[Federal Register Volume 80, Number 232 (Thursday, December 3, 2015)]
[Proposed Rules]
[Pages 75705-75778]
[FR Doc No: 2015-29796]

Vol. 80

Thursday,

No. 232

December 3, 2015

Part II

Environmental Protection Agency

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

40 CFR Parts 52, 78, and 97

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

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

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

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 52, 78, and 97

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

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

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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

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

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

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

FOR FURTHER INFORMATION CONTACT: Mr. David Risley, Clean Air Markets
Division, Office of Atmospheric Programs (Mail Code 6204M),
Environmental Protection Agency, 1200 Pennsylvania Avenue NW.,
Washington, DC 20460; telephone number:<PHONE_NUMBER>; email address:
<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

Preamble Glossary of Terms and Abbreviations

    The following are abbreviations of terms used in the preamble.

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

Table of Contents

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

    D. Addressing the Status of Outstanding Transport Obligations
for the 1997 Ozone NAAQS
IV. Legal Authority
    A. EPA's Authority for the Proposed Rule
    1. Statutory Authority
    2. FIP Authority for Each State Covered by the Proposed Rule
V. Analyzing Downwind Air Quality and Upwind-State Contributions
    A. Overview of Air Quality Modeling Platform
    B. Emission Inventories
    1. Foundation Emission Inventory Data Sets
    2. Development of Emission Inventories for EGUs
    3. Development of Emission Inventories for Non-EGU Point Sources
    4. Development of Emission Inventories for Onroad Mobile Sources
    5. Development of Emission Inventories for Commercial Marine
Category 3 (Vessel)
    6. Development of Emission Inventories for Other Nonroad Mobile
Sources
    7. Development of Emission Inventories for Nonpoint Sources
    C. Air Quality Modeling to Identify Nonattainment and
Maintenance Receptors
    D. Pollutant Transport From Upwind States
    1. Air Quality Modeling To Quantify Upwind State Contributions
    2. Application of Screening Threshold
VI. Quantifying Upwind-State EGU NOX Reduction Potential
to Reduce Interstate Ozone Transport for the 2008 NAAQS
    A. Introduction
    B. NOX Mitigation Strategies
    1. EGU NOX Mitigation Strategies
    2. Non-EGU NOX Mitigation Strategies
    C. Uniform EGU Cost Thresholds for Assessment
    D. Assessing Cost, EGU NOX Reductions, and Air
Quality
    E. Quantifying State Emissions Budgets
VII. Implementation Using the Existing CSAPR Ozone-Season Allowance
Trading Program and Relationship to Other Rules
    A. Background
    B. FIP Requirements and Key Elements of the CSAPR Trading
Programs
    1. Applicability
    2. State Budgets
    3. Allocations of Emission Allowances
    4. Variability Limits, Assurance Levels, and Penalties
    5. Implementation Approaches for Transitioning the Existing
CSAPR NOX Ozone-Season Program to Address Transport for a
Newer NAAQS
    6. Compliance Deadlines
    7. Monitoring and Reporting and the Allowance Management System
    8. Recordation of Allowances
    C. Submitting a SIP
    1. 2018 SIP Option
    2. 2019 and Beyond SIP Option
    3. SIP Revisions That Do Not Use the CSAPR Trading Program
    4. Submitting a SIP to Participate in CSAPR for States Not
Included in This Proposal
    D. Title V Permitting
    E. Relationship to Other Emission Trading and Ozone Transport
Programs
    1. Interactions With Existing CSAPR Annual Programs, Title IV
Acid Rain Program, NOX SIP Call, 176A Petition, and Other
State Implementation Plans
    2. Other Federal Rulemakings
VIII. Costs, Benefits, and Other Impacts of the Proposed Rule
IX. Summary of Proposed Changes to the Regulatory Text for the CSAPR
FIPs and CSAPR Trading Program
X. Statutory and Executive Order Reviews
    A. Executive Order 12866: Regulatory Planning and Review and
Executive Order 13563: Improving Regulation and Regulatory Review
    B. Paperwork Reduction Act (PRA)
    C. Regulatory Flexibility Act (RFA)
    D. Unfunded Mandates Reform Act (UMRA)
    E. Executive Order 13132: Federalism
    F. Executive Order 13175: Consultation and Coordination With
Indian Tribal Governments
    G. Executive Order 13045: Protection of Children From
Environmental Health Risks and Safety Risks
    H. Executive Order 13211: Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution or Use
    I. National Technology Transfer and Advancement Act (NTTAA)
    J. Executive Order 12898: Federal Actions To Address
Environmental Justice in Minority Populations and Low-Income
Populations
    K. Determinations Under Section 307(b)(1) and (d)

I. Executive Summary

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

A. Purpose of Regulatory Action

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

B. Major Provisions

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

C. Benefits and Costs

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

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

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

II. General Information

A. To whom does this action apply?

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

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

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

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

A. The Interstate Transport Challenge Under the 2008 Ozone Standard

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

D. Addressing Outstanding Transport Obligations for the 1997 Ozone
NAAQS

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

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

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

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

IV. Legal Authority

A. EPA's Authority for the Proposed Rule

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

V. Analyzing Downwind Air Quality and Upwind-State Contributions

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

A. Overview of Air Quality Modeling Platform

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

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

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

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

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

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

B. Emission Inventories

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

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

1. Foundation Emission Inventory Data Sets
    The EPA developed emission data representing the year 2011 to
support air quality modeling of a base year from which future air
quality could be forecasted. The EPA used the 2011 National Emission
Inventory (NEI) version 2 (2011NEIv2), released in March 2015, as the
primary basis for the U.S. inventories supporting the 2011 air quality
modeling. Documentation on the 2011NEIv2 is available in the 2011
National Emissions Inventory, version 2 TSD available in the docket for