rule) to potential existing
covered units. For purposes of this NODA, a potential existing unit is
assumed to be a unit that would potentially meet the proposed
applicability criteria (i.e., the criteria in proposed Sec. Sec.
97.404, 97.504, 97.604, and 97.704 in the proposed Transport Rule) for
covered units and that commenced commercial operation prior to January
1, 2009. This cutoff date was chosen for existing units because it
assured that at least 1 full year of historic data would be available
to determine each existing unit's allocation. This NODA contains a list
of, and sets forth allocations under the two alternative methodologies
to, units that potentially meet the covered and existing unit criteria
discussed above based on EPA's best available data.
To identify the potential existing Transport Rule units, EPA relied
largely on data reported to EPA. To develop the list of potential
existing Transport Rule units, EPA first included any fossil-fuel-fired
unit serving a generator greater than 25 MWe producing electricity for
sale that is in a proposed Transport Rule state and on line prior to
January 1, 2009 and that reported emissions data in 2010 under at least
one of the following ongoing EPA trading programs: Clean Air Interstate
Rule (CAIR) NOX or CAIR SO2 annual trading
program, Acid Rain Program (ARP), and CAIR NOX ozone Season
in Massachusetts, Connecticut, or Arkansas. Data reported to EPA under
the CAIR and ARP programs meets the requirements of part 75 and has
been certified as to its accuracy and completeness by the source's
designated representative.
Next, EPA supplemented the list of units by using data from the
Integrated Planning Model (IPM) v.4.10 to identify potential existing
Transport Rule units that were not included in emissions data reported
to EPA. Specifically, IPM's National Electric Energy Data System
(NEEDS) was used to identify and obtain data for a subset of fossil-
fuel-fired units serving generators greater than 25 MWe producing
electricity for sale that are in a proposed Transport Rule state and
were not reporting under one of the aforementioned ongoing EPA trading
programs. NEEDS is a representation of all units capable of supplying
electricity to the U.S. electric grid. This subset of units identified
through NEEDS was then screened to remove units that were not potential
existing Transport Rule units and thus not eligible to obtain
allocations under one of the two alterative allocation methodologies
discussed in this NODA.
In particular, if the unit was retired or in cold storage in 2010
or is a steam turbine at a combined cycle (CC) plant, then it was not
included as a unit in the list of potential existing Transport Rule
units.\1\ The remaining units in this subset of units were added to the
list. For instance, there were units in Nebraska, Kansas, and Oklahoma
that were identified through NEEDS as being potential existing
Transport Rule units that were not currently reporting under one or
more of the aforementioned ongoing EPA trading programs because the
units were not ARP units and were not in a CAIR state. Finally, a small
number of units were added to or removed from the list based on comment
and supporting data previously submitted to the EPA during the comment
period on the proposed Transport Rule by the unit owner or operator.
---------------------------------------------------------------------------
\1\ In NEEDS, the combustion turbine and steam turbine
associated with a single CC plant are generally represented as two
separate generating units. The steam turbine at a CC does not
combust fuel, though, and should not be included in the list of
potential existing Transport Rule units.
---------------------------------------------------------------------------
As described above, the list of potential existing Transport Rule
units is based on EPA and NEEDS data. Units identified using the EPA
and NEEDS databases were included in the list of potential existing
Transport Rule units if they were in one of the following states
covered by the proposed Transport Rule: Arkansas, Alabama, Connecticut,
Delaware, District of Columbia, Florida, Georgia, Illinois, Iowa,
Indiana, Kansas, Kentucky, Louisiana, Maryland, Massachusetts,
Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Jersey, New
York, North Carolina, Oklahoma, Ohio, Pennsylvania, South Carolina,
Tennessee, Texas, Virginia, West Virginia, and Wisconsin.
EPA notes that inclusion of a unit in, or exclusion of a unit from,
the list of potential existing Transport Rule units presented in this
NODA reflects only a preliminary assessment of the applicability of the
proposed Transport Rule and in no way suggests that EPA has made a
determination about the
[[Page 1113]]
applicability of the proposed Transport Rule to any unit. As discussed
above, the list of units developed for this NODA enables EPA to
calculate illustrative allowance allocations for potential existing
units based on the alternative methodologies presented. Moreover, this
list may be used by EPA to calculate unit-level allocations in the
final Transport Rule. While allocations calculated for the final
Transport Rule would be based on the best available data provided to
EPA by the time of the calculation, the applicability of the final
Transport Rule to an individual unit would be determined based on all
relevant data, whether or not EPA would have such data at the time that
allocations would be calculated. In fact, because any list of units
developed for purposes of allowance allocation may not be entirely
consistent with applicability determinations made in the future, the
proposed Transport Rule (proposed Sec. Sec. 97.411(c), 97.511(c),
97.611(c), and 97.711(c)) would establish procedures to be applied when
the Administrator would determine that a unit allocated allowances
would turn out not to actually be a proposed Transport Rule unit. For
example, under these proposed procedures, if such a determination would
be made after EPA's recordation of the allowance allocation but before
EPA's deduction of allowances for compliance with the requirement to
hold allowances covering emissions, the Administrator would deduct the
recorded allowances and transfer them to a new unit set-aside for the
appropriate state.
If owners and operators believe that their units that are included
in the list of potential existing units should not be included, these
owners and operators should submit comments on this NODA informing EPA
why the units should not be in the list. If owners and operators
believe that their units should be, but are not, treated as potential
existing Transport Rule units and included in the list of such units
provided by this NODA, these owners and operators should submit
comments on this NODA, informing EPA that the units should be added to
the list and allocated allowances and providing support for this
addition to the list. The data necessary for calculating allowance
allocations under the two alternative allocation methodologies should
also be provided. A unit that would not be allocated allowances as an
existing unit because of the unit's exclusion from the list of
potential existing Transport Rule units could ultimately be determined
to be a Transport Rule unit. Under the proposed Transport rule, each
Transport Rule unit would be subject to the allowance-holding
requirements of the Transport Rule regardless of whether the unit would
be allocated any allowances as an existing unit.
B. Historic Heat Input and Emissions Data Used in the Allowance
Allocation
The alternative allocation methodologies presented in this NODA
draw on historic heat input and historic emissions for potential
existing Transport Rule units. For units subject to one of the
aforementioned ongoing EPA trading programs and included in the list of
potential existing Transport Rule units, EPA used reported heat-input
data from the EPA database for the years 2005 through 2009. For these
same units, EPA used reported emissions from the EPA database for the
years 2003 to 2009. These data are publicly available through EPA's
data and maps at http://camddataandmaps.epa.gov/gdm/.
For units included in the list of potential existing Transport Rule
units that were not reporting under one of the aforementioned ongoing
EPA trading programs, EPA used historic heat input and emissions data
from Energy Information Administration (EIA) forms 767, 860, 906, 920,
and 923. These data are publicly available at http://www.eia.doe.gov/cneaf/electricity/page/data.html.
V. What are the alternative allocation methodologies and on what is EPA
requesting comment?
(a) Why is EPA considering heat input-based allocation methodologies?
In the proposed Transport Rule, EPA proposed a methodology for
allocating allowances to potential existing Transport Rule units. That
methodology is based on a combination of adjusted historic and adjusted
projected emissions data. EPA received a large number of public
comments from a variety of commenters suggesting alternative allocation
methodologies. One of the most frequently suggested metrics for
allocation was historic heat input. Commenters stated that using
historic heat input as the basis for allocations has the following
advantages:
(i) Historic heat input data are more likely to be accurate at a
unit level than projected unit-level emissions and are generally based
on quality-assured data reported by sources from continuous monitoring
systems.
(ii) Historic heat input data are fuel-neutral.
(iii) Historic heat input data are emissions-control-neutral and
thus do not yield reduced allocations for units that installed or are
projected to install pollution control technology.
EPA is considering the above-listed points made by commenters
regarding heat-input based allocations.
Numerous commenters also noted that EPA has broad authority to
implement alternative allocation methodologies under sections
110(a)(2)(D)(i)(I) and 302(y) of the Clean Air Act (CAA).\2\ EPA agrees
with commenters that the Agency has significant discretion in this
area. Neither the CAA nor the D.C. Circuit Court's opinion in North
Carolina v. EPA (531 F.3d 896 (D.C. Cir. 2008), specifies a particular
methodology that EPA must use to allocate allowances to individual
units. The statute focuses on prohibiting emissions within the state
that significantly contribute to or interfere with maintenance. Under
CAA section 110(a)(2)(D)(i)(I), states have significant discretion to
develop a control program in a SIP that achieves this objective and EPA
has similarly wide latitude when issuing a FIP. Moreover, the
definition of FIP in section 302(y) of the Act clarifies that a FIP may
include ``enforceable emission limitations or other control measures,
means or techniques (including economic incentives, such as marketable
permits or auctions of emissions allowances)'' but does not require EPA
to use any particular methodology to allocate allowances under a FIP
trading program. In light of this lack of direction concerning
allowance allocation, EPA has significant discretion to select an
allocation methodology that is reasonable and consistent with the goals
of CAA section 110(a)(2)(D)(i)(I) of the Act, including improving long-
term air quality and encouraging cost-effective emissions reductions.
---------------------------------------------------------------------------
\2\ CAA section 302(y) defines the term ``Federal implementation
plan'' as follows:
Federal implementation plan.--The term ``Federal implementation
plan'' means a plan (or portion thereof) promulgated by the
Administrator to fill all or a portion of a gap or otherwise correct
all or a portion of an inadequacy in a State implementation plan,
and which includes enforceable emission limitations or other control
measures, means or techniques (including economic incentives, such
as marketable permits or auctions of emissions allowances), and
provides for attainment of the relevant national ambient air quality
standard.
---------------------------------------------------------------------------
EPA believes the allocation methodologies presented in the proposed
Transport Rule as well as those presented in this NODA all meet that
test. Section 110(a)(2)(D)(i)(I) of the CAA requires that emissions
``within a state'' that significantly contribute to nonattainment or
interfere with maintenance in another state be
[[Page 1114]]
prohibited. In the proposed Transport Rule, EPA analyzed each
individual state's significant contribution and interference with
maintenance and calculated budgets that represent each state's
emissions after the elimination of those prohibited emissions. The
methodology used to allocate allowances to individual units in a
particular state has no impact on that state's budget or on the
requirement that the state's emissions not exceed that budget plus
variability. Regardless of the allocation methodology used, all
emissions in each covered state that significantly contribute to
nonattainment or interfere with maintenance in another state will be
prohibited. In sum, the allocation methodology has no impact on the
rule's ability to satisfy the statutory mandate of CAA section
110(a)(2)(D)(i)(I) to eliminate significant contribution and
interference with maintenance in downwind states.
EPA believes that a historic-heat-input-based allocation
methodology is consistent with the goals of CAA section
110(a)(2)(D)(i)(I). The proposed Transport Rule would set state budgets
reflecting the overall emission reductions necessary for each
respective state to eliminate significant contribution and interference
with maintenance in downwind states. The initial allocation of
allowances under each state budget to existing units on the basis of
the units' historic heat input would yield a distribution of allowances
putting relatively greater burden on the higher-emission-rate units to
reduce emissions or purchase additional allowances in order for the
units to be in compliance with the proposed Transport Rule trading
programs. This pattern would result because heat-input-based
allocations would provide the same share of allowances to units with
the same heat input even though the higher-emission-rate units would
require more allowances in order to cover their emissions than would
lower-emission-rate units. EPA believes that, because higher-emission-
rate units generally are responsible for a greater share of a state's
total emissions and thus bear greater responsibility for a states'
significant contribution and interference with maintenance, this
distribution of burden is consistent with the goals of CAA section
110(a)(2)(D)(i)(I).
The proposed Transport Rule includes four trading programs
(SO2 Group 1, SO2 Group 2, NOX annual,
and NOX ozone season). EPA requests comment on whether the
allocation methodology chosen for each of the four trading programs
must be the same or whether it would be reasonable to allocate using
different methodologies for the different programs. EPA also requests
comment on rationales for using different methodologies for the
different trading programs.
(b) What are the alternative heat input allocation methodologies and
how would they be applied?
This NODA provides an opportunity for public comment on the two
alternative allocation methodologies described below. To make it easier
for commenters to compare the methodologies presented in this NODA with
the methodology proposed in the proposed Transport Rule, EPA is
providing in the rulemaking docket for the Transport Rule (and on the
EPA Web site) data showing the unit-level allocations that would result
if the methodologies were applied to allocate allowances from the state
budgets in the proposed Transport Rule. As noted above, these budgets
may be revised in the final Transport Rule and thus the unit-level
allocations (based on 97% of the respective state budgets) in this NODA
would not necessarily be the unit-level allocations in the final rule.
The alternative allocation methodologies described in this NODA
represent two variations of historic-heat-input-based allocations. For
each alternative allocation methodology, the underlying data and
resulting allocations are set forth in allocation tables located at
http://www.epa.gov/airquality/transport/actions.html and in the public
docket for the Transport Rule. The calculations used to derive the
unit-by-unit allocations for each alternative option are described
below.
Option 1 described below would allocate a state's existing unit
budget (i.e., 97% of its budget) based on each unit's proportionate
share of the state's total historic heat input.
Option 2 would yield the same initial allocation pattern as Option
1 (based on historic heat input) but would then add a constraint (i.e.,
a limit on allocations) premised on a unit's reasonably foreseeable
maximum emissions under the proposed Transport Rule trading programs.
Option 1--Historic Heat Input Approach
This option would establish a baseline historic heat input value
for each potential existing Transport Rule unit and allocate to that
unit a share of available allowances under each proposed Transport Rule
program equal to the unit's percentage share of the total baseline
historic heat input for all potential existing Transport Rule units in
the state. As with all allocation approaches under consideration by
EPA, this option would be applied to each state separately using the
portion of that state's budget available for potential existing
Transport Rule units in that state. Allocations under this approach for
each existing unit would be determined by applying the following steps.
1. For each unit in the list of potential existing Transport Rule
units, annual heat input values for the baseline period of 2005 through
2009 would be identified using data reported to EPA or, where EPA data
is unavailable, EIA. As discussed above, for purposes of this NODA,
potential existing Transport Rule units are units that potentially meet
the applicability criteria in the proposed Transport Rule and began
commercial operation prior to January 1, 2009. A number of units would
not have non-zero data for one or more of the baseline years (e.g., a
unit that came on line after 2005 but before 2009) and would be
assigned a zero value for each of those years in the baseline. (Step 2
explains how such zero values would be treated in the calculations.)
This option would use a five-year baseline in order to improve
representation of a unit's normal operating conditions over time. EPA
requests comment on the existing-unit cut-off date of January 1, 2009
for purposes of this NODA.
2. For each unit, the three highest, non-zero annual heat input
values within the 5 year baseline would be selected and averaged.
Selecting the three highest, non-zero annual heat input values within
the five-year baseline would reduce the likelihood that any particular
single year's operations (which might be negatively affected by outages
or other unusual events) would determine a unit's allocation. If a unit
would not have three non-zero heat input values during the 5 year
baseline period, EPA would average only those years for which a unit
does have non-zero heat input values. For example, if a unit has only
reported data for 2008 and 2009 among the baseline years and the
reported heat input values are 2 and 4 mmbtus respectively, then the
unit's average heat input used to determine its pro-rata share of the
state budget would be (2+4)/2 = 3.
3. Each unit would be assigned a baseline heat input value
calculated as described in step 2 above. This baseline heat input value
is referred to in the data tables in the rulemaking docket and on the
Web site referenced previously, and in the remainder of this NODA, as
the ``three-year average heat input''.
[[Page 1115]]
4. The three-year average heat inputs of all potential existing
Transport Rule units in a state would be summed to obtain that state's
total ``three-year average heat input''.
5. Each unit's three-year average heat input would be divided by
the state's total three-year average heat input to determine that
unit's share of the state's total three-year average heat input.
6. Each unit's share of the state's total three-year average heat
input would be multiplied by the state's existing-unit portion of the
state budget (i.e., 97% of the state budget) to determine that unit's
allocation.
Option 2--Emissions-Rate-Informed Historic Heat Input Approach
This option retains the historic-heat-input-based approach but adds
a constraint premised on a unit's reasonably foreseeable maximum
emissions under the proposed Transport Rule trading programs. For the
majority of units, the historic heat input-based allocation will not be
sufficient to cover historic emission levels; this reflects the shared
burden on units to reduce emissions in order to eliminate the state's
significant contribution and interference with maintenance. Heat input-
based allocations only exceed historic emissions for units at the lower
end of the range of historic emission rates for the pollutant involved.
For these lower-emission rate units, this option would establish, based
on historic data, a reasonably foreseeable maximum emissions level
reflecting a reasonable upper-bound capacity utilization factor and a
well-controlled emission rate that all units (regardless of the type of
fuel they combust) can meet for the pollutant. For those units whose
heat-input-based allocations would exceed historic emissions, this
option would limit the historic-heat-input-based allocations to this
maximum emissions level so that the units would not be allocated
allowances in excess of their reasonably foreseeable maximum emissions.
EPA believes that this approach would result in a reasonable initial
distribution of allowances that is consistent with the goals of CAA
section 110(a)(2)(D)(i)(I).
1. The same 6 steps outlined above in Option 1 would be applied to
each unit.
2. A seven-year (2003 through 2009) historic emissions baseline
would be established for SO2, NOX, and ozone
season NOX based on data reported to EPA or, where EPA data
is unavailable, EIA data. This approach would use this seven-year
historic emissions baseline in order to reflect unit-level emissions
before and after the promulgation of the CAIR.
3. For each unit, the maximum annual historic SO2 and
NOX emissions would be identified within the seven-year
baseline. Similarly, the maximum ozone season NOX emissions
from the seven-year baseline for each unit would be identified. These
values are referred to as the ``maximum historic baseline emissions''
for each unit.
4. For each unit whose historic-heat-input-based allocation exceeds
its maximum historic baseline emissions, EPA would determine an
emission level (referred to as the ``well-controlled-rate maximum'' for
each unit) calculated as:
a. For a unit reporting maximum hourly heat input to EPA, the
reported figure multiplied by a well-controlled emission rate of 0.06
lbs/mmBtu for SO2 and 0.06 lbs/mmBtu for NOX. For
a unit that does not report maximum hourly heat input to EPA, EPA would
estimate the unit's maximum hourly heat input by multiplying the unit's
heat rate and capacity values (from NEEDS in IPM version 4.10). These
well-controlled emission rates of 0.06 lbs/mmBtu for SO2 and
NOX represent the lowest annual emission rates assumed
achievable when state-of-the-art pollution control technologies are
installed at coal units in the IPM modeling.\3\
---------------------------------------------------------------------------
\3\ As identified in EPA's documentation of EPA Base Case v.4.10
model available at http://www.epa.gov/airmarkets/progsregs/epa-ipm/docs/v410/Chapter5.pdf. These emission rates are based on the floor
rates used in IPM modeling and are intended to reflect the lower
bound of emission rates that suppliers are willing to guarantee when
installing state-of-the-art pollution control equipment (selective
catalytic reduction (SCR) and flue-gas desulfurization (FGD)).
---------------------------------------------------------------------------
b. The unit's maximum hourly heat input determined in
step 4.a above would be multiplied by 8,760 hours (annual) or 3,672
hours (ozone season) to get an annual or ozone season emissions level
at 100% utilization.
c. The unit's emissions level at 100% utilization determined in
step 4.b above would be multiplied by the reasonable upper-bound
capacity factor for each technology type. These upper-bounds would be
calculated as the utilization values at the 95th percentile in each
technology class.\4\ These 95th percentile values are set forth in the
table below.
---------------------------------------------------------------------------
\4\ Capacity factors were determined as follows. (1) Using data
reported to EPA by source owners and operators under the
aforementioned ongoing EPA trading programs, EPA determined, for
units reporting electrical output, the capacity factor for each unit
for each year of operation during 2000-2009 by dividing gross
electrical output by maximum hourly load times 8,760 hours/year and,
for units reporting steam output (KLBsteam), dividing total mass of
steam produced by the maximum rate times 8,760 hours; (2) EPA then
identified each unit's plant type based on how the unit was listed
in NEEDS in IPM version 4.10 (e.g., coal steam, combined cycle,
combustion turbine, oil/gas steam, and ``other''). ``Other''
comprised fossil waste, biomass, tires, and landfill gas. (3) Using
the units' calculated annual capacity factors, EPA identified the
95th percentile value of capacity factor for each plant type.
Resulting values are in Table 1 above. This analysis is based
largely on the same data and methodology used in the Capacity Factor
Analysis Technical Support Document located at http://www.epa.gov/airquality/transport/pdfs/TSD_capacity_factors_analysis_for_new_units_7-6-10.pdf. However, in this analysis EPA expanded the
data set to include all units, whereas the previous analysis had
examined solely CAIR units online after 1999 because its focus had
been on new units.
Table I--Summary of Capacity Factors at 95th Percentile
[``Reasonable Upper-Bound Capacity Factor'']
------------------------------------------------------------------------
Ozone
Technology class Annual season
------------------------------------------------------------------------
Coal-fired boiler..................................... 0.87 0.89
Combined cycle........................................ 0.70 0.73
Combustion turbine.................................... 0.14 0.22
Oil or gas fired boiler............................... 0.46 0.55
Other................................................. 0.71 0.75
------------------------------------------------------------------------
5. If a unit identified in step 4 has an historic-heat-input-based
allocation greater than both its maximum historic baseline emissions
(as determined in step 3) and its well-controlled-rate maximum (as
determined in step 4), then its allocation (referred to as the unit's
``reasonable foreseeable maximum emissions level'') would equal the
higher of these two values.
6. The difference (if positive) under step 5 between a unit's
historic-heat-input-based allocation and its ``reasonable foreseeable
maximum emissions level'' would be reapportioned on the same basis as
described in step 1 to units whose historic-heat-input-based
allocations are not revised under step 5. Steps 4, 5, and 6 would be
repeated with each revised allocation distribution until the entire
existing-unit portion of the state budget (i.e., 97% of the state
budget) would be allocated.
The table below provides an example of application of the steps in
Option 2.
[[Page 1116]]
Table II--Demonstration of Allocations Using Option 2 in a Two-Unit State With a 30-Ton State Budget
----------------------------------------------------------------------------------------------------------------
Step 1 Step 2 & 3 Step 4 Step 5 (greater Step 6
------------------------------------------------ of step 3 ---------------
result or step 4
result)
Heat-input- Historic Well- ------------------
based maximum controlled- Reasonable Final
allocation baseline rate maximum foreseeable allocation
emissions maximum
emissions level
----------------------------------------------------------------------------------------------------------------
Unit A........................ 10 4 6 6 6
Unit B........................ 20 40 N/A N/A 24
----------------------------------------------------------------------------------------------------------------
(c) What allocations-related data and information are the EPA making
available for review and comment?
EPA has used the best available data to develop a list of potential
existing Transport Rule units and to calculate illustrative allowance
allocations for each such unit under the two alternative allocation
methodologies discussed in this NODA. However, through the NODA, EPA is
giving unit owners and operators and the public in general the
opportunity to offer comments on individual units' inclusion in or
exclusion from such list and--for units that EPA included on the list
or that commenters believe should be included on the list--on the data
needed for allocation calculations (including any necessary data that
EPA has not provided in this NODA) under the two alternative allocation
methodologies and the allocations that result or should result from
such calculations.
For units on the list of potential existing Transport Rule units,
EPA is providing for the years 2003 through 2009 the relevant EPA-
reported heat input and emissions data under the aforementioned ongoing
EPA trading programs and, for those units not reporting under these
programs, heat input and fuel data in EIA databases. EPA is also
providing the Agency's calculations using these data in the two
alternative allocation methodologies described in this NODA.
In addition to comments on the list of potential existing Transport
Rule units, allocation-related data, and calculations of allocations,
EPA requests comments on the appropriateness of the alternative
allocation methodologies and their implications for rule
implementation. In particular, EPA encourages commenters to address the
following:
Are the alternative allocation methodologies clear and
easy to understand?
Do these alternative methodologies raise any
implementation concerns, such as concerns about feasibility of
implementing the methodology?
How are these methodologies consistent with the goals of
CAA section 110(a)(2)(D)(i)(I)?
Do these alternative methodologies yield a reasonable
distribution of allowances?
Should the same methodology be used for each of the
proposed Transport Rule trading programs, or should a different
methodology be used for one or more such trading programs?
(d) Why is the EPA providing opportunity to comment on these
allocation-related data and information?
Through this NODA, EPA is providing owners and operators, states
and the public in general the opportunity to comment on the
allocations-related data and information described above in order to
ensure that we use the best available data in the Transport Rule FIP
allocation process. For example, the heat input and emissions data used
to calculate allocations came from data reported to EPA and EIA, and a
unit owner or operator (or other member of the public) should comment
if he or she sees any discrepancy between the data reported for the
unit and the heat input and emissions data used in calculating the
allocations in this NODA. Such comment should include the data that the
commenter believes EPA should use and the source of that data and where
else the data may be reported to the Federal government. EPA is also
providing an opportunity to comment on the calculations using the
alternative allocation methodologies and the data in order to ensure
the accuracy of the calculations.
The allocations presented in this NODA are also based on the list
of potential existing Transport Rule units developed using data
currently available to EPA. As discussed above, a unit's inclusion on
or exclusion from this list does not constitute a determination of the
applicability of the proposed Transport Rule to the unit, but rather
reflects EPA's preliminary application of the applicability provisions
in the proposed Transport Rule. In order to ensure the accuracy of the
allocation calculations, the EPA is providing this opportunity for
source owners and operators, and the public in general, to (1) comment
on units' inclusion in, or exclusion from, the allocation tables in the
NODA and the data on which the inclusion or exclusion is or should be
based, (2) comment on the heat input and other data used or that should
be used to calculate the allocations and the resulting allocations, and
(3) submit corrections of the data or supplementary data. While EPA
requests that owners and operators, states, and other members of the
public who believe that a unit has been incorrectly included in or
excluded from the allocation tables submit a comment (including any
supporting data). EPA is not requesting, and will not consider, any
comments on the proposed applicability provisions themselves (proposed
Sec. Sec. 97.404, 97.504, 97.604, and 97.704).
The addition or removal of existing units to or from a state's list
of potential existing Transport Rule units will not impact the size of
the state budget. EPA's responses to comments on this NODA concerning
the list of potential existing Transport Rule units and the data to be
used to allocate to specific units and EPA's updated modeling and
responses to comments on the proposed Transport Rule concerning the
proposed state budgets may result in the individual units receiving
different shares of the applicable state budget than reflected in the
allocation tables.
(e) What supporting documentation do I need to provide with my
comments?
While we will consider all comments on issues that are within the
scope of this NODA, these comments should be supported with appropriate
documentation. Supporting documentation can include, but is not limited
to, spreadsheets, explanations of why you believe the data on such
spreadsheets are accurate (e.g., the
[[Page 1117]]
quality assurance of the data), and information on the data source.
In general, we do not anticipate revisions to unit heat input and
emissions data reported to EPA under the ARP and CAIR programs since,
in submitting the data under these programs, a source's DR has already
certified the accuracy and completeness of the data. However, we will
consider any comments. For example, a source's DR may provide evidence
that we improperly calculated heat input at the unit-level if the heat
input was actually measured at another location (such as a common
stack). As a further example, a source's DR may demonstrate that the
data provided in this NODA are not consistent with the data reported to
EPA for compliance with the ARP or CAIR programs. In that case, the
commenter should explain why the data values in EPA's data files are
incorrect and should document and explain the new data values.
Similarly, in general, we do not anticipate revisions to data
reported to EIA since such data were submitted to meet regulatory
reporting requirements. However, we will consider any comments on the
data as reported, as well as on any calculation in which we used the
data for purposes of this NODA.
VI. On what aspects of the proposed assurance provisions is EPA
requesting comment?
(a) Whether the Assurance Provision Allowance Surrender Requirement
Should be Calculated on a Designated Representative Basis
Under the proposed Transport Rule, the assurance provisions would
be triggered for a state for a given year if total emissions for
covered units in the state for the year exceed the state assurance
level (i.e., the state budget plus the state's variability limit). As
proposed, if this level were exceeded, the assurance provision
allowance surrender requirement would be imposed on certain owners of
covered units in the state and calculated on an owner-by-owner basis.
Specifically, each owner whose share of the state's total covered-unit
emissions exceeded the owner's share of the state assurance level would
have to surrender a proportionate share of the state's exceedance. In
this NODA, EPA is requesting comment on whether the surrender
requirement should be imposed on certain owners and operators of
covered units in the state but calculated on a DR-by-DR basis, rather
than on an owner-by-owner basis.
Under this alternative approach, the calculation of shares of
covered-unit emissions and of the state budget plus variability would
be performed for each group of covered units having a common DR. EPA
would use the DR as of the allowance transfer deadline for a given
control period (generally March 1 following the control period for the
proposed Transport Rule NOX and SO2 annual
trading programs and December 1 following the control period for the
proposed Transport Rule NOX ozone season trading program)
for determining assurance provision surrender requirements. In order to
be treated as a group of covered units for this purpose, the units
would have to be located at sources in the state with the same
individual as their DR (not alternate designated representative).\5\
---------------------------------------------------------------------------
\5\ Under proposed Sec. Sec. 97.413, 97.513, 97.613, and
97.713, the owners and operators of a source could designate one
individual as the DR, who would represent and legally bind them in
all matters concerning the proposed Transport Rule trading programs.
Under these provisions, these owners and operators also could
designate another individual as the alternate designated
representative, who could act on behalf of the DR and would legally
bind the DR and thus the owners and operators. EPA notes that the
concept of requiring representation of source owners and operators
by a DR has been used in prior EPA trading programs, including the
ARP and CAIR trading programs.
---------------------------------------------------------------------------
For each such group of covered units in the state, the DR's share
of the state's covered-unit emissions (i.e., the total emissions of the
covered units at the group of covered sources having that DR) for the
year and the DR's share of the state assurance level (i.e., the total
allocations for the covered units at such sources plus the units'
proportionate share of the state variability limit) would be
calculated. The owners and operators represented by a common DR whose
share of state covered-unit emissions exceeded his or her share of the
state assurance level would all be subject to the DR's proportionate
share of the proposed assurance provision allowance surrender
requirement (i.e., the requirement that one allowance be surrendered
for each ton by which the state's total covered-unit emissions would
exceed the state assurance level). The DR's share of the surrender
requirement would equal the amount by which the DR's share of the
state's total covered-unit emissions exceeded the DR's share of the
state assurance level, divided by the sum of all such exceedances for
all DRs for covered units in the state. The owners and operators would
be collectively and individually liable for making this allowance
surrender and would determine themselves how to divide up the actual
surrender. This would be similar to the way that all owners and
operators of a covered source that fails to hold allowances covering
the source's emissions are collectively and individually liable for an
excess emissions penalty. The owners and operators subject to the
allowance surrender requirement would be required to transfer the
necessary amount of allowances by the specified deadline to an
assurance account created by EPA for these owners and operators.
EPA believes that imposing the proposed assurance provision
allowance surrender requirement at the DR level, rather than owner
level, is more straightforward and consistent with information already
provided to EPA and potentially provides owners and operators with more
flexibility than under the approach in the proposed Transport Rule.
Other requirements under the proposed Transport Rule trading programs
(e.g., the requirement to monitor and report emissions and to hold
allowances covering emissions) would be imposed on a unit-by-unit or
source-by-source basis. Consequently, EPA would not generally obtain
detailed ownership information (such as percentage ownership in
individual units) and would have to collect such information only in
order to implement the owner-by-owner approach in the assurance
provisions in the proposed Transport Rule. The DR approach for
calculating the assurance provision surrender requirements would
eliminate the need to collect detailed ownership information and would
also avoid the complications arising from having to divide up units'
emissions and allocations among partial owners of the units. In
addition, the DR approach would apply to units with a common DR even in
the case where the units involved did not have a common owner or
operator. This would allow owners and operators to designate a common
DR for all of the sources at which their units are located and thereby
obtain the increased flexibility of having the assurance provisions
apply to the entire group. Like the proposed approach of calculating
the assurance provision surrender requirements on an owner-by-owner
basis, the alternative approach of calculating such requirements on a
DR-by-DR basis could be applied under any of the allocation methods
under consideration. In developing the final Transport Rule, EPA will
consider both approaches.
[[Page 1118]]
(b) Whether the Overall Assurance Provision Approach Should Be
Maintained if One of the Alternative Allocation Methodologies Is Used
in the Final Transport Rule
EPA received several comments on the proposed Transport Rule
concerning whether the proposed assurance provisions should be changed
if the proposed allocation methodology were changed. For the reason
discussed below, EPA does not believe that a change in allocation
methodology would necessitate any changes in the assurance provisions
set forth in the proposed Transport Rule. In the unlikely event that a
state exceeds its state assurance level, only the owners and operators
whose shares (or the owners and operators whose common DR's share) of
the state's emissions exceed the owners' and operators' (or the common
DR's) share of the state assurance level would be subject to the
allowance surrender requirement.
While EPA believes the likelihood of triggering assurance
provisions would be low for the reasons provided in the proposed
Transport Rule (75 FR 45314), the assurance provisions must have an
enforcement mechanism to be effective. The assurance provision
allowance surrender requirements exist to ensure that the state budgets
plus variability limits (the state assurance levels) would not be
exceeded in any state. These surrender requirements identify what
penalties would apply if the assurance level were to be exceeded.
EPA believes that a change to the allocation methodology would not
necessitate any changes to the assurance provisions in the proposed
Transport Rule for the following reason. The proposed Transport Rule
explained that, in the event that a state's total emissions would
exceed the state budget plus variability, those groups of units
(whether grouped by owner as in the proposal or by common DR as
discussed in this NODA) with an analogous exceedance (i.e., those
groups of units with total emissions exceeding their total allowance
allocations plus their shares of state variability) would reasonably be
viewed as accounting for the state's exceedance and thus should be
subject to proportionate shares of the allowance surrender penalty
calculated as one allowance to be surrendered for each ton of the
state's exceedance. Even under a different allowance allocation
methodology than the allocation methodology proposed in the Transport
Rule, it would continue to be the case that groups of units with
greater emissions than their allocations plus share of state
variability would reasonably be held responsible for the state's excess
of emissions over the state assurance level. EPA believes that any
state that would exceed its state assurance level would likely do so
because not all units would have made the reductions necessary to
eliminate the state's contribution to nonattainment or interference
with maintenance. Moreover, the groups of units with emissions
exceeding their allocations plus share of variability would be the
units that were most likely to have contributed to the state's
exceedance of its state assurance level and thus to the state's
triggering of the assurance provisions. Consequently, it would be
reasonable to penalize those groups of units (whether grouped by owner
or by common DR)--through application of the assurance provision
allowance surrender requirement--for the state's exceedance.
EPA received comments that proposed assurance provision penalties
should be delinked from allocations and that a different method of
imposing such penalties should be applied. However, as discussed above,
the Agency still believes that the proposed assurance provisions
provide a reasonable way of identifying those sources within a state
that most likely contributed to, and share responsibility for, any
triggering of the assurance provisions. EPA also believes that the
proposed assurance provisions, with calculation of the allowance
surrender requirements made on an owner-by-owner basis (as proposed) or
on a DR-by-DR basis (under the alternative discussed in this NODA)
provide a reasonable way of distributing proportionate shares of the
responsibility for eliminating a state's significant contribution and
interference with maintenance. However, EPA is requesting comment in
this NODA on the implications of retaining the proposed assurance
provisions (with the surrender requirements calculated on an owner-by-
owner or DR-by-DR basis) in conjunction with the alternative allocation
methodologies presented. While EPA believes that the overall approach
for the assurance provisions would still be appropriate with an
alternative allocation methodology, the Agency may reevaluate some of
the details of those provisions, for example, the proposed variability
limits for each state, the treatment of new units that have not yet
been allocated allowances, and the allowance surrender levels when it
promulgates the final Transport Rule.
VII. Allocations to New Covered Units in Indian Country in the Future
EPA received comments that it did not adequately consider
opportunities for Indian tribes to enter into any of the trading
programs in the Transport Rule proposal. This section explains and
provides an opportunity to comment on some options for allocating
allowances to covered units that might in the future be constructed in
Indian country. In addition, EPA has initiated a process to consult
with any interested tribes on issues related to the proposed Transport
Rule and will conclude this consultation before making any final
decisions on this issue. EPA will take into consideration additional
input it receives as part of the tribal consultation process.
In the Tribal Authority Rule, EPA determined that it was
appropriate to treat eligible Indian tribes in the same manner as
states for purposes of the prohibitions and authority contained in CAA
section 110(a)(2)(D). See 63 FR 7254, 7260; February 12, 1998. Tribes
are not, however, required to submit implementation plans. As explained
in EPA's regulations outlining Tribal Clean Air Act authority, EPA is
authorized to promulgate FIPs for Indian country as necessary or
appropriate to protect air quality if a tribe does not submit and get
EPA approval of an implementation plan. See 40 CFR 49.11(a). Presently,
there are no covered sources located in Indian country in the region
covered by the proposed Transport Rule. In the event of the planned
construction of such a source in Indian country in the proposed
Transport Rule region, EPA intends to work with the relevant Tribal
government to ensure that Tribal concerns regarding allocations are
addressed and, at the same time, that emissions from the source do not
violate CAA section 110(a)(2)(D)(i)(I). In the case of a covered source
locating in the future in Indian country in the proposed Transport Rule
region, the EPA anticipates that the Transport Rule FIPs would require
the covered source to meet the requirements of the proposed EPA
administered Transport Rule trading programs if those programs are
finalized.
EPA also anticipates that any covered units at a covered source
locating in Indian country in the proposed Transport Rule region would
be eligible to receive allowances from the EPA-administered new unit
set-aside under the FIPs for the proposed Transport Rule state in which
the area of Indian country is located. Identical to the approach
proposed in the Transport Rule for other new covered units, the
[[Page 1119]]
owner or operator of units in Indian country in the proposed Transport
Rule region could request allocations from the EPA-administered new
unit set-aside by a specified deadline each year. The allocations
distributed by EPA under the FIPs would equal that unit's emissions for
the control period in the preceding year (75 FR 45322). EPA has not
currently identified a basis for treating new units locating in Indian
country without initial SO2 or NOX allowance
allocations differently from new units locating elsewhere in the
Transport Rule region without initial allowance allocations.
As part of this NODA, EPA is requesting comment on all aspects of
how allowances for covered units locating on tribal lands should be
allocated. Specifically, EPA requests comment on how, in the final
Transport Rule FIPs, EPA should allocate allowances to any covered
units that are constructed in Indian country in the proposed Transport
Rule region in the future. EPA is also requesting comment on how any
such allowance allocation methodology should, if at all, affect state
budgets or allowance allocations to existing units and what further
action, if any, EPA should take to work with Tribes and affected states
to resolve this issue in the event any covered units are constructed in
Indian Country in the proposed Transport Rule region. Finally, EPA
requests comment on how such allocations should be addressed in a state
that has submitted a SIP providing for state allocation of allowances
in the proposed Transport Rule trading programs.
VIII. Provisions for States To Submit Transport Rule SIPs or
Abbreviated SIPs Providing for State Allocation of Allowances in
Proposed Transport Rule Trading Programs
The proposed Transport Rule explains that ``by promulgating these
Transport Rule FIPs, EPA would in no way affect the right of states to
submit, for review and approval, a SIP that replaces the Federal
requirements of the FIP with state requirements. In order to replace
the FIP in a state, the state's SIP must provide adequate provisions to
prohibit NOX and SO2 emissions that contribute
significantly to nonattainment or interfere with maintenance [of the
1997 ozone and 1997 and 2006 PM2.5 NAAQS] in another state
or states * * * EPA is taking comment on all aspects of how a state
could replace the Transport Rule FIP with a SIP and on what the SIP
approval criteria should be.'' 75 FR 45342.
EPA received comments suggesting that EPA allow states to replace
EPA's allowance allocation provisions in the proposed Transport Rule
trading programs by state-developed allocation provisions. Commenters
referenced the two alternatives provided to states by EPA in the CAIR
trading programs where: (1) EPA adopted a rule and model trading
regulations under which states that adopted, as state SIP trading
programs, the model regulations (with only certain limited changes
allowed, e.g., in the allocation provisions) could participate in the
EPA-administered CAIR trading programs; and (2) EPA adopted a rule
allowing states to adopt in SIPs provisions replacing only certain
provisions in the CAIR FIPs (e.g., the allocation provisions) and to
remain in the CAIR trading programs under the CAIR FIPs. Under both
approaches, the covered units in the state participated in the CAIR
trading programs, albeit with state-, rather than EPA-, determined
allocations.
In the comment period on the proposed Transport Rule FIP, EPA
received comments supporting these two types of approaches for allowing
states to replace EPA allocations under the proposed Transport Rule
trading programs by state allocations. EPA is therefore requesting
comment--in conjunction with comment on the alternative allocation
methodologies--on both of the following two approaches, which are
analogous to the approaches adopted under the CAIR trading programs.
These approaches would allow states to--and would provide the only ways
that states could--allocate allowances and participate in the proposed
Transport Rule trading programs.
Under the first approach, EPA would adopt new provisions, as part
of the proposed Transport Rule FIP that would allow a state to submit a
SIP (referred as an abbreviated SIP) that would modify specified
provisions of the proposed Transport Rule FIP trading programs.
Specifically, the abbreviated SIP would substitute state allocation
provisions (for entities other than opt-in units)-- for control periods
in years after 2012 and applicable to a proposed Transport Rule FIP
trading program--in lieu of the current allocation provisions (except
those for opt-in units) under those proposed Transport Rule FIP
program. The Transport Rule FIP provisions that could be replaced would
be proposed Sec. Sec. 97.411(a) and (b) and 97.412 (in the proposed TR
NOX Annual Trading Program), proposed Sec. Sec. 97.511(a)
and (b) and 97.512 (in the TR NOX Ozone Season Trading
Program), proposed Sec. Sec. 97.611(a) and (b) and 97.612 (in the TR
SO2 Group 1 Trading Program), and proposed Sec. Sec.
97.711(a) and (b) and 97.712 (in the TR SO2 Group 2 Trading
Program). The abbreviated SIP could provide for this substitution of
state allocations in one or more of the proposed Transport Rule FIP
trading programs applicable to the state.
If the state allocation provisions met certain requirements and the
abbreviated SIP did not change any other provisions in the respective
proposed Transport Rule FIP trading program, then EPA would approve the
abbreviated SIP. In the substitute state allocation provisions, the
state could allocate allowances to Transport Rule units (whether
existing or new units) or other entities (such as renewable energy
facilities) or could auction some or all of the allowances. For EPA
approval, the state allocation provisions would have to meet the
following requirements. First, the provisions would have to provide
that, for each year for which the state allocation provisions would
apply, the total amount of control period (annual or ozone season)
allowances allocated and, where applicable, auctioned could not exceed
the applicable state budget for that year under the relevant proposed
Transport Rule FIP trading program.
Second, to the extent the state provisions would provide for
allocations for, or auctions open to, existing units (i.e., units
covered by proposed Sec. 97.411(a), Sec. 97.511(a), 97.611(a), or
97.711(a), as applicable), the provisions would have to provide that
the permitting authority under title V of the CAA for the state would
issue final allocations and, if applicable, auction results by May 1
(or January 1 with regard to the NOX ozone season program)
of the year two years before the year of the control period for which
the allowances would be distributed. To the extent the provisions would
provide for allocations for or auctions open to new units (i.e., units
covered by proposed Sec. 97.411(b) and 97.412, Sec. 97.511(b) and
97.512, 97.611(b) and 97.612, or 97.711(b) and 97.712, as applicable)
or any other entities, the provisions would also have to provide that
the permitting authority would issue final allocations and, if
applicable, auction results by August 1 (or May 1 with regard to the
NOX ozone season program) of the year of the control period
for which the allowances would be distributed. The allocation (or
auction) of allowances would be final and could not be subject to
modification
[[Page 1120]]
(e.g., through an allowance surrender adjusting the allocation).\6\
---------------------------------------------------------------------------
\6\ If any auctions were to be conducted, the provisions would
have to specify the auction procedures that the permitting authority
would use.
---------------------------------------------------------------------------
Third, the state provisions could not change any other provisions
of the proposed Transport Rule FIP trading programs with regard to the
allowances (e.g., the deadlines for allocation recordation,
requirements for transfer or use of allowances, and allocation and
recordation of allowances for opt-in units) or any other aspect of such
trading programs.\7\
---------------------------------------------------------------------------
\7\ However, if auctions were to be conducted, the abbreviated
SIP would have to provide that any allowance auctioned to a covered
unit or source would be treated as an allocated allowance, solely
for purposes of applying the assurance provisions in the proposed
Transport Rule FIP.
---------------------------------------------------------------------------
Under the second approach, EPA would adopt a new rule that would
provide that, if a state submitted a SIP (referred to as a full SIP)
that adopted trading program regulations meeting certain requirements
for control period in years after 2012, then EPA would approve the full
SIP as correcting the deficiency under CAA section 110(a)(2)(D)(i)(I)
in the state's SIP that was the basis for issuance of the comparable
proposed Transport Rule FIP. In the state allocation provisions, the
state could allocate allowances to Transport Rule units (whether
existing or new units, except for opt-in units) or other entities (such
as renewable energy facilities) or could auction allowances.
As a result of EPA approval of the state's full SIP under this
second approach, the state's trading program set forth in the SIP would
be integrated with the comparable proposed Transport Rule FIP trading
program (whether or not modified by an abbreviated SIP) covering other
states. Moreover, covered sources in the state could participate in the
integrated trading program, and the allowances issued under the state
trading program would be interchangeable with the allowances issued in
the comparable proposed Transport Rule trading program.
Like the abbreviated SIP discussed above, a full SIP providing for
state participation in the integrated trading program could include
only limited differences from the provisions of the proposed Transport
Rule FIP trading program. First, the only differences that the full SIP
could adopt would be in the allocation provisions (other than those for
opt-in units). Second, the revised state allocation provisions in the
full SIP would have to meet the same requirements as state allocation
provisions in an abbreviated SIP. For example, the full SIP would have
to provide that, for each year, the total amount of control period
(annual or ozone season) allocations would not exceed the applicable
state budget for that year. Further, to the extent the full SIP would
provide for allocations for existing units, the SIP would have to
provide that the permitting authority would issue final allocations by
May 1 (or January 1 with regard to the NOX ozone season
program) of the year two years before the year of the control period
for which the allowances would be distributed. To the extent the full
SIP would provide for allocations for new units or any other entities,
the SIP would also have to provide that the permitting authority would
issue final allocations by August 1 (or May 1 with regard to the
NOX ozone season program) of the year of the control period
for which the allowances would be distributed. The allocation of
allowances would be final and could not be subject to modification.\8\
---------------------------------------------------------------------------
\8\ In addition, the requirements for state allocation
provisions in full SIPs would apply to any auctioned allowances in
the same way that is described above with regard to any allowances
to be auctioned under abbreviated SIPs.
---------------------------------------------------------------------------
It is important to note that, of course, each state would still
have the ability to submit other types of SIPs using emissions
reduction approaches other than the proposed Transport Rule trading
programs to correct the deficiency under CAA section 110(a)(2)(D)(i)(I)
in the state's SIP that was the basis for the proposed Transport Rule
FIPs. The EPA would review such SIP submissions on a case-by-case basis
and intends to provide guidance to states that want to develop and
submit such SIPs. However, in order for the state to use the proposed
Transport Rule trading programs to correct that deficiency in the SIP,
the state would have to submit a full SIP in accordance with this
second approach.
In order for a state's allocation provisions in an abbreviated SIP
or a full SIP to replace EPA's allocation provisions for a control
period in a given year under these two approaches, a state would have
to submit the abbreviated SIP or full SIP meeting the requirements of
these approaches by a deadline that would provide EPA sufficient time
to review and approve the SIP provisions and to record the unit-by-unit
allocations or auction results. EPA would need about 6 months--starting
from the date of receipt of an abbreviated or full SIP--to complete its
review and approval process, which would have to provide an opportunity
for public comment on the approval (or disapproval) action. The
following tables show, for the allocations or auction results for the
control periods in 2012 through 2018, the deadlines that would apply
for submission of an abbreviated or full SIP, for submission of the
unit-by-unit allocations or auction results for recordation by EPA, and
for recordation. These tables assume: Allocation (or auction) and
recordation of allowances for existing units under the Transport Rule
trading programs one year at a time and about one and one-half years
ahead of the year for which the allocations (or auctions) apply; and
allocation (or auction) and recordation of allowances for new units and
other entities one year at a time and six months after the commencement
of the control period for which the allocations (or auction) apply.
Because EPA anticipates issuing the final Transport Rule around mid-
2011, there would not be sufficient time for states to develop and
submit abbreviated or full SIPs with allowance allocation provisions,
and for EPA to review and approve such SIP submissions, before
September 2011 when EPA would record allocations to existing units for
2012 and 2013. Consequently, the tables assume that the first year for
which state allocations might be used, in lieu of EPA allocation, would
be 2014.
Table III--Deadlines for Submission of Abbreviated or Full SIPs and Unit-by-Unit Allocations or Auction Results and for Recordation; Annual Trading
Programs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Deadline for State Deadline for EPA
First TR control period for which Deadline for State Deadline for State submitting Deadline for EPA recording allocations
allowances would be allocated or submitting abbreviated submitting allocations allocations or recording allocations or auction results
auctioned or full SIP or auction results for auction results for or auction results for new units and
existing units new units and others for existing units others
--------------------------------------------------------------------------------------------------------------------------------------------------------
2012............................... NA.................... NA.................... NA................... September 1, 2011.... September 1, 2012.
2013............................... NA.................... NA.................... NA................... September 1, 2011.... September 1, 2013.
[[Page 1121]]
2014............................... November 1, 2011...... May 1, 2012........... August 1, 2014....... June 1, 2012......... September 1, 2014.
2015............................... November 1, 2012...... May 1, 2013........... August 1, 2015....... June 1, 2013......... September 1, 2015.
2016............................... November 1, 2012...... May 1, 2014........... August 1, 2016....... June 1, 2014......... September 1, 2016.
2017............................... November 1, 2014...... May 1, 2015........... August 1, 2017....... June 1, 2015......... September 1, 2017.
2018............................... November 1, 2015...... May 1, 2016........... August 1, 2018....... June 1, 2016......... September 1, 2018.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table IV--Deadlines for Submission of Abbreviated or Full SIPs and Unit-by-Unit Allocations or Auction Results and for Recordation; Ozone Season Trading
Programs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Deadline for State Deadline for EPA
First TR control period for which Deadline for State Deadline for State submitting Deadline for EPA recording allocations
allowances would be allocated or submitting abbreviated submitting allocations allocations or recording allocations or auction results
auctioned or full SIP or auction results for auction results for or auction results for new units and
existing units new units and others for existing units others
--------------------------------------------------------------------------------------------------------------------------------------------------------
2012............................... NA.................... NA.................... NA................... September 1, 2011.... June 1, 2012.
2013............................... NA.................... NA.................... NA................... September 1, 2011.... June 1, 2013.
2014............................... November 1, 2011...... May 1, 2012........... May 1, 2014.......... June 1, 2012......... June 1, 2014.
2015............................... November 1, 2012...... May 1, 2013........... May 1, 2015.......... June 1, 2013......... June 1, 2015.
2016............................... November 1, 2013...... May 1, 2014........... May 1, 2016.......... June 1, 2014......... June 1, 2016.
2017............................... November 1, 2014...... May 1, 2015........... May 1, 2017.......... June 1, 2015......... June 1, 2017.
2018............................... November 1, 2015...... May 1, 2016........... May 1, 2018.......... June 1, 2016......... June 1, 2018.
--------------------------------------------------------------------------------------------------------------------------------------------------------
As discussed above, a trading program adopted by a state in a full
SIP and approved by EPA under the second approach would be fully
integrated with any comparable proposed Transport Rule FIP trading
program (i.e., the proposed TR NOX Annual, TR NOX
Ozone Season, TR SO2 Group 1, or TR SO2 Group 2
Trading Program respectively) for other states. This would apply
whether the comparable proposed Transport Rule FIP program for other
states was modified by an abbreviated SIP approved by EPA under the
first approach or was not modified by an abbreviated SIP. The
integration of these three types of trading programs would be
accomplished primarily through the definitions of the terms, ``TR
NOX Annual allowance'', ``TR NOX Ozone Season
allowancerdquo;, ``TR SO2 Group 1 allowance'', and ``TR
SO2 Group 2 allowance'' in the full SIPs approved by EPA and
the proposed TR FIP trading programs (whether or not the programs were
modified by abbreviated SIPs). ``TR NOX Annual allowance''
would be defined in the state and proposed Transport Rule FIP trading
programs as including allowances issued under any of the following
trading programs: The comparable EPA-approved state trading programs;
the comparable proposed Transport Rule FIP trading program with EPA-
approved state allocation provisions; and the proposed Transport Rule
FIP trading program with EPA allocation provisions. Similarly, the
definitions in the state and Transport Rule FIP trading programs of
``TR NOX Ozone Season allowance'', ``TR SO2 Group
1 allowance'', and ``TR SO2 Group 2 allowance'' respectively
would include allowances issued under all three types of trading
programs. As a result, allowances issued in one approved state trading
program would be interchangeable with allowances issued in the
comparable Transport Rule FIP trading program (whether or not modified
by an abbreviated SIP), and all these allowances could be used for
compliance with the allowance-holding requirements (to cover emissions
and to meet assurance provision requirements) in all three types of
trading programs.
The integration of state and the proposed Transport Rule FIP
trading programs would also be reflected in the definitions of ``TR
NOX Annual Trading Program,'' ``TR NOX Ozone
Season Trading Program'', ``TR SO2 Group 1 Trading
Program'', and ``TR SO2 Group 2 Trading Program''. Each of
these definitions in the state and Transport Rule FIP trading programs
would expressly encompass the comparable proposed Transport Rule FIP
trading programs (whether or not modified by an abbreviated SIP) and
the comparable EPA-approved state full SIP trading program.
Dated: December 30, 2010.
Brian McLean,
Director, Office of Atmospheric Programs.
[FR Doc. 2011-109 Filed 1-6-11; 8:45 am]
BILLING CODE 6560-50-P