Cost effectiveness.  EPA's Group 2 status for Minnesota was justified by EPA's analysis that it was not cost effective for Minnesota sources to make Group 1 state reductions due to relatively low Minnesota baseline emission rates. The same cost effectiveness rationale used by EPA in their Group 1 vs. Group 2 determinations would suggest it is not cost effective to include states in the Transport Rule if EPA analysis shows that the reductions required to meet Group 2 emission budgets have already been implemented in a state.    [EPA-HQ-OAR-2009-0491-2750.1, pp.7-8]
NextEra Energy, Inc.
Florida should remain a Group 2 state for SO2 in the final rule based on EPA's multi-factor assessment using the air assessment tool
The methodology EPA proposes to use to quantify significant contribution in the Transport Rule is a multifactor approach that accounts for both cost and air quality improvement. In step one, EPA identifies what emissions reductions are available at various costs) quantifying emissions reductions that would occur within each state at ascending costs pet ton of emissions reductions. In step two, EPA uses a simplified air quality assessment tool to estimate the impact that the combined reductions available from upwind contributing states and the downwind state) at different cost-per-ton levels) would have on air quality at downwind air quality monitoring sites that had nonattainment and/or maintenance problems. While less rigorous than the air quality models used for attainment demonstrations) EPA believes that this air quality assessment tool is acceptable for assessing the impact of numerous options on upwind reductions in the process of identifying upwind state significant contribution. It allows the Agency to analyze many more potential scenarios in a shorter time frame than the time-and-resource-intensive more refined air quality modeling would permit (more refined air quality modeling can take several months) while multiple scenarios can be evaluated using the air quality assessment tool in a single day). [EPA-HQ-OAR-2009-0491-2718.1, p.7]
EPA did, however, conduct more refined air quality modeling of select emissions budgets to serve as a check on the appropriateness of the simplified method. This check confirmed the directional conclusions of the air quality assessment tool and largely confirmed the more detailed results of the air quality assessment tool, but there were some instances where EPA identified discrepancies between the results of the simplified air quality assessment tool and the more refined air quality modeling [EPA-HQ-OAR-2009-0491-2718.1, p.7]
For the annual PM, standard, the air quality assessment tool projected that, after implementation of the proposed FIP, only one area (Allegheny County, PA would have a continuing NAAQS air quality problem under the maintenance criteria. The results of the refined air quality modeling were very similar. This modeling projected similar annual PM reductions in downwind states and projected that Allegheny County, PA would remain in nonattainment and that Birmingham, AL would exceed the threshold for 'maintenance' by a slight amount less than 0.1 ug/m3). For this reason, EPA is taking comment on whether Florida, the one group 2 state that was identified as linked to Birmingham, should be moved from Group 2 to Group 1.[EPA-HQ-OAR-2009-0491-2718.1, p.7]
Since the refined air quality modeling projects that Birmingham, AL will exceed the maintenance criteria by only an extremely slight amount and because reductions from nearby point sources will reduce local emissions in the area, NextEra Energy does not believe the refined air quality modeling demonstrates that upwind reductions beyond those in the proposed FIP are required to address significant contribution and interference maintenance of the annual NAAQS in Birmingham. On this basis, supports EPA's proposal to include Florida as a Group 2 state for S02. [EPA-HQ-OAR-2009-0491-2718.1, p.7]
North Carolina Department of Environment and Natural Resources
The NCOAQ thinks that $2000/ton of 502 is reasonable. EPA should be consistent in the use of the tool to determine reductions needed. [EPA-HQ-OAR-2009-0491-2767.1 p.7]
Pfeiff, Mike
11. Preferred Approach Maximum Cost Threshold - The methodology the EPA uses to determine significant contribution (Federal Register page 45233) is unlawful. Specially, the EPA does not apply uniform cost standard across all states. Instead, the EPA, 'divides, for individual pollutants, the significant contributing states in to two groups: those with significant contribution that can be eliminated at a lower cost threshold; and those significant contribution is not eliminated' (Federal Register page 45233). A non uniform cost threshold definitions across states prejudices certain states. The Proposed Transport Rule does not provide the EPA the authority to determine cost thresholds that are not uniform.
I request the EPA to explain why the use of non uniform cost standards across all states in not arbitrary and capricious. [EPA-HQ-OAR-2009-0491-2742.1, p.9]
Progress Energy Service Company
Florida Should Remain a Group 2 State
EPA is taking comment on whether Florida, which is a Group 2 state for purposes of the S02 program, should instead be included as a Group I state. Treating Florida as a Group I state would result in little, if any, additional improvement to the air quality in surrounding states. [EPA-HQ-OAR-2009-0491-2831.1 p.9]
For the annual PM2.5 standard, EPA's use of the air quality assessment tool projected that, after implementation of the proposed rule, the Birmingham, Alabama, annual PM2.5 monitors would not have an air quality nonattainment or maintenance problem. However, the results of the refined air quality modeling, using the regional air quality model CAMx, projected that Birmingham would exceed the threshold for 'maintenance' by a slight amount (less than 0.1 uglm3 ). (75 FR 45283) Based on these results of the refined modeling, EPA has requested comment on whether Florida should be moved from Group 2 to Group 1. Progress Energy agrees with EPA's conclusion that upwind reductions beyond those in the proposed rule are not required to address significant contribution and interference with maintenance of the annual PM2.5 NAAQS in Birmingham. As EPA states, 'the refined air quality modeling projects that Birmingham, AL, will exceed the maintenance criteria by only an extremely slight amount.' [EPA-HQ-OAR-2009-0491-2831.1 p.9]
In addition, EPA erred in assuming that units 4, 5, 6 and 7 at Plant Crist in Escambia County, Florida, and units 4 and 5 at Crystal River in Citrus County, Florida, have dispatchable wet FGDs that would not operate in the 2012 base case. In fact, the operation of these wet FGDs is required by their permits, and together they reduce the total combined Florida electric sector S02 emissions by almost 40%. Had EPA fully accounted for the reductions from Florida sources in the base case, that analysis would almost certainly have found that Florida does not interfere with maintenance of the annual PM2.5 standard in Birmingham. Therefore, Florida should not be considered for inclusion as a Group I state, and Progress Energy urges the agency to maintain its Group 2 status. [EPA-HQ-OAR-2009-0491-2831.1 p.9]
State of Wisconsin, Department of Natural Resources
EPA needs to consider deeper control levels in identifying EGU responsibility for states with remaining significant contribution.
EPA's assessment for the proposed rule indicates a need to explore a broader range of EGU control cost effectiveness in this rule for both S02 and NOx controls in states directly impacting Wisconsin air quality. While identifying the core issue of insufficiency of remedy within the evaluated controls cost range, we also note a limiting system issue is one of controls installation feasibility in short timeframes. EPA's assessments showed a large drop in projected S02 emissions when going from $2000/ton to $2400/ton. This step function drop in residual emissions is probably due to a projected scrubber retrofit of a significant amount of installed baseload capacity that currently is configured to use sub-bituminous coal. Increasing the assessment to the same top level evaluated for NOx control (up to $5000/ton) would place all parts of the region into a more consistently and equitably controlled circumstance and would ensure that the major baseload portions of the utility fleet would no longer significantly contribute to ambient air quality problems downwind. While such control installation levels could not be achieved by 2014, much of the additional control need could be met in 2016 and later. [EPA-HQ-OAR-2009-0491-2829.2, pp.7-8]
Tampa Electric Company
EPA indicates in the proposal that Florida emissions have some impact on Birmingham's attainment status that may support including Florida as a Group 1 state. Although there is inadequate time to fully evaluate EPA's conclusions, Tampa Electric believes it would unnecessarily burdensome to impose an even stricter SO2 cap on Florida since EPA's modeling shows Birmingham "will exceed the maintenance criteria by only an extremely slight amount...." (75 FR at 45283, Col. 2). We understand that Alabama Department of Environmental Management recently conducted refined modeling for the Birmingham PM2.5 SIP, in accordance with EPA guidance on PM2.5 attainment modeling. This effort includes local emissions reductions that EPA failed to consider in the refined Transport Rule modeling (see, EPA Transport Rule Emissions Inventory TSD, p.11), and shows that the Birmingham area will actually attain the annual PM2.5 standard in 2012. We agree with EPA that reductions from local sources will have a more significant impact on reducing emissions in this area and that upwind reductions beyond those proposed are not necessary. [EPA-HQ-OAR-2009-0491-2745.1 p.7]
Tennessee Valley Authority (TVA)
B. Issue: EPA believes it is appropriate to use multiple cost thresholds where one group of states can, for a lower cost, eliminate non-attainment and maintenance for all downwind problem areas to which they are linked. (p. 45274)[EPA-HQ-OAR-2009-0491-2782.1, p. 11]
TVA Comment: As indicated in our earlier comment, TVA agrees that states in Group 1 and Group 2 should not be assigned the same cost per ton; however, it is hard to decipher EPA's rationale for grouping the states from reviewing Figures IV-D-1 to IV-D-4. It does not appear reasonable to place states such as Kentucky, Tennessee and West Virginia in Group 1 in view of the flat cost curves associated with SO2 reductions in these states. [EPA-HQ-OAR-2009-0491-2782.1, p. 11]
Further, EPA invites comment on whether certain states, while placed in Group 2 in the proposal, should be moved from Group 2 to Group 1 because refined air quality modeling predicts that the downwind states to which they are linked will continue to have nonattainment or maintenance problems. (p. 45283-84) TVA recommends that air quality significance thresholds, once established to identify states with significant contributions to downwind nonattainment or maintenance, should be rigorously applied. Section 110 would require nothing less. There are also a couple of policy reasons that make rigorous application of the threshold criteria necessary even in those states that may be on the cusp in creating downwind nonattainment or maintenance problems. First, the air quality standards that are being addressed in this Transport Rule are under reconsideration and likely to be further lowered. EPA recognizes that if more protective NAAQS are promulgated, further emission reductions would be needed in upwind states that significantly contribute to the air quality problems in another state. [p. 45228] Thus, states that are today on the cusp are very likely to become targeted for significant reductions in the near future. Second, the remedy proposed by EPA in the Transport Rule allows for limited interstate trading, providing EGUs the flexibility to implement controls in a cost-effective manner. Increasing the number of states in a group increases the opportunity for such interstate trading by increasing the size of the trading pool. Since Group 2 states must make deeper reductions than Group 1 states, the former group is likely to derive a greater benefit than the latter from having a larger trading pool. [EPA-HQ-OAR-2009-0491-2782.1, pp. 11-12]
Texas Mining and Reclamation Association
 The proposed Transport Rule currently requires that Texas demonstrate NOX reductions with respect to the 8-hour ozone NAAQS. Texas is not currently held to the additional reductions for SO2 and NOX for the annual PM2.5 NAAQS or 24-hour PM2.5 NAAQS required for "Group 1" and "Group 2" states. EPA is now seeking comment on and considering, inclusion of Texas in the moderate SO2-controlled group, the "Group 2" states.   [EPA-HQ-OAR-2009-0491-2734.1 p.3]
 EPA's concern seems to be that the SO2-regulated states will switch to lower-sulfur coal, thereby creating a market for the higher-sulfur coal in the "unregulated states" such as Texas. EPA projects that Texas's new reliance on the higher-sulfur coal will result in SO2 increases over the base case and above 5,000 tons.1 In EPA's modeling, Texas' SO2 emissions would exceed the 0.15 ug/m3 threshold for annual PM2.5 in 2012. For this reason, EPA is considering including Texas as a Group 2 member subject to SO2 reductions by 2012.2 [EPA-HQ-OAR-2009-0491-2734.1 p.3]
1 75 Fed. Reg. at 45284.
2 As a Group 2 state, Texas would be required to make additional SO2 reductions through (1) operating existing scrubbers, (2) installing scrubbers by 2012, and (3) using coal with a lower sulfur content. 75 Fed. Reg. at 45290.
  Texas is currently demonstrating attainment for the 24-hour and annual PM2.5 NAAQS; there are no nonattainment areas for PM2.5 in Texas. To require additional reductions in SO2 based on the assumption that Texas may invest in coal with a higher sulfur content is speculative and unsubstantiated. Without a clear basis for this assumption, EPA should not include Texas into an additional regulatory program . [EPA-HQ-OAR-2009-0491-2734.1 p.3]
Xcel Energy Inc.
2. EPA should leave Minnesota in the SO2 Group 2 trading program.
Xcel Energy opposes moving Minnesota from SO2 Group 2 to Group 1. EPA has performed a detailed analysis supporting Minnesota's inclusion in Group 2 using the air quality assessment tool. EPA's analysis placed Minnesota in Group 2 because the air quality assessment tool indicated that the 2012 reductions will resolve the nonattainment or maintenance problems at all areas to which they are linked. [EPA-HQ-OAR-2009-0491-2728.1, p.8]
EPA is considering moving Minnesota from the Group 2 to the Group 1 SO2 trading program because the CAMx model indicates that one or more of the states to which Minnesota is linked will have continuing nonattainment or maintenance problems after implementation of the 2012 reductions. We strongly oppose this approach, for the following reasons:[EPA-HQ-OAR-2009-0491-2728.1, p.8]
- EPA used the air quality assessment tool as the basis for the state designations under CATR.[EPA-HQ-OAR-2009-0491-2728.1, p.8]
- EPA has stated on page 45283 that it believes additional study of the winter portion of the problem is warranted to address the issues raised by the CAMx modeling. We agree that additional study of this issue should occur before EPA changes the SO2 trading group designation of Minnesota from Group 2 to Group 1 in the SO2 trading program.[EPA-HQ-OAR-2009-0491-2728.1, p.8]
For these reasons, EPA should not move Minnesota from the Group 2 to the Group 1 SO2 trading program.[EPA-HQ-OAR-2009-0491-2728.1, p.8]
Response:
With respect to EPA's selection of receptors as having non-attainment and maintenance problems in the 2012 base case, EPA's source apportionment modeling, and EPA's identification of significant contribution to nonattainment and interference with maintenance, EPA updated and improved its analysis with respect to each of these steps for the final Transport Rule.
EPA updated the assumptions and inputs to the emissions inventories (based in part on public comment) for which details can be found in section V and VI of the preamble for the final Transport Rule and the Documentation Supplement for EPA Base Case v.4.10_FTransport  -  Updates for Final Transport Rule.
EPA modified and improved the Air Quality Assessment Tool (AQAT) for use in the final transport rule analysis.  Details can be found in section VI.C of the preamble for the final Transport Rule and the Significant Contribution and State Emissions Budgets Final Rule Technical Support Document.  These sections describe improvements to AQAT, demonstrate EPA's confidence that AQAT estimates of ambient air quality would align well with CAMx modeling for the assessed cost thresholds, and show that detailed CAMx modeling of the final Transport Rule supported AQAT's results.
Further, section VI.D of the preamble for the final Transport Rule and the Significant Contribution and State Emissions Budgets Final Rule Technical Support Document detail the methods used and rational for determination of significant contribution to non-attainment and interference with maintenance, including determination of Group 1 and Group 2 states for the final Transport Rule.
Organization: New York University School of Law, Institute for Policy Integrity
Wholesale Markets Brokers' Association
Comment:
New York University School of Law, Institute for Policy Integrity
:: Trading should be allowed between SO2 group one states and SO2 group two states, with appropriate trading ratios. [EPA-HQ-OAR-2009-0491-2691.1, p.1]
5. Trading Between SO2 Groups
The Transport Rule divides states into two groups based on the significance of their SO2 emissions to downwind impacts. Under its preferred approach, EPA does not permit trading between the two separate groups. By limiting the size of the marketplace, this restriction will reduce the opportunities to take advantage of the lowest-cost abatement opportunities, without creating any measurable benefit to the environment or public health. Since EPA will already ensure that every state is taking reasonable measures to reduce its significant contribution (either through the current assurance provisions or the modifications recommended in these comments), the prohibition on intergroup trading is not necessary to comply with statutory mandates. To the extent the harms caused by SO2 emissions vary with geographic origin, trading ratios could be established to account for marginal damage differences, without interfering with a more open and efficient trading scheme. For example, firms operating in group one states might be required to submit two allowances for each ton of emissions, versus only one allowance required in group two states. [EPA-HQ-OAR-2009-0491-2691.1, p.13]
Because the prohibition on intergroup trading raises costs without providing benefits, EPA should remove it and allow trading among all states. EPA should also study the potential benefits of using trading ratios to govern trades between states in group one and group two. If trading ratios would increase net benefits at an acceptable administrative cost (because of significant disparity in marginal damages and/or wide variation in marginal abatement costs), EPA should adopt such an approach. [EPA-HQ-OAR-2009-0491-2691.1, p.13]
Wholesale Markets Brokers' Association
By restricting trading zones to arbitrary political boundaries, and not physical proximity, the CATR proposal would unduly limit the number and nature of market participants. In practical terms, this reality when coupled with the current electric utilities rate regulation strongly suggest that EPA take steps to broaden the number of potential market participants and increase the time period and geographic area within which allowances may be lawfully used for compliance purposes. Unfortunately, EPA's proposal, with its Group 1 and Group 2 states, goes in the opposite direction. By limiting potential trades to states within a group, EPA artificially reduces the number of potential market participants, and ignores the location of Group 1 and 2 states adjacent to each other. This artificial limitation on the size of the emissions trading market is further aggravated because the Group 2 states are not contiguous to each other in many cases. Because Group 2 states are scattered on the periphery of the Group 1 states, trading among Group 2 states is likely to be severely (and needlessly) limited. [EPA-HQ-OAR-2009-0491-2799.1, p.4]
To best improve air quality and public health, the Association suggest that EPA instead consider using a substantial fixed distance from electric generating units as the basis for trading. This will more closely reflect physical reality and facilitate trading on a predictable basis. Thus, this rule would be based on the physical aspects of particulates rather than the arbitrary political boundaries. While EPA may seek to use a standard distance around the country, it might also set a fixed distance applicable to each state, reflecting the average of weather conditions for that state. In that fashion, EPA would address the court's concern that emission reductions be tied to reductions of monitored air quality in downwind states. [EPA-HQ-OAR-2009-0491-2799.1, p.4]
Response:
EPA's rationale for prohibiting trading between Group 1 and Group 2 SO2 states can be found in section VI.D of the preamble for the final Transport Rule.
Organization: Utility Air Regulatory Group (UARG)
Southern Company
Comment:
Southern Company
B. EPA's Significant Contribution Analysis and Process to Classify Certain States as 'Group l' or 'Group 2' States is Inadequately Explained and Misguided
In the Proposed Transport Rule, EPA describes its process for classifying states as 'group 1' and 'group 2' states for PM2.5 as follows:
EPA used the air quality assessment tool to analyze the impact of requiring all states linked to the downwind state site with an air quality problem, as well as the downwind state, to reduce emissions consistent with the levels discussed for 2012 ... previously. The air quality assessment tool shows that those 2012 reductions will resolve the nonattainment and maintenance problems for all of the areas to which [certain] states [referred to as group 2 states] are linked . ... EPA also assessed whether, in 2014, the combination of this level of reduction from the group 2 states and the remaining states (referred to as group 1 states) continued to result in all downwind areas-except for Allegheny County, Pennsylvania-fully addressing their nonattainment [and/or] maintenance problems, and determined that it did. [EPA-HQ-OAR-2009-0491-2864.1, p. 28]
Conversations with EPA staff have revealed that, while not untrue, this description is incomplete and potentially misleading, especially with respect to the analysis that led to classification of the group 1 states. A representative of Southern Company contacted EPA's Clean Air Markets Division on September 3, 2010, and again on September 10, 2010, requesting clarification regarding how EPA classified individual states as group 1 or group 2 states. A representative of the Clean Air Markets Division explained the process as follows. [EPA-HQ-OAR-2009-0491-2864.1, p. 28]
EPA first determined which downwind monitors were classified as nonattainment and/or maintenance for PM2.5 based on the projected 2012 base case air quality, and then identified upwind states that were 'linked' to these monitors. This step in EPA's methodology determined which states were included in the Transport Rule for PM2.5, at least as group 2 states, based on their significant contribution to nonattainment or interference with maintenance. Next, EPA used its air quality assessment tool and the emission changes resulting from the 2014 cost curves to evaluate how air quality at the nonattainment and maintenance monitors would change in response to emission reductions from 'linked' upwind states, assuming a linear relationship between reductions in the upwind states' emissions and reductions in their respective contribution to projected ambient concentrations at the downwind monitors. EPA evaluated each monitor independently, considering only emission reductions from 'linked' upwind states and the state in which the monitor is situated. EPA found that the 24-hour PM2.5 NAAQS was controlling because most annual PM2.5 problems were resolved at relatively low dollars-per-ton thresholds, while 24-hour PM2.5 problems were more likely to persist at higher cost thresholds. EPA focused on the maintenance monitors and did not consider the nonattainment monitors separately because of the way that nonattainment and maintenance sites were determined. 28 [EPA-HQ-OAR-2009-0491-2864.1p. 29]
Using its air quality assessment tool, EPA determined that, in 2014, there were six monitors that still showed maintenance problems at approximately $300-400 per ton that, with the exception of one in Allegheny County, Pennsylvania, could be eliminated at $2,400 per ton or less. EPA then decided that the states linked to those six monitors that continued to have maintenance problems at higher dollar-per-ton levels should be required to make additional emission reductions and used the 2012 base case to determine which upwind states were 'linked' to those six remaining monitors. EPA classified upwind states linked to those six monitors as group 1 states and upwind states not linked to those six monitors as group 2 states. It appears that this was the sole determinant for classifying states as group 1. Strikingly, according to EPA's Clean Air Markets Division, in determining group 1 or group 2 status in 2014, EPA ignored the air quality benefits that would accrue in 2012 and 2013 from the emission reductions required by the Transport Rule in 2012 and from state rules and consent decrees that require emission reductions by 2014. [EPA-HQ-OAR-2009-0491-2864.1, p. 29]
This illogical decision not to consider the results of reductions required beginning in 2012 in projecting remaining maintenance problems in 2014 demonstrates a complete disconnect in the Agency's analysis. EPA characterizes its Proposed Transport Rule as having two 'phases.' 75 Fed. Reg. at 45215/3. It makes no sense to evaluate phase II of the proposal in isolation, ignoring the projected effects of phase I. EPA's approach is made worse by the Agency's decision to ignore the effects of CAIR for purposes of modeling. See section XI-A. Had EPA considered the emission reductions that would result from the 2012 CAIR compliance deadline, it is likely that the maintenance problems projected at most or all of these six monitors in 2014 would not have existed, even if the Agency had continued to ignore the effects of CAIR. Air quality has been improving steadily in recent years, and, consistent with that nationwide trend, 24-hour PM2.5 concentrations at all six of the monitors at issue show a strong downward trend. [EPA-HQ-OAR-2009-0491-2864.1, p. 29]
See Figure XI-1 [See EPA-HQ-OAR-2009-0491-2864.1, p. 36 for Figure.] showing the 98th percentile design values for 24-hour PM2.5 at these six monitors from 2003-2008 at Section XI-F. EPA should redo (as well as publish for public comment) its analysis of 2014 air quality by including consideration of the emission reductions required in 2012 under the proposed rule. A balanced analysis of this issue is likely to remove any justification for imposing more stringent S02 requirements on certain states in phase II of the program. [EPA-HQ-OAR-2009-0491-2864.1, p. 30]
E. A Lower Cost Solution Appears Possible for PM2.5
It is unclear why EPA chose to drive to such a stringent 'remedy' when a lower cost solution appears possible for PM2.5. Using the AQAT, focusing on the 2012 cost curves, and assuming that local controls should bear some of the burden, it would appear that a similar air quality benefit could be achieved at between $200 and $400 per ton of S02. Table XI-3 below [See EPA-HQ-OAR-2009-0491-2864.1, p. 33 for the Table.] shows the results of these costs levels vs. the 2012 remedy. [EPA-HQ-OAR-2009-0491-2864.1, p. 33]
4. If EPA Deems It Necessary To Require 2012 Emissions Reductions Beyond CAIR, It Should Have Analyzed Air Quality Benefits Using the 2012 Emission Reduction Cost Curves
Once EPA established that nonattainment and maintenance could be achieved at all monitors in 2014 at $2000 per ton, it then considered what reductions could be achieved by 2012. EPA concluded that 'it is important to require all such reductions by 2012 to ensure that they are achieved as expeditiously as practicable.' CAIR was left in place by the Court and is achieving significant emissions reductions and air quality improvements (see Section XI-A). If EPA considered 2012 an important target date to achieve reductions beyond CAIR, it should have conducted an air quality analysis of air quality benefits that could be achieved by 2012 using the 2012 cost curves that were published in the Transport Rule. Using our replicated version of the AQAT, we found that, in 2012, Florida would have resolved all of its downwind PM2.5 linkages at $100 per ton, and Alabama would have resolved all of its downwind PM2.5 linkages at $200 per ton. This should have resulted in 2012 projected EGU budgets for these two states of 204,309 and 274,958 tons of S02, respectively. The proposed remedy budgets are 161,739 and 161,871 tons of S02 in 2012, which are overly and unnecessarily stringent to resolve the nonattainment and maintenance issues at the downwind receptors to which these two states are linked. [EPA-HQ-OAR-2009-0491-2864.1, p. 42]

Footnote 28:  As described above, EPA determined maintenance sites based on the future-year maximum PM2.5 design values, and nonattainment sites based on future-year five-year weighted average annual PM2.5 design values. Thus, all nonattainment sites were also maintenance sites. 75 Fed. Reg. at 45247. See Section XI-G for comments regarding the manner in which EPA determined maintenance sites.

Utility Air Regulatory Group (UARG)
The Process EPA Used To Classify Certain States as "Group 1" States Is Inadequately Explained and Misguided.
In the Proposed Transport Rule, EPA describes its process for classifying states as "group 1" and "group 2" states for PM2.5 as follows:
EPA used the air quality assessment tool to analyze the impact of requiring all states linked to the downwind state site with an air quality problem, as well as the downwind state, to reduce emissions consistent with the levels discussed for 2012 . . . previously. The air quality assessment tool shows that those 2012 reductions will resolve the nonattainment and maintenance problems for all of the areas to which [certain] states [referred to as group 2 states] are linked . . . . EPA also assessed whether, in 2014, the combination of this level of reduction from the group 2 states and the remaining states (referred to as group 1 states) continued to result in all downwind areas -- except for Allegheny County, Pennsylvania -- fully addressing their nonattainment [and/or] maintenance problems, and determined that it did. [EPA-HQ-OAR-2009-0491-2756.1, p.66]
75 Fed. Reg. at 45282/1-2. Conversations between UARG members and EPA staff have revealed that, while not untrue, this description is materially incomplete and potentially misleading, especially with respect to the analysis that led to classification of the group 1 states. A representative of Southern Company contacted EPA's Clean Air Markets Division on September 3, 2010, and again on September 10, 2010, requesting clarification regarding how EPA classified individual states as group 1 or group 2 states. A representative of the Clean Air Markets Division explained the process as follows. [EPA-HQ-OAR-2009-0491-2756.1, pp.66-67]
EPA first determined which downwind monitors were classified as nonattainment and/or maintenance for PM2.5 based on the projected 2012 base case air quality, and then identified upwind states that were "linked" to these monitors. This step in EPA's methodology determined which states were included in the Transport Rule for PM2.5, at least as group 2 states, based on their significant contribution to nonattainment or interference with maintenance. Next, EPA used its air quality assessment tool and the emission changes resulting from the 2014 cost curves to evaluate how air quality at the nonattainment and maintenance monitors would change in response to emission reductions from "linked" upwind states, assuming a linear relationship between reductions in the upwind states' emissions and reductions in their respective contribution to projected ambient concentrations at the downwind monitors. EPA evaluated each monitor independently, considering only emission reductions from "linked" upwind states and the state in which the monitor is situated. EPA found that the 24-hour PM2.5 NAAQS was controlling because most annual PM2.5 problems were resolved at relatively low dollars-per-ton thresholds, while 24-hour PM2.5 problems were more likely to persist at higher cost thresholds. EPA focused on the maintenance monitors and did not consider the nonattainment monitors separately because of the way that nonattainment and maintenance sites were determined. [EPA-HQ-OAR-2009-0491-2756.1, p.67]
Using its air quality assessment tool, EPA determined that, in 2014, there were six monitors that still showed maintenance problems at approximately $300-$400 per ton that, with the exception of one in Allegheny County, Pennsylvania, could be eliminated at $2,400 per ton or less. EPA then decided that the states linked to those six monitors that continued to have maintenance problems at higher dollar-per-ton levels should be required to make additional emission reductions, and EPA used the 2012 base case to determine which upwind states were "linked" to those six remaining monitors. EPA classified upwind states that, in the 2012 base case, were linked to those six monitors as group 1 states and classified upwind states not linked to those six monitors as group 2 states. It appears that this was the sole determinant for classifying states as group 1. Strikingly, according to EPA's Clean Air Markets Division, in determining group 1 or group 2 status in 2014, EPA ignored the air quality benefits that would accrue in 2012 and 2013 from the emission reductions required by the Transport Rule during those years and from state rules, consent decrees, and other requirements that will result in additional emission reductions by 2014. [EPA-HQ-OAR-2009-0491-2756.1, pp.67-68]
This illogical decision not to consider the results of reductions required beginning in 2012 in projecting remaining maintenance problems in 2014 demonstrates a complete disconnect in the Agency's analysis. EPA characterizes its Proposed Transport Rule as having two "phases." 75 Fed. Reg. at 45215/3. It makes no sense to evaluate phase II of the proposal in isolation, ignoring the projected effects of phase I (and other emission reduction requirements applicable in the period leading up to 2014). EPA's approach is made worse by the Agency's decision to ignore the effects of CAIR and local controls for purposes of modeling. See section VII.A supra and section VII.F infra. Had EPA considered the emission reductions that would result from the 2012 compliance deadline and other controls, it is likely that the supposed maintenance problems projected at most or all of these six monitors in 2014 would be shown not to exist, even if the Agency had continued to ignore the effects of CAIR. As these comments note above, air quality has been improving steadily in recent years, and, consistent with that nationwide trend, 24-hour PM2.5 concentrations at all six of the monitors at issue show a strong downward trend. See graph showing the 98th percentile design values for 24-hour PM2.5 at these six monitors from 2003-2008 at section VII.D supra. EPA should redo and publish for public comment its analysis of 2014 air quality by including consideration of the emission reductions required in 2012 and 2013 under the proposed rule and other applicable requirements. A balanced analysis of this issue is likely to remove any justification for imposing more stringent SO2 requirements on certain states in phase II of the program. [EPA-HQ-OAR-2009-0491-2756.1, pp.68-69]
Response:
Section VI.D of the preamble for the final Transport Rule and the Significant Contribution and State Emissions Budgets Final Rule Technical Support Document detail the methods used and rational for determination of significant contribution to non-attainment and interference with maintenance, including determination of Group 1 and Group 2 states for the final Transport Rule.
Regarding the comment that "in determining group 1 or group 2 status in 2014, EPA ignored the air quality benefits that would accrue in 2012 and 2013 from the emission reductions required by the Transport Rule in 2012 and from state rules and consent decrees that require emission reductions by 2014" EPA does include emission reductions in 2014 from state rules and consent decrees that happened in 2012, 2013, and 2014.  EPA took comment on these emission reduction requirements and reflected them in the Air Quality modeling for the final Transport Rule and the application of AQAT for determining significant contribution.  Details on emissions inventories can be found in sections V and VI of the preamble for the final transport rule and in the Documentation Supplement for EPA Base Case v.4.10_FTransport  -  Updates for final Transport Rule.  Details on EPA's rationale and methods for determining Group 1 and Group 2 SO2 states can be found in section VI.D of the preamble for the final Transport Rule.
With respect to EPA's final determination of SO2 and NOX reductions under the final Transport Rule, details on the rationale and methods used can be found in sections V and VI of the preamble for the final Transport Rule.

IV.D.4.b. Modeling Methods/ Air Quality Assessment Tool/Results of Evaluation With Detailed Air Quality Model (CAMx)

Organization: American Forest & Paper Association (AF&PA)
Comment:
American Forest & Paper Association (AF&PA)
Finally, we have concerns about the technical quality of the modeling used to support EPA's proposal, and in particular about EPA's decision to use AQAT rather than CAMX modeling. Those concerns are set out in more detail in a Technical Appendix. [EPA-HQ-OAR-2009-0491-2643.1, p.2]
D. AF&PA Supports CAMx Modeling as Superior to AQAT
For this rulemaking EPA has identified the Comprehensive Air Quality Model with Extension (CAMx) to assess ambient concentrations of ozone and PM2.5. CAMx, is among the 'one-atmosphere' Eulerian photochemical dispersion models that simulate regional to large-scale dispersion and the complex non-linear gas and particulate phase chemical and physical processes that govern the formation, transport and removal of secondary pollutants. In selecting CAMx for this assessment EPA recognizes that there is not a simple direct relationship between natural and anthropogenic emissions and these secondary pollutants. [EPA-HQ-OAR-2009-0491-2643.1, p.7]
Because this rulemaking required iterative simulations, EPA did not apply CAMx directly, citing the substantial level of effort, time and resources required for each CAMx simulation. Rather, the Air Quality Assessment Tool (AQAT) was developed with the objective of efficiently evaluating the effectiveness of multiple control strategies. In developing AQAT, CAMx was first applied to a base case in a source contribution mode to relate the contribution of EGU sources of NOx and SO2 in individual states to modeled ambient concentrations of ozone and PM2.5 at selected locations where ozone and PM2.5 NAAQS are presently exceeded. AQATs' formulation assumes that changes in emissions within a state will result in proportional changes in modeled concentrations according to the modeled relationships. Specifically, in AQAT:
:: A reduction in SO2 emissions leads to a proportional decrease in downwind PM2.5 sulfate contributions;
:: A reduction in NOx emissions leads to a proportional decrease in downwind PM2.5 nitrate contributions;
:: A reduction in NOx emissions leads to a proportional decrease in downwind ambient ozone concentrations [EPA-HQ-OAR-2009-0491-2643.1, p.7]
The chief limitations to AQAT is that it does not account for interactions that occur associated with the change in the mix of emissions and that the resolution of the interaction between emissions and ambient air quality are limited to the state level. Thus, AQAT incorporates an inherently incorrect assumption that the modeled ratio of a state's emissions to ambient concentrations is invariant even as the mix of emissions changes with each emissions control strategy evaluated. This type of simplified linear method can only be used to evaluate small perturbations in emissions necessary to evaluate the emissions reductions necessary to address very small margins of NAAQS non-compliance. If it is determined that PM2.5 and ozone concentrations will need to be reduced substantially, the magnitude of the projected necessary changes in emissions will result in complex non-linear pollutant interactions that will take effect such that the linearity assumptions inherent in AQAT are violated. [EPA-HQ-OAR-2009-0491-2643.1, p.8]
EPA's limited 2014 comparison of AQAT and CAMx simulations for 24-hour PM2.5 confirm the inaccuracy and bias in AQAT's estimation of the effectiveness of emission reductions. In an attempt to verify the viability of the AQAT application, EPA ran CAMx for the 2014 remedy scenario and compared results to the AQAT results for 24-hour PM2.5 concentrations at the nonattainment monitor locations. The comparison shows that AQAT at nearly all locations overestimated total reductions in PM2.5 concentrations relative to CAMx. The difference in the daily average design value between AQAT and CAMx was 5.7 μg/m3 or about 16% of the 35 μg/m3 NAAQS. [EPA-HQ-OAR-2009-0491-2643.1, p.8]
From this comparison it is apparent that AQATs assumption of linearity between changes in emissions and ambient concentrations of secondary pollutants is not well founded. CAMx explicitly accounts for interactions and nonlinearities in the atmospheric reactions. EPA conjectures that the degree to which AQAT overestimated the sensitivity of precursor emissions to ambient PM2.5 concentrations could be related in part to the seasonal differences in the response of sulfate concentrations to changes in SO2 emissions. It is also well-established that the NOx contribution to particulate nitrate is highly seasonally dependent and in competition with sulfate formation. Although EPA has not explicitly evaluated the adequacy of AQAT in developing the proposed rule, it is certain that AQATs assumption of linearity between NOx emissions has similar limitations. [EPA-HQ-OAR-2009-0491-2643.1, p.8]
It should be kept in mind that the noted deficiencies in AQAT are based not on observational evidence but on comparisons to CAMx, a model which itself has substantial, documented limitations in relating precursor emissions to secondary pollutant concentrations. The fact that AQAT substantially overestimates the improvement in daily average PM2.5 concentrations relative to CAMx indicates that EPA does not have an effective modeling tool upon which to develop national and regional emissions control strategies. The evidence provided by the CAMx-AQAT comparison is that AQAT as currently constituted is not sufficiently refined to provide accurate, unbiased projections of changes in secondary pollutant concentrations associated with various emission control strategies involving precursor emissions. [EPA-HQ-OAR-2009-0491-2643.1, p.8]
The inadequacy of the simplified AQAT approach makes it imperative that EPA develop a more refined approach to establish emission control strategies for this rulemaking. In Section IV.D.2. of the Rule, EPA requests comments on whether there are ways to use air quality modeling in conjunction with the air quality assessment tool to carry out the significant contribution analysis in a way that would not extend the time needed to complete this rulemaking and whether or not there are ways to improve the air quality assessment tool. There are a number of ways this may be accomplished. For instance, AQAT could be used as a starting point and then CAMx could then be applied directly to refine the strategies. Another approach would be to refine AQAT by developing a more robust multivariate tool based on a simplified parameterization developed based on CAMx sensitivity studies. While it is acknowledged that either approach will require additional time and resources, given that widespread emission reductions will be required under this rulemaking, it is mandatory that EPA apply the best available modeling technology. [EPA-HQ-OAR-2009-0491-2643.1, p.9]
Response:
For the final Transport Rule, EPA made significant modifications and improvements to the development and use of AQAT.  Please refer to Section VI of the preamble for the final Transport Rule for more details.
Organization: Clean Air Task Force
Comment:
Clean Air Task Force
Reasonable Determination of 'Significant Contribution' Requires Additional Reductions of Power Plant Emissions of SO2 and NOx.
EPA explains in the TR proposal that for reasons of administrative convenience it initially used a 'simplified air quality assessment tool, rather than actual air quality modeling, to identify air quality impacts of the options considered. However, EPA did follow up this simplified approach with more rigorous and refined air quality modeling of the selected emission budgets. This modeling produced different results, which raises several issues upon which EPA seeks comment. In essence, the refined modeling (CAMx) projected that a number of downwind areas would continue to experience nonattainment or maintenance problems with either the PM or ozone NAAQS, or both, even after implementation of the proposed TR. EPA indicates that it intends to conduct further analysis to determine whether additional reductions are necessary, and notes that it is committed to providing downwind states full relief from upwind emissions. We support EPA's stated intention in this regard, and submit that the court's opinion in North Carolina v. EPA requires no less. [EPA-HQ-OAR-2009-0491-2738.1, p.13; This comment can also be found at section IV.D.2 of this comment summary]
Response:
For the final Transport Rule, EPA made significant improvements to the development and use of AQAT.  Please refer to Section VI of the preamble for the final Transport Rule for more details.  Additionally, as described in Section VI.D of the preamble for the final Rule, EPA finds that, for states covered by this rule for the 1997 annual PM2.5  NAAQS or the 2006 24-hr PM2.5 NAAQS, the annual NOX and SO2 reductions under the final Transport Rule successfully address significant contribution and interference with maintenance with respect to the NAAQS for which the state is covered.  Regarding the ozone standard, EPA believes it can best serve states with ozone non-attainment and maintenance problems by quickly finalizing this rule and seeking further ozone season NOX reductions as appropriate in subsequent rulemakings.  See final Transport Rule preamble section VI.D for more details about elimination of significant contribution.
Additionally, air quality modeling results provided in section VIII.B of the preamble for the final Transport Rule indicate that the final transport rule will resolve non-attainment with all PM2.5 standards for all receptors with the exception of 1 receptor with remaining non-attainment problems for the 24-hour PM2.5 standard in the Liberty-Clairton area--which EPA has noted is heavily influenced by a local source of organic carbon (75 FR 45281).  This modeling also indicates that only 1 area (Houston, TX) is expected to have remaining non-attainment problems for the ozone standard and only 1 area (Baton Rouge, LA) is expected to have remaining maintenance problems for the ozone standard.
Organization: Georgia Department of Natural Resources, Air Protection Branch
Comment:
Georgia Department of Natural Resources, Air Protection Branch
Insignificance of NOx Emissions to Annual and Daily PM2.5
EPA combined the modeled contributions of nitrate and sulfate from each state for the purpose of evaluating the interstate contributions to annual and daily PM2.5. The combined contribution from nitrate and sulfate were compared against specific threshold criteria (0.35 _g/m3 for daily PM2.5 and 0.15 _g/m3 for annual PM2.5). In order to justify annual state budgets for both SO2 and NOx, it should be demonstrated that SO2 and NOx individually are significant contributors. In some parts of the country (i.e., the Southeast U.S.), the contributions from SO2 are 10 to 100 times higher than the contribution from NOx. In these cases, there is no justification for setting annual NOx budgets based solely on the finding that SO2 is a significant contributor. Instead, SO2 and NOx need to be compared individually against the significance threshold criteria so that only the significant pollutants are targeted for controls. Also, it has been documented that controlling NOx year-round in the Southeastern U.S. vs. controlling NOx in the ozone season only may lead to HIGHER annual PM2.5 concentrations. [EPA-HQ-OAR-2009-0491-2647.1, p.3]
Based on an analysis of the nitrate source apportionment contributions presented by EPA in the Transport Rule Air Quality Modeling Technical Support Document, Georgia EPD believes that Georgia NOx emissions do not significantly contribute to daily PM2.5 or annual PM2.5 in nonattainment and maintenance areas outside Georgia. Therefore, only ozone season NOx budgets (not annual NOx budgets) should be developed for the states in the Southeastern U.S. [EPA-HQ-OAR-2009-0491-2647.1, p.3]
Georgia EPD analyzed the impact from the combination of NOx and SO2 (EPA approach) as well as NOx and SO2 individually on nonattainment and maintenance areas outside Georgia. EPA identified 147 monitors with a 2012 maximum projected design value above the current daily PM2.5 NAAQS of 35 _g/m3. Of those 147 monitors, the maximum impact from Georgia NOx was 0.0364 _g/m3, which is approximately 0.1% of the NAAQS. The EPA approach combined the impacts of SO2 and NOx and compared the combined impacts to 1% of the NAAQS (0.35 _g/m3). If the combined impacts were above 0.35 _g/m3, the upwind state was linked to the downwind monitor and targeted for emission reductions. This approach results in 18 monitors being linked with emissions in Georgia (see Table 1). It should be noted that the majority of the impacts are coming from SO2 (sulfate) and less than 10% of the total impacts are coming from NOx (nitrate). [[See Docket Number EPA-HQ-OAR-2009-0491-2647.1, p.4 for Table 1]] [EPA-HQ-OAR-2009-0491-2647.1, p.3]
EPA identified 50 monitors with a 2012 maximum projected design value above the current annual PM2.5 NAAQS of 15 _g/m3. Of those 50 monitors, the maximum impact from Georgia NOx (not including impacts on Georgia monitors) was 0.0159 _g/m3, which is approximately 0.1% of the NAAQS. The EPA approach combined the impacts of SO2 and NOx and compared the combined impacts to 1% of the NAAQS (0.15 _g/m3). If the combined impacts were above 0.15 _g/m3, the upwind state was linked to the downwind monitor and targeted for emission reductions. This approach results in 8 monitors (not including Georgia monitors) being linked with emissions in Georgia (see Table 2). It should be noted that the majority of the impacts are coming from SO2 (sulfate) and less than 4% of the total impacts are coming from NOx (nitrate). [[See Docket Number EPA-HQ-OAR-2009-0491-2647.1, p.4 for Table 2]]. [EPA-HQ-OAR-2009-0491-2647.1, p.4]
This analysis clearly demonstrates that the impacts of Georgia NOx emissions individually on daily and annual PM2.5 in neighboring nonattainment and maintenance areas is insignificant and annual NOx emissions budgets are not justified. [EPA-HQ-OAR-2009-0491-2647.1, p.5]
[[The above comments can also be found in Section IV.B.1.]]
Response:
Please refer to Section V.A of the preamble for the final Transport Rule for a discussion about the topic of this comment.
Organization: Louisiana Chemical Association (LCA)
Comment:
Louisiana Chemical Association (LCA)
EPA modeling shows that virtually the entire impact on PM2.5 annual levels at the Clinton Drive monitor are due to sulfate emissions. The following data, taken from EPA Preamble Tables IV.C-1, IV.C-3 and IV.C-5, and based on the IPM v.3.02 modeling, demonstrate that SO2 emissions from Louisiana will significantly decline, without enactment of the Transport Rule or a FIP: [EPA-HQ-OAR-2009-0491-3527.1, p. 10; see p. 11 for Table 1. SO2 Emissions in TPY-EPA IPM v3.02 Base Case Modeling.]
In summary, EPA's own modeling shows that without the Transport Rule/FIP, overall emissions of SO2 in Louisiana will decrease by 12,758 tpy from 2005 levels by 2012 and by 26,618 tpy from 2005 levels by 2014. As discussed above, Harris County, Texas is currently in attainment with the annual PM2.5 NAAQS and has a strong downward trend of PM2.5 emissions over the past several years. If Louisiana SO2 emissions are not causing interference with maintenance now, and are projected to have this significant of a decrease of SO2 without the Transport Rule, then it is not reasonable for EPA to conclude that Louisiana will interfere with maintenance of the PM2.5 standard in Harris County or that the Transport Rule/FIP is justified. If greater emissions are not affecting maintenance, then how can lesser emissions affe.ct maintenance? LCA believes that it would be arbitrary and capricious for EPA to arrive at this as a final conclusion. [EPA-HQ-OAR-2009-0491-3527.1, p. 11; see pp 12-14 for extensive discussion of this issue.]
Response:
EPA's final Transport Rule modeling does not identify Louisiana as a state with emissions that for significantly contribute or interfere with maintenance of the 1997 annual or 2006 24-hour  PM2.5 standards.  See Section V and VI of the preamble for the final Transport Rule for more information.
Organization: Tennessee Department of Environment and Conservation, Division of Air Pollution Control
State of Missouri Department of Natural Resources
Northern Indiana Public Service Company (NIPSCO)
Group Against Smog and Pollution (GASP)
Comment:
Group Against Smog and Pollution (GASP)
[These comments were submitted as testimony at the Philadelphia, Pennsylvania public hearing on August 26, 2010.  See Docket Number EPA-HQ-OAR-2009-0491-1938, pp.200-201.]
CAMx modeling, which EPA admits is more accurate, shows that higher cost thresholds are needed for many regions to meet attainment for the 24-hour PM 2.5 standard.
We also support moving all states expected to have attainment issues under CAMx modeling from group two to group one, and adding Texas to group two. It makes little sense to have more accurate date from CAMx modeling not to use it.
Northern Indiana Public Service Company (NIPSCO)
In the proposed rule the EPA indicates the need to complete an analysis of wintertime particulate matter to appropriately address the wintertime 24-hr. PM 2.5 NMOS compliance issues. We recommend EPA complete its analysis of significant contribution and interference with maintenance for the 24-hour PM2.5 standard, and provide sufficient public notice and comment on the proposed remedy, for inclusion in the Transport Rule before finalizing the rule. This would further the ability of affected utilities to review the provisions and incorporate any additional or revised compliance requirements into system analysis and development of their overall compliance strategy. [EPA-HQ-OAR-2009-0491-2747.1 p.10]
State of Missouri Department of Natural Resources
In order for the Air Quality Assessment Tool (AQAT) to be convincing, it needs to show results for annual and 24-hour PM2.5 and ozone that are consistent with those of the refined modeling tools in the Comprehensive Air quality Model with extensions; (CAMX). The differing results for 24-hour PM2.5 from AQAT and CAMX calls into question the cost-per-ton analysis predictions. EPA should evaluate why AQAT gave inconsistent results as compared to CAMX before finalizing the rule. [EPA-HQ-OAR-2009-0491-3806, p.2]
EPA requests comments on whether the $2,000 per ton cost cutoff for SO2 should be raised, page 45283 . While all the reductions at $2,000 per ton may be achieved with the first Transport Rule, it would be appropriate to review a higher cost threshold with the second Transport Rule. Since the Integrated Planning Model analyses only allow for costs up to $2,500. per ton, EPA should find additional ways to analyze costs above that threshold. [EPA-HQ-OAR-2009-0491-3806, pp.2-3]
Tennessee Department of Environment and Conservation, Division of Air Pollution Control
Comment on Contributions to PM2.5 Nonattainment and Maintenance: EPA indicates that Tennessee's downwind contributions to PM2.5 nonattainment and maintenance are as follows: [See Docket Number OAR-2009-0591-0553.1, p.4 for the table]. We request that EPA review these values in light of our requested changes to the 2012 baseline. [EPA-HQ-OAR-2009-0491-0553.1, p.4]

 Footnote 1: Comments submitted by SESARM and supported by Tennessee noted that "EPA should incorporate into its revised CAIR rule the screening levels found in the original CAIR rule  -  2 parts per billion for ozone and 0.2 micrograms per cubic meter for PM2.5. These screening levels have been upheld by the Court and are practical to use.'
Response:
For the final Transport Rule, EPA performed updated analyses using new CAMx modeling and significant improvements to AQAT.  Based on these new assessments, EPA identified states with emissions that significantly contribute to downwind non-attainment and maintenance problems and quantified the emission reductions necessary to address those contributions.  More information on these assessments can be found in Sections V and VI of the preamble for the final Transport Rule.
EPA updated the PM2.5 contribution modeling after incorporating a number of changes to the 2012 baseline.  These updates are discussed in Section V.C of the preamble for the final Transport Rule.
EPA made several improvements to AQAT for the final Transport Rule.  For details about AQAT and its ability to estimate similar air quality results to CAMx, please refer to section VI.C of the preamble for the final Transport Rule and the Significant Contribution and State Emissions Budgets Final Rule Technical Support Document.

With respect to the evaluation of SO2 costs for the final Transport Rule and EPA's determination of elimination of significant contribution, please refer to section VI of the preamble for the final rule.

EPA updated the methods used to assess significant contribution to non-attainment and interference with maintenance with respect to the 24-hour PM2.5 NAAQS.  For details on the methods used for the final Transport Rule, please refer to section VI of the preamble.
IV.D.4.c. Possible Emissions Increases in Non-covered States/ Should TX Be Included for PM2.5

Organization: Fond du Lac Reservation
National Tribal Air Association (NTAA)
Comment:
Fond du Lac Reservation
Scope of the Transport Rule
Not only is the Band concerned with the potential impacts of the Transport Rule on Indian tribes in the eastern part of the nation, largely based on the incomplete technical and benefit analyses done by the EPA, we are equally concerned with how the Rule could impact tribes beyond the Eastern U.S. Our concern grows out of EPA's modeling, not as to how tribes were omitted, but how NOx and SO2 emissions could increase for those parts of the nation not covered by the Rule. [EPA-HQ-OAR-2009-0491-3707, p.3]
According to EPA's modeling, and as recently confirmed by Sam Napolitano, director of EPA's Clean Air Markets division, the demand for low sulfur coal will increase in the Eastern U.S. as sources in upwind states try to comply with their emission allocation budgets. As a result, higher sulfur coal will become more readily available and less expensive to purchase, likely encouraging sources in the Western and U.S. to retool their facilities so as to be able to use such coal at a lesser expense to them in the long run. This, in turn, could substantially and adversely impact the health and welfare of Indian tribes, many which occupy lands contiguous or close to a number of coal-fired power plants in the West. In fact, the EPA has already made it known that there could be an increase of more than 5,000 tons of SO2 emissions in North Dakota and South Dakota, states contiguous or near to a number of tribes, including Fond du Lac. [EPA-HQ-OAR-2009-0491-3707, p.4]
Because of this potential impact to Indian tribes beyond the region covered under the Transport Rule, the Band recommends that the EPA expand the scope of the Rule so as to cover the remainder of the nation as a means to prevent consequential increases in NOx and SO2 emissions due to the Rule's implementation. [EPA-HQ-OAR-2009-0491-3707, p.4]
National Tribal Air Association (NTAA)
Scope of the Transport Rule
Not only is the NTAA concerned with the potential impacts of the Transport Rule on Indian Tribes in the eastern part of the nation, largely based on the incomplete technical and benefit analyses done by the EPA, but our organization is equally concerned with how the Rule could impact Tribes beyond the Eastern U.S. Our concern grows out of EPA's modeling, not as to how Tribes were omitted, but how NOx and SO2 emissions could increase for those parts of the nation not covered by the Rule. [EPA-HQ-OAR-2009-0491-2778.1, p.4]
According to EPA's modeling, and as recently confirmed by Sam Napolitano, director of EPA's Clean Air Markets division, the demand for low sulfur coal will increase in the Eastern U.S. as sources in upwind states try to comply with their emission allocation budgets. As a result, higher sulfur coal will become more readily available and less expensive to purchase, likely encouraging sources in the Western U.S. to retool their facilities so as to be able to use such coal at a lesser expense to them in the long run. This, in turn, could substantially and adversely impact the health and welfare of Indian Tribes, many which occupy lands contiguous or close to a number of coal-fired power plants in the West. In fact, EPA has already made it known that there could be an increase of more than 5,000 tons of SO2 emissions in North Dakota and South Dakota, states also contiguous or near to a number of Tribes. [EPA-HQ-OAR-2009-0491-2778.1, p.4]
Because of this potential impact to Indian Tribes beyond the region covered under the Transport Rule, the NTAA recommends that the EPA expand the scope of the Rule so as to cover the remainder of the nation as a means to prevent consequential increases in NOx and SO2 emissions due to the Rule's implementation. [EPA-HQ-OAR-2009-0491-2778.1, p.4]
Response:
See section XII.J of the preamble for a detailed discussion of potential emission changes in states not covered by the final Transport Rule based on EPA's updated modeling. The final modeling does not show the potential SO2 emissions increases in North Dakota and South Dakota that were seen in the modeling at proposal.
See sections V and VI of the preamble to the final rule for a detailed discussion of the analyses that determined the final rule's geographic coverage. Also see section III.E of this RTC document for a discussion of why the rule addresses the eastern portion of the United States.
See sections III and XII.J in the final rule's preamble, and sections III.F, XII.E, and XIX of this RTC document, for discussions of other regulatory actions that will impact power sector emissions.
See sections V and VI of the preamble to the final Transport Rule and section IV of this RTC document for discussion of EPA's technical analysis in developing this rule.  See section XIII of the preamble to the final rule, the Regulatory Impact Analysis (RIA), and sections IX and XX.D of this RTC for further information on benefits.
Organization: National Association of Clean of Air Agencies (NACAA)
Clean Air Task Force
Calpine Corporation
Group Against Smog and Pollution (GASP)
Pew Environment Group
Comment:
Calpine Corporation
By not including Texas in the PM2.5 (annual) program the proposed rulemaking will significantly degrade air quality in that state. [EPA-HQ-OAR-2009-0491-3614, p.3]
EPA Should Include Texas in the Annual Program
EPA predicts that SO2 emissions in Texas will increase by over 100,000 tons per year if the state is not included in the annual SO2 and NOx trading programs in the proposed rulemaking. Calpine is a significant generator of electricity in Texas (over 7,000 megawatts of capacity) and our corporate headquarters is in Houston, Texas. Calpine has invested in advanced air pollution controls at its Texas plants and we believe that EPA has a responsibility not to enact rules that would degrade air quality in Texas. Calpine urges EPA to include Texas in the annual program. [EPA-HQ-OAR-2009-0491-3614, pp.4-5]
Clean Air Task Force
Furthermore, power plants in five states 32 that are in EPA's 37 state study region but outside of the proposed control region are projected to increase emissions following implementation of the rule, as they will be subject only to the much weaker Title IV acid rain restrictions. In fact, the increase in Texas is large enough to cause it to become a significant contributor (under the Agency's proposed 1% NAAQS threshold test) to downwind PM nonattainment and maintenance problems. [EPA-HQ-OAR-2009-0491-2738.1, p.7; This comment can also be found at section III.D and IV.B.2 of this comment summary]
[These comments were also submitted as testimony at the Philadelphia, Pennsylvania public hearing on August 26, 2010.  See Docket Number EPA-HQ-OAR-0491-1938, p.107.]
Geographical Coverage of the Proposed Emission Caps.
The geographical scope of the proposed TR must be expanded. There are two separate but inter-related problems with the current proposal.  First, EPA's choice of a 1.0% NAAQS threshold for determining significant contribution is too high, and should be reduced by at least half to 0.5%. Second, EPA's analysis of the air quality impacts of its TR proposal projects that EGUs in five states will increase their SO2 emissions. As a result, the amount of downwind contribution from Texas will exceed EPA's 1% NAAQS threshold for significant contribution, and that of Arkansas and North Dakota will also exceed our recommended reduced significant contribution threshold of no more than 0.5% of the applicable NAAQS. [EPA-HQ-OAR-2009-0491-2738.1, p.21; For additional comments pertaining to Geographical Coverage of the Proposed Emission Caps see pages 21-22 of this comment]
The second problem with the geographical area proposed to be covered by the TR is that EGU emissions in five states not subject to the rule are projected by EPA to increase. For example, Texas SO2 emissions are expected to increase by over 130,000 tons, producing downwind air quality impacts that will exceed EPA's proposed 1% NAAQS threshold for significant contribution. Therefore, whether or not EPA lowers its proposed significant contribution threshold, Texas must be included in the TR control region for SO2 and NOx. [EPA-HQ-OAR-2009-0491-2738.1, p.22]
[These comments were also submitted as testimony at the Philadelphia, Pennsylvania public hearing on August 26, 2010.  See Docket Number EPA-HQ-OAR-0491-1938, p.109.]
We also note that EPA did not evaluate many states in the western US for their potential contribution to ozone and PM2.5 nonattainment problems, but that emissions in Colorado may also increase as a result of the TR. 130 We believe that, for all future transport rulemakings, EPA should analyze the contribution of all 48 states in the continental US, and require emission reductions from any state whose emissions are found to contribute to downwind nonattainment in excess of the minimum threshold. [EPA-HQ-OAR-2009-0491-2738.1, p.22]

Footnote: 32 These five states are TX, AR, MS, ND and SD. 75 Fed. Reg. at 45284.
Group Against Smog and Pollution (GASP)
[These comments were submitted as testimony at the Philadelphia, Pennsylvania public hearing on August 26, 2010.  See Docket Number EPA-HQ-OAR-0491-1938, p.194.]
adding Texas to group 2.
National Association of Clean of Air Agencies (NACAA)
Inclusion of Texas in SO2 Control Program
NACAA recommends that Texas be included in the SO2 control program as a group 2 state. As EPA notes in the proposal, EPA's analysis shows that if Texas is not included in the SO2 control program, Texas' SO2 emissions would increase the state's contribution to an amount that would exceed the threshold for annual PM2.5 (thus exceeding the threshold for inclusion in the SO2 program). 10 Since implementation of the Transport Rule program changes Texas from a state whose contribution to annual PM2.5 does not exceed EPA's threshold to a state that does, EPA must proactively address the impacts that naturally flow from the Transport Rule and include Texas in the Transport Rule, so that the Transport Rule does not cause Texas to violate section 110(a)(2)(D) of the Act. [EPA-HQ-OAR-2009-0491-2771.1, p.6]
Pew Environment Group
EPA's modeling shows that even after the proposed rule is implemented: power plants in several states that are outside of the proposed control region will increase emissions following implementation of the rule, as they will be subject only to the much weaker Title IV acid rain restrictions; in fact, the increase in Texas is large enough to cause it to become a significant contributor to downwind nonattainment. [EPA-HQ-OAR-2009-0491-2703.1 p.2]
Response:
EPA's analysis for the final rule identifies Texas as a state with emissions that significantly contribute to nonattainment or interfere with maintenance of the 1997 PM2.5, 2006 PM2.5, and 1997 ozone NAAQS in other states.  Texas is required, under the final rule, to reduce ozone season NOx emissions due to its significant contribution to nonattainment and interference with maintenance of the 1997 ozone NAAQS.  It is also required, under the final rule to reduce annual NOx and annual SO2 emissions due to its significant contribution to nonattainment and interference with maintenance of the 1997 PM2.5 NAAQS.
In further response to Clean Air Task Force, EPA's rationale for the choice of the air quality threshold is given in preamble section V.D.1.  EPA also notes the suggestion about evaluating the effects of future rulemakings in all of the continental states.
Organization: NRG Energy
Gulf Coast Lignite Coalition
Texas Mining and Reclamation Association
Comment:
Gulf Coast Lignite Coalition
 GCLC also requests that EPA not include Texas in the Group 2 SO2 reductions program, based on an assumption that Texas will become reliant on a market of cheaper coal with a higher sulfur content. EPA should not require compliance with a new emission reduction program based on speculation instead of facts. [EPA-HQ-OAR-2009-0491-2734.1 p.4]
NRG Energy
The appropriate exclusion of Texas from the Transport Rule's SO2 Annual program EPA has requested comment on whether Texas should be included as a Group 2 state. EPA expresses concern regarding the potential increase in SO2 emissions in Texas if the state exclusion is in place. NRG understands that the majority of coal units in Texas utilize low sulfur coal, typically western sub-bituminous coal. In our experience, the use of a different, higher sulfur fuel would likely violate current operating permits and/or trigger both state and federal new source permitting requirements. Under this scenario, best available control technology requirements inherent with air quality permitting would preclude emission increases resulting from fuel switching. Consequently, NRG believes that EPA's projected modeled SO2 emission increase for Texas is not realistic and that EPA should not include Texas as a Group 2 state. [EPA-HQ-OAR-2009-0491-2749.1, p. 3]
Texas Mining and Reclamation Association
GCLC also requests that EPA not include Texas in the Group 2 SO2 reductions program, based on an assumption that Texas will become reliant on a market of cheaper coal with a higher sulfur content. EPA should not require compliance with a new emission reduction program based on speculation instead of facts. [EPA-HQ-OAR-2009-0491-2734.1 p.4]
Response:
EPA considered all comments on and updated emission information, air quality information and modeling assumptions as appropriate in response to comments submitted on the proposed rule and subsequent NODAs, including assumptions about the use of coal as it was modeled in both the base case and in the remedy case.  The final modeling identified Texas as a state with emissions that significantly contribute to nonattainment or interfere with maintenance of the 1997 annual and the 2006 24-hr PM2.5 NAAQS in other states.  No states were shown to contribute above the threshold level in the remedy case modeling done for the final rule.
Organization: San Miguel Electric Cooperative, Inc.
Comment:
San Miguel Electric Cooperative, Inc.
EPA has requested comment on whether Texas should be included in the SO2 controls program (75FR45284). 'Further analysis with the air quality assessment tool indicates that these projected increases in the Texas SO2 emissions would increase Texas's contribution to an amount that would exceed the 0.15 ug/m3 threshold for annual PM2.5. For this reason, EPA takes comment on whether Texas should be included in the program as a group 2 state.' [EPA-HQ-OAR-2009-0491-2641.1,p.5]
San Miguel believes that Texas should not be included in the SO2 controls program under the proposed rule. According to EPA data, the electric power industry in Texas already has made significant progress in reducing emissions in nitrogen oxides (NOx) and sulfur dioxide (SO2) even as Texas has consumed more energy and the economy has grown. Texas is already leading the way in clean electric generating units and should not be penalized for its successful emissions reductions. Inclusion of Texas in the SO2 controls program could force many EGUs to switch coals or from coal to some other type of fuel, jeopardizing fuel diversity. That in turn, would decrease the reliability of electricity, increase the cost of electricity, increase the frequency and intensity of natural gas shortages, and increase the price of natural gas. Another result is that it would produce severe, negative impacts on the economy of the State of Texas, and particularly in areas of the state (such as some locations of east and central Texas) whose primary economy is based on coal-fired electric generation and coal mining. [EPA-HQ-OAR-2009-0491-2641.1, p.5]
One of the concerns of the EPA is that units not in the SO2 control program will switch to a higher sulfur fuel. San Miguel as outlined in the introduction fires only lignite provided by the mine-mouth lignite mine. The unit was designed to burn this fuel and would require extensive modifications to switch to a sub-bituminous coal. Also San Miguel does not have a railroad coal delivery system. Thus a different fuel cannot be burned without significant modifications to the unit, at a cost estimated at over eighty million dollars. [EPA-HQ-OAR-2009-0491-2641.1,p.5]
San Miguel believes that Texas should not be included in the SO2 controls program. [EPA-HQ-OAR-2009-0491-2641.1, p.5]
Response:
EPA considered all comments on and updated emission information, air quality information and modeling assumptions as appropriate in response to comments submitted on the proposed rule and subsequent NODAs, including assumptions about the use of coal as it was modeled in both the base case and in the remedy case.  The final modeling identified Texas as a state with base case emissions that significantly contribute to nonattainment or interfere with maintenance of the 1997 annual and the 2006 24-hr PM2.5 NAAQS in other states.  No states were shown to contribute above the threshold level in the remedy case modeling done for the final rule.
In EPA's emissions modeling for the final rule, the San Miguel unit has access only to lignite coal supply.  San Miguel burns 100% lignite coal in the final rule's base case 2012 and 2014 modeling, as shown in the IPM run titled "TR_Base_Case_Final" parsed for 2012 and 2014.  The unit also burns 100% lignite coal in the modeling of the final Transport Rule remedy, as shown in IPM run "TR_Remedy_Final" parsed for 2012 and 2014.  The IPM runs are available in the docket and on the Transport Rule website (epa.gov/airtransport).
See section VIII in the preamble to the final Transport Rule and the Regulatory Impact Analysis (RIA) for economic impacts of the rule.  See the Resource Adequacy and Reliability in the IPM Projections for the Transport Rule TSD in the docket for impacts to electric reliability.
EPA had requested comment at proposal on whether Texas should be included in the SO2 controls program (75FR45284). 'Further analysis with the air quality assessment tool indicates that these projected increases in the Texas SO2 emissions would increase Texas's contribution to an amount that would exceed the 0.15 ug/m3 threshold for annual PM2.5. For this reason, EPA takes comment on whether Texas should be included in the program as a group 2 state. [EPA-HQ-OAR-2009-0491-2641.1,p.5]
Organization: Texas Chemical Council
Comment:
Texas Chemical Council
I. Texas Should Not Be Subject to the Transport Rule
TCC strongly maintains that Texas should not be subject to the Transport Rule because EPA's reasoning for including Texas in the rule proposal is fundamentally flawed. EPA states in the preamble that one of its key guiding principles in establishing the rule was to appropriately identify necessary upwind reductions. 75 Fed. Reg. at 45,226. Specifically, EPA states: [EPA-HQ-OAR-2009-0491-2815.1, p.1]
"Emissions from upwind states can, alone or in combination with local emissions, result in air quality levels that exceed the NAAQS and jeopardize the health of residents in downwind communities. Each upwind state is required by the "good neighbor provision" to eliminate its individual significant contribution to downwind state nonattainment and to eliminate emissions that interfere with downwind states" maintenance of air quality standards." 75 Fed. Reg. at 45,226. [EPA-HQ-OAR-2009-0491-2815.1, pp.1-2]
Texas emissions do not contribute to downwind nonattainment or maintenance interference for the 1997 8-hour ozone standard, the 2006 PM2.5 annual standard or the 2006 PM2.5 24-hour standard. In the proposal, EPA asserts that Texas should fall under the rule because emissions from Texas contribute to the downwind nonattainment of Baton Rouge, Louisiana under the 8-hour ozone standard. 75 Fed. Reg. at 45,269. EPA has made a fatally flawed linkage between Texas emissions and Louisiana air quality based on its own final determination on September 9, 2010 that Baton Rouge, Louisiana is in attainment with the 8-hour ozone standard. 75 Fed. Reg. 54,778  -  54,779 (Sept. 9, 2010). [EPA-HQ-OAR-2009-0491-2815.1, p.2]
In addition, EPA's 8-hour ozone contribution modeling in this instance unjustly assigned fault to Texas where Baton Rouge's air quality is concerned. Considering the dramatic improvements in air quality achieved by Texas in the last 15 years, Texas fits squarely within the "good neighbor provision," as evidenced by EPA's recent determination that Baton Rouge has reached attainment with the 8-hour ozone standard, and should be exempt from the rule proposal altogether. Texas' "good neighbor" status is also underscored by EPA's recent determination that the Beaumont-Port Arthur (BPA) area is in attainment in with the 1997 8-hour ozone standard and the state's request to EPA for a determination that the HGB area is also in attainment with the 1997 8-hour ozone standard. Accordingly, Texas should not be subject to the Transport Rule. [EPA-HQ-OAR-2009-0491-2815.1, p.2]
Response:
See section V of the preamble to the final rule for a detailed discussion of EPA's conclusion that emissions from Texas significantly contribute to nonattainment or interfere with maintenance of the relevant NAAQS in other states.  Also see sections IV.C, IV.C.1 through IV.C.5, and XV of this RTC document for further information, including discussion of the modeling linking emissions from Texas to Baton Rouge, LA.
Organization: Texas Commission on Environmental Quality
Xcel Energy Inc.
Association of Electric Companies of Texas (AECT)
Luminant
Comment:
Association of Electric Companies of Texas (AECT)
AECT does not see the need to include Texas in the SO2 controls program under the proposed rule and we support the exclusion of Texas from the SO2 controls program under the proposed rule. [EPA-HQ-OAR-2009-0491-3351.1, p.2]
Texas Should Not be Included in the SO2 Program as a Group 2 State
In the development of the proposed rule, EPA evaluated whether the rule could cause changes in the operation of EGUs not regulated under the proposal and whether such changes would cause emission increases resulting in downwind ambient air impacts above the 1 percent contribution threshold. EPA's modeling indicated that the proposed rule could affect the relative price of lower and higher sulfur coal. The modeling also projected that these fuel price effects could lead to greater use of higher sulfur coal in Texas, increasing annual SO2 emissions in Texas by 136,000 tons over the base case. EPA has requested comment on whether Texas should be included as a Group 2 state. [EPA-HQ-OAR-2009-0491-3351.1,p.2]
The majority of coal units in Texas utilize low sulfur coal, typically Powder River Basin (PRE) subbituminous coal. The use of a different, higher sulfur fuel would likely trigger both state and federal new source permitting requirements and the best available control technology requirements inherent with air quality permitting would preclude emission increases resulting from fuel switching. Consequently, AECT believes that EPA's projected modeled SO2 emission increase for Texas is not realistic and that EPA should not include Texas as a Group 2 state. [EPA-HQ-OAR-2009-0491-3351.1, p.2]
SO2 Emissions from Power Plants in Texas Have Declined and Air Ouality has Improved
Electric generating units (EGUs) in Texas have already achieved significant reductions in SO2 emissions over the past several years. According to the Acid Rain score-card data for 2009, the average SO2 emissions rate (in lb/mmBtu) for EGUs in Texas was only about two-thirds of the average SO2 emissions rate for EGUs in the rest of the country. [EPA-HQ-OAR-2009-0491-3351.1,p.2]
Effectiveness of Existing SO2 Control Programs
The entire state of Texas is currently in attainment with the existing SO2 and Particulate Matter 2.5 (PM2.5) standards. [EPA-HQ-OAR-2009-0491-3351.1, p.2]
EGUs in Texas have been making SO2 emission reductions for decades, all while meeting Texas' and the nation's ever-increasing demand for electricity. SO2 emissions control programs related to EPA's Acid Rain program and the state Senate Bill 7 program are examples of the SO2 emission reduction programs already in place and being implemented by EGUs. While these SO2 emission reductions have provided environmental benefits, they have cost electricity consumers billions of dollars. [EPA-HQ-OAR-2009-0491-3351.1,p.3]
Texas EGUs have one of the highest SO2 scrubbed capacities in the nation. Nearly half of the coal-fired generation capacity in Texas has flue gas desulfurization systems, and several companies that have completed or are constructing new units have made commitments to offset or more than offset the SO2 and NOx emissions from the new units. In addition, units in Texas consume over 62 million tons of low-sulfur PRB coal annually.[EPA-HQ-OAR-2009-0491-3351.1, p.3]
AECT is concerned that due to Texas EGUs' high current SO2 scrubbed capacity, and significant use of low- sulfur PRB, that inclusion of Texas in the SO2 controls program under the proposed rule would make it very difficult for Texas EGUs to be able to further reduce their S02 emissions and require controls at higher cost than other states for no commensurate environmental benefit. Texas is a competitive market for electricity. Prohibitively high cost of controls would lead to several significant problems, such as the forced retirement of viable and wellcontrolled EGUs and/or fuel switching from native Texas coal to more imported coal or natural gas. Such problems would negatively impact the electric reliability that is needed to meet Texas' large and ever increasing electricity demand. AECT is concerned that such problems would adversely affect Texas, while only providing little, if any, environmental or public health benefit. [EPA-HQ-OAR-2009-0491-3351.1,p.3]
Twelve percent of electricity that is generated in Texas is generated using native Texas coal, which is an amount equal to the electricity generation of the entire state of Wisconsin.  The total economic impact of coal-fired EGUs and coal mining in Texas (according to a 2004 report) is very significant - accounting for almost $10,500,000,000 in annual total expenditures and over 33,000 permanent jobs. [EPA-HQ-OAR-2009-0491-3351.1,p.3]
Texas is already leading the way in clean electric generating units and should not be penalized for its successful emissions reductions. Inclusion of Texas in the SO2 controls program would force many EGUs to switch from coal to some other type of fuel, jeopardizing fuel diversity. That, in turn, would decrease the reliability of electricity, increase the cost of electricity, increase the frequency and intensity of natural gas shortages, and significantly increase the price of natural gas. Another result is that it would produce severe, negative impacts on the economy of the State of Texas, and especially in part of the state (such as parts of East Texas) whose primary economy is based on coal-fired electric generation and coal mining. [EPA-HQ-OAR-2009-0491-3351.1,pp.3-4]
For the foregoing reasons, AECT strongly supports Texas exclusion from the SO2 controls program under the proposed rule. [EPA-HQ-OAR-2009-0491-3351.1,p.4]
Luminant
:: EPA correctly determined that Texas should not be included in the annual SO2 program.
o Seventy-two percent of Luminant coal-fired generation capacity has flue gas desulfurization systems, and approximately 50 percent of the coal-fired capacity in Texas has such systems. Other units are using low-sulfur subbituminous coal.
o Sulfur dioxide emissions from Electric Generating Units (EGUs) in Texas have already been reduced sixteen percent since the baseline modeling year used in the rule (2005) and will continue to decline. Several companies that have completed or are constructing new units have made commitments to offset or more than offset the sulfur dioxide and nitrogen oxides emissions from the new units. [EPA-HQ-OAR-2009-0491-2729.1, p.2]
II. Luminant Supports the Decision to Exclude Texas from the Annual SO2 and NOx Programs
The CATR Integrated Planning Model (lPM) base case shows that Texas will not significantly contribute to any PM2.5 nonattainment areas and thus, is not included in either the NOx or SO2 annual CATR programs. Luminant supports EPA's decision not to include Texas in the annual programs. Texas led the way in reductions of NOx in the United States, with a 2003 power plant average NOx rate of 0.142 lb/mmBtu. In 2009, this Texas average was 0.098 lb/mmBtu while the national average was 0.160 lb/mmBtu. [EPA-HQ-OAR-2009-0491-2729.1, p.5]
On page 45284 of the proposed rule, EPA expresses some concern that Texas' SO2 emissions will significantly increase if it is not included in the Group 2 SO2 program. Luminant believes that this concern is unfounded. Coal-fired units in Texas are of newer vintage than those in the CATR program region. Out of roughly 23,000 megawatts of coal-fired capacity in Texas, about half, or 11,500 megawatts, has flue gas desulfurization (FGD) systems. The other units combust subbituminous coal, or a blend of subbituminous coal and Gulf Coast lignite. Approximately 72% of Luminant's coal-fired generation capacity has FGD systems. Several of the companies constructing new coal-fired units have committed to offsetting the new emissions or even reducing emissions beyond previous fleet emissions. Since the modeling base case year of 2005, Texas coal-fired units have reduced their SO2 emissions by 16% and Luminant believes that this downward trend will continue because of these commitments, permit restrictions, and contracts for subbituminous coal. [EPA-HQ-OAR-2009-0491-2729.1, p.5]
Texas Commission on Environmental Quality
The TCEQ objects to the EPA proposing a rule that might apply to Texas at finalization (i.e. whether to include Texas in the Transport Rule FIP as a Sulfur Dioxide (S02) Group 2 State for fine particulate matter (PM2.5)) without providing adequate notice and information necessary for evaluation and comment. Further, the TCEQ disagrees with the EPA's conclusions that predict as likely a substantial increase in S02 emissions in Texas as support for such consideration. [EPA-HQ-OAR-2009-0491-2857.1, p.2]
Request for Comment on Including Texas in the Transport Rille FIP as an S02 Group 2 State for PM2.s (75 FR 45284)
The TCEQ strongly objects to the EPA proposing a rule that might apply to Texas at finalization without providing adequate notice and information necessary for comment in the proposal.
The EPA's request for comment on this issue as well as other language in the preamble (75 FR 45359) indicates that Texas could be made subject to the S02 Group 2 Trading Program at finalization of the current proposal rather than at finalization of a future proposal. The current proposal of the Transport rule does not provided adequate information for the TCEQ and other affected entities to comment regarding whether or not Texas should be included in the rule for PM2.5. Annual S02 budgets, new unit set-aside, and variability limits for Texas are not provided in the proposal; therefore, the TCEQ and other affected entities cannot adequately comment as to the potential implications of including Texas under this portion of the proposed rule. If the EPA wanted to consider including Texas in the S02 Group 2 Trading Program because of assumed future concerns with PM2.5 then the EPA should have proposed the rule in that manner or proposed an alternative that included Texas so that affected entities would be given adequate notice to comment. Further, any inclusion of Texas in the PM2.5 program should be proposed with an adequate rationale and evidence supporting the need for this inclusion. If the final rule does include Texas in the S02 Group 2 Trading Program at adoption of this rulemaking, potentially regulated entities would have been denied the opportunity to comment on the adequacy of the S02 budgets, new unit set-aside, and variability limits. [EPA-HQ-OAR-2009-0491-2857.2, p.9]
While the TCEQ generally agrees that the implementation of environmental regulations might impact fuel costs, the TCEQ disagrees with the EPA's conclusion that the 802 emissions in Texas will substantially increase as predicted by the EPA's models.
The EPA's request for comment concerning whether. Texas should be included in the ru1e for PM2 .5 is based on the EPA's prediction that S02 emissions in Texas will increase by 136,000 tpy above the base case if the Transport Rule is implemented. This assumed spike in S02 emissions is based on the EPA's models projecting that the rule might increase the cost of low sulfur coal and decrease the cost of high sulfur coal, and that this projected cost shift might cause sources in states not covered in the rule for PM2 .5 to switch to high sulfur coal. However, the EPA's prediction appears to be based solely on a hypothetical market analysis and ignores factors that would restrict the use of high sulfur coal. [EPA-HQ-OAR-2009-0491-2857.2, pp.9-10]
Comparison of the base case and controlled case IPM data files indicates that the EPA is predicting that only certain coal-fired units, approximately 40 percent of the units in Texas, will experience this assumed shift to high sulfur coal. However, the TCEQ has not been able to identify any specific reason or logical pattern in the proposal as to why the EPA believes these particular units win switch to high sulfur coal. Because the EPA is considering including Texas in the S02 Group 2 Trading Program based on the predicted changes for these units, the EPA should provide clear and specific reasons for why these units are expected to change to high sulfur coal. [EPA-HQ-OAR-2009-0491-2857.2, p.10]
Many of the coal-fired utility units in Texas that the EPA assumes win have substantial S02 emission increases have permit provisions that set specific S02 pound per million British thermal unit (lb/MMBtu) emission specifications or low percent sulfur coal content limits that would prohibit the fuel switching to high sulfur coal that the EPA is predicting. One of the facilities that the EPA predicts to have more than a 15,000 tpy increase in S02 emissions will actually have a 27,547 tpy reduction in S02 emissions as a result of an enforceable site cap on S02 emissions that will go into effect in October 2012. The EPA should not ignore these other restricting factors when considering the possible future S02 emissions. [EPA-HQ-OAR-2009-0491-2857.2, p.10]
Given the recent finalization of the S02 NAAQS and the stringency of that standard, it is highly unlikely that any coal-fired power plant would pursue a permit modification that would result in a significant increase in S02 emissions. The rPM upon which this projected sulfur increase is based clearly does not even appropriately consider the EPA's own regulations. [EPA-HQ-OAR-2009-0491-2857.2, p.10]
The TCEQ's quick review of the rPM parsed base case files indicates that the EPA has not properly characterized the current fuel mix for the coal-fired utility units in Texas or that the EPA is assuming a significant shift in coal fuel mix is going to occur in Texas prior to the predicted shift to high sulfur coals. Four of the facilities identified by EPA as being 100 percent subbituminous are lignite or lignite-blend units. This indicates that the base assumptions the EPA has used in its base case modeling are in error, and thus, any modeled predictions for future coal fuel use are questionable and cannot be used as a rational basis for decisionmaking. [EPA-HQ-OAR-2009-0491-2857.2, p.10]
Xcel Energy Inc.
III. STATES INCLUDED AND EXCLUDED FROM THE PROPOSED RULE
1. EPA should not include Texas in the SO2 trading program.
Xcel Energy opposes including Texas in SO2 Group 2 or Group 1. As EPA it self indicates in the CATR preamble, the modeling data does not support inclusion of Texas in the SO2 programs. Texas' emissions do not contribute to downwind nonattainment above the thresholds established in the proposed rule. [EPA-HQ-OAR-2009-0491-2728.1, p.7]
EPA is considering including Texas in the Group 1 or Group 2 SO2 trading program not because of its air quality impacts, but because its models show that, as a result of the Transport Rule, more eastern utilities would likely turn to lower sulfur western coal, causing Texas utilities to shift to coals with higher sulfur content. EPA apparently is considering including Texas in the SO2 trading program because it does not wish to see any SO2 emissions increase in Texas regardless of the impact on air quality. We strongly oppose this approach, for the following reasons: [EPA-HQ-OAR-2009-0491-2728.1, p.7]
- EPA's evidence for emissions increase - the results of an IPM model run - does not reflect the real world of utility operations. In fact, it is much more difficult to switch fuels than the model implies. The decision regarding which coal to use in a boiler is driven by a number of factors, including price, availability, transportation, boiler configuration, long-term contracts, and permit emission limits. The IPM model cannot account for these factors. In fact, most utilities have units designed for a specific fuel type supplied through long-term contracts for at least some of their' portfolio. They cannot and will not easily change to a higher sulfur fuel. [EPA-HQ-OAR-2009-0491-2728.1, p.7]
- The majority, of coal units in Texas utilize low sulfur coal, typically western subbituminous coal. The use of a different, higher sulfur fuel would likely trigger both state and federal new source permitting requirements and the best available control technology requirements inherent with air quality permitting would preclude emission increases resulting from fuel switching. Consequently, as indicated in its testimony, the Association of Electric Companies of Texas ('AECT') believes that EPA's projected modeled SO2 emission increase for Texas is not realistic and that EPA should not include Texas as a Group 2 state. We support AECT's position. [EPA-HQ-OAR-2009-0491-2728.1, p.7]
- EPA has no basis under this rule to cap SO2 emissions in Texas. As its name implies, the Transport Rule is designed to protect downwind air quality from pollution transported across state lines. EPA's own analysis shows that it has no basis for limiting SO2 from Texas for this purpose. [EPA-HQ-OAR-2009-0491-2728.1, p.7]
- EPA and Texas already have authority to limit SO2 emissions to address air quality within the state. If Texas emission limits are too high to protect air quality within cities like Dallas and Houston in the state, the state can impose new limits under Section 110 of the Clean Air Act without relying on the Transport Rule. [EPA-HQ-OAR-2009-0491-2728.1, p.7]
- EPA should not dictate fuel supply policy for companies. Speculative considerations of potential changes to coal contracts are not appropriate rationales for major expansions of air regulator), programs. EPA does not have the expertise or regulatory mandate to analyze coal markets, and should not engage in imposing pre-emptive regulation for problems that do not currently exist. [EPA-HQ-OAR-2009-0491-2728.1, pp.7-8]
For these reasons, EPA should not include Texas in the CATR SO2 program. [EPA-HQ-OAR-2009-0491-2728.1, p.8]
Response:
As discussed in sections III, V, and VI of the preamble to the final Transport Rule, EPA has updated and improved the modeling inputs and platforms used to identify states with contributions to downwind nonattainment or maintenance receptors that meet or exceed the 1% air quality thresholds in the 2012 base case.  These updates -- which include a number of updates to the modeling inputs for Texas -- were made based on public comments received on the proposed rule and the subsequent notices of data availability (NODAs) and other standard updates.
In the proposed rule, EPA requested comment on whether Texas should be included in the Transport Rule for annual PM2.5.  EPA's analysis for the proposal showed that emissions in Texas would significantly contribute to nonattainment or interfere with maintenance of the annual PM2.5 NAAQS in a downwind state if Texas were not included in the rule for fine particles.  In contrast to the analysis at proposal, the updated modeling conducted for the final rule supports EPA's conclusion that in the base case, Texas significantly contributes to nonattainment or interferes with maintenance of the 1997 PM2.5 NAAQS in another state.  Thus, Texas is required in the final rule to reduce annual SO2 emissions (as a Group 2 state) and annual NOx emissions to eliminate its significant contribution to nonattainment and interference with maintenance, based on its emissions in the base case.
Certain commenters questioned EPA's determination in the proposal that projected SO2 emissions in Texas would increase enough to trigger the air quality threshold if the state is not covered by the Transport Rule SO2 program.  EPA notes that Texas is included in the final rule as a result of the state's contributions to downwind receptors in the updated base case modeling, thus, the comments on whether SO2 emissions in Texas might increase if the state were not covered (as was projected in the modeling for the proposal) are no longer relevant.
Based on a careful review of public comments  on the emissions inventories and modeling,  EPA updated input data and assumptions for Texas units in the final rule, including restricting the coal choice in 2012 where EPA received information indicating that short-term factors (e.g., coal contracts and boiler engineering considerations) limited a unit's choice to a particular assigned coal.  EPA imposed limits on the fuel assignments at four Texas coal steam plants (Big Brown, Limestone, Martin Lake, and Monticello) to increase consistency with reported fuel use at the plants.  For further information about these updates see section 9.3.11, "Short-term restrictions on coal choice and related issues" in the IPM documentation in the docket ("Documentation Supplement for EPA Base Case v.4.10_FTransport  -  Updates for Final Transport Rule").  Also see the IPM documentation for a summary of EPA's modeling of state EGU emission reduction requirements (including, e.g., Senate Bill 7, as referenced by an above commenter).
EPA has identified 10 facilities in Texas that were burning lignite fuels in 2010.  Of these, 6 were burning 100% lignite, and 4 were blending lignite and subbituminous.  EPA modeling shows the 6 lignite only units continue to burn 100% lignite in both base case and policy case modeling.  EPA models no coal switching at these facilities.  Additionally, of the 4 units that reported lignite and sub-bituminous blending to EIA for 2010, two units are projected to blend these types of coal in the EPA modeling of the Transport Rule policy scenario, and the other two units are projected to switch to 100 percent sub-bituminous to achieve cost-effective emission reductions.  EIA fuel use data reported by these two sources over the past 10 years demonstrates a steady increase in their subbituminous use, providing historic evidence that is consistent with the economic projections in EPA's modeling.
With respect to the comment about SO2 permit limits, EPA notes that its IPM modeling includes SO2 permit limits as inputs for the individual generating units (see "NEEDS v.4.10_FTransport" available in the docket).
With respect to the comment about analyzing coal markets, EPA notes that the Agency conducts periodic independent formal peer review of IPM covering the model itself and key modeling input assumptions, including separate panels of independent experts who review the model's coal supply and transportation assumptions, natural gas assumptions, and model formulation.  In addition to formal peer review, the rulemaking process offers opportunities for expert review and comment by operators of the electricity sector that is represented in IPM, stakeholders affected by the policies being modeled, and developers of other models of the U.S. electricity sector.  This feedback provides a highly detailed public review of data inputs, assumptions, model representation, and model results.
With respect to the comment regarding SO2 emission reductions that have occurred in Texas "since the modeling base case year of 2005" EPA notes that we analyzed each state's contributions to downwind air quality problems based on a projected future 2012 base case (not a 2005 base case) that includes reductions since 2005.  As discussed in section V.C.2 of the final rule preamble, EPA used 2012 base case modeling to identify future nonattainment and maintenance locations and to quantify the contributions of emissions in upwind states to annual and 24-hour PM2.5 and 8-hour ozone in downwind states.  (For the reasons discussed in section V.B of the preamble, the 2012 base case does not include CAIR-specific emissions reductions.)  EPA agrees with the commenter that Texas EGUs have reduced their SO2 emissions since 2005.  According to EPA's Acid Rain Program (ARP) database, EGUs in Texas emitted about 535,000 tons of SO2 in 2005, while EPA's projected 2012 base case EGU emissions for Texas are about 446,000 tons (roughly 16% lower).  EPA also notes that its projected 2012 base case EGU SO2 emissions are lower than recent historical emissions in Texas as shown in the following table:
                    Texas EGU SO2 Emissions (Thousand Tons)
                                2008 Emissions
                                2009 Emissions
                                2010 Emissions
                             2012 Final Base Case
                                      484
                                      454
                                      461
                                      446
The Transport Rule's interstate trading programs with assurance provisions provide regulatory flexibility that promotes the power sector's ability to operate as an integrated, interstate system and to provide electric reliability.  The final rule does not dictate the compliance choices of individual plants.  EPA performed a sensitivity analysis that shows that Texas can sustain the operation of lignite mines and the provision of lignite coal to Texas EGUs while still cost-effectively meeting the Transport Rule's emission reduction requirements (see section V.C.2 of the preamble for further discussion of this analysis).  Comments about potential impacts of the Transport Rule to electric reliability are addressed in section V.D.2.g in this RTC and the "Technical Support Document on Resource Adequacy and Reliability in the Transport Rule" in the docket.  Regarding the comment about benefits and economic impacts of the Transport Rule, see sections VIII and XII of the preamble and see the Regulatory Impact Analysis (RIA).
EPA provided a full opportunity for comment on whether Texas should be included in the annual NOX and annual SO2 programs in the Transport Rule based on its significant contribution to nonattainment or interference with maintenance of the 1997 annual PM2.5 NAAQS in other states.  Indeed, any argument that the parties could not have anticipated EPA's ultimate decision to include Texas in the rule based on its significant contribution with respect to the 1997 PM2.5 standards is refuted by the fact that EPA explicitly requested comment on this issue. See 75 FR 45284.
It is well established that a final rule need not be identical to the proposed rule.  It need only be a "logical outgrowth" of the proposed regulations.  See Small Refiner Lead Phase-Down Task Force v. EPA, 705 F.2d 506, 546-47 (D.C. Cir. 1983).  As the court has long recognized, a contrary approach would lead to the absurd result that "the agency can learn from the comments on its proposal only at the peril of starting a new procedural round of commentary," International Harvester Co. v. Ruckelshaus, 478 F.2d 615 (D.C. Cir 1973).  The notice and comment process does not begin anew each time a proposed rule is changed in response to public comments on a proposal.  Notice is the primary consideration used by the courts to determine whether a proposed rule requires a supplemental proposal. To determine if a final rule is a logical outgrowth of a proposal, courts look to whether "interested parties `should have anticipated' that the change was possible and thus reasonably should have filed their comments on the subject during the notice-and-comment period." CSX Transp. Inc. v. Surface Transportation Board, 584 F.3d 1076 (D.C. Cir 2009) (internal citations omitted).  "'[A] final rule represents a logical outgrowth where the NPRM expressly asked for comments on a particular issue or otherwise made clear that the agency was contemplating a particular change.'" International Union v. Mine Safety and Health Administration, 626 F.3d 84 (D.C. Cir 2010) (internal citations omitted).

In this instance, EPA explicitly asked for comments on the issue in question.  EPA explicitly notified the public in the proposal that it was considering including Texas in the Transport Rule annual programs as a group 2 state, and requested comment on that issue.  Then, in the final rule, EPA decided to do what it had told the public, in the proposal, that it was considering.  Specifically, in the proposal, EPA noted that its analysis for the proposal indicated that projected increases in Texas SO2 emissions associated with implementation of the Transport Rule (e.g, as a result of fuel switching associated with changes in the price of low verses higher sulfur coal) would cause Texas's contribution to exceed the threshold for annual PM2.5.  It then explicitly requested comment on "whether Texas should be included in the program as a group 2 state."  75 FR 45284.  The analysis for the final rule, then demonstrated that emissions in Texas significantly contribute to nonattainment and interfere with maintenance in another state even in the base case.  In other words, even without any increases in Texas emissions associated with implementation of the Transport Rule in other states, emissions in Texas are significantly contributing to nonattainment and maintenance problems downwind.  For this reason, EPA decided to do what it requested comment on.  That is, it decided to include Texas in the annual programs as a group 2 state.  For these reasons, EPA's inclusion of Texas in the final rule based on its significant contribution and interference with maintenance with respect to the annual PM2.5 NAAQS is a logical outgrowth of the proposal.

The fact that the proposal did not include illustrative annual NOX and annual SO2 budgets for Texas does not change this conclusion.  In the proposal, EPA clearly identified and took comment on a methodology for identifying and quantifying emissions within a state that significantly contribute to nonattainment or interfere with maintenance downwind.  EPA also clearly identified the states for which it would be doing such analysis, and it identified and took comment on the data inputs to be used in the calculation.  EPA received numerous comments on the methodology, including comments from TCEQ and sources in Texas.  EPA also received numerous comments on and corrections to Texas-specific data.  EPA refined its methodology and data inputs in response to public comments.  The illustrative budgets provided in the proposal merely demonstrated the outcome of applying the proposed methodology to the data inputs used for the proposal.  Adjustments were made to all states budgets and the allowance allocations for all states between proposal and final.  EPA provided an ample opportunity to comment on the methodology and data inputs to be used to calculate states' significant contribution, and explicitly provided notice that it was considering including Texas in the final rule due to its impact on downwind nonattainment and maintenance problems with respect to the 1997 PM2.5 NAAQS.  For these reasons, EPA's determination that Texas must be included in the annual programs because of these impacts is a logical outgrowth of the proposal.

IV.D.4.d. Other Comments On Application of Approach to Fine Particles (PM2.5)

Organization: Nebraska Public Power District
Omaha Public Power District
Comment:
Nebraska Public Power District
11) Significant Impact Levels. EPA's current TR proposal would set significant contribution levels for PM2.5 substantially lower than the "significant impact levels" (SILs) it has already proposed for modeling of individual sources (Federal Register, September 21, 2007). The prior rule proposal provides three options for an annual average PM2.5 SIL: 1.0, 0.8 or 0.3 μg/m3, and three options for a 24-hour average PM2.5 SIL: 5.0, 4.0, and 1.2 μg/m3. It is not reasonable to use a lower SIL for modeling impact contributions of entire states in the TR, than for individual sources in a permitting context. We recommend that EPA stay consistent with the prior rule proposal, and use a TR significance level for individual states no higher than the lowest proposed SILs (0.3 μg/m3 for annual averages and 1.2 μg/m3 for 24-hour averages). [EPA-HQ-OAR-2009-0491-2711.1, p.8]
Omaha Public Power District
EPA's current TR proposal would set significant contribution levels for PM2.5 substantially lower than the 'significant impact levels' (SILs) it has already proposed for modeling of individual sources (Federal Register, September 21,2007). The prior rule proposal provides three options for an annual average PM2.5 SIL: 1.0, 0.8 or 0.3 ug/m3, and three options for a 24-hour average PM2.5 SIL: 5.0, 4.0, and 1.2 ug/m3. It is not reasonable to use a lower SIL for modeling impact contributions of entire states in the TR, than for individual sources in a permitting context. We recommend that EPA stay consistent with the prior rule proposal, and use a TR significance level for individual states no higher than the lowest proposed SILs (0.3 ug/m3 for annual averages and 1.2 ug/m3 for 24-hour averages). [EPA-HQ-OAR-2009-0491-2680.1, pp. 5-6]
Response:
As discussed in Section V.D of the preamble for the final Transport Rule, EPA determined that it is inappropriate to compare the thresholds for significant contribution under the final Transport Rule against "significant impact levels" which serve a different purpose.  EPA made this determination previously and it can be found in 70 FR 25101; May 12, 2005.
Organization: New York State Department of Environmental Conservation
Comment:
New York State Department of Environmental Conservation
Furthermore, as noted in the proposal, the highest particulate nitrate concentrations in the East tend to occur in cooler months and regions. New York is concerned with EPA's inability to adequately determine the impact of NOx and ammonia on wintertime ambient PM levels as these represent a substantial amount of the PM2.5 found in the East in cooler months. A summertime-only focus could result in the failure to cost-effectively address wintertime based PM2.5 nonattainment caused by transport. [EPA-HQ-OAR-2009-0491-2730.1, p.7]
Response:
For the final Transport Rule, for reasons more fully described in Section VI of the preamble for the final Transport Rule, EPA was able to use CAMx modeling to evaluate ammonia emissions, NOX reductions, and formation of the nitrate component of PM2.5.  Therefore, with respect to EPA's ability to adequately determine the impact of NOX and ammonia on wintertime ambient PM levels, EPA believes that it is employing the best modeling capabilities available for the final Transport Rule.  Additionally, as described in Section VI.C of the preamble for the final Transport Rule, EPA made substantial improvements to AQAT to specifically address the seasonality of PM2.5 non-attainment and maintenance.  Finally, as described in Section VI.D of the preamble for the final Transport Rule, EPA finds, for the states covered by this rule for the 1997 PM2.5  NAAQS or the 2006 PM2.5 NAAQS, that the annual NOX and SO2 reductions under the final Transport Rule successfully address significant contribution to nonattainment and interference with maintenance with respect to the NAAQS for which they are covered.
IV.D.5. [Reserved]

IV.D.5.a. Specific Application of Overall Approach to Ozone: EGU Cost Curves/ Air Quality Assessment (AQAT)/ Cost Thresholds

Organization: Environmental Defense Fund (EDF)
Comment:
Environmental Defense Fund (EDF)
This recommendation reflects the general principle that results from the CAMx air quality model should be given precedence over the less reliable results from the simplified model. While the air quality assessment tool is a useful device for exploring potential regulations, there is no justification for using it as the basis for the actual rule given the contrary evidence from the more sophisticated modeling.  Moreover, EPA's estimated cost curves, developed using the IPM model, show that significant further reductions in SO2 emissions can be made at electric generating units at costs between $2,000 and $2,400 per ton. [EPA-HQ-OAR-2009-0491-2834.1 p.7]
Response:
EPA made several improvements to AQAT for the final Transport Rule.  For details about AQAT and it's ability to estimate similar air quality results to CAMx, please refer to section VI.C of the preamble for the final Transport Rule and the Significant Contribution and State Emissions Budgets Final Rule Technical Support Document.
With respect to SO2 emission reductions available and various costs and how those reductions factored into EPA's determination of NOx and SO2 costs under the final Transport Rule, please refer to section VI of the preamble for the final rule.
Organization: Texas Commission on Environmental Quality
Clean Air Task Force
Maryland Department of Environment (MDE)
New York State Department of Environmental Conservation
Comment:
Clean Air Task Force
With respect to ozone, EPA should raise the $500/ton minimum cost threshold in the Transport Rule proposal for requiring ozone season NOx reductions, keeping in mind that EPA found in the 1998 NOx SIP Call that a cost threshold of up to $2000/ton (in $1990; the equivalent of approximately $3200 in $2006) of NOx removed was highly cost-effective. 35 [EPA-HQ-OAR-2009-0491-2738.1, p.8]
[These comments were also submitted as testimony at the Philadelphia, Pennsylvania public hearing on August 26, 2010.  See Docket Number EPA-HQ-OAR-0491-1938, pp.108-109.]
Over a decade ago, in the 1998 NOx SIP Call, EPA found that NOx reductions of up to an average cost of $2000/ton (in $1990) of NOx removed were highly cost-effective; this cost threshold is the equivalent of approximately $3200 in $2006. 100 EPA determined the $2000/ton average cost figure based on "NOx emissions controls that are available and of comparable cost to other recently undertaken or planned NOx measures." 101 However, EPA claims in the instant rulemaking that it will be difficult to require additional NOx reductions (i.e., reductions beyond those resulting from a $500/ton marginal cost threshold) without causing unacceptable delay in the finalization of the TR, noting that, unlike the case with SO2 controls, NOx controls for other source categories are available at costs between $500 and $3200/ton. 102 [EPA-HQ-OAR-2009-0491-2738.1, pp.17-18]
Furthermore, as discussed above in connection with SO2, 105 and in note 80 [See EPA-HQ-OAR-2009-0491-2738.1, p.14 for comments pertaining to footnote 80] and accompanying text, actual NOx emissions in 2009 from EGUs in sixteen states were already below their proposed TR NOx state caps. Here too, the TR would allow these states to increase their NOx emissions from current levels. This should not be permitted, and increasing the cost threshold for NOx reductions is one way to address this problem. [EPA-HQ-OAR-2009-0491-2738.1, p.18]
In view of the foregoing, we urge EPA to raise the NOx cost threshold uniformly 106 to at least $3200/ton and to include, at minimum, EGUs, large boilers, large stationary combustion engines and cement kilns in the TR FIPs. [EPA-HQ-OAR-2009-0491-2738.1, p.18]
Reductions in power plant NOx emissions in the 90% range are also feasible using selective catalytic reduction (SCR) technology. SCR technology for NOx control, although more recent than FGD control for SO2, is also in widespread use in the utility industry and is reliable and effective. EPA reports that "[o]perating data available from many plants indicate that the 90% NOx removal rate has been met or exceeded at these plants." And a 2001 report by the Northeast States for Coordinated Air Use Management (NESCAUM) stated: "Recent experience with actual SCR installations and vendor representations concerning expected system performance suggest that future SCR installation -- especially when coupled with advanced low-NOx burner technology -- can be expected to consistently deliver reductions in excess of 90 percent." [EPA-HQ-OAR-2009-0491-2738.1, p.19; For additional comments pertaining to Tighter Control on Regional Power Plant Emissions are Feasible and can be Implemented without Threatening the Economy or the Electric Power System see pages 19-21 of this comment]
Specifically, EPA determined in the NOx SIP Call that "highly cost-effective" controls were those that "achieve the greatest feasible emissions reduction but still cost no more than $2000 per ton of ozone season NOx emissions removed (in 1990 dollars), on average." NOx SIP Call, 63 Fed. Reg. at 57399.
We note that EPA primarily based its determination of "highly cost-effective" controls in the NOx SIP Call on average costs rather than incremental or marginal costs used by EPA in the proposed TR. Thus, the equivalent marginal cost in $2006 of those controls found highly cost effective in the NOx SIP Call would be significantly higher than $3200/ton.
The $500/ton ozone season NOx marginal cost cut-off should also be raised to at least $3200/ton.
For reasons similar to those discussed above in connection with annual NOx, the cost threshold for ozone season NOx reductions should also be raised. EPA's CAMx modeling shows not only that a number of downwind areas will continue to have nonattainment and maintenance problems with respect to the PM NAAQS, but also that several areas will have similar problems with the ozone NAAQS. Specifically, remaining ozone problem areas include Houston, Baton Rouge and New York City. 107 States linked to those problem areas include Alabama, Arkansas, Florida, Georgia, Illinois, Kentucky, Louisiana, Mississippi, Tennessee and Texas, as well as Connecticut, Delaware, Indiana, [EPA-HQ-OAR-2009-0491-2738.1, p.18] Maryland, New Jersey, North Carolina, Ohio, Pennsylvania, Virginia, West Virginia and Michigan -- that is, all but five of the states in the proposed TR. 108
For the reasons stated above with respect to annual NOx, 109 EPA should adopt a cost threshold for determining ozone season NOx reductions at a level no lower than $3200/ton in $2006, and should require NOx reductions from EGUs, large boilers, large stationary combustion engines and cement kilns. EPA should also apply this higher cost threshold on a uniform basis for all covered sources in all contributing states in the TR, for the reasons stated earlier in connection with SO2 reductions. 110  [EPA-HQ-OAR-2009-0491-2738.1, p.19]
Footnote:

Specifically, EPA determined in the NOx SIP Call that "highly cost-effective" controls were those that "achieve the greatest feasible emissions reduction but still cost no more than $2000 per ton of ozone season NOx emissions removed (in 1990 dollars), on average." NOx SIP Call, 63 Fed. Reg. at 57399.
We note that EPA primarily based its determination of "highly cost-effective" controls in the NOx SIP Call on average costs rather than incremental or marginal costs used by EPA in the proposed TR. Thus, the equivalent marginal cost in $2006 of those controls found highly cost effective in the NOx SIP Call would be significantly higher than $3200/ton.
106 For the reasons stated earlier in connection with SO2 emissions, EPA should establish a single cost threshold for NOx, and not establish different "groups" of states with different reduction requirements.
Maryland Department of Environment (MDE)
Cost Thresholds and Cost-Effectiveness
In the proposed rule EPA suggests that a generic $500 per ton level represents the appropriate cost threshold for NOx reductions that can be achieved by 2012. Maryland sees at least two major problems with this presumption. First, using this cost threshold for NOx suggests that emission reductions above this level are not "cost effective" for the purposes of the proposed Transport Rule. Second, EPA uses this cost threshold in its rationale for foregoing the option of proposing a second phase of higher cost threshold NOx controls in 2014 in the proposed rule. Maryland urges EPA to revise its approach to determining the appropriate NOx controls in the proposed Transport Rule that are feasible to implement by 2014 and that will eliminate significant contribution and interference with maintenance for the 1997 ozone standard. [EPA-HQ-OAR-2009-0491-2639.2, p.4]
Maryland disagrees with EPA's assignment of a simple $500/ton cost-effectiveness threshold in the proposed Transport Rule, especially when our own state is already enacting NOx control measures at significantly higher costs. Further, EPA states in the proposed Transport Rule that the reductions achieved at this cost threshold will not eliminate significant contribution or interference with maintenance for eleven states linked to ozone air quality problems in New York City. This not only sets a dangerous precedent that the proposed Transport Rule does not have to fully achieve its primary mission, but it also leaves the downwind nonattainment area with the requirement to meet its attainment requirements with controls starting at over many times the cost per ton used in the proposed Transport Rule. Maryland believes that EPA's proposed dollar-per-ton cost thresholds are too low; they do not to capture all realizable cost effectiveness, and more importantly, they do not accurately reflect the cost associated with the emissions reductions required for each individual upwind state to eliminate its significant contribution and interference with maintenance. [EPA-HQ-OAR-2009-0491-2639.2, p.4]
Maryland encourages EPA to consider all transported and local pollution affecting an area on an equal cost per ton of control basis. Due to limited options for further reducing air pollution to meet the ozone and particulate matter NAAQS, Maryland and states across the OTR have been compelled to consider measures as high as $2,000 - $80,000 per ton of NOx controlled. [EPA-HQ-OAR-2009-0491-2639.2, pp.4-5]
Where significant contributions are not eliminated by the EPA proposal, Maryland believes that it is reasonable to require controls that reflect much higher costs than cited in EPA's proposed Transport Rule. This is especially true in the case of EGUs near the border of another state. Where a significantly contributing EGU is the primary cause of a violation of a NAAQS, the unit must reduce its emissions sufficiently to eliminate that violation. Maryland believes that the use of a dollar per ton cost threshold to determine emissions controls is inappropriate in this situation. The use of a dollar per ton threshold might be appropriate in order to call for more control than would otherwise be required to meet the receiving states emission limits, especially where a contributing state is not itself requiring available control technologies on its EGU sources.  [EPA-HQ-OAR-2009-0491-2639.2, p.5]
New York State Department of Environmental Conservation