[Federal Register Volume 81, Number 207 (Wednesday, October 26, 2016)]
[Rules and Regulations]
[Pages 74504-74650]
[FR Doc No: 2016-22240]

Vol. 81

Wednesday,

No. 207

October 26, 2016

Part II

Environmental Protection Agency

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40 CFR Parts 52, 78, and 97

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

Federal Register / Vol. 81, No. 207 / Wednesday, October 26, 2016 /
Rules and Regulations

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 52, 78, and 97

[EPA-HQ-OAR-2015-0500; FRL-9950-30-OAR]
RIN 2060-AS05

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

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: The Environmental Protection Agency (EPA) published the
original Cross-State Air Pollution Rule (original CSAPR) on August 8,
2011, to address interstate transport of ozone pollution under the 1997
ozone National Ambient Air Quality Standards (NAAQS) and interstate
transport of fine particulate matter (PM2.5) pollution under
the 1997 and 2006 PM2.5 NAAQS. The EPA is finalizing this
Cross-State Air Pollution Rule Update (CSAPR Update) to address
interstate transport of ozone pollution with respect to the 2008 ozone
NAAQS. This final rule will benefit human health and welfare by
reducing ground-level ozone pollution. In particular, it will reduce
ozone season emissions of oxides of nitrogen (NOX) in 22
eastern states that can be transported downwind as NOX or,
after transformation in the atmosphere, as ozone, and can negatively
affect air quality and public health in downwind areas.
    For these 22 eastern states, the EPA is issuing Federal
Implementation Plans (FIPs) that generally provide updated CSAPR
NOX ozone season emission budgets for the electric
generating units (EGUs) within these states, and that implement these
budgets via modifications to the CSAPR NOX ozone season
allowance trading program that was established under the original
CSAPR. The EPA is finalizing these new or revised FIP requirements only
for certain states that have failed to submit an approvable State
Implementation Plan (SIP) addressing interstate emission transport for
the 2008 ozone NAAQS. The FIPs require affected EGUs in each covered
state to reduce emissions to comply with program requirements beginning
with the 2017 ozone season (May 1 through September 30). This final
rule partially addresses the EPA's obligation under the Clean Air Act
to promulgate FIPs to address interstate emission transport for the
2008 ozone NAAQS. In conjunction with other federal and state actions
to reduce ozone pollution, these requirements will assist downwind
states in the eastern United States with attaining and maintaining the
2008 ozone NAAQS.
    This CSAPR Update also is intended to address the July 28, 2015
remand by the United States Court of Appeals for the District of
Columbia Circuit of certain states' original CSAPR phase 2 ozone season
NOX emission budgets. In addition, this rule updates the
status of certain states' outstanding interstate ozone transport
obligations with respect to the 1997 ozone NAAQS, for which the
original CSAPR provided a partial remedy.

DATES: This final rule is effective on December 27, 2016.

ADDRESSES: The EPA has established a docket for this action under
Docket ID No. EPA-HQ-OAR-2015-0500. All documents in the docket are
listed on the www.regulations.gov Web site. Although listed in the
index, some information is not publicly available, e.g., CBI or other
information whose disclosure is restricted by statute. Certain other
material, such as copyrighted material, is not placed on the Internet
and will be publicly available only in hard copy form. Publicly
available docket materials are available either electronically through
www.regulations.gov.

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

Preamble Glossary of Terms and Abbreviations

    The following are abbreviations of terms used in the preamble.

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

Table of Contents

I. Executive Summary
    A. Purpose of Regulatory Action
    B. Major Provisions
    C. Benefits and Costs
II. General Information
    A. To whom does this final action apply?
III. Legal Authority
    A. The EPA's Statutory Authority for the Final Rule
    B. FIP Authority for Each State Covered by the Final Rule
IV. Air Quality Issues Addressed and Overall Approach for the Final
Rule
    A. The Interstate Transport Challenge Under the 2008 Ozone
Standard
    1. Background on the Nature of the Interstate Ozone Transport
Problem
    2. Events Affecting Application of the Good Neighbor Provision
for the 2008 Ozone NAAQS
    B. Approach To Address Ozone Transport Under the 2008 Ozone
NAAQS via FIPS
    1. Requiring Emission Reductions From Upwind States
    2. Focusing on 2017 for Analysis and Implementation
    3. The CSAPR Framework
    4. Partial Versus Full Resolution of Transport Obligation
    5. Why Focus on Eastern States
    6. Short-Term NOX Emissions
    C. Responding to the Remand of CSAPR NOX Ozone Season
Emission Budgets
    D. Addressing Outstanding Transport Obligations for the 1997
Ozone NAAQS
V. Analyzing Downwind Air Quality and Upwind State Contributions
    A. Overview of Air Quality Modeling Platform
    B. Emission Inventories
    1. Foundation Emission Inventory Data Sets
    2. Development of Emission Inventories for EGUs
    3. Development of Emission Inventories for Non-EGU Point Sources
    4. Development of Emission Inventories for Onroad Mobile Sources
    5. Development of Emission Inventories for Commercial Marine
Category 3 (Vessel)
    6. Development of Emission Inventories for Other Nonroad Mobile
Sources
    7. Development of Emission Inventories for Nonpoint Sources

    C. Definition of Nonattainment and Maintenance Receptors
    D. Air Quality Modeling To Identify Nonattainment and
Maintenance Receptors
    E. Pollutant Transport From Upwind States
    1. Air Quality Modeling To Quantify Upwind State Contributions
    2. Application of Screening Threshold
    3. Update to EGU Modeling for Quantifying Emission Budgets
VI. Quantifying Upwind State EGU NOX Emission Budgets To
Reduce Interstate Ozone Transport for the 2008 NAAQS
    A. Introduction
    B. Levels of Uniform Control Stringency
    1. EGU NOX Mitigation Strategies
    2. Non-EGU NOX Mitigation Strategies and Feasibility
for the 2017 Ozone Season
    3. Summary of EGU Uniform Control Stringency Represented by
Marginal Cost of Reduction (Dollar per Ton)
    C. EGU NOX Reductions and Corresponding Emission
Budgets
    1. Evaluating EGU NOX Reduction Potential
    2. Quantifying Emission Budgets
    D. Multi-Factor Test Considering Costs, EGU NOX
Reductions, and Downwind Air Quality Impacts
VII. Implementation Using the Existing CSAPR NOX Ozone
Season Allowance Trading Program and Relationship to Other Rules
    A. Introduction
    B. New and Revised FIPs
    C. Updates to CSAPR NOX Ozone Season Trading Program
Requirements
    1. Relationship of Allowances and Compliance for CSAPR Update
States and States With Ongoing Original CSAPR Requirements
    2. Use of Banked Vintage 2015 and 2016 CSAPR NOX
Ozone Season Trading Program Allowances for Compliance in CSAPR
Update States
    D. Feasibility of Compliance
    E. FIP Requirements and Key Elements of the CSAPR Trading
Programs
    1. Applicability
    2. State Budgets
    3. Allocations of Emission Allowances
    4. Variability Limits, Assurance Levels, and Penalties
    5. Compliance Deadlines
    6. Monitoring and Reporting and the Allowance Management System
    7. Recordation of Allowances
    F. Submitting a SIP
    1. 2018 SIP Option
    2. 2019 and Beyond SIP Option
    3. SIP Revisions That Do Not Use the CSAPR Trading Program
    4. Submitting a SIP To Participate in CSAPR for States Not
Included in This Rule
    G. Title V Permitting
    H. Relationship to Other Emission Trading and Ozone Transport
Programs
    1. Interactions With Existing CSAPR Annual Programs, Title IV
Acid Rain Program, NOX SIP Call, and Other State
Implementation Plans
    2. Other Federal Rulemakings
VIII. Costs, Benefits, and Other Impacts of the Final Rule
IX. Summary of Changes to the Regulatory Text for the CSAPR FIPs and
CSAPR Trading Programs
X. Statutory and Executive Order Reviews
    A. Executive Order 12866: Regulatory Planning and Review and
Executive Order 13563: Improving Regulation and Regulatory Review
    B. Paperwork Reduction Act (PRA)
    C. Regulatory Flexibility Act (RFA)
    D. Unfunded Mandates Reform Act (UMRA)
    E. Executive Order 13132: Federalism
    F. Executive Order 13175: Consultation and Coordination With
Indian Tribal Governments
    G. Executive Order 13045: Protection of Children From
Environmental Health Risks and Safety Risks
    H. Executive Order 13211: Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution or Use
    I. National Technology Transfer and Advancement Act (NTTAA)
    J. Executive Order 12898: Federal Actions To Address
Environmental Justice in Minority Populations and Low-Income
Populations
    K. Congressional Review Act (CRA)
    L. Judicial Review and Determinations Under Section 307(b)(1)
and (d)

I. Executive Summary

    The EPA published the original Cross-State Air Pollution Rule
(original CSAPR) \1\ on August 8, 2011 to address the interstate
transport of emissions with respect to the 1997 ozone National Ambient
Air Quality Standards (NAAQS) and the 1997 and 2006 fine particulate
matter (PM2.5) NAAQS.\2\ The EPA is finalizing this Cross-
State Air Pollution Rule Update for the 2008 Ozone NAAQS (CSAPR Update)
to address the interstate transport of emissions with respect to the
2008 ozone NAAQS. The 2008 ozone NAAQS is an 8-hour standard that was
set at 75 parts per billion (ppb).\3\ The EPA proposed the CSAPR Update
with respect to the 2008 ozone NAAQS on December 3, 2015 (80 FR 75706),
and solicited comment on that action. The EPA provided an additional
opportunity to comment on the air quality modeling platform and air
quality modeling results that were used for the proposed CSAPR Update,
through an August 4, 2015 Notice of Data Availability (NODA) (80 FR
46271) requesting comment on these data. This final rule is informed by
comments received on the NODA and proposed CSAPR Update. This CSAPR
Update also is intended to address the remand by the United States
Court of Appeals for the District of Columbia Circuit of certain
states' original CSAPR NOX ozone season phase 2 emission
budgets. Additionally, this rule updates the status of outstanding
interstate ozone transport obligations for states that the original
CSAPR provided a partial remedy with respect to the 1997 ozone NAAQS.
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    \1\ See 76 FR 48208 (August 8, 2011).
    \2\ The original CSAPR did not evaluate the 2008 ozone standard
because the 2008 ozone NAAQS was under reconsideration during the
analytic work for the rule.
    \3\ See 73 FR 16436 (March 27, 2008).
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A. Purpose of Regulatory Action

    The purpose of this rulemaking is to protect public health and
welfare by reducing interstate emission transport that significantly
contributes to nonattainment, or interferes with maintenance, of the
2008 ozone NAAQS in the eastern U.S. Ground-level ozone causes a
variety of negative effects on human health, vegetation, and
ecosystems. In humans, acute and chronic exposure to ozone is
associated with premature mortality and a number of morbidity effects,
such as asthma exacerbation. Ozone exposure can also negatively impact
ecosystems, for example, by limiting tree growth.
    Studies have established that ozone occurs on a regional scale
(i.e., hundreds of miles) over much of the eastern U.S., with elevated
concentrations occurring in rural as well as metropolitan
areas.4 5 To reduce this regional-scale ozone transport,
assessments of ozone control approaches have concluded that
NOX control strategies are effective. Further, studies have
found that EGU NOX emission reductions can be effective in
reducing ozone pollution--specifically 8-hour peak concentrations,
which is the form of the 2008 ozone standard. For example, studies have
shown EGU NOX reductions achieved under one of the EPA's
prior interstate transport rulemakings known as the NOX SIP
Call \6\ were effective in reducing 8-hour peak ozone concentrations
during the ozone season.\7\
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    \4\ Bergin, M.S. et al. (2007) Regional air quality: Local and
interstate impacts of NOX and SO2 emissions on
ozone and fine particulate matter in the eastern United States.
Environmental Sci & Tech. 41: 4677-4689.
    \5\ Liao, K. et al. (2013) Impacts of interstate transport of
pollutants on high ozone events over the Mid-Atlantic United States.
Atmospheric Environment 84, 100-112.
    \6\ 63 FR 57356 (October 27, 1998).
    \7\ G[eacute]go et al. (2007) Observation-based assessment of
the impact of nitrogen oxides emissions reductions on O3
air quality over the eastern United States. J. of Applied
Meteorology and Climatology 46: 994-1008.
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    Clean Air Act (CAA or the Act) section 110(a)(2)(D)(i)(I),
sometimes called the ``good neighbor provision,''

requires states \8\ to prohibit emissions that will contribute
significantly to nonattainment or interfere with maintenance in any
other state with respect to any primary or secondary NAAQS. The statute
vests states with the primary responsibility to address interstate
emission transport through the development of good neighbor State
Implementation Plans (SIPs). The EPA supports state efforts to submit
good neighbor SIPs for the 2008 ozone NAAQS and has shared information
with states to facilitate such SIP submittals. However, the CAA also
requires the EPA to fill a backstop role by issuing Federal
Implementation Plans (FIPs) where states fail to submit good neighbor
SIPs or the EPA disapproves a submitted good neighbor SIP.
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    \8\ The term ``state'' has the same meaning as provided in CAA
section 302(d) which specifically includes the District of Columbia.
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    On July 13, 2015, the EPA published a rule finding that 24 states
\9\ failed to make complete submissions that address the requirements
of section 110(a)(2)(D)(i)(I) related to the interstate transport of
pollution as to the 2008 ozone NAAQS. See 80 FR 39961 (July 13, 2015)
(effective August 12, 2015). This CSAPR Update finalizes FIPs for 13 of
these states (Alabama, Arkansas, Illinois, Iowa, Kansas, Michigan,
Mississippi, Missouri, Oklahoma, Pennsylvania, Tennessee, Virginia, and
West Virginia). On June 15, 2016 and July 20, 2016, the EPA published
additional rules finding that New Jersey and Maryland, respectively,
also failed to submit transport SIPs for the 2008 ozone NAAQS. See 81
FR 38963 (June 15, 2016) (effective July 15, 2016); 81 FR 47040 (July
20, 2016) (Maryland, effective August 19, 2016). This final CSAPR
Update also finalizes FIPs addressing the good neighbor provision for
these two states. Additionally, the EPA is finalizing FIPs for seven
states for which it finalized disapproval of the states' good neighbor
SIPs for the 2008 ozone NAAQS: Indiana, Kentucky, Louisiana, New York,
Ohio, Texas, and Wisconsin. The FIPs being promulgated partially
address the EPA's outstanding CAA obligations to prohibit interstate
transport of air pollution which will contribute significantly to
nonattainment in, or interfere with maintenance by, any other state
with respect to the 2008 ozone NAAQS. The EPA also determines that it
has fully satisfied its FIP obligation as to 9 states (Florida,
Georgia, Maine, Massachusetts, Minnesota, New Hampshire, North
Carolina, South Carolina, and Vermont), which the EPA has determined do
not contribute significantly to nonattainment in, or interfere with
maintenance by, any other state with respect to the 2008 ozone NAAQS.
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    \9\ The states included in this finding of failure to submit
are: Alabama, Arkansas, California, Florida, Georgia, Illinois,
Iowa, Kansas, Maine, Massachusetts, Michigan, Minnesota,
Mississippi, Missouri, New Hampshire, New Mexico, North Carolina,
Oklahoma, Pennsylvania, South Carolina, Tennessee, Vermont,
Virginia, and West Virginia.
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    The EPA is finalizing a FIP for each of the 22 states subject to
this rule, having found that they failed to submit a complete good
neighbor SIP (15 states) or having issued a final rule disapproving
their good neighbor SIP (7 states). However, even after these FIPs take
effect, any state included in this rule can submit a good neighbor SIP
at any time that, if approved by the EPA, could replace the FIP for
that state. Additionally, CSAPR provides states with the option to
submit abbreviated SIPs to customize the methodology for allocating
CSAPR NOX ozone season allowances while participating in the
ozone season trading program and the EPA is extending that approach in
this rule.
    The 22 states for which the EPA is promulgating FIPs to reduce
interstate ozone transport as to the 2008 ozone NAAQS are listed in
Table I.A-1.

 Table I.A-1--List of 22 Covered States for the 2008 8-Hour Ozone NAAQS
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                               State name
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Alabama
Arkansas
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maryland
Michigan
Mississippi
Missouri
New Jersey
New York
Ohio
Oklahoma
Pennsylvania
Tennessee
Texas
Virginia
West Virginia
Wisconsin
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    The final CSAPR Update addresses collective contributions of ozone
pollution from states in the eastern U.S. and builds on previous
eastern-focused efforts to address collective contributions to
interstate transport, including the NOX SIP Call, the Clean
Air Interstate Rule,\10\ and the original CSAPR rules. The EPA is not
finalizing FIPs to address interstate emission transport for western
states, where there may be additional factors to consider in the EPA's
and state's evaluations.
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    \10\ 70 FR 25162 (May 12, 2005).
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    The EPA finds, in the final air quality modeling on which this rule
is based, one state for which the EPA proposed a FIP in the proposed
CSAPR Update rule, North Carolina, is not linked to any downwind
nonattainment or maintenance receptors. Therefore, the EPA is not
finalizing a FIP for North Carolina.
    For 14 of the eastern states evaluated in this rule (Connecticut,
Florida, Georgia, Maine, Massachusetts, Minnesota, Nebraska, New
Hampshire, North Carolina, North Dakota, Rhode Island, South Carolina,
South Dakota, and Vermont), the EPA has determined that emissions from
those states do not significantly contribute to nonattainment or
interfere with maintenance of the 2008 ozone NAAQS in downwind states.
Accordingly, the EPA has determined that it need not require further
emission reductions from sources in these states to address the good
neighbor provision as to the 2008 ozone NAAQS.
    Of the 22 states covered in this CSAPR Update, 21 states \11\ have
original CSAPR NOX ozone season FIP requirements with
respect to the 1997 ozone NAAQS. One state, Kansas, has newly added
CSAPR NOX ozone season FIP requirements in this action. For
the 22 states affected by one of the FIPs finalized in this action, the
EPA is promulgating new FIPs with EGU NOX ozone season
emission budgets to reduce interstate transport for the 2008 ozone
NAAQS.
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    \11\ Alabama, Arkansas, Illinois, Indiana, Iowa, Kentucky,
Louisiana, Maryland, Michigan, Mississippi, Missouri, New Jersey,
New York, Ohio, Oklahoma, Pennsylvania, Tennessee, Texas, Virginia,
West Virginia, and Wisconsin.
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    One state, Georgia, has an ongoing original CSAPR NOX
ozone season FIP requirement with respect to the 1997 ozone NAAQS, but
the EPA has found that is does not contribute to interstate transport
with respect to the 2008 ozone NAAQS. The EPA did not reopen comment on
Georgia's interstate transport obligation with respect to the 1997
ozone NAAQS in this rulemaking, so Georgia's original CSAPR
NOX ozone season requirements (including its emission
budget) continue unchanged.
    In addition to reducing interstate ozone transport with respect to
the 2008 ozone NAAQS, this rule also addresses the status of
outstanding interstate ozone transport obligations with respect

to the 1997 ozone NAAQS. In the original CSAPR, the EPA promulgated
FIPs for 25 states to address ozone transport with respect to the 1997
NAAQS. For 11 of these states,\12\ the original CSAPR rulemakings
quantified ozone season NOX emission reductions that were
not necessarily sufficient to eliminate all significant contribution to
downwind nonattainment or interference with downwind maintenance of the
1997 ozone NAAQS. Relying on modeling completed for this final rule,
this action finds that, with implementation of the original CSAPR
NOX ozone season emission budgets, emissions from ten of
these states no longer significantly contribute to downwind
nonattainment or interference with maintenance for the 1997 ozone
NAAQS. The EPA further finds that, with implementation of the CSAPR
Update NOX ozone season emission budgets, emissions from
these ten states also no longer significantly contribute to downwind
nonattainment or interference with maintenance for the 1997 ozone
NAAQS. With respect to Texas, the modeling shows that emissions from
within the state no longer significantly contribute to downwind
nonattainment or interference with maintenance for the 1997 ozone NAAQS
even without implementation of the original CSAPR NOX ozone
season emission budget. Accordingly, sources in Texas will no longer be
subject to the emissions budget calculated to address the 1997 ozone
NAAQS. However, as described earlier, this rule finalizes a new
emissions budget for Texas designed to address interstate transport
with respect to the 2008 ozone NAAQS.
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    \12\ Alabama, Arkansas, Georgia, Illinois, Indiana, Kentucky,
Louisiana, Mississippi, Missouri, Tennessee, and Texas. (See CSAPR
Final Rule, 76 FR at 48220, and the CSAPR Supplemental Rule, 76 FR
at 80760, December 27, 2011).
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    This action is also intended to address the portion of the July 28,
2015 opinion of the United States Court of Appeals for the District of
Columbia (D.C. Circuit) remanding without vacatur 11 states' CSAPR
phase 2 NOX ozone season emission budgets. EME Homer City
Generation, L.P., v. EPA, No. 795 F.3d 118, 129-30, 138 (EME Homer City
II). This action promulgates new NOX ozone season budgets
addressing interstate transport with respect to the 2008 ozone NAAQS
that take effect in 2017, which replace the invalidated phase 2 budgets
for 8 states, and also removes the remaining three states from the
CSAPR NOX ozone season trading program as a result of the
EPA's finding that these three states do not significantly contribute
to downwind nonattainment or interference with maintenance for the 2008
standard.\13\
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    \13\ The EPA is promulgating new emission budgets that would
replace the invalidated CSAPR phase 2 NOX ozone season
budgets for Iowa, Maryland, Michigan, New Jersey, New York, Ohio,
Oklahoma, Pennsylvania, Texas, Virginia, West Virginia, and
Wisconsin. The EPA is removing Florida, North Carolina, and South
Carolina from the CSAPR ozone season NOX trading program.
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    The EPA acknowledges that, in EME Homer City II, the D.C. Circuit
also remanded without vacatur the CSAPR phase 2 SO2 emission
budgets as to four states. 795 F.3d at 129, 138. This final rule does
not address the remand of these CSAPR phase 2 SO2 annual
emission budgets. On June 27, 2016, the EPA released a memorandum
outlining the agency's approach for responding to the D.C. Circuit's
July 2015 remand of the CSAPR phase 2 SO2 annual emission
budgets for Alabama, Georgia, South Carolina and Texas. The memorandum
can be found at https://www3.epa.gov/airtransport/CSAPR/pdfs/CSAPR_SO2_Remand_Memo.pdf.
    On October 1, 2015, the EPA strengthened the ground-level ozone
NAAQS, based on extensive scientific evidence about ozone's effects on
public health and welfare.\14\ While reductions achieved by this final
rule will aid in attainment and maintenance of the 2015 standard, the
CSAPR Update rule to reduce interstate emission transport with respect
to the 2008 ozone NAAQS is a separate and distinct regulatory action
and is not meant to address the CAA's good neighbor provision with
respect to the 2015 ozone NAAQS final rule.
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    \14\ 80 FR 65291 (October 26, 2015).
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    The EPA notes that the level of the annual PM2.5 NAAQS
was also revised after CSAPR was promulgated (78 FR 3086, January 15,
2013). However, this final rule does not address the 2012
PM2.5 standard.\15\
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    \15\ The EPA issued a memo addressing CAA section
110(a)(2)(D)(i)(I) requirements for the 2012 PM2.5 NAAQS,
see ``Information on the Interstate Transport `Good Neighbor'
Provision for the 2012 Fine Particulate Matter National Ambient Air
Quality Standards under Clean Air Act section 110(a)(2)(D)(i)(I),''
March 17, 2016.
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B. Major Provisions

    To reduce interstate emission transport under the authority
provided in CAA section 110(a)(2)(D)(i)(I), this rule further limits
ozone season (May 1 through September 30) NOX emissions from
electric generating units (EGUs) in 22 eastern states using the same
framework used by the EPA in developing the original CSAPR. The CSAPR
framework provides a 4-step process to address the requirements of the
good neighbor provision for ambient ozone or PM2.5
standards: (1) Identifying downwind receptors that are expected to have
problems attaining or maintaining clean air standards (i.e., NAAQS);
(2) determining which upwind states contribute to these identified
problems in amounts sufficient to ``link'' them to the downwind air
quality problems; (3) for states linked to downwind air quality
problems, identifying upwind emissions that significantly contribute to
downwind nonattainment or interfere with downwind maintenance of a
standard; and (4) for states that are found to have emissions that
significantly contribute to nonattainment or interfere with maintenance
of the NAAQS downwind, reducing the identified upwind emissions via
regional emission allowance trading programs. Each time the relevant
NAAQS are revised, this process can be applied for the new NAAQS. In
this final action, the EPA applies this 4-step CSAPR framework to
update CSAPR with respect to the 2008 ozone NAAQS.
    The EPA is aligning implementation of this rule with relevant
attainment dates for the 2008 ozone NAAQS, as required by the D.C.
Circuit's decision in North Carolina v. EPA.\16\ The EPA's final 2008
Ozone NAAQS SIP Requirements Rule \17\ established the attainment
deadline of July 20, 2018 for ozone nonattainment areas currently
designated as Moderate. Because the attainment date falls during the
2018 ozone season, the 2017 ozone season will be the last full season
from which data can be used to determine attainment of the NAAQS by the
July 20, 2018 attainment date. Therefore, consistent with the court's
instruction in North Carolina, the EPA establishes emission budgets and
implementation of these emission budgets starting with the 2017 ozone
season.
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    \16\ 531 F.3d 896, 911-12 (D.C. Cir. 2008) (holding that the EPA
must coordinate interstate transport compliance deadlines with
downwind attainment deadlines).
    \17\ 80 FR 12264, 12268; 40 CFR 51.1103.
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    In order to apply the first and second steps of the CSAPR 4-step
framework to interstate transport for the 2008 ozone NAAQS, the EPA
used air quality modeling to project ozone concentrations at air
quality monitoring sites to 2017. The EPA updated this modeling for the
final rule, using the most current complete dataset available, taking
into account comments submitted on the August 2015 Air Quality Modeling
NODA and on the CSAPR Update rule proposal. For the final rule, the EPA
evaluated modeling

projections for air quality monitoring sites and considered current
ozone monitoring data at these sites to identify receptors that are
anticipated to have problems attaining or maintaining the 2008 ozone
NAAQS. The EPA then uses air quality modeling to assess contributions
from upwind states to these downwind receptors and evaluates these
contributions relative to a screening threshold of 1 percent of the
NAAQS. States with contributions that equal or exceed 1 percent of the
NAAQS are identified as warranting further analysis for significant
contribution to nonattainment or interference with maintenance. States
with contributions below 1 percent of the NAAQS are considered to not
significantly contribute to nonattainment or interfere with maintenance
of the NAAQS in downwind states.\18\
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    \18\ As discussed further in section V, EPA's modeling showed
that the following eastern states contribute below the 1 percent
contribution threshold to downwind nonattainment or maintenance
receptors: Connecticut, Florida, Georgia, Maine, Massachusetts,
Minnesota, Nebraska, New Hampshire, North Carolina, North Dakota,
Rhode Island, South Carolina, South Dakota, and Vermont.
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    To apply the third step of the 4-step CSAPR framework, the EPA
quantified emission budgets that limit allowable emissions and
represent the emission levels that remain after each state makes EGU
NOX emission reductions that are necessary to reduce
interstate ozone transport for the 2008 NAAQS. To establish the CSAPR
Update emission budgets, the EPA evaluated levels of uniform
NOX control stringency, represented by an estimated marginal
cost per ton of NOX reduced. The EPA applied the CSAPR
multi-factor test to evaluate cost, available emission reductions, and
downwind air quality impacts to determine the appropriate level of
uniform NOX control stringency that addresses the impacts of
interstate transport on downwind nonattainment or maintenance
receptors. The EPA used this multi-factor assessment to gauge the
extent to which emission reductions are needed, and to ensure those
reductions do not represent over-control.
    The multi-factor test generates a ``knee in the curve'' at a point
where emission budgets reflect a control stringency with an estimated
marginal cost of $1,400 per ton. This level of stringency in emission
budgets represents the level at which incremental EGU NOX
reduction potential and corresponding downwind ozone air quality
improvements are maximized with respect to marginal cost. That is, the
ratio of emission reductions to marginal cost and the ratio of ozone
improvements to marginal cost are maximized relative to the other
emission budget levels evaluated. The EPA finds that very cost-
effective EGU NOX reductions can make meaningful and timely
improvements in downwind ozone air quality to address interstate ozone
transport for the 2008 ozone NAAQS for the 2017 ozone season. Further,
this evaluation shows that emission budgets reflecting the $1,400 per
ton cost threshold do not over-control upwind states' emissions
relative to either the downwind air quality problems to which they are
linked or the 1 percent contribution threshold that triggered further
evaluation. As a result, the EPA is finalizing EGU NOX ozone
season emission budgets developed using uniform control stringency
represented by $1,400 per ton. The emission budgets that the EPA is
finalizing in FIPs for the CSAPR Update rule are summarized in table
I.B-1.

  Table I.B-1--Final 2017 EGU NOX Ozone Season Emission Budgets for the
                            CSAPR Update Rule
                         [Ozone season NOX tons]
------------------------------------------------------------------------
                                                          CSAPR update
                         State                             rule 2017 *
                                                        emission budgets
------------------------------------------------------------------------
Alabama...............................................            13,211
Arkansas..............................................      12,048/9,210
Illinois..............................................            14,601
Indiana...............................................            23,303
Iowa..................................................            11,272
Kansas................................................             8,027
Kentucky..............................................            21,115
Louisiana.............................................            18,639
Maryland..............................................             3,828
Michigan..............................................            17,023
Mississippi...........................................             6,315
Missouri..............................................            15,780
New Jersey............................................             2,062
New York..............................................             5,135
Ohio..................................................            19,522
Oklahoma..............................................            11,641
Pennsylvania..........................................            17,952
Tennessee.............................................             7,736
Texas.................................................            52,301
Virginia..............................................             9,223
West Virginia.........................................            17,815
Wisconsin.............................................             7,915
22 State Region.......................................   316,464/313,626
------------------------------------------------------------------------
* The EPA is finalizing CSAPR EGU NOX ozone season emission budgets for
  Arkansas of 12,048 tons for 2017 and 9,210 tons for 2018 and
  subsequent control periods.

    Our analysis shows that there is uncertainty regarding whether or
not meaningful, cost-effective non-EGU emission reductions are
achievable for the 2017 ozone season. Therefore, non-EGU reductions are
not included in the final rule.
    For most states, the EGU NOX ozone season emission
budgets finalized in this action represent a partial remedy to address
interstate emission transport for the 2008 ozone NAAQS.\19\ However, as
stated in the proposal, the EPA believes that it is beneficial to
implement, without further delay, EGU NOX reductions that
are achievable in the near term, particularly before the Moderate area
attainment date of 2018. Generally, notwithstanding that additional
reductions may be required to fully address the states' interstate
transport obligations, the EGU NOX emission reductions
implemented by this final rule are needed for upwind states to
eliminate their significant contribution to nonattainment or
interference with maintenance of the 2008 ozone NAAQS and for downwind
states with ozone nonattainment areas that are required to attain the
standard by July 20, 2018.
---------------------------------------------------------------------------

    \19\ The requirements for one state, Tennessee, will fully
eliminate that state's significant contribution to downwind
nonattainment and interference with maintenance of the 2008 ozone
NAAQS.
---------------------------------------------------------------------------

    To meet the fourth step of the four-step CSAPR framework (i.e.,
implementation), the FIPs contain enforceable measures necessary to
achieve the emission reductions in each state. The FIPs contained in
this CSAPR Update require power plants in covered states (i.e., states
that significantly contribute to ozone nonattainment or interfere with
maintenance of the ozone standard in the east) to participate in a
CSAPR NOX ozone season Group 2 allowance trading program.
CSAPR's trading programs and the EPA's prior emission trading programs
(e.g., CAIR and the NOX SIP Call) provide a proven
implementation framework for achieving emission reductions. In addition
to providing environmental certainty (i.e., a cap on emissions), these
programs also provide regulated sources with flexibility in choosing
compliance strategies. By using the CSAPR allowance trading programs,
the EPA is applying an implementation framework that was shaped by
notice and comment in previous rulemakings and reflects the evolution
of these programs in response to court decisions and practical
experience gained by states, industry and the EPA. Further, this
program is familiar to the EGUs that will be regulated under this rule,
which means that monitoring, reporting, and compliance will continue as
they are already conducted under CSAPR's current ozone season and
annual programs.\20\
---------------------------------------------------------------------------

    \20\ One state, Kansas, will have a new CSAPR ozone season
requirement. EGUs located in Kansas currently participate in the
CSAPR NOX and SO2 annual programs. The
remaining 22 states were included in the original CSAPR ozone season
program as to the 1997 ozone NAAQS.

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

    The CSAPR Update establishes two trading groups within the CSAPR
NOX ozone season allowance trading program--Group 1 for
Georgia and Group 2 for the 22 CSAPR Update states. At this time,
Georgia is the only state included in the CSAPR NOX ozone
season Group 1 trading program. The EPA will issue distinct allowances
for these trading groups; CSAPR NOX ozone season Group 1
allowances and CSAPR NOX ozone season Group 2 allowances.
Covered entities demonstrate compliance by holding and surrendering one
allowance for each ton of NOX emitted during the ozone
season. In order to ensure that the CSAPR NOX ozone season
trading program implements emission reductions needed to meet the Clean
Air Act's good neighbor requirements for the CSAPR Update states, the
EPA finalizes a prohibition on allowance usage between Georgia and the
CSAPR Update states. However, the EPA provides an option for Georgia to
voluntarily adopt via SIP an emission budget that is commensurate with
CSAPR Update emission budgets that could include Georgia in the Group 2
trading program with the CSAPR Update states. Implementation of Group 1
and Group 2 trading programs is substantially the same as the original
CSAPR NOX ozone season trading program. For states with
continuing obligations to address interstate transport with respect to
the 1997 ozone NAAQS as well as obligations under this rule with
respect to the 2008 ozone NAAQS,\21\ the EPA is coordinating the FIP
requirements for the two NAAQS by providing that compliance with the
2008 ozone NAAQS FIP requirements simultaneously satisfies the state's
transport obligations with respect to the less stringent 1997 ozone
NAAQS. These states will therefore only be required to comply with the
CSAPR NOX ozone season Group 2 requirements.
---------------------------------------------------------------------------

    \21\ Alabama, Arkansas, Illinois, Indiana, Kentucky, Louisiana,
Mississippi, Missouri, and Tennessee.
---------------------------------------------------------------------------

    For this CSAPR Update, the EPA considered whether, and to what
extent, banked \22\ 2015 and 2016 CSAPR NOX ozone season
allowances should be eligible for compliance in the CSAPR Update rule
states. As proposed, the CSAPR Update finalizes a limit on the number
of banked allowances carried over based on the need to assure that the
CAA objective of the CSAPR Update is achieved. This approach
transitions some allowances for compliance to further ensure
feasibility of implementing the CSAPR Update rule. The EPA proposed to
use turn-in ratios calculated using a formula--essentially the same
formula that the EPA is finalizing in this rule. Specifically, the
final rule establishes a one-time allowance conversion that transitions
a limited number of banked vintage 2015 and 2016 allowances for
compliance use in CSAPR Update states. This allowance conversion limits
the number of banked allowances to 1.5 years of states' aggregated
CSAPR variability limits (approximately 99,700 allowances) in order to
ensure that implementation of the trading program will result in
NOX emission reductions sufficient to address significant
contribution to nonattainment or interference with maintenance of
downwind pollution with respect to the 2008 ozone NAAQS.
---------------------------------------------------------------------------

    \22\ Allowances that were not used for compliance and were saved
for use in a later compliance period.
---------------------------------------------------------------------------

    The compliance requirements of this final rule are in addition to
existing, on-the-books EPA and state environmental regulations. To the
extent that new, unplanned actions may also reduce EGU NOX
emissions within a state included in the CSAPR Update, whether for
compliance with other environmental requirements or for other reasons,
such actions would help the state comply with its good neighbor
requirements. The final FIP compliance requirements begin with the 2017
ozone season and will continue for subsequent ozone seasons to ensure
that upwind states included in this rule meet their Clean Air Act
obligation to address interstate emission transport with respect to the
2008 ozone NAAQS for 2017 and future years. Even after the attainment
deadline has passed, areas are required to continue to attain and
maintain the NAAQS, and these good neighbor emission limits will ensure
that future emissions are consistent with states' ongoing good neighbor
obligations.
    The EPA is finalizing revisions to the Code of Federal Regulations
(CFR), specifically: 40 CFR part 97, subparts BBBBB and EEEEE (federal
CSAPR NOX ozone season trading programs); 40 CFR 52.38(b)
(CSAPR NOX ozone season FIP requirements and rules on
replacing or modifying the FIP requirements through a SIP revision);
state-specific subparts of 40 CFR part 52 for 25 states (descriptions
for these states of FIP requirements and consequences of SIP revisions
related to ozone season NOX emissions); and 40 CFR part 78
(provisions addressing the scope of coverage of the administrative
appeal procedures) to address interstate transport for the 2008 ozone
NAAQS. In addition, as proposed, various minor corrections are being
finalized to these CFR sections and other sections of parts 52, 78, and
97 relating to the CSAPR ozone season and annual trading programs.
    The remainder of this preamble is organized as follows: Section III
describes the EPA's legal authority for this action; section IV
describes the human health and environmental context, the EPA's overall
approach for addressing interstate transport through use of the CSAPR
framework, and the EPA's response to the remand of certain CSAPR
NOX ozone season emission budgets; section V describes the
air quality modeling platform and emission inventories that the EPA
used in its assessment of downwind receptors of concern and upwind
state ozone contributions to those receptors for the final rule;
section VI describes the EPA's approach to quantify upwind state
obligations in the form of final EGU NOX emission budgets;
section VII details the implementation requirements including key
elements of the CSAPR allowance trading program and deadlines for
compliance; section VIII describes the expected costs, benefits, and
other impacts of this rule; section IX discusses changes to the
existing regulatory text for the CSAPR FIPs and the CSAPR trading
programs; and section X discusses the statutes and executive orders
affecting this rulemaking. The preamble sections include certain
significant comments and responses to comments as they pertain to the
topic covered in each section.

C. Benefits and Costs

    The rule will achieve near-term emission reductions from the power
sector, lowering ozone season NOX in 2017 by 61,000 tons,
compared to 2017 projections without the rule.
    Consistent with Executive Order 13563, ``Improving Regulation and
Regulatory Review,'' the EPA has estimated the costs and benefits of
the rule. Estimates here are subject to uncertainties discussed further
in the Regulatory Impact Analysis (RIA) in the docket. The estimated
net benefits of the rule at 3 percent and 7 percent discount rates are
$460 million to $810 million and $450 million to $790 million (2011$),
respectively. The non-monetized benefits include reduced ecosystem
impacts and improved visibility. Discussion of the rule's costs and
benefits is provided in preamble section VIII and in the RIA, which is
found in the docket for this final rule. The EPA's estimate of the
rule's costs

and quantified benefits is summarized in Table I.C-1.

    Table I.C-1--Summary of Compliance Costs, Monetized Benefits, and
            Monetized Net Benefits of the Final Rule for 2017
                                 [2011$]
------------------------------------------------------------------------
                                                      Impacts  (benefits
                                  Impacts  (benefits    at 7% discount
           Description              at 3% discount         rate)  ($
                                  rate) ($ millions)       millions)
------------------------------------------------------------------------
Annualized Compliance Costs \a\.  68................  68
Monetized benefits \b\..........  530 to 880........  520 to 860
Monetized Net benefits (benefits- 460 to 810........  450 to 790
 costs).
------------------------------------------------------------------------
\a\ The annualized compliance costs estimate is used as a proxy for the
  total annualized social costs. These costs are determined using the
  4.77% percent discount rate from the electricity sector model used for
  this analysis and are rounded to two significant figures. The
  annualized compliance costs presented here reflect the cost to the
  electricity sector of complying with the FIPs. These costs do not
  include monitoring, recordkeeping, and reporting costs, which are
  reported separately. See Chapter 4 of the RIA for this final rule for
  details and explanation.
\b\ Total monetized health benefits are estimated at 3 percent and 7
  percent discount rates and are rounded to two significant figures. The
  total monetized benefits reflect the human health benefits associated
  with reducing exposure to ozone and PM2.5. It is important to note
  that the monetized benefits and co-benefits include many but not all
  health effects associated with pollution exposure. Benefits are shown
  as a range reflecting studies from Krewski et al. (2009) with Smith et
  al. (2009) to Lepeule et al. (2012) with Zanobetti and Schwartz
  (2008).

II. General Information

A. To whom does this final action apply?

    This rule affects EGUs, and regulates the following groups:

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

    This table is not intended to be exhaustive, but rather provides a
guide for readers regarding entities likely to be regulated by this
action. This table lists the types of entities that the EPA is now
aware will be regulated by this action. Other types of entities not
listed in the table could also be regulated. To determine whether your
entity is regulated by this action, you should carefully examine the
applicability criteria found in 40 CFR 97.504 and 97.804. If you have
questions regarding the applicability of this action to a particular
entity, consult the person listed in the FOR FURTHER INFORMATION
CONTACT section.

III. Legal Authority

A. The EPA's Statutory Authority for the Final Rule

    The statutory authority for this final action is provided by the
CAA as amended (42 U.S.C. 7401 et seq.). Specifically, sections 110 and
301 of the CAA provide the primary statutory underpinnings for this
rule. The most relevant portions of section 110 are subsections
110(a)(1), 110(a)(2), and 110(a)(2)(D)(i)(I), and 110(c)(1).
    Section 110(a)(1) provides that states must make SIP submissions
``within 3 years (or such shorter period as the Administrator may
prescribe) after the promulgation of a national primary ambient air
quality standard (or any revision thereof),'' and that these SIP
submissions are to provide for the ``implementation, maintenance, and
enforcement'' of such NAAQS.\23\ The statute directly imposes on states
the duty to make these SIP submissions, and the requirement to make the
submissions is not conditioned upon the EPA taking any action other
than promulgating a new or revised NAAQS.\24\
---------------------------------------------------------------------------

    \23\ 42 U.S.C. 7410(a)(1).
    \24\ See EPA v. EME Homer City Generation, L.P., 134 S. Ct.
1584, 1601 (2014).
---------------------------------------------------------------------------

    The EPA has historically referred to SIP submissions made for the
purpose of satisfying the applicable requirements of CAA sections
110(a)(1) and 110(a)(2) as ``infrastructure SIP'' submissions. Section
110(a)(1) addresses the timing and general requirements for
infrastructure SIP submissions, and section 110(a)(2) provides more
details concerning the required content of these submissions. It
includes a list of specific elements that ``[e]ach such plan''
submission must address.\25\ All states, regardless of whether the
state includes areas designated as nonattainment for the relevant
NAAQS, must have SIPs that meet the applicable requirements of section
110(a)(2), including provisions of section 110(a)(2)(D)(i)(I) described
later and that are the focus of this rule.
---------------------------------------------------------------------------

    \25\ The EPA's general approach to infrastructure SIP
submissions is explained in greater detail in individual notices
acting or proposing to act on state infrastructure SIP submissions
and in guidance. See, e.g., Guidance on Infrastructure State
Implementation Plan (SIP) Elements under Clean Air Act Sections
110(a)(1) and 110(a)(2) (Sept. 2013).
---------------------------------------------------------------------------

    Section 110(c)(1) requires the Administrator to promulgate a FIP at
any time within 2 years after the Administrator: (1) Finds that a state
has failed to make a required SIP submission, (2) finds a SIP
submission to be incomplete pursuant to CAA section 110(k)(1)(C), or
(3) disapproves a SIP submission, unless the state corrects the
deficiency through a SIP revision that the Administrator approves
before the FIP is promulgated.\26\
---------------------------------------------------------------------------

    \26\ 42 U.S.C. 7410(c)(1).
---------------------------------------------------------------------------

    Section 110(a)(2)(D)(i)(I), also known as the ``good neighbor
provision,'' provides the basis for this action. It requires that each
state SIP shall include provisions sufficient to ``prohibit[] . . . any
source or other type of emissions activity within the State from
emitting any air pollutants in amounts which will--(I) contribute
significantly to nonattainment in, or interfere with maintenance by,
any other State with respect to any [NAAQS].'' \27\
---------------------------------------------------------------------------

    \27\ 42 U.S.C. 7410(a)(2)(D)(i)(I).
---------------------------------------------------------------------------

    The EPA has previously issued three rules interpreting and
clarifying the requirements of section 110(a)(2)(D)(i)(I) for states in
the eastern half of the United States. These rules, and the associated
court decisions addressing these rules, provide important guidance
regarding the requirements of section 110(a)(2)(D)(i)(I).
    The NOX SIP Call, promulgated in 1998, addressed the
good neighbor provision for the 1979 1-hour ozone NAAQS and the 1997 8-
hour ozone NAAQS.\28\ The rule required 22 states and the District of
Columbia to amend their SIPs and limit NOX emissions that
contribute to ozone nonattainment. The EPA set a NOX ozone
season budget for each covered state, essentially a cap on ozone season
NOX emissions in the state. Sources in the covered states
were given the option to participate in a regional cap-and-trade
program, known as the NOX Budget Trading Program (NBP). The
NOX SIP Call was largely upheld by the D.C. Circuit in
Michigan

v. EPA, 213 F.3d 663 (D.C. Cir. 2000), cert. denied, 532 U.S. 904
(2001).
---------------------------------------------------------------------------

    \28\ 63 FR 57356 (Oct. 27, 1998).
---------------------------------------------------------------------------

    The Clean Air Interstate Rule (CAIR), promulgated in 2005,
addressed both the 1997 PM2.5 and the 1997 ozone standards
under the good neighbor provision.\29\ CAIR required SIP revisions in
28 states and the District of Columbia to ensure that certain emissions
of sulfur dioxide (SO2) and/or NOX--important
precursors of regionally transported PM2.5 (SO2
and NOX) and ozone (NOX)--were prohibited. Like
the NOX SIP Call, states were given the option to
participate in a regional cap-and-trade program to satisfy their SIP
obligations. When the EPA promulgated the final CAIR in May 2005, the
EPA also issued a national rule finding that states had failed to
submit SIPs to address the requirements of CAA section 110(a)(2)(D)(i)
with respect to the 1997 PM2.5 and the 1997 ozone NAAQS.
Those states were required by the CAA to have submitted good neighbor
SIPs for those standards by July 2000.\30\ These findings of failure to
submit triggered a 2-year clock for the EPA to issue FIPs to address
interstate transport, and on March 15, 2006, the EPA promulgated FIPs
to ensure that the emission reductions required by CAIR would be
achieved on schedule.\31\ CAIR was remanded to the EPA by the D.C.
Circuit in North Carolina, 531 F.3d 896 (D.C. Cir. 2008), modified on
reh'g, 550 F.3d 1176. For more information on the legal considerations
of CAIR and the D.C. Circuit holding in North Carolina, refer to the
preamble of the original CSAPR rule.\32\
---------------------------------------------------------------------------

    \29\ 70 FR 25162 (May 12, 2005).
    \30\ 70 FR 21147 (May 12, 2005).
    \31\ 71 FR 25328 (April 28, 2006).
    \32\ 76 FR 48208, 48217 (Aug. 8, 2011).
---------------------------------------------------------------------------

    In 2011, the EPA promulgated the original CSAPR to address the
issues raised by the remand of CAIR and additionally to address the
good neighbor provision for the 2006 PM2.5 NAAQS.\33\ CSAPR
requires 28 states to reduce SO2 emissions, annual
NOX emissions, and/or ozone season NOX emissions
that significantly contribute to other states' nonattainment or
interfere with other states' abilities to maintain these air quality
standards. To accomplish implementation aligned with the applicable
attainment deadlines, the EPA promulgated FIPs for each of the 28
states covered by CSAPR. The FIPs implement regional cap-and-trade
programs to achieve the necessary emission reductions. States can
submit good neighbor SIPs at any time that, if approved by the EPA,
would replace the CSAPR FIP for that state.\34\ As discussed later,
CSAPR was the subject of decisions by both the D.C. Circuit and the
Supreme Court, which largely upheld the rule.
---------------------------------------------------------------------------

    \33\ 76 FR 48208.
    \34\ Alabama has submitted, and EPA has approved, a SIP revision
that replaces the CSAPR FIPs for the annual trading programs in
Alabama. 81 FR 59869 (Aug. 31, 2016).
---------------------------------------------------------------------------

    On August 21, 2012, the D.C. Circuit issued a decision in EME Homer
City Generation, L.P. v. EPA, 696 F.3d 7 (D.C. Cir. 2012), vacating
CSAPR and holding, among other things, that states had no obligation to
submit good neighbor SIPs until the EPA had first quantified each
state's good neighbor obligation.\35\ The implication of this decision
was that the EPA did not have authority to promulgate the CSAPR FIPs as
a result of states' failure to submit or the EPA's disapproval of good
neighbor SIPs. The D.C. Circuit also held that the EPA erred in
apportioning upwind emission reduction obligations using uniform cost
thresholds, and that such approach may result in unnecessary over-
control.\36\ The EPA sought review, first with the D.C. Circuit en banc
and then with the Supreme Court. While the D.C. Circuit declined to
consider the EPA's appeal en banc,\37\ on January 23, 2013, the Supreme
Court granted the EPA's petition for certiorari.\38\
---------------------------------------------------------------------------

    \35\ EME Homer City Generation, L.P. v. EPA, 696 F.3d 7, 31
(D.C. Cir. 2012) (EME Homer City I).
    \36\ Id. at 23-27.
    \37\ EME Homer City Generation, L.P. v. EPA, No. 11-1302 (D.C.
Cir. January 24, 2013), ECF No. 1417012 (denying the EPA's motion
for rehearing en banc).
    \38\ EPA v. EME Homer City Generation, L.P., 133 S. Ct. 2857
(2013) (granting the EPA's and other parties' petitions for
certiorari).
---------------------------------------------------------------------------

    On April 29, 2014, the Supreme Court issued a decision reversing
the D.C. Circuit's EME Homer City opinion on CSAPR and held, among
other things, that under the plain language of the CAA, states must
submit SIPs addressing the good neighbor provision within 3 years of
promulgation of a new or revised NAAQS, regardless of whether the EPA
first provides guidance, technical data or rulemaking to quantify the
state's obligation.\39\ Thus, the Supreme Court affirmed that states
have an obligation in the first instance to address the good neighbor
provision after promulgation of a new or revised NAAQS, a holding that
also applies to states' obligation to address interstate transport for
the 2008 ozone NAAQS. The Court also reversed the D.C. Circuit's
holding that the EPA's use of cost to apportion upwind states' emission
reduction obligations was impermissible, finding that the EPA's
approach was a ``permissible construction of the statute.'' \40\ The
Supreme Court remanded the litigation to the D.C. Circuit for further
proceedings.
---------------------------------------------------------------------------

    \39\ EPA v. EME Homer City Generation, L.P., 134 S. Ct. 1584,
1600-01 (2014).
    \40\ Id. at 1606-07.
---------------------------------------------------------------------------

    Finally, on July 28, 2015, the D.C. Circuit issued its opinion on
CSAPR regarding the remaining legal issues raised by the petitioners on
remand from the Supreme Court, EME Homer City II, 795 F.3d 118. This
decision largely upheld the EPA's approach to addressing interstate
transport in CSAPR, leaving the rule in place and affirming the EPA's
interpretation of various statutory provisions and the EPA's technical
decisions. The decision also remanded the rule without vacatur for
reconsideration of the EPA's emission budgets for certain states. In
particular and as discussed in section IV, the court declared invalid
the CSAPR phase 2 NOX ozone season emission budgets of 11
states, holding that those budgets over-control with respect to the
downwind air quality problems to which those states were linked for the
1997 ozone NAAQS. The court's decision explicitly applies to 11 states:
Florida, Maryland, New Jersey, New York, North Carolina, Ohio,
Pennsylvania, South Carolina, Texas, Virginia, and West Virginia. Id.
at 129-30, 138. The court also remanded without vacatur the CSAPR phase
2 SO2 annual emission budgets for four states (Alabama,
Georgia, South Carolina, and Texas) for reconsideration. Id. at 129,
138. The court instructed the EPA to act ``promptly'' in addressing
these issues on remand. Id. at 132.\41\
---------------------------------------------------------------------------

    \41\ In 2011, EPA finalized a supplemental rule that added five
states to the CSAPR NOX ozone season trading program, 76
FR 80760 (Dec. 27, 2011). In 2012, the EPA also finalized two rules
making certain revisions to CSAPR. 77 FR 10324 (Feb. 21, 2012); 77
FR 34830 (June 12, 2012). Various petitioners filed legal challenges
to these rules in the D.C. Circuit. See Public Service Company of
Oklahoma v. EPA, No. 12-1023 (D.C. Cir., filed Jan. 13, 2012);
Wisconsin Public Service Corp. v. EPA, No. 12-1163 (D.C. Cir., filed
Apr. 6, 2012); Utility Air Regulatory Group v. EPA, No. 12-1346
(D.C. Cir., filed Aug. 9, 2012). These cases were held in abeyance
during the pendency of the litigation in EME Homer City, and remain
pending in the D.C. Circuit as of the date of signature of this
rule.
---------------------------------------------------------------------------

    Section 301(a)(1) of the CAA also gives the Administrator of the
EPA general authority to prescribe such regulations as are necessary to
carry out her functions under the Act.\42\ Pursuant to this section,
the EPA has authority to clarify the applicability of CAA requirements.
In this action, among other things, the EPA is clarifying the
applicability of section 110(a)(2)(D)(i)(I) by identifying
NOX emissions in certain states that must be prohibited
pursuant

to this section with respect to the 2008 ozone NAAQS.
---------------------------------------------------------------------------

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

    In particular, the EPA is using its authority under sections 110
and 301 to promulgate FIPs that establish or revise EGU NOX
ozone season emission budgets for 22 eastern states to mitigate their
significant contribution to nonattainment or interference with
maintenance of the 2008 ozone NAAQS in another state.\43\ The EPA is
also responding to the court's remand in EME Homer City II with respect
to the remanded NOX ozone season emission budgets.
---------------------------------------------------------------------------

    \43\ One state, Kansas, will have a new CSAPR ozone season
requirement under this final rule. The remaining 21 states were
included in the original CSAPR ozone season program as to the 1997
ozone NAAQS.
---------------------------------------------------------------------------

B. FIP Authority for Each State Covered by the Final Rule

    As discussed previously, all states have an obligation to submit
SIPs that address the applicable requirements of CAA section 110(a)(2)
within 3 years of promulgation of a new or revised NAAQS. With respect
to the 2008 ozone NAAQS, states were required to submit SIPs addressing
the good neighbor provision by March 12, 2011. If the EPA finds that a
state has failed to submit a SIP to meet its statutory obligation to
address section 110(a)(2)(D)(i)(I) or if the EPA disapproves a good
neighbor SIP, then the EPA has not only the authority but the
obligation, pursuant to section 110(c)(1), to promulgate a FIP to
address the CAA requirement no later than 2 years after the finding or
disapproval.
    On July 13, 2015, the EPA published a rule finding that 24 states
failed to make complete submissions that address the requirements of
section 110(a)(2)(D)(i)(I) related to the interstate transport of
pollution as to the 2008 ozone NAAQS. See 80 FR 39961 (July 13, 2015)
(effective August 12, 2015). The finding action triggered a 2-year
deadline for the EPA to issue FIPs to address the good neighbor
provision for these states by August 12, 2017. The states included in
this finding of failure to submit are: Alabama, Arkansas, California,
Florida, Georgia, Illinois, Iowa, Kansas, Maine, Massachusetts,
Michigan, Minnesota, Mississippi, Missouri, New Hampshire, New Mexico,
North Carolina, Oklahoma, Pennsylvania, South Carolina, Tennessee,
Vermont, Virginia, and West Virginia.
    Several additional eastern states--Connecticut, Delaware, Indiana,
Kentucky, Louisiana, Maryland, Nebraska, New Jersey, New York, North
Dakota, Ohio, Rhode Island, South Dakota, Texas, Wisconsin, and the
District of Columbia--had previously submitted SIPs to address the
requirements of section 110(a)(2)(D)(i)(I) for the 2008 ozone NAAQS.
Since the EPA issued the findings notice, the agency has also received
a SIP submission addressing the good neighbor provision for the 2008
ozone NAAQS from the states of Maine, New Hampshire, North Carolina,
and Vermont. Maryland and New Jersey subsequently withdrew their good
neighbor SIP submittals addressing the 2008 ozone standard. The EPA
issued separate notices finding that Maryland and New Jersey failed to
make complete submissions that address the requirements of section
110(a)(2)(D)(i)(I) related to the interstate transport of pollution as
to the 2008 ozone NAAQS. See 81 FR 47040 (July 20, 2016) (Maryland,
effective August 19, 2016); 81 FR 38963 (June 15, 2016) (New Jersey,
effective July 15, 2016). The finding actions triggered a 2-year
deadline for the EPA to issue FIPs to address the good neighbor
provision for Maryland by August 19, 2018 and New Jersey by July 15,
2018.
    To the extent that the EPA had not finalized action on these SIPs
at proposal, the states were encouraged to evaluate their submissions
in light of the information provided in the proposal with respect to
interstate ozone transport for the 2008 ozone NAAQS. The EPA has
finalized disapproval or partial disapproval of the good neighbor SIPs
from Indiana, Kentucky, Louisiana, New York, Ohio, Texas and
Wisconsin,\44\ triggering the EPA's authority and obligation to
promulgate FIPs that implement the requirements of the good neighbor
provision for those states. The EPA has approved good neighbor SIPs
addressing the 2008 ozone standard submitted by Nebraska, North Dakota,
and South Dakota. The EPA has not yet taken final action to approve or
disapprove the SIPs submitted by Connecticut, Delaware, the District of
Columbia, Maine, New Hampshire, North Carolina, Rhode Island, and
Vermont. However, the EPA is not finalizing FIPs as to these states in
this action. The EPA will review and act upon these states' SIPs in
separate, future actions.
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    \44\ The EPA has finalized a partial disapproval of the good
neighbor SIP from the state of Wisconsin. The EPA partially approved
Wisconsin's SIP as to the state's significant contribution to
nonattainment and partially disapproved as to the state's
interference with maintenance of the 2008 ozone NAAQS. See 81 FR
53309 (August 12, 2013).
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    Comment: Some commenters have questioned the EPA's authority to
propose FIPs for certain states before the EPA has either issued
findings of failure to submit good neighbor SIPs or taken final action
to approve or disapprove pending good neighbor SIPs submitted by those
states. Commenters state that the EPA's development of FIPs prior to
taking those actions upsets the balance of state and federal authority.
Some commenters state that this approach is inconsistent with the
sequencing of events envisioned by Congress in CAA section 110(c).
Another commenter contends that the CAA contemplates that states should
have an opportunity to correct any problems with its SIP in a timely
fashion and avoid imposition of a FIP. The commenter states that, until
the EPA proposes to disapprove a state's SIP, the state does not know
what corrections would be necessary.
    One commenter states that the Supreme Court's decision in EPA v.
EME Homer City Generation means that the EPA may issue a FIP if more
than two years have elapsed since the EPA found the state's SIP was
inadequate. The commenter suggests that states should be given the
opportunity to submit a SIP after the EPA establishes a state budget
before a FIP is implemented. The commenter states that the EPA adhered
to the CAA in prior transport rulemakings like the NOX SIP
Call and CAIR by allowing states to decide how to meet budgets
quantified by the EPA.
    Response: The EPA disagrees with commenters' contention that we
cannot propose a FIP for a state prior to taking final action on the
state's SIP. CAA section 110(c) provides that the EPA ``shall
promulgate a [FIP] at any time within two years after'' the EPA either
finds that a state has failed to make a required submission or
disapproves a SIP, in whole or in part. As the Supreme Court confirmed
in EPA v. EME Homer City Generation, ``EPA is not obliged to wait two
years or postpone its action even a single day: The Act empowers the
Agency to promulgate a FIP `at any time' within the two-year limit.''
134 S. Ct. at 1601.
    The EPA's proposal was not the ``promulgation'' of a FIP. Rather,
the EPA is only finalizing FIPs for those states for which the EPA has
either made a finding of failure to submit a SIP addressing the state's
good neighbor obligation as to the 2008 ozone NAAQS or for which the
EPA disapproved the state's good neighbor SIP. Accordingly, consistent
with section 110(c), the EPA is only promulgating FIPs for those states
that the EPA found have failed to address the statutory SIP obligation.
    The EPA also disagrees that it was required to provide states with
an opportunity to submit a SIP addressing the budgets calculated in
this rule

before promulgating a FIP. The Supreme Court clearly held that the Act
does not ``condition the duty to promulgate a FIP on EPA's having first
quantified an upwind State's good neighbor obligations.'' 134 S. Ct. at
1601. Nor does the Act ``require EPA to furnish upwind States with
information of any kind about their good neighbor obligations before a
FIP issues.'' Id. While the EPA has taken a different approach in some
prior rulemakings by providing states with an opportunity to submit a
SIP after the EPA quantified the states' budgets, the circumstances of
this rule require a different approach. As discussed in more detail
earlier, it is important for the EPA to assure that emission reductions
are achieved, to the extent feasible, by the 2017 ozone season in order
to assist downwind areas with meeting the July 20, 2018 attainment
deadline for Moderate nonattainment areas. If the EPA were to permit
states an opportunity to develop and submit state plans to address the
emission reductions required by this rule before imposing a federal
plan, the EPA could not ensure that these emission reductions would be
achieved in a timely manner. However, states may submit SIPs to replace
the FIPs promulgated in this final rule at any time. Some types of SIPs
that a state might consider are outlined in more detail later in
section VII.
    In addition to the agency's general FIP authority and the comments
received on that issue, there is a unique issue related to the EPA's
FIP obligation for Kentucky. On March 7, 2013, the EPA finalized action
on the State of Kentucky's SIP submission addressing, among other
things, the good neighbor provision requirements for the 2008 ozone
NAAQS.\45\ The EPA disapproved the submission as to the good neighbor
requirements. In the notice, the EPA explained that the disapproval of
the good neighbor portion of the state's infrastructure SIP submission
did not trigger a mandatory duty for the EPA to promulgate a FIP to
address these requirements.\46\ Citing the D.C. Circuit's decision EME
Homer City I, the EPA explained that the court concluded states have no
obligation to make a SIP submission to address the good neighbor
provision for a new or revised NAAQS until the EPA first defines a
state's obligations pursuant to that section.\47\ Therefore, because a
good neighbor SIP addressing the 2008 ozone standard was not at that
time required, the EPA indicated that its disapproval action would not
trigger an obligation for the EPA to promulgate a FIP to address the
interstate transport requirements.\48\
---------------------------------------------------------------------------

    \45\ 78 FR 14681 (March 7, 2013).
    \46\ Id. at 14683.
    \47\ Id.
    \48\ Id.
---------------------------------------------------------------------------

    On April 30, 2013, the Sierra Club filed a petition for review of
the EPA's action in the United States Court of Appeals for the Sixth
Circuit based on the agency's conclusion that the FIP clock was not
triggered by the disapproval of Kentucky's good neighbor SIP.\49\
Subsequently, on April 29, 2014, the Supreme Court issued a decision
reversing and vacating the D.C. Circuit's decision in EME Homer City.
Following the Supreme Court decision, the EPA requested, and the Sixth
Circuit granted, vacatur and remand of the portion of the EPA's final
action on Kentucky's good neighbor SIP that determined that the FIP
obligation was not triggered by the disapproval.\50\
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    \49\ Sierra Club v. EPA, Case No. 13-3546 (6th Cir., filed Apr.
30, 2013).
    \50\ Order, Sierra Club v. EPA, Case No. 13-3546, Document No.
74-1 (Mar. 13, 2015).
---------------------------------------------------------------------------

    In this document, the EPA is correcting the portion of the Kentucky
disapproval notice indicating that the FIP clock would not be triggered
by the SIP disapproval. The EPA believes that the EPA's obligation to
develop a FIP was triggered on the date of the judgment issued by the
Supreme Court in EPA v. EME Homer City Generation, June 2, 2014, and
the EPA is obligated to issue a FIP at any time within two years of
that date. The EPA does not believe that the FIP obligation was
triggered as of the date of the SIP disapproval because the controlling
law as of that date was the D.C. Circuit decision in EME Homer City I,
which held that states had no obligation to submit a SIP and the EPA
had no authority to issue a FIP until the EPA first quantified each
state's emission reduction obligation under the good neighbor
provision. Accordingly, the most reasonable conclusion is that the
EPA's FIP obligation was triggered when the Supreme Court clarified the
state and federal obligations with respect to the good neighbor
provision. Thus, the EPA finds that the FIP obligation was triggered as
of June 2, 2014, and that the EPA was obligated to promulgate a FIP
that corrects the deficiency by June 2, 2016.

IV. Air Quality Issues Addressed and Overall Approach for the Final
Rule

A. The Interstate Transport Challenge Under the 2008 Ozone Standard

1. Background on the Nature of the Interstate Ozone Transport Problem
    Interstate transport of NOX emissions poses significant
challenges with respect to attaining the 2008 ozone NAAQS in the
eastern U.S. and thus presents a threat to public health and welfare.
The following sections discuss the nature and sources of ozone, how
ozone is transported in the atmosphere and across state boundaries, and
ozone's impacts on human health and the environment.
    a. Nature of ozone and the Ozone NAAQS. Ground-level ozone is not
emitted directly into the air, but is a secondary air pollutant created
by chemical reactions between oxides of nitrogen (NOX),
carbon monoxide (CO), methane (CH4), and non-methane
volatile organic compounds (VOCs) in the presence of sunlight.
Emissions from electric utilities, industrial facilities, motor
vehicles, gasoline vapors, and chemical solvents are some of the major
anthropogenic sources of ozone precursors. The potential for ground-
level ozone formation increases during periods with warmer temperatures
and stagnant air masses; therefore ozone levels are generally higher
during the summer months.\51\ Ground-level ozone concentrations and
temperature are highly correlated in the eastern U.S. with observed
ozone increases of 2-3 ppb per degree Celsius reported.\52\ Increased
temperatures may also increase emissions of volatile man-made and
biogenic organics and can indirectly increase anthropogenic
NOX emissions as well (e.g., increased electricity
generation to power air conditioning).
---------------------------------------------------------------------------

    \51\ Rasmussen, D.J. et al. (2011) Ground-level ozone-
temperature relationships in the eastern US: A monthly climatology
for evaluating chemistry-climate models. Atmospheric Environment 47:
142-153.
    \52\ Bloomer, B.J., J.W. Stehr, C.A. Piety, R.J. Salawitch, and
R.R. Dickerson (2009), Observed relationships of ozone air pollution
with temperature and emissions, Geophys. Res. Lett., 36, L09803.
---------------------------------------------------------------------------

    The 2008 primary and secondary ozone standards are both 75 ppb as
an 8-hour maximum level. Specifically, the standards require that an
area may not exceed 75 ppb using the 3-year average of the fourth
highest 24-hour maximum 8-hour rolling average ozone concentration.
    b. Ozone transport. Precursor emissions can be transported downwind
directly or, after transformation in the atmosphere, as ozone. Studies
have

established that ozone formation, atmospheric residence, and transport
occurs on a regional scale (i.e., hundreds of miles) over much of the
eastern U.S., with elevated concentrations occurring in rural as well
as metropolitan areas. As a result of ozone transport, in any given
location, ozone pollution levels are impacted by a combination of local
emissions and emissions from upwind sources. The transport of ozone
pollution across state borders compounds the difficulty for downwind
states in meeting health-based air quality standards (i.e., NAAQS).
Numerous observational studies have demonstrated the transport of ozone
and its precursors and the impact of upwind emissions on high
concentrations of ozone pollution. Bergin et al., for example, examined
the impacts of statewide emissions of NOX, SO2,
and VOCs on concentrations of ozone and fine particulate matter in the
eastern U.S. They found on average 77 percent of each state's ground-
level ozone is produced by precursor emissions from upwind states.\53\
Liao et al., showed the impacts of interstate transport of
anthropogenic NOX and VOC emissions on peak ozone formation
in 2007 in the Mid-Atlantic U.S. Results suggest reductions in
anthropogenic NOX emissions from EGU and non-EGU sources
from the Great Lakes region as well as northeastern and southeastern
U.S. would be effective for decreasing area-mean peak ozone
concentrations in the Mid-Atlantic.\54\
---------------------------------------------------------------------------

    \53\ Bergin, M.S. et al. (2007) Regional air quality: local and
interstate impacts of NOX and SO2 emissions on
ozone and fine particulate matter in the eastern United States.
Environmental Sci & Tech. 41: 4677-4689.
    \54\ Liao, K. et al. (2013) Impacts of interstate transport of
pollutants on high ozone events over the Mid-Atlantic United States.
Atmospheric Environment 84, 100-112.
---------------------------------------------------------------------------

    The EPA has previously concluded in the NOX SIP Call,
CAIR, and CSAPR that, for reducing regional-scale ozone transport, a
NOX control strategy is effective. While substantial
progress has been made in reducing ozone in many urban areas, regional-
scale ozone transport is still an important component of peak ozone
concentrations during the summer ozone season. Model assessments have
looked at impacts on peak ozone concentrations after potential emission
reduction scenarios for NOX and VOCs for NOX-
limited and VOC-limited areas. For example, Jiang and Fast concluded
that NOX emission reductions strategies would be effective
in lowering ozone mixing ratios in urban areas and Liao et al. showed
NOX reductions would reduce peak ozone concentrations in
non-attainment areas in the Mid-Atlantic (i.e. a 10 percent reduction
in EGU and non-EGU NOX emissions would result in
approximately a 6 ppb reduction in peak ozone concentrations in
Washington, DC).\55\ Assessments of ozone conducted for the October
2015 Regulatory Impact Analysis of the Final Revisions to the National
Ambient Air Quality Standards for Ground-Level Ozone (EPA-452/R-15-007)
also show the importance of NOX emissions on ozone
transport. This analysis is in the docket for this rule and also can be
found in the docket for the 2015 ozone NAAQS, Docket No. EPA-HQ-OAR-
2013-0169-0057.
---------------------------------------------------------------------------

    \55\ Jiang, G.; Fast, J.D. (2004) Modeling the effects of VOC
and NOX emission sources on ozone formation in Houston
during the TexAQS 2000 field campaign. Atmospheric Environment 38:
5071-5085.
---------------------------------------------------------------------------

    Further, studies have found that EGU NOX emission
reductions, particularly, can be effective in reducing ozone pollution
as quantified by the form of the 2008 ozone standard, 8-hour peak
concentrations. Specifically, studies have found that EGU
NOX emission reductions can be effective in reducing the
upper end of the cumulative ozone distribution in the summer on a
regional scale.\56\ Analysis of air quality monitoring data trends
shows reductions in summertime ozone concurrent with implementation of
EGU NOX reduction programs.\57\ Gilliland et al. presented
reductions in observed versus modeled ozone concentrations in the
eastern U.S. downwind from major NOX sources. The results
showed significant reductions in ozone concentrations (10-25 percent)
from observed measurements (CASTNET and AQS) \58\ between 2002 and
2005, linking reductions in EGU NOX emissions from upwind
states with ozone reductions downwind of the major source areas.\59\
Another study shows that EGU NOX emissions can contribute
between 5 ppb and 25 ppb to average 8-hour peak
---------------------------------------------------------------------------

    \56\ Hidy, G.M. and Blanchard C.L. (2015) Precursor reductions
and ground-level ozone in the Continental United States. J. of Air &
Waste Management Assn. 65, 10.
    \57\ Simon, H. et al. (2015) Ozone trends across the United
States over a period of decreasing NOX and VOC emissions.
Environmental Science & Technology 49, 186-195.
    \58\ CASTNET is the EPA's Clean Air Status and Trends Network.
AQS is the EPA's Air Quality System.
    \59\ Gilliland, A.B. et al. (2008) Dynamic evaluation of
regional air quality models: Assessing changes in O3
stemming from changes in emissions and meteorology. Atmospheric
Environment 42: 5110-5123.
---------------------------------------------------------------------------

ozone concentrations in Mid-Atlantic metropolitan statistical
areas.\60\ Additionally, G[eacute]go et al. showed that ground-level
ozone concentrations were significantly reduced after the
NOX SIP Call in regions downwind of major EGUs in the Ohio
River Valley.\61\
---------------------------------------------------------------------------

    \60\ Summertime Zero-Out Contributions of regional
NOX and VOC emissions to modeled 8-hour ozone
concentrations in the Washington, DC, Philadelphia, PA, and New York
City MSAs.
    \61\ G[eacute]go et al. (2007) Observation-based assessment of
the impact of nitrogen oxides emissions reductions on O3
air quality over the eastern United States. J. of Applied
Meteorology and Climatology 46: 994-1008.
---------------------------------------------------------------------------

    Previous regional ozone transport efforts, including the
NOX SIP Call, CAIR, and CSAPR, required ozone season
NOX reductions from EGUs to address interstate transport of
ozone. The EPA has taken comment on regulating EGU NOX
emissions to address interstate ozone transport in the notice-and-
comment process for these rulemakings. The EPA received no significant
adverse comments in any of these earlier proposals regarding the rules'
focus on ozone season EGU NOX reductions to address
interstate ozone transport. Further, many comments received on the
proposed CSAPR Update encouraged the EPA to seek further EGU
NOX reductions to address interstate transport for the 2008
ozone NAAQS. As described later in this document, the EPA's analysis
finds that the power sector continues to be capable of making
NOX reductions that reduce interstate transport with respect
to ground-level ozone.
    c. Health and environmental effects. Exposure to ambient ozone
causes a variety of negative effects on human health, vegetation, and
ecosystems. In humans, acute and chronic exposure to ozone is
associated with premature mortality and a number of morbidity effects,
such as asthma exacerbation. In ecosystems, ozone exposure causes
visible foliar injury, decreases plant growth, and affects ecosystem
community composition. For more information on the human health and
welfare and ecosystem effects associated with ambient ozone exposure,
see the EPA's October 2015 Regulatory Impact Analysis of the Final
Revisions to the National Ambient Air Quality Standards for Ground-
Level Ozone (EPA-452/R-15-007) in the docket for this rule and can be
also found in the docket for the 2015 ozone NAAQS, Docket No. EPA-HQ-
OAR-2013-0169-0057.

2. Events Affecting Application of the Good Neighbor Provision for the
2008 Ozone NAAQS
    On March 12, 2008, the EPA promulgated a revision to the NAAQS,
lowering both the primary and secondary standards to 75 ppb. See
National Ambient Air Quality Standards for Ozone, Final Rule, 73 FR
16436 (March 27, 2008). These revisions of the NAAQS, in turn,
triggered a 3-year deadline of March 12, 2011, for states to submit SIP
revisions addressing infrastructure requirements under CAA sections
110(a)(1) and 110(a)(2), including the good neighbor provision. During
this 3-year SIP development period, on September 16, 2009, the EPA
announced \62\ that it would reconsider the 2008 ozone NAAQS. To reduce
the workload for states during the interim period of reconsideration,
the EPA also announced its intention to propose staying implementation
of the 2008 standards with respect to a number of the requirements. On
January 6, 2010, the EPA proposed to revise the 2008 NAAQS for ozone
from 75 ppb to a level within the range of 60 to 70 ppb. See 75 FR 2938
(January 19, 2010). The EPA indicated its intent to issue final
standards based upon the reconsideration by summer 2011.
---------------------------------------------------------------------------

    \62\ Fact Sheet. The EPA to reconsider Ozone Pollution
Standards. http://www.epa.gov/groundlevelozone/pdfs/O3_Reconsideration_FACT%20SHEET_091609.pdf.
---------------------------------------------------------------------------

    On August 8, 2011, the EPA published the original CSAPR, in
response to the D.C. Circuit's remand of the EPA's prior federal
transport rule, CAIR. See 76 FR 48208 (August 8, 2011). The original
CSAPR addressed ozone transport under the 1997 ozone NAAQS, but did not
address the 2008 ozone standard, because the 2008 ozone NAAQS was under
reconsideration when CSAPR was finalized.
    On September 2, 2011, consistent with the direction of the
President, the Administrator of the Office of Information and
Regulatory Affairs of the Office of Management and Budget returned the
draft final 2008 ozone rule the EPA had developed upon reconsideration
to the agency for further consideration.\63\ In view of that action and
the timing of the agency's ongoing periodic review of the ozone NAAQS
required under CAA section 109 (as announced on September 29, 2008),
the EPA decided to coordinate further proceedings on its voluntary
reconsideration of the 2008 ozone standards with its ongoing periodic
review of the ozone NAAQS.\64\ Implementation for the original 2008
ozone standards was renewed. However, a number of legal developments
pertaining to the EPA's promulgation of the original CSAPR created
uncertainty surrounding the EPA's statutory interpretation and
implementation of the good neighbor provision.
---------------------------------------------------------------------------

    \63\ See Letter from Cass R. Sunstein, Administrator, Office of
Information and Regulatory Affairs, to Lisa Jackson, Administrator,
U.S. Environmental Protection Agency (Sept. 2, 2011), available at
http://www.reginfo.gov/public/return/EPA_Return_Letter_9-2-2011.pdf.
    \64\ Id.
---------------------------------------------------------------------------

    On August 21, 2012, the D.C. Circuit issued a decision in EME Homer
City Generation, L.P. v. EPA addressing several legal challenges to
CSAPR and holding, among other things, that states had no obligation to
submit good neighbor SIPs until the EPA had first quantified each
state's good neighbor obligation.\65\ According to that decision, the
submission deadline for good neighbor SIPs under the CAA would not
necessarily be tied to the promulgation of a new or revised NAAQS.
While the EPA disagreed with this interpretation of the statute and
sought review of the decision in the D.C. Circuit and the U.S. Supreme
Court, the EPA complied with the D.C. Circuit's ruling during the
pendency of its appeal. In particular, the EPA indicated that,
consistent with the D.C. Circuit's opinion, it would not at that time
issue findings that states had failed to submit good neighbor SIPs for
the 2008 ozone NAAQS.\66\
---------------------------------------------------------------------------

    \65\ EME Homer City I, 696 F.3d at 31.
    \66\ See, e.g., Memorandum from the Office of Air and Radiation
former Assistant Administrator Gina McCarthy to the EPA Regions,
``Next Steps for Pending Redesignation Requests and State
Implementation Plan Actions Affected by the Recent Court Decision
Vacating the 2011 Cross-State Air Pollution Rule,'' November 19,
2012; 78 FR 65559 (November 1, 2013) (final action on Florida
infrastructure SIP submission for 2008 8-hour ozone NAAQS); 78 FR
14450 (March 6, 2013) (final action on Tennessee infrastructure SIP
submissions for 2008 8-hour ozone NAAQS); Final Rule, Findings of
Failure To Submit a Complete State Implementation Plan for section
110(a) Pertaining to the 2008 Ozone National Ambient Air Quality
Standard, 78 FR 2884 (January 15, 2013).
---------------------------------------------------------------------------

    On January 23, 2013, the Supreme Court granted the EPA's petition
for certiorari.\67\ On April 29, 2014, the Supreme Court reversed the
D.C. Circuit's EME Homer City opinion on CSAPR and held, among other
things, that under the plain language of the CAA, states must submit
SIPs addressing the good neighbor provision within 3 years of
promulgation of a new or revised NAAQS, regardless of whether the EPA
first provides guidance, technical data, or rulemaking to quantify the
state's obligation.\68\ Thus, the Supreme Court affirmed that states
have an obligation in the first instance to address the good neighbor
provision after promulgation of a new or revised NAAQS, a holding that
also applies to the states' obligation to address transport for the
2008 ozone NAAQS.
---------------------------------------------------------------------------

    \67\ EPA v. EME Homer City Generation, L.P., 133 S. Ct. 2857
(2013) (granting the EPA's and other parties' petitions for
certiorari).
    \68\ EPA v. EME Homer City Generation, L.P., 134 S. Ct. at 1600-
01.
---------------------------------------------------------------------------

    States were therefore required to submit SIPs addressing the good
neighbor provision with respect to the 2008 ozone NAAQS by March 12,
2011. Under the Supreme Court's holding, to the extent that states have
failed to submit SIPs to meet this statutory obligation or the EPA has
disapproved SIPs, then the EPA has not only the authority, but the
obligation, to promulgate FIPs to address the CAA requirement.

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

1. Requiring Emission Reductions From Upwind States
    As described in section IV.A.1.b, the EPA finds that upwind EGU
emission reductions are generally effective at reducing interstate
transport of ozone pollution. And as described in section VI, with
respect to this rule, the EPA finds that upwind emission reductions are
achievable and will result in important and meaningful decreases in
harmful downwind ozone pollution.
    At the same time, the EPA also notes that section
110(a)(2)(D)(i)(I) of the CAA only requires upwind states to prohibit
emissions that will significantly contribute to nonattainment or
interfere with maintenance of the NAAQS in other states. It does not
shift to upwind states the full responsibility for ensuring that all
areas in downwind states attain and maintain the NAAQS. Downwind states
also have control responsibilities because, among other things, the Act
requires each state to adopt enforceable plans (i.e., State
Implementation Plans) to attain and maintain air quality standards. The
requirements established for upwind states through this final rule will
supplement downwind states' local emission control strategies. The
downwind states' local control strategies, in conjunction with the
emission reductions from upwind states that this rule will provide,
promote attainment and maintenance of the 2008 ozone NAAQS.
    The Clean Air Act's good neighbor provision requires states and the
EPA to address interstate transport of air pollution that affects
downwind states' ability to attain and maintain NAAQS. Other provisions
of the CAA, namely sections 179B and 319(b), are available

to deal with NAAQS exceedances not attributable to the interstate
transport of pollution covered by the good neighbor provisions but
caused by emission sources outside the control of a downwind state.
These provisions address international transport and exceptional
events, respectively.69 70
---------------------------------------------------------------------------

    \69\ The EPA recognizes that both in-state and upwind wildfires
may contribute to monitored ozone concentrations. The EPA encourages
all states to consider how the appropriate use of prescribed fire
may benefit public safety and health by resulting in fewer ozone
exceedances for both the affected state and their neighboring
states.
    \70\ The CAA and the EPA's implementing regulations,
specifically the Exceptional Events Rule at 40 CFR 50.14, allow for
the exclusion of air quality monitoring data from regulatory
determinations when events, including wildland fires, contribute to
NAAQS exceedances or violations if they meet certain requirements,
including the criterion that the event be not reasonably
controllable or preventable. Wildland fires can be of two types:
Wildfire (unplanned) and prescribed fire (planned). Under the
Exceptional Events Rule, unless there is evidence to the contrary,
wildfires are considered, by their nature, to be not reasonably
controllable or preventable. Because prescribed fires on wildland
are intentionally ignited for resource management purposes, to meet
the not reasonably controllable or preventable criterion, they must
be conducted under a certified Smoke Management Program or employ
basic smoke management practices. Both types of wildland fire must
also satisfy the other rule criteria for influenced air quality
monitoring data to be excluded under the Exceptional Events Rule. In
November 2015, the EPA proposed revisions to the Exceptional Events
Rule and released a draft guidance document, which applies the
proposed rule revisions to wildfire events that could influence
ozone concentrations. These actions, which the EPA intends to
finalize in the summer of 2016, further clarify the treatment of
wildland fires under the Exceptional Events Rule.
---------------------------------------------------------------------------

    Comment: Some commenters claimed that local measures should be
evaluated first, before requiring upwind emission reductions, in terms
of efforts to attain and maintain the 2008 ozone NAAQS. Commenters also
claimed that the EPA failed to adequately evaluate local measures to
reduce ozone concentrations at identified nonattainment and maintenance
receptors.
    Response: The EPA disagrees with these comments. First, the Clean
Air Act makes no reference to considering local measures before upwind
measures in planning for attainment and maintenance of a NAAQS. In
fact, the EPA notes that commenters' local-first argument is at
opposition with the NAAQS implementation schedule provided in the CAA.
Specifically, the Clean Air Act requires upwind states to submit
infrastructure SIPs, including requirements to address interstate
transport, within three years of promulgation of a new or revised
NAAQS. Submission of interstate transport SIP requirements is one of
the first chronological actions in NAAQS implementation. States are
required to submit attainment plans for Moderate ozone nonattainment
areas within 3 years of nonattainment designation, which normally comes
two to three years after promulgation of a new or revised NAAQS.
Marginal ozone nonattainment areas that fail to meet their attainment
deadlines and are reclassified as Moderate areas may be provided a new
deadline upon reclassification to submit Moderate area plans. See CAA
section 182(i). Depending on the designations schedule, Moderate area
attainment plans would be due approximately 5 years after promulgation
of a new or revised standards, i.e., 2 years after interstate transport
SIPs, and plans for reclassified areas would follow even later.
Commenters' request that the EPA not evaluate upwind obligations until
downwind controls have been evaluated is therefore unavailing under the
statutory structure. If states or the EPA waited until Moderate area
attainment plans were due before requiring upwind reductions, then
these upwind reductions would be delayed several years beyond the
mandatory CAA schedule. Further, the CAA implementation timeline
implies that requiring local reductions first would place an
inequitable burden on downwind areas by requiring them to plan for
attainment and maintenance without any upwind actions. Adhering to the
CAA schedule provides that downwind areas are able to plan for
attainment and maintenance while accounting for previously determined
and quantified upwind actions.
    Further, the commenters are incorrect in asserting that the EPA has
not considered any local controls obligations at downwind receptors
when quantifying upwind state emission reductions. As described further
in section VI, when evaluating air quality improvements at each level
of control stringency, the EPA assumed that the downwind state home to
an identified receptor would make emission reductions at an equivalent
level of control stringency. While this final rule does not mandate any
particular level of reductions in downwind states, the analysis to
quantify upwind state reductions assumes that downwind states share
responsibility for addressing identified air quality problems with the
upwind states.
2. Focusing on 2017 for Analysis and Implementation
    The EPA is aligning the analysis and implementation of this final
rulemaking with the 2017 ozone season (May 1-September 30) in order to
assist downwind states with timely attainment of the 2008 ozone NAAQS.
On March 6, 2015, the EPA's final 2008 Ozone NAAQS SIP Requirements
Rule \71\ revised the attainment deadline for ozone nonattainment areas
currently designated as Moderate to July 20, 2018. The EPA established
this deadline in the 2015 Ozone SIP Requirements Rule after previously
establishing a deadline of December 31, 2018, which was vacated by the
D.C. Circuit Court in Natural Resources Defense Council v. EPA. \72\ In
order to demonstrate attainment by this deadline, states will need to
rely on design values calculated using ozone season data from 2015
through 2017, since the July 20, 2018 deadline does not afford enough
time for measured data of the full 2018 ozone season. Therefore,
consistent with the court's instruction in North Carolina, the EPA has
identified achievable upwind emissions reductions and aligned
implementation of these reductions, to the extent possible, for the
2017 ozone season. These 2017 reductions can positively influence air
quality that would be used to demonstrate attainment. To the extent
that ozone improvements in 2017 yield the 4th highest daily maximum 8-
hour average concentrations for all monitors in the area that are below
the level of the 2008 ozone NAAQS, states can request a 1-year
attainment date extension under CAA section 181(a)(5), as interpreted
in 40 CFR 51.1107.
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    \71\ 80 FR 12264, 12268 (Mar. 6, 2015); 40 CFR 51.1103.
    \72\ 777 F.3d 456 (D.C. Cir. 2014).
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    The EPA has therefore conducted its analyses of downwind air
quality problems and upwind state contributions based on projections to
the 2017 ozone season. The EPA also limits its assessment of
NOX mitigation potential to those strategies that are
feasible for the 2017 ozone season. This rulemaking also finalizes the
2017 ozone season as the initial control period for the finalized FIPs.
    Comment: Several comments claimed that requiring reductions
beginning with the 2017 ozone season does not provide sufficient time
to implement emission reductions for compliance with this rulemaking's
limitations on emissions.
    Response: The EPA disagrees with these comments. In establishing
its limitations on emissions (i.e., emission budgets and corresponding
assurance levels), under the CSAPR Update rule the EPA explicitly took
into account the fact that only certain emission reduction strategies
can be implemented for the 2017 ozone season. Specifically, the

agency considered activities that may be implemented quickly, such as
turning on and optimizing existing SCR at power plants. The emission
budgets are thus calculated to reflect only those activities that can
be implemented by the 2017 ozone season.\73\ Further, the CSAPR Update
rule provides regulated entities the ability to comply by means of the
CSAPR limited interstate trading program, which gives flexibility in
compliance and does not require any specific action for compliance at
any specific facility, other than holding allowances to cover emitted
tons of pollution. Within this allowance trading program, the EPA also
facilitates compliance by carrying over some banked allowances that can
be used for compliance with the CSAPR Update, starting in 2017. More
information about compliance feasibility is provided in section VII.
Additionally, the EPA provides an EGU NOX Mitigation
Strategies Final Rule TSD, which is found in the docket for this final
rule that further discusses the feasibility of complying with this
rule's emissions requirements.
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    \73\ This is true with one exception. The EPA finds that for
Arkansas it is reasonable to delay EGU NOX reduction
potential for certain new combustion controls until 2018 and
therefore gives Arkansas a 2017 budget that does not reflect these
controls and a 2018 budget that does reflect these controls. This
issue is discussed further in Section VI.
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3. The CSAPR Framework
    The original CSAPR used a four-step framework to address the
requirements of the good neighbor provision for the 1997 ozone NAAQS
and the 1997 and 2006 PM2.5 NAAQS.\74\ The EPA is following
the same CSAPR framework in this CSAPR Update to identify and address
the requirements of the good neighbor provision with respect to the
newer 2008 ozone NAAQS. By applying the CSAPR framework with respect to
the newer 2008 ozone NAAQS, the EPA is using an approach that is
informed by public comment on the original CSAPR rulemaking and has
been reviewed in litigation by the D.C. Circuit Court of Appeals and
the Supreme Court. The four steps are: (1) Identifying downwind
receptors that are expected to have problems attaining or maintaining
clean air standards \75\ (i.e., NAAQS); (2) determining which upwind
states contribute to these identified problems in amounts sufficient to
``link'' them to the downwind air quality problems; (3) for states
linked to downwind air quality problems, identifying upwind emissions
that significantly contribute to nonattainment or interfere with
maintenance of a standard; and (4) for states that are found to have
emissions that significantly contribute to nonattainment or interfere
with maintenance of the NAAQS downwind, reducing the identified upwind
emissions through regional emission allowance trading programs. The
following subsections include summaries of the four steps and comments
and responses on the application of the CSAPR framework from the
proposal.
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    \74\ See CSAPR, Final Rule, 76 FR 48208 (August 8, 2011).
    \75\ As noted in section IV, the term maintenance used under the
CSAPR framework is distinct from the term as applied the plan
required of nonattainment areas redesignated to attainment.
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    a. Step 1. In the original CSAPR, downwind air quality problems
were assessed using modeled future air quality concentrations for a
year aligned with attainment deadlines for the NAAQS considered in that
rulemaking. The assessment of future air quality conditions generally
accounts for on-the-books emission reductions \76\ and the most up-to-
date forecast of future emissions in the absence of the transport
policy being evaluated (i.e., base case conditions). The locations of
downwind air quality problems are identified as those with monitors
that are projected to be unable to attain (i.e., nonattainment
receptor) or maintain (i.e., maintenance receptor) the standard. This
final rule follows this same general approach. However, in this rule,
the EPA also considers current monitored air quality data to further
inform the projected identification of downwind air quality problems
for this final rule. The proposed CSAPR Update put forward this change
from the original CSAPR approach and commenters generally supported
consideration of monitoring data. Further details and application of
step one are described in section V of this rulemaking.
---------------------------------------------------------------------------

    \76\ Since CSAPR was designed to replace CAIR, CAIR emissions
reductions were not considered ``on-the-books.''
---------------------------------------------------------------------------

    Comment: Some commenters challenged the methodology proposed by the
EPA to identify maintenance receptors in the step 1 analysis.
Commenters contend that maintenance receptors for purposes of the CSAPR
Update analysis should only be identified as those areas that were
previously designated nonattainment. The commenters explain that the
proposed methodology for identifying maintenance receptors is
inconsistent with how the statute defines maintenance areas in section
175A of the CAA. Other commenters contend that the EPA should not
identify an area as a maintenance receptor where the area currently
measures clean data. The commenters are concerned that it is arbitrary
and capricious to treat clean data differently with respect to
identifying nonattainment receptors and maintenance receptors.
    Response: The EPA does not agree with the commenters' contention
that it may only identify maintenance receptors as those areas that
were once designated nonattainment. Such an interpretation would be
contrary to the statutory process for SIP development. Area
designations occur two to three years after promulgation of a new or
revised NAAQS pursuant to CAA section 107(d)(1)(B)(i). State SIP
submissions pursuant to CAA section 110(a)(1) and (2), including good
neighbor SIPs, are also due three years after promulgation of a new or
revised NAAQS. Attainment plans for those areas designated
nonattainment are due between 18 months and 4 years after designation,
depending on the pollutant, pursuant to the requirements of subpart D
of title I of the CAA. Re-designations, including application of the
requirements of CAA section 175A to develop a maintenance plan, by
definition, occur after the initial designation and frequently well
after the development and submission of the state's attainment plan.
    Given that the statutory timeframe for development of the good
neighbor SIP requires submission before the downwind state's
development of an attainment plan, before an area is likely to be re-
designated from nonattainment to attainment (with the attendant
maintenance plan obligations), and in some cases before or at the same
time designations for a new or revised standard might be finalized, the
EPA does not believe it is reasonable to interpret the good neighbor
provision to make states' emission reduction obligations dependent on
either current or prior designations of downwind areas with potential
air quality problems in other states. While circumstances related to
implementation of the 2008 ozone NAAQS (described in more detail
earlier) led many states to delay submission of good neighbor SIPs
addressing that standard and while the EPA is, in this case, addressing
its FIP obligation many years after designations were finalized, these
circumstantial factors do not revise the Congressional intent inherent
in the statutory structure just described.
    Moreover, section 110(a)(1) instructs states to submit plans that
provide for the ``implementation, maintenance, and enforcement'' of the
NAAQS. Nothing in the provision indicates that states need only address
maintenance of air quality

in those areas that were once formally designated nonattainment as to a
particular NAAQS. Therefore, where CAA section 110(a)(2)(D)(i)(I)
instructs state plans to prohibit emissions activity within the state
which will ``interfere with maintenance'' of the NAAQS in any other
state, this provision is logically read consistent with section
110(a)(1) to require upwind states to address the maintenance of the
NAAQS in all areas downwind. In this respect, the EPA does not agree
with commenters that its identification of maintenance receptors for
purposes of the good neighbor provision is constrained by the
applicability of the provisions in CAA section 175A. Although the
statute invokes the word ``maintenance'' in that provision to describe
the requirements for maintenance plans that apply in areas that have
been re-designated from nonattainment to attainment, the good neighbor
provision neither implicitly nor explicitly indicates that a state's
evaluation of whether it interferes with maintenance in another state
should be limited to evaluation of areas subject to the requirements of
section 175A.
    Regardless of designation, any area may violate the NAAQS if
emissions affecting air quality in that area are not adequately
controlled. The court in North Carolina was specifically concerned with
such areas when it rejected the view that ``a state can never
`interfere with maintenance' unless the EPA determines that at one
point it `contribute[d] significantly to nonattainment.' '' 531 F.3d at
910. The court pointed out that areas barely attaining the standard due
in part to emissions from upwind sources would have ``no recourse''
pursuant to such an interpretation. Id. Accordingly, the court
instructed the EPA to give ``independent significance'' to the
maintenance prong of CAA section 110(a)(2)(D)(i)(I) by separately
identifying such downwind areas for purposes of defining states'
obligations pursuant to the good neighbor provision.
    In areas that are currently measuring clean data with respect to
the 2008 ozone NAAQS, these measurements can be driven by a number of
factors, including recent meteorology that is not conducive to ozone
formation. Due to the variable nature of meteorology, the fact that
such areas are currently attaining the standard does not address
whether the areas might struggle to maintain the standard in the
future, which was precisely the issue raised in North Carolina. The
EPA's approach to defining maintenance receptors directly responds to
these concerns raised by the D.C. Circuit in North Carolina. Thus,
although the EPA has considered recent monitored data for purposes of
identifying nonattainment receptors in this rulemaking, it does not
believe the data should inform the agency's identification of
maintenance receptors.
    b. Step 2. The original CSAPR used a screening threshold of one
percent of the NAAQS \77\ to identify upwind states that were
``linked'' to downwind air pollution problems. States were identified
as needing further evaluation for actions to address transport if their
air quality impact was greater than or equal to one percent of the
NAAQS for at least one downwind problem receptor (i.e., nonattainment
or maintenance receptor identified in step 1). For ozone, the impacts
include those from total emissions within the state of anthropogenic
volatile organic compounds (VOC) and NOX from all sectors.
The EPA evaluated a given state's contribution based on the average
relative downwind impact calculated over multiple days. States whose
air quality impacts to all downwind problem receptors were below this
threshold did not require further evaluation for actions to address
transport--that is, these states were determined to make insignificant
contributions to downwind air quality problems and therefore have no
emission reduction obligations under the good neighbor provision. The
EPA used this threshold because it determined that much of the ozone
nonattainment problem in the eastern half of the United States results
from collective impacts of relatively small contributions from a number
of upwind states. Use of the one percent threshold for CSAPR is
discussed in the preambles to the proposed and final CSAPR rules. See
75 FR 45237 (Aug. 2, 2010); 76 FR 48238 (Aug. 8, 2011).
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    \77\ See section IV.B for a discussion of the Supreme Court's
consideration of the one percent threshold.
---------------------------------------------------------------------------

    The EPA is using the same approach for identifying states that are
linked to downwind nonattainment and maintenance receptors in this
final rule because the EPA's analysis shows that much of the ozone
nonattainment problem being addressed by this rule is still the result
of the collective impacts of relatively small contributions from many
upwind states. Therefore, application of a uniform threshold helps the
EPA to identify those upwind states that should share responsibility
for addressing the downwind nonattainment and maintenance problem to
which they collectively contribute. Continuing to use one percent of
the NAAQS as the screening metric to evaluate collective contribution
from many upwind states also allows the EPA (and states) to apply a
consistent framework to evaluate interstate emission transport under
the ``good neighbor'' provision from one NAAQS to the next.
Accordingly, the EPA has applied an air quality screening threshold
calculated as one percent of the 2008 ozone NAAQS, 0.75 ppb, to
identify those states ``linked'' to downwind nonattainment and
maintenance receptors with respect to the 2008 ozone NAAQS which
require further analysis to identify potential emission reductions.
Consistent with the EPA's findings in the original CSAPR, the agency
has determined that states with contributions to all downwind
nonattainment and maintenance receptors below this threshold make
insignificant contributions to downwind air quality problems and
therefore have no emission reduction obligations under the good
neighbor provision with respect to the 2008 ozone NAAQS. Application of
step 2 is described in section V.
    Comment: Some commenters supported the continued use of an air
quality screening threshold of one percent of the NAAQS to identify
upwind states requiring further analysis. However, some commenters
opposed the use of the proposed one percent threshold because the
commenters claim that the EPA had not technically demonstrated that
continued use of the one percent screening metric is appropriate for
linking an upwind state to a downwind nonattainment or maintenance
receptor with respect to the 2008 ozone NAAQS. Some commenters believed
that use of the one percent threshold was too stringent given that the
proposed rule only focuses on emission reductions from one sector,
EGUs. Other commenters believed that one percent (0.75 ppb) was not
stringent enough, and they recommended using a lower value such as 0.5
ppb.
    Response: The EPA continues to believe that it is appropriate to
use a threshold of one percent of the NAAQS for identifying states
which merit further analysis to determine if emission reductions may be
warranted. The EPA has consistently determined in past analyses
conducted for the NOX SIP Call, CAIR, and CSAPR that ozone
nonattainment problems generally result from relatively small
contributions from many upwind states, along with contributions from
in-state sources and in some cases, substantially larger

contributions from a subset of particular upwind states.\78\
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    \78\ See NOX SIP Call, 63 FR 57356, 57375-377
(October 27, 1998); CAIR, 70 FR 25162, 25172 & 25186 (May 12, 2005);
CSAPR, 76 FR 48208, 48236-237 (August 8, 2011).
---------------------------------------------------------------------------

    The EPA determined that it is appropriate to use a low air quality
threshold when analyzing states' collective contributions to downwind
nonattainment and maintenance for ozone as well as PM2.5.
    To further support the EPA's evaluation of the appropriate
screening threshold to use for this purpose, the EPA compiled the
contribution modeling results from the air quality modeling conducted
for this rule in order to analyze the impact of different possible
thresholds. The EPA notes that similar contribution modeling data were
available for comment in the docket for the proposed CSAPR Update. This
compiled analysis demonstrates the reasonableness of continuing to use
one percent as an air quality threshold to account for the combined
impact of relatively small contributions from many upwind states. See
the Air Quality Modeling Technical Support Document for the Final
Cross-State Air Pollution Rule Update (AQM TSD). For each of the ozone
receptors identified in the final CSAPR Update rule analysis, the EPA
identified: (1) The total upwind state contributions, and (2) the
amount of the total upwind state contribution that is captured at one
percent, five percent, and half (0.5) percent of the NAAQS. The EPA
continues to find that the total collective contribution from upwind
states' sources represent a significant portion of the ozone
concentrations at downwind nonattainment and maintenance receptor
locations. This analysis shows that the one percent threshold generally
captures a substantial percentage of the total pollution transport
affecting downwind states without also implicating states that
contribute insignificant amounts.
    In response to commenters who advocated for a lower threshold, the
EPA observes that the analysis shows that a lower threshold would
result in relatively modest increases in the overall percentage of
ozone pollution transport captured relative to the amounts captured at
the one percent level at a majority of the receptors. A lower percent
threshold could lead to emission reduction responsibilities in
additional states that individually have a relatively small impact on
those receptors, compared to other upwind states -- an indicator that
emission controls in those states are likely to have a smaller air
quality impact at the downwind receptor.
    In response to commenters who advocated for a higher threshold, the
EPA observes that the analysis of a 5 percent threshold shows that a
higher threshold would result in a relatively large reduction in the
overall percentage of ozone pollution transport captured relative to
the amounts captured at the one percent level at a majority of the
receptors. In fact, at a 5 percent threshold there would not be any
upwind states linked to the nonattainment and maintenance receptors in
Texas.
    As a result of our analyses of higher and lower thresholds, as
described in the AQM TSD, the agency is not convinced that selecting a
threshold below one percent or above one percent is necessary or
desirable.
    Comment: Some commenters suggested more specifically that a 0.5 ppb
threshold would be more appropriate for upwind states contributing to
downwind receptors in Texas. The commenters note that the lower
threshold will add more states in the rule and address more of the
maximum combined upwind state impacts to Texas' receptors.
    Response: The EPA agrees that a lower threshold of 0.5 ppb would
capture more of the upwind states that contribute to Texas receptors.
However, the contribution of upwind state interstate transport to
receptors in Texas is less than the upwind state interstate transport
contribution identified for other downwind nonattainment and
maintenance receptors in this rule. Therefore, the potential ozone
reductions that would result from including additional upwind states
are relatively small. The EPA believes it is therefore reasonable to
use a uniform threshold for all states included in this rule.
    c. Step 3. For states that are linked in step 2 to downwind air
quality problems, the original CSAPR evaluated emission reductions
available in upwind states by application of uniform levels of control
stringency, represented by cost. The EPA evaluated NOX
reductions that were available in upwind states by applying uniform
levels of control stringency to entities in these states. For each
uniform level of control stringency evaluated, the EPA used a multi-
factor test to evaluate cost, NOX reduction potential, and
downwind air quality impacts. This multi-factor test was used to select
a uniform level of control stringency on the remaining allowable
emissions--those available after reducing significant contribution to
nonattainment or interference with maintenance of a NAAQS downwind. The