ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 52 and 97

[EPA-HQ-OAR-2009-0491; FRL-     ]

RIN 2060-AR22

Revisions to Federal Implementation Plans to Reduce Interstate Transport
of Fine Particulate Matter and Ozone

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

SUMMARY: EPA is proposing or seeking comment on revisions to the final
Transport Rule promulgated on August 8, 2011.  These revisions address
discrepancies in unit-specific modeling assumptions that affect the
proper calculation of Transport Rule state budgets and assurance levels
in Florida, Louisiana, Michigan, Mississippi, Nebraska, New Jersey, New
York, Texas, and Wisconsin, as well as new unit set-asides in Arkansas
and Texas.  EPA is also proposing to revise allowance allocations to
specific units covered by certain consent decrees that restrict the use
of those allowances.  These important technical fixes maintain the
Transport Rule’s ability to achieve the elimination of significant
contribution and interference with maintenance as quantified by the
proper application of these methodologies.

EPA is also proposing to amend the assurance penalty provisions of the
rule to make them effective beginning January 1, 2014, rather than in
2012, in order to promote the development of allowance market liquidity
as these revisions are finalized.  EPA believes that deferring the
effective date of the assurance provisions would provide additional
confidence and would in no waynot compromise the air quality goals of
the program.

In addition, we are proposing to correct typographical errors in the
rule.

DATES: Comments.  Comments must be received on or before [INSERT DATE 30
DAYS FROM DATE OF PUBLICATION IN THE FEDERAL REGISTER] unless a public
hearing is requested in which event comments must be received on or
before [INSERT DATE 45 DAYS FROM DATE OF PUBLICATION OF NOTICE OF PUBLIC
HEARING].

Public Hearing.  On [INSERT DATE OF PUBLICATION OF NOTICE OF PUBLIC
HEARING IN THE FEDERAL REGISTER], EPA published a notice announcing that
if a public hearing on this proposal is requested by [INSERT DATE 7 DAYS
AFTER PUBLICATION OF NOTICE OF PUBLIC HEARING IN THE FEDERAL REGISTER],
it will be held on October 28, 2011, at 9 a.m. at USEPA.     Please
refer to the public hearing notice published at [INSERT CITATION TO
PUBLICATION OF NOTICE OF PUBLIC HEARING IN THE FEDERAL REGISTER] for
additional information on the public hearing.

	EPA will provide further information about the hearing on its webpage
if a hearing is requested.  Oral testimony will be limited to the
subject matter of the proposal, the scope of which is discussed below.
Any member of the public may file a written statement by the close of
the comment period.

ADDRESSES: Submit your comments, identified by Docket ID No.
EPA-HQ-OAR-2009-0491, by one of the following methods:

http:// HYPERLINK "http://www.regulations.gov" www.regulations.gov :
Follow the on-line instructions for submitting comments.

Mail: Air and Radiation Docket and Information Center, U.S.
Environmental Protection Agency, Mailcode: 2822T, 1200 Pennsylvania
Avenue, NW, Washington, D.C. 20460.

Hand Delivery: Air and Radiation Docket, EPA West Building, Room 3334,
1301 Constitution Avenue, NW, Washington, D.C. 20460.  Such deliveries
are only accepted during the Docket’s normal hours of operation, and
special arrangements should be made for deliveries of boxed information.

Instructions:  Direct your comments to Docket ID No.
EPA-HQ-OAR-2009-0491.  EPA's policy is that all comments received will
be included in the public docket without change and may be made
available online at http:// HYPERLINK "http://www.regulations.gov"
www.regulations.gov , including any personal information provided,
unless the comment includes information claimed to be Confidential
Business Information (CBI) or other information whose disclosure is
restricted by statute. Do not submit information that you consider to be
CBI or otherwise protected through www.regulations.gov or e-mail.  The
http:// HYPERLINK "http://www.regulations.gov" www.regulations.gov
website is an “anonymous access” system, which means EPA will not
know your identity or contact information unless you provide it in the
body of your comment.  If you send an e-mail comment directly to EPA
without going through www.regulations.gov your e-mail address will be
automatically captured and included as part of the comment that is
placed in the public docket and made available on the Internet.  If you
submit an electronic comment, EPA recommends that you include your name
and other contact information in the body of your comment and with any
disk or CD-ROM you submit.  If EPA cannot read your comment due to
technical difficulties and cannot contact you for clarification, EPA may
not be able to consider your comment.  Electronic files should avoid the
use of special characters, any form of encryption, and be free of any
defects or viruses.  For additional information about EPA’s public
docket visit the EPA Docket Center homepage at
http://www.epa.gov/epahome/dockets.htm.

Docket: All documents in the docket are listed in the http:// HYPERLINK
"http://www.regulations.gov" www.regulations.gov  index.  Although
listed in the index, some information is not publicly available, e.g.,
CBI or other information whose disclosure is restricted by statute.
Certain other material, such as copyrighted material, will be publicly
available only in hard copy.  Publicly available docket materials are
available either electronically in http:// HYPERLINK
"http://www.regulations.gov" www.regulations.gov  or in hard copy at the
Air and Radiation Docket, EPA West Building, Room 3334, 1301
Constitution Avenue, NW, Washington, D.C. 20460.  The Public Reading
Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday,
excluding legal holidays.  The telephone number for the Public Reading
Room is<PHONE_NUMBER>, and the telephone number for the Air and
Radiation Docket is<PHONE_NUMBER>.

FOR FURTHER INFORMATION CONTACT:  Gabrielle Stevens, U.S. Environmental
Protection Agency, Clean Air Markets Division, MC 6204J, Ariel Rios
Building, 1200 Pennsylvania Ave., NW, Washington, D.C. 20460, telephone
(202) 343-9252, e-mail at<EMAIL_ADDRESS>Electronic copies
of this document can be accessed through the EPA Website at:
http://epa.gov/crossstaterule.

General Information

 Does this action apply to me?

Regulated Entities.  Entities regulated by this action primarily are
fossil fuel-fired boilers, turbines, and combined cycle units that serve
generators that produce electricity for sale or cogenerate electricity
for sale and steam.  Regulated categories and entities include:

Category	NAICS code	Examples of potentially regulated industries

Industry	2211, 2212, 2213 	Electric service providers

This table is not intended to be exhaustive, but rather to provide a
guide for readers regarding entities likely to be regulated by this
action. This table lists the types of entities which EPA is now aware
could potentially be regulated by this action. Other types of entities
not listed in this table could also be regulated. To determine whether
your facility, company, business, organization, etc., is regulated by
this action, you should carefully examine the applicability criteria in
§§ 97.404, 97.504, and 97.604 of title 40 of the Code of Federal
Regulations. If you have questions regarding the applicability of this
action to a particular entity, consult the person listed in the
preceding FOR FURTHER INFORMATION CONTACT section.

B. Where can I get a copy of this document and other related
information?

In addition to being available in the docket, an electronic copy of this
proposal will also be available on the World Wide Web. Following
signature by the EPA Administrator, a copy of this action will be posted
on the transport rule Web site http://www.epa.gov/airtransport.

C. What should I consider as I prepare my comments for EPA?

1. Submitting CBI. Do not submit this information to EPA through
http://www.regulations.gov or e-mail. Clearly mark the part or all of
the information that you claim to be CBI. For CBI information in a disk
or CD–ROM that you mail to EPA, mark the outside of the disk or
CD–ROM as CBI and then identify electronically within the disk or
CD–ROM the specific information that is claimed as CBI. In addition to
one complete version of the comment that includes information claimed as
CBI, a copy of the comment that does not contain the information claimed
as CBI must be submitted for inclusion in the public docket. Information
so marked will not be disclosed except in accordance with procedures set
forth in 40 CFR part 2. Send or deliver information identified as CBI
only to the following address: Roberto Morales, OAQPS Document Control
Officer (C404–02), U.S. EPA, Research Triangle Park, NC 27711,
Attention Docket ID No. EPA–HQ–OAR–2009–0491.

2. Tips for preparing your comments.

When submitting comments, remember to:

• Identify the rulemaking by docket number and other identifying
information (subject heading, Federal Register date and page number).

• Follow directions — The agency may ask you to respond to specific
questions or organize comments by referencing a Code of Federal
Regulations (CFR) part or section number.

• Explain why you agree or disagree; suggest alternatives and
substitute language for your requested changes.

• Describe any assumptions and provide any technical information and/
or data that you used.

• If you estimate potential costs or burdens, explain how you arrived
at your estimate in sufficient detail to allow for it to be reproduced.

• Provide specific examples to illustrate your concerns, and suggest
alternatives.

• Explain your views as clearly as possible, avoiding the use of
profanity or personal threats.

• Make sure to submit your comments by the comment period deadline
identified.

D. How is this Preamble Organized?

I. General Information

A. Does this action apply to me?

B. Where can I get a copy of this document and other related
information?

C. What should I consider as I prepare my comments for EPA?

D. How is the preamble organized?

II. Summary of Proposed Rule and Background

III. Specific Revisions

Budgets/New Unit Set-aside Revisions

B. Allowance Allocation Revisions to Units Covered by Existing Utility
Consent Decrees

C. Amend the Assurance Penalty Provisions to Make Them Effective
Starting in 2014

D. Correct Typographical Errors

IV. Recordation of Transport Rule Allowances

V. 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

C. Regulatory Flexibility Act (RFA)

D. Unfunded Mandates Reform Act

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 and Safety Risks

H. Executive Order 13211: Actions that Significantly Affect Energy
Supply, Distribution, or Use

I. National Technology Transfer Advancement Act

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

II.   Summary of Proposed Rule and Background

EPA has identified errors or potential errors in unit-specific modeling
assumptions that affect the proper calculation of Transport Rule state
budgets in Florida, Louisiana, Michigan, Mississippi, Nebraska, New
Jersey, New York, Texas, and Wisconsin, as well as new unit set-asides
in Arkansas and Texas.  EPA is proposing to take the following distinct
actions to revise individual state budgets and new-unit set asides:  (1)
revise Michigan’s annual NOX budget to account for an erroneously
assumed selective catalytic reduction (SCR) emission control device at
one unit; (2) revise Nebraska’s annual NOX budget to account for an
erroneously assumed SCR emission control device at one unit; (3) revise
the Texas SO2 budget to account for erroneously assumed flue gas
desulphurization (FGD, or scrubber) emission control devices at three
units and revised assumptions regarding flue gas treatment in existing
scrubbers at seven units; (4) revise the Arkansas ozone-season new unit
set-aside to account for erroneously omitted projected emissions from
one new unit; (5) revise the Texas new unit set-aside to account for
erroneously omitted projected emissions for SO2, ozone-season NOX, and
annual NOX; (6) revise New Jersey’s ozone season NOX, annual NOX, and
annual SO2 budgets to account for an erroneously assumed FGD and SCR
emission control devices at one unit, and taking into account
operational constraints likely to necessitate non-economic generation at
six facilities; (7) revise Wisconsin’s annual SO2 and annual NOX
budgets to account for erroneously assumed FGD and SCR devices at two
units; (8) revise New York’s annual SO2, annual NOX, and ozone season
NOX budgets taking into account operational constraints likely to
necessitate non-economic generation at ten units; (9) revise
Louisiana’s ozone season NOX budget taking into account operational
constraints likely to necessitate non-economic generation at twelve
units; (10) revise Mississippi’s ozone season NOX budget taking into
account operational constraints likely to necessitate non-economic
generation at four units; (11) revise the Texas annual NOX and ozone
season NOX budgets taking into account operational constraints likely to
necessitate non-economic generation at seven units; and (12) revise
Florida’s ozone-season NOX budget taking into account the
unavailability of a previously operating nuclear unit.  See section
III.A of this preamble for further explanation of these revisions.

These proposed revisions to state budgets also entail revisions to the
affected states' assurance levels, as the variability limits for each
state are calculated as a percentage of the applicable budget.  See the
final Transport Rule, 76 FR 48208, 48267-68, August 8, 2011 (explaining
variability limit derivation).  The purpose of these revisions is to
establish state budgets and new unit set-asides that are consistent with
the proper application of methodologies established in the final
Transport Rule.

The resulting budgets maintain significant emission reductions from
historic levels and are consistent with the final Transport Rule’s
methodology for defining significant contribution and interference with
maintenance.  The changes represent the proper application of the
methodology established in the final Transport Rule.  No changes to that
methodology are being proposed, and EPA is not reopening the methodology
established in the final Transport Rule for public comment.  EPA is also
not proposing any change to the levels of stringency (i.e., cost per
ton) selected in the final Transport Rule’s determination of
significant contribution and interference with maintenance and is not
reopening that issue for public comment.  See “Significant
Contribution Assessment TSD” in the docket for this rulemaking for a
demonstration of how the revisions in this rulemaking represent the
proper application of and are consistent with the methodology developed
in the final Transport Rule.

It is EPA’s intent, in conducting this rulemaking, to make the
revisions in this proposal as well as to conduct a clearly defined,
time-limited process by which any similarly justified revisions to the
final Transport Rule state budgets are identified and effectuated in a
timely and expeditious manner.  To that end, EPA is seeking that all
relevant information that may support similar revisions be submitted in
full by the comment deadline on this rulemaking, such that the Agency
may consider whether a subsequent and timely rulemaking should address
any further revisions to the final Transport Rule state budgets.  EPA
believes that the likelihood of additional substantive revisions merited
to the Transport Rule state budgets is limited, considering that EPA has
already conducted several notice-and-comment processes through initial
proposal of the Transport Rule and multiple notices of data availability
(NODAs) to prompt the public to provide the relevant input information
that informs the calculation of the Transport Rule state budgets.
Please see section III.A of this preamble for a more detailed
description of the type of information EPA is requesting in comments on
this rulemaking for this purpose.

EPA is also proposing revisions to allowance allocations at certain
units in six states that are affected by existing utility consent
decrees.  EPA has identified provisions in certain utility consent
decrees which the Agency believes would restrict the use of Transport
Rule allowances allocated to certain units and effectively make certain
Transport Rule reduction requirements marginally more stringent than
intended by making certain allowances intended for compliance purposes
unavailable.  When establishing the state budgets under the final
Transport Rule, EPA successfully accounted for the emission reduction
requirements of these consent decrees; therefore, the Transport Rule
state budgets sustain the environmental protection secured by those
existing utility consent decrees.  However, when dividing those state
budgets into individual unit-level allowance allocations, EPA included
allowance allocations to certain units that exceed those units’
allowable emissions under the terms of the applicable consent decree.
Under these conditions, the consent decree provisions of concern
identified in this proposal would determine the quantity of allocated
quantify those allowances in excess of allowable emissions at the unit
in question and prevent them from being available for compliance use by
any source under the Transport Rule programs.  Because EPA has already
secured the environmental improvements required by the consent decrees
by incorporating their emission reductions into the Transport Rule state
budgets, there is no environmental need to prevent the allowances from
being used for compliance by sources subject to the Transport Rule aside
from those sources whose emissions are restricted by the terms of the
consent decrees to which they are subject.  Therefore, EPA is proposing
to revise Transport Rule unit-level allowance allocations to the
specific units affected by these consent decrees to reflect their
maximum allowable emissions, such that none of the allowances affected
by the provisions of concern are unnecessarily removed from use for
compliance by other units.  While EPA intends to perform this revision
to benefit program implementation, EPA does not believe resolution of
this issue is a necessary precondition for successful implementation of
and compliance with the Transport Rule programs in 2012, because as
described in section IV of this preamble, notwithstanding these proposed
revisions, EPA will still be able to distribute 99.7 percent of all
existing unit allowances under the state budgets established in the
final Transport Rule by that rule’s November 7 deadline.  See section
III.B of this preamble for further explanation of this revision.

EPA is also proposing in this action to amend the assurance penalty
provisions of the Transport Rule to make them effective January 1, 2014.
 This change takes account of the fact that the revisions described
above are being proposed, and any information described above concerning
requested additional revisions may be submitted, close to the
commencement of the Transport Rule programs.  The proposed amendment to
the assurance provisions is intended to promote the development of
allowance market liquidity as these revisions are finalized, thereby
smoothing the transition from the Clean Air Interstate Rule (CAIR)
programs to the Transport Rule programs in 2012.  See section III.C of
this preamble for further explanation of this revision.

EPA is also proposing to correct typographical errors in certain
sections of rule text in parts 52 and 97 in the final Transport Rule.
See section III.D of this preamble for further explanation of these
corrections.

III. Specific Revisions

 Budget and New Unit Set-Aside Revisions

After the final Transport Rule was published, EPA identified
discrepancies in certain data assumptions that substantially affected
the calculation of a few states' budgets in the final rule.  Therefore,
EPA is proposing the following revisions:

Increase Michigan’s 2012 and 2014 annual NOX budgets in accordance
with a revision to the final Transport Rule analysis that erroneously
assumed that an SCR exists at Monroe Unit 2.

EPA is proposing to revise Michigan’s 2012 and 2014 annual NOX budgets
in accordance with a revision to the final Transport Rule analysis that
erroneously assumed an SCR exists at Monroe Unit 2.  This SCR is
planned, but is not expected to be online in 2012 or 2014.  Therefore,
EPA is proposing to adjust its 2012 and 2014 projections to reflect
projected emissions without an SCR at this unit.  This would result in a
5,228 ton increase in the state’s annual NOX budget.  See “Technical
Revisions and Adjustments to State Budgets TSD” in the docket for this
rulemaking for a quantitative demonstration of this proposed revision,
as well as for the impacts this revision would have on the state’s
assurance level, new unit set-aside, and Indian country new unit
set-aside, and “Revisions to Unit Level Allocations under the FIP”
in the docket for a quantitative demonstration of the effect of this
revision on unit-level allocations under the FIP.

This revised assumption about Monroe Unit 2 would also affect the
calculation of Michigan’s potential ozone-season NOX budget (as well
as the state’s assurance level, new unit set-aside, Indian country new
unit set-aside, and unit-level allocations under the FIP) if that state
is included in the Transport Rule ozone-season NOX program as previously
proposed (76 FR 40662, July 11, 2011).  EPA will address this issue,
along with other public comments submitted on that rulemaking, when the
Agency finalizes that rulemaking later this year.

(2) Increase Nebraska’s 2012 and 2014 annual NOX budgets in accordance
with a revision to the final Transport Rule analysis that erroneously
assumed that an SCR exists at Nebraska City Unit 1.

EPA is proposing to increase Nebraska’s 2012 and 2014 annual NOX
budgets in accordance with a revision to the final Transport Rule
analysis that erroneously assumed that an SCR exists at Nebraska City
Unit 1.  There is no SCR that is present, planned, or under construction
at the unit.  Therefore, EPA is proposing to adjust its baseline
emission projections for the state to reflect projected emissions
without an SCR at this unit.  This adjustment results in an increase of
3,599 tons to the state’s annual NOX budget.  See “Technical
Revisions and Adjustments to State Budgets TSD” in the docket for this
rulemaking for a quantitative demonstration of this proposed revision,
as well as for the impacts this revision would have on the state’s
assurance level, new unit set-aside, and Indian country new unit
set-aside, and “Revisions to Unit Level Allocations under the FIP”
in the docket to this rulemaking for a quantitative demonstration of the
effect of this proposed revision on unit-level allocations under the
FIP.

(3) Increase the Texas 2012 and 2014 SO2 budgets in accordance with a
revision to the final Transport Rule analysis that erroneously assumed
that scrubbers exist at W. A. Parish Unit 6, J.T. Deely Unit 1, and J.T.
Deely Unit 2, and that assumed full flue gas treatment in existing
scrubbers at Martin Lake, Monticello, Sandow, W.A. Parish, and Oklaunion
facilities.

EPA is proposing to address several revisions to the modeling
assumptions affecting the calculation of the Texas SO2 budget.  In
particular, EPA is proposing to increase the Texas SO2 budget in
accordance with a revision to the final Transport Rule analysis that
erroneously assumed flue-gas desulfurization (FGD) technology is
installed on J.T. Deely Units 1 and 2 and W.A. Parish Unit 6 by 2012.
At the time that EPA conducted its final Transport Rule analysis to
determine state budgets, EPA had information (both from public sources,
as cited below, as well as from a private subscription-only power sector
pollution control database) showing that FGD retrofits for these sources
were originally planned or announced to be installed by 2012,.  However,
newer information shows that these FGDs are no longer scheduled to be
installed in 2012.  Furthermore, as a Group 2 state, Texas is not
subject to a cost threshold under the Transport Rule that is intended to
incentivize the construction of new FGDs in addition to those that are
already scheduled for installation.

A number of facilities in Texas currently face limitations regarding the
amount of flue gas that can be treated in their existing FGDs.  In the
final Transport Rule analysis, EPA relied on the SO2 removal efficiency
that these facilities reported at their scrubbers to the Energy
Information Administration (EIA).  However, EPA has now determined that
the facilities’ reports only intended to address the removal
efficiency for the portion of the flue gas treated in the scrubber.  For
this reason, that removal efficiency should not be applied to the total
amount of sulfur combusted in the coal consumed (as some of the flue gas
at these units must be vented without being treated in the scrubber as
originally constructed).  When the SO2 removal rates are decreased to
reflect the reported operational constraint of each affected
scrubber’s flue gas treatment, the projected emission level for Texas,
after all significant contribution identified in the final Transport
Rule is addressed, correspondingly rises.

Therefore, in accordance with the revised unit-level input assumptions
regarding existing scrubbers and flue gas treatment at the Texas units
described above, EPA is proposing to increase the state’s 2012 and
2014 SO2 budgets each by 70,067 tons.  See “Technical Revisions and
Adjustments to State Budgets TSD” in the docket for this rulemaking
for a quantitative demonstration of how each of these unit-level
adjustments affects the calculation of this proposed revision, as well
as for the impacts this revision would have on the state’s assurance
levels, new unit set-aside, and Indian country new unit set-aside.

 (4) Increase Arkansas’ ozone-season NOX new unit set-aside in
accordance with a revision to the final Transport Rule’s calculation
of the new unit set-aside that erroneously omitted Plum Point Unit 1’s
projected emissions.

EPA is not proposing to adjust Arkansas’ ozone season NOX budget in
this rulemaking.  However, EPA is proposing to adjust the portion of
that budget dedicated to the new unit set-aside account.  In the final
Transport Rule, EPA had determined a 2 percent new unit set-aside for
ozone season NOX in the state.  That value would be changed to 5 percent
in this rulemaking.  The revision is consistent with the new unit
set-aside methodology described in the final rule.  The updated value
simply reflects the revised classification of one unit to be treated as
a new unit for purposes of unit-level allowance allocation.  This unit,
Plum Point Unit 1, commenced commercial operation on or after January 1,
2010, and therefore should be considered a new unit under the final
Transport Rule’s unit-level allocation methodology (76 FR 48290);
however, the final Transport Rule erroneously omitted this unit’s
projected emissions from the calculation of Arkansas’ ozone-season NOX
new unit set-aside.  Including this unit’s projected emissions in the
calculation would yield a revised new unit set-aside of 5 percent of the
state’s budget instead of the previous 2 percent value.  See the
“Technical Revisions and Adjustments to State Budgets TSD” in the
docket for this rulemaking for a quantitative demonstration of this
proposed revision.

This proposed revision to Arkansas’ new unit set-aside would
necessarily result in changes to allowance allocations to existing
units.  See “Revisions to Unit Level Allocations under the FIP”
tables in the docket to this rulemaking for a quantitative demonstration
of the effect of this revision on unit-level allocations under the FIP.

(5)	Increase Texas’ ozone-season NOX, annual NOX, and SO2 new unit
set-asides in accordance with a revision to the final Transport Rule’s
calculations of the new unit set-asides that erroneously omitted Oak
Grove Unit 2’s projected emissions.

EPA is also proposing a revision to the calculation of the new unit
set-asides for ozone-season NOX, annual NOX, and SO2 in Texas.  The
updated values would simply reflect the revised classification of one
unit to be treated as a new unit for purposes of unit-level allowance
allocation.  This unit, Oak Grove Unit 2, commenced commercial operation
on or after January 1, 2010, and therefore should be considered a new
unit under the final Transport Rule’s unit-level allocation
methodology; however, the final Transport Rule erroneously omitted this
unit’s projected emissions from the calculation of Texas’s
ozone-season NOX, annual NOX, and SO2 new unit set-asides.  Including
this unit’s projected emissions in the calculation would yield revised
new unit set-asides of 4 percent of the state’s ozone-season NOX
budget, 4 percent of the state’s annual NOX budget, and 5 percent of
the state’s SO2 budget.  See the “Technical Revisions and
Adjustments to State Budgets TSD” in the docket for this rulemaking
for a quantitative demonstration of this proposed revision.

(6)Increase New Jersey’s 2012 and 2014 ozone-season NOX, annual NOX,
and SO2 budgets in accordance with revisions to the final Transport Rule
analysis that erroneously assumed that an SCR and scrubber exist at BL
England Unit 1 and to reflect operational constraints likely to
necessitate non-economic dispatch at six other facilities in 2012.

EPA is proposing to revise New Jersey’s ozone-season NOX, annual NOX,
and SO2 budgets in accordance with revisions to assumed control
technologies at BL England Unit 1 as well as operational constraints
affecting units at six other facilities.  The SCR and scrubber that had
been planned to be installed at BL England Unit 1, and which EPA assumed
would be in place in 2012, are not actually required by a New Jersey
administrative order until December 2013.  Furthermore, the agreement
limits operation of the unit to the ozone season.  Therefore, EPA is
proposing to adjust New Jersey’s 2012 state budgets to reflect
projected emissions without an SCR or scrubber at this unit and its
operation only during the ozone season.

EPA is also proposing revisions to New Jersey’s state budgets based on
information demonstrating that northern New Jersey is an
out-of-merit-order dispatch area, meaning that units in that area are
frequently dispatched out of regional economic order as a result of
short-run limitations on the ability to meet local electricity demand
with generation from outside the area.  Conditions in this
out-of-merit-order dispatch area are likely to necessitate what would
otherwise be non-economic generation at six New Jersey plants (Bergen,
Edison, Essex, Kearny, Linden, and Sewaren Generating Stations) in the
immediate future.  EPA did not consider these immediate-term conditions
in its calculation of the New Jersey emission budgets in the final
Transport Rule.  EPA is proposing to adjust New Jersey’s emission
budgets based on analysis of the frequency these units have recently
been called to run for non-economic purposes, according to data provided
by the utility operating those units.

For this proposal, EPA has calculated the net change in the state's 2012
and 2014 total emissions (that inform the state budgets) to account for
increased generation (and related emissions) from the specific units
affected by the immediate-term non-economic constraints described above,
as well as for a corresponding reduction in generation (and related
emissions) at other units within the state, to maintain the electricity
supply and demand equilibrium modeled in the final Transport Rule.

EPA re-calculated the emissions from BL England Unit 1 and the six
plants with non-economic generation to account for the input assumption
changes described above.  These calculations yield increases to the New
Jersey 2012 state budgets for annual SO2 of 2,096 tons, annual NOX of
420 tons, and ozone-season NOX of 592 tons; and 2014 state budget
increases for annual NOX of 112 tons, and ozone-season NOX of 195 tons.
See “Technical Revisions and Adjustments to State Budgets TSD” in
the docket for this rulemaking for a quantitative demonstration of this
proposed revision, as well as for the impacts this revision would have
on the state’s assurance level and new unit set-aside, and
“Revisions to Unit Level Allocations under the FIP” in the docket
for a quantitative demonstration of the effect of this revision on
unit-level allocations under the FIP.

(7) Increase Wisconsin’s 2014 SO2 budget and 2012 and 2014 annual NOX
budget in accordance with a revision to the final Transport Rule
analysis that erroneously assumed that an FGD exists at Weston Unit 3,
wet FGDs (instead of dry FGDs) exist at Columbia Units 1 and 2, and a
SCR exists at John P. Madgett Unit 1.

EPA is proposing to increase Wisconsin’s annual SO2 budget by a total
of 7,757 tons in accordance with revisions to the Weston Unit 3 and
Columbia Units 1 and 2 FGD status in 2014.  EPA had assumed that a
scrubber would be available at Weston Unit 3 in 2014 in its base case
modeling.  There is no FGD expected to be online at the facility in
2014.  The final Transport Rule did not assume an operating scrubber at
Weston Unit 3 in 2012, but did assume the FGD would be in place and
operating by 2014.  Therefore, EPA is proposing to adjust Wisconsin's
2014 SO2 budget to reflect the unit’s operation without an FGD in
2014.  This would result in a 5,605 ton increase to Wisconsin’s 2014
annual SO2 budget.

EPA had also assumed that the two scrubbers being installed at Columbia
Units 1 and 2 were wet scrubbers.  Instead, dry scrubbers have been
planned and approved at these units.  In EPA’s modeling, the assumed
removal rate of a new wet scrubber is 96 percent and a new dry scrubber
is 92 percent.  Therefore, the 2014 modeled remedy emissions from these
units would be twice their current amount, if the assumption of wet
scrubbers was changed to dry scrubbers for the facility.  To account for
this adjustment, EPA is proposing to increase the Wisconsin 2014 SO2
emission budget by 2,152 tons.  No change is needed for 2012 since EPA
did not model any scrubbers operating at those units in that year.

To account for these adjustments, EPA is proposing to increase the
Wisconsin SO2 budget by a total of 7,757 tons in 2014.

EPA is also proposing to increase Wisconsin’s annual NOX budget in
2012 and 2014.  EPA had assumed a SCR would be installed at John P.
Madgett Unit 1 in 2012 in its budget determination and remedy modeling.
There is no SCR expected to be online in 2012 or 2014 at the unit.
Therefore, EPA is proposing to adjust Wisconsin’s annual NOX budgets
to reflect the unit’s operation without a SCR.  This would result in a
2,473 ton increase to the state’s annual NOX budget.

The revised assumptions about John P. Madgett Unit 1 would also affect
the calculation of Wisconsin’s potential ozone-season NOX budget (as
well as the state’s assurance level, new unit set-aside, Indian
country new unit set-aside, and unit-level allocations under the FIP) if
that state is included in the Transport Rule ozone-season NOX program as
previously proposed (76 FR 40662, July 11, 2011).  EPA will address this
issue, along with other public comments submitted on that rulemaking,
when the Agency finalizes that rulemaking later this year.

See the “Technical Revisions and Adjustments to State Budgets TSD”
in the docket for this rulemaking for a quantitative demonstration of
this proposed revision, as well as for the impacts this revision would
have on the state’s assurance level, new unit set-aside, and Indian
country new unit set-aside, and “Revisions to Unit Level Allocations
under the FIP” in the docket for a quantitative demonstration of the
effect of this revision on unit-level allocations under the FIP.

(8) Increase New York’s 2012 and 2014 ozone-season NOX, annual NOX,
and SO2 budgets in accordance with a revision to the final Transport
Rule analysis that did not reflect operational constraints likely to
necessitate non-economic dispatch at certain units.

EPA is proposing to increase the New York state ozone-season NOX, annual
NOX, and SO2 budgets in accordance with revisions to the assumed
operation of several specific units in 2012, to satisfy three specific
immediate-term operational constraints documented by the New York
Independent System Operator (NYISO).  These three constraints are
referred to here as the N-1-1 Contingency, the Minimum Oil Burn Rules,
and out-of-merit-order dispatch conditions, which collectively affect
the likely 2012 and 2014 operations of specific units in the New York
City and Long Island areas.

The N-1-1 Contingency requires that certain units be available to
deliver generation with advance notice of only 30 seconds at certain
times during the year.  These specific units require several hours to
reach the necessary level of generation under these contingency
circumstances; therefore, the contingency requirement frequently
necessitates their ongoing operation whether or not the contingency is
actually triggered at any given time.  Based on information published by
NYISO, EPA identified Arthur Kill Generating Station, Ravenswood, and
Astoria Generating Station as needing to maintain minimum generation
levels at two units in each facility to meet the N-1-1 Contingency
constraint.

The Minimum Oil Burn Rules require that certain units be able to
immediately burn oil in the event of a natural gas supply disruption to
the New York City and Long Island area infrastructure.  Some units are
incapable of immediately switching fuel, so they must burn a minimum
amount of oil on an ongoing basis when operating to comply with this
requirement.  EPA determined that the Minimum Oil Burn Rules would
require residual fuel oil consumption at the Arthur Kill Generating
Station, Ravenswood, Astoria Generating Station, and Northport
facilities.  Based on information published by the NYISO, EPA determined
that these units would burn oil in 2012 and 2014 at the same proportion
of total projected heat input as shown for the share of historic heat
input reported as residual fuel oil at those facilities.

Data presented in the NYISO 2010 Comprehensive Area Transmission Review
Study and the NYISO Operating Study, Summer 2011, demonstrate that Long
Island is an out-of-merit-order dispatch area, meaning that units in
that area are frequently dispatched out of regional economic order as a
result of short-run limitations on the ability to meet local electricity
demand with generation from outside the area.  Conditions in this
out-of-merit-order dispatch area are likely to necessitate in the
immediate future what would otherwise be non-economic generation at 3
units at the Northport facility.

For this proposal, EPA has calculated the net change in the state's
total emissions (that inform the state budgets) to account for increased
generation (and related emissions) from the specific units affected by
the immediate-term non-economic constraints described above, as well as
for a corresponding reduction in generation (and related emissions) at
other units within the state, to maintain the electricity supply and
demand equilibrium modeled in the final Transport Rule.  These
calculations yield increases to the New York 2012 and 2014 state budgets
for annual SO2 of 3,527 tons, annual NOX of 3,485 tons, and ozone-season
NOX of 1,911 tons.  See “Technical Revisions and Adjustments to State
Budgets TSD” in the docket for this rulemaking for a quantitative
demonstration of this proposed revision, as well as for the impacts this
revision would have on the state’s assurance levels, new unit
set-aside, and Indian country new unit set-aside.

(9) Increase Louisiana’s 2012 and 2014 ozone-season NOX budgets in
accordance with a revision to the final Transport Rule analysis to
reflect operational constraints likely to necessitate non-economic
dispatch at twelve units.

EPA is proposing revisions to Louisiana’s 2012 and 2014 state ozone
season NOX budgets based on information demonstrating that the West of
the Atchafalaya Basin (WOTAB), Downstream of Gypsy (DSG), and Amite
South regions of Louisiana are out-of-merit-order dispatch areas,
meaning that units in those areas are frequently dispatched out of
regional economic order as a result of short-run limitations on the
ability to meet local electricity demand with generation from outside
the area.  Conditions in these out-of-merit-order dispatch areas are
likely to necessitate what would otherwise be non-economic generation at
five Louisiana plants (R.S. Nelson, Nine Mile Point, Michoud, Little
Gypsy, and Waterford) in the immediate future.  EPA did not consider
these immediate-term conditions in its calculation of the Louisiana
emission budget in the final Transport Rule.  EPA is proposing to adjust
Louisiana’s ozone season NOX emission budget based on analysis
projecting the minimum frequency these units will have to run in the
immediate term for non-economic purposes, according to data provided by
the utility operating those units.

For this proposal, EPA has calculated the net change in the state's
total emissions (that inform the state budgets) to account for increased
generation (and related emissions) from the specific units affected by
the immediate-term non-economic constraints described above, as well as
for a corresponding reduction in generation (and related emissions) at
other units within the state, to maintain the electricity supply and
demand equilibrium modeled in the final Transport Rule.

EPA re-calculated the emissions from the five plants with non-economic
generation to account for the input assumption changes described above.
These calculations yield increases to Louisiana’s 2012 and 2014 state
budgets for ozone-season NOX of 4,231 tons.  See “Technical Revisions
and Adjustments to State Budgets TSD” in the docket for this
rulemaking for a quantitative demonstration of this proposed revision,
as well as for the impacts this revision would have on the state’s
assurance level, new unit set-aside, and Indian country new unit
set-aside, and “Revisions to Unit Level Allocations under the FIP”
in the docket for a quantitative demonstration of the effect of this
revision on unit-level allocations under the FIP.

(10) Increase Mississippi’s 2012 and 2014 ozone-season NOX budgets in
accordance with a revision to the final Transport Rule analysis to
reflect operational constraints likely to necessitate non-economic
dispatch at certain units.

EPA is proposing revisions to Mississippi’s state ozone season NOX
budget based on information demonstrating that the Mississippi Region is
an out-of-merit-order dispatch area, meaning that units in that area are
frequently dispatched out of regional economic order as a result of
short-run limitations on the ability to meet local electricity demand
with generation from outside the area.  Conditions in this
out-of-merit-order dispatch area are likely to necessitate what would
otherwise be non-economic generation at three Mississippi plants (Rex
Brown, Gerald Andrus, and Baxter Wilson) in the immediate future.  EPA
did not consider these immediate-term conditions in its calculation of
the Mississippi emission budget in the final Transport Rule.  EPA is
proposing to adjust Mississippi’s 2012 and 2014 ozone season NOX
emission budgets based on analysis projecting the minimum frequency
these units will have to run in the immediate-term for non-economic
purposes, according to data provided by the utility operating those
units.

For this proposal, EPA has calculated the net change in the state's
total emissions (that inform the state budgets) to account for increased
generation (and related emissions) from the specific units affected by
the immediate-term non-economic constraints described above, as well as
for a corresponding reduction in generation (and related emissions) at
other units within the state, to maintain the electricity supply and
demand equilibrium modeled in the final Transport Rule.

EPA re-calculated the emissions from the three plants with non-economic
generation to account for the input assumption changes described above.
These calculations yield increases to Mississippi’s 2012 and 2014
state budgets for ozone-season NOX of 2,136 tons.  See “Technical
Revisions and Adjustments to State Budgets TSD” in the docket for this
rulemaking for a quantitative demonstration of this proposed revision,
as well as for the impacts this revision would have on the state’s
assurance level, new unit set-aside, and Indian country new unit
set-aside, and “Revisions to Unit Level Allocations under the FIP”
in the docket for a quantitative demonstration of the effect of this
revision on unit-level allocations under the FIP.

(11) Increase Texas’s 2012 and 2014 annual and ozone-season NOX
budgets in accordance with a revision to the final Transport Rule
analysis to reflect operational constraints likely to necessitate
non-economic dispatch at certain units.

EPA is proposing revisions to Texas’s 2012 and 2014 state annual and
ozone season NOX budgets based on information demonstrating that the
West of the Atchafalaya Basin (WOTAB) and Western Regions are
out-of-merit-order dispatch areas, meaning that units in those areas are
frequently dispatched out of regional economic order as a result of
short-run limitations on the ability to meet local electricity demand
with generation from outside the area.  Conditions in these
out-of-merit-order dispatch areas are likely to necessitate what would
otherwise be non-economic generation at two Texas plants (Lewis Creek
and Sabine) in the immediate future.  EPA did not consider these
immediate-term conditions in its calculation of the Texas emission
budgets in the final Transport Rule.  EPA is proposing to adjust
Texas’s emission budgets based on analysis projecting the minimum
frequency these units will have to run in the immediate-term for
non-economic purposes, according to data provided by the utility
operating those units.

For this proposal, EPA has calculated the net change in the state's
total emissions (that inform the state budgets) to account for increased
generation (and related emissions) from the specific units affected by
the immediate-term non-economic constraints described above, as well as
for a corresponding reduction in generation (and related emissions) at
other units within the state, to maintain the electricity supply and
demand equilibrium modeled in the final Transport Rule.

EPA re-calculated the emissions from the two plants with non-economic
generation to account for the input assumption changes described above.
These calculations yield increases to Texas’s 2012 and 2014 state
budgets for annual NOX of 1,375 tons and ozone-season NOX of 1,375 tons.
 See “Technical Revisions and Adjustments to State Budgets TSD” in
the docket for this rulemaking for a quantitative demonstration of this
proposed revision, as well as for the impacts this revision would have
on the state’s assurance level, new unit set-aside, and Indian country
new unit set-aside, and “Revisions to Unit Level Allocations under the
FIP” in the docket for a quantitative demonstration of the effect of
this revision on unit-level allocations under the FIP.

(12) Increase Florida’s 2012 ozone-season NOX budget in accordance
with a revision to the final Transport Rule analysis to reflect the
unavailability of Crystal River Unit 3, a nuclear unit.

EPA’s power sector analysis in the final Transport Rule that informed
its calculation of Florida’s state ozone-season budget included
generation from Crystal River Unit 3, a nuclear unit that has operated
historically.  However, utilities in Florida have notified EPA that this
unit will be offline for repairs throughout 2012 and is expected to
return to service in 2013.  As such, EPA expects that the generation
previously projected in the Transport Rule analysis from this unit in
2012 will necessarily have a different origin with different emission
consequences that should be considered in the calculation of Florida’s
ozone-season NOX state budget.  EPA has calculated that this replacement
generation would yield an increase of 819 tons of ozone-season NOX in
2012 and is proposing to increase Florida’s 2012 ozone-season NOX
budget by 819 tons, accordingly.  See “Technical Revisions and
Adjustments to State Budgets TSD” in the docket for this rulemaking
for a quantitative demonstration of this proposed revision, as well as
for the impacts this revision would have on the state’s assurance
level, new unit set-aside, and Indian country new unit set-aside, and
“Revisions to Unit Level Allocations under the FIP” in the docket
for a quantitative demonstration of the effect of this revision on
unit-level allocations under the FIP.

EPA has also received and is making available in the public docket for
this proposal additional unit-level information provided by Florida
utilities addressing assumptions of each unit's ability to control
ozone-season NOX.  EPA requests comment on all aspects of the data in
the docket, including whether the emission data provided in this
information is a more accurate representation of achievable NOX emission
rates in 2012, and whether using this data would be consistent with the
methodology used in the Transport Rule.  EPA specifically requests
comment on whether this information could support a further revision to
the state's ozone-season NOX budget, and if so, how such a revision
should be calculated.  See “Information Submitted by Florida
Utilities” in the docket for this rulemaking.

Further Explanation on Revisions and Request for Comments.  All of the
proposed revisions to state budgets and new unit set-asides described
above would correspondingly affect unit-level allowance allocations in
the states involved.  Specifically, any changes to the levels of new
unit set-asides or state budgets would be carried through to unit-level
allocations based on the final Transport Rule allocation methodology for
existing units (including any amendments made to specific unit-level
allocations in this rulemaking, described below).  For example, if a
state budget would increase, then the share of that increase going to
existing units would be apportioned based on the final Transport
Rule’s allocation methodology to existing units (aside from specific
unit-level allocation adjustments included in this proposal pertinent to
utility consent decrees, discussed below in section III.B of this
preamble).  Unit-level allocations to potential covered sources under
the Transport Rule have been updated to reflect all of the proposed
revisions described in this proposal and are set forth in the
“Revisions to Unit Level Allocations under the FIP” TSD in the
docket for this rulemaking.

EPA evaluated the likely air quality impacts of the revisions presented
above using the air quality assessment tool, on a state-by-state and
case-by-case basis, for the SO2 budget increases in 2014 for Texas, New
York, and Wisconsin, and compared those estimates to the final Transport
Rule air quality analysis.  The results do not change the conclusions
that EPA made about the appropriateness of controlling upwind emissions
at the cost-effective thresholds selected in the final Transport Rule to
successfully quantify and eliminate significant contribution to
nonattainment and interference with maintenance at downwind receptors.
For more information, this evaluation can be found in the “Significant
Contribution Assessment Technical Support Document” in the docket for
this rulemaking.

For this proposal, EPA also qualitatively assessed this proposal’s
revisions to annual NOX and ozone-season NOX state budgets against each
state’s total NOX emission inventories which informed the air quality
projections in the final Transport Rule analysisfor 2014.  The annual
NOX budget increases for Michigan, Nebraska, New Jersey, New York,
Texas, and Wisconsin are 5,228, 3,599, 112, 3,485, 1,375 and 2,473 tons,
respectively.  Comparing those budget increases to the total 2014 annual
NOX emission inventories in those states under the final Transport
Rule’s control scenario analysis, EPA calculates that these revisions
represent increases of 1.2 percent, 2.1 percent, 0.1 percent, 0.8
percent, 0.1 percent, and 1.0 percent, respectively, of the total annual
NOX emission inventories for those states in the final Transport
Rule’s 2014 control scenario analysis.  See the “Significant
Contribution Assessment TSD” in the docket for this rulemaking for
more details.  These increases are minimal compared torepresent only a
small portion of each state’s total NOX emissions.

The ozone-season NOX budget increases in 2014 for Louisiana,
Mississippi, New Jersey, New York, and Texas are 4,231, 2,136, 195,
1,911, and 1,375 tons, respectively.  Comparing those budget increases
to the total 2014 ozone-season NOX emission inventories in those states
under the final Transport Rule’s control scenario analysis, EPA
calculates that these revisions represent increases of 2.2 percent, 2.4
percent, 0.2 percent, 1.0 percent, and 0.2 percent, respectively, of the
total ozone-season NOX emission inventories for those states in the
final Transport Rule’s 2014 control scenario analysis.  See the
“Significant Contribution Assessment TSD” in the docket for this
rulemaking for more details.  These increases are minimal compared
torepresent only a small portion of each state’s total ozone-season
NOX emissions.

EPA requests comment on the revised unit-level and utility-system
operational information described above and on the corresponding
proposed revisions in state budgets, variability limits, new unit
set-asides, Indian country new unit set-asides, and unit-level
allocations resulting from the application of such revised information
using the methodologies set forth in the final Transport Rule for
developing state budgets, variability limits, new unit set-asides,
Indian country new unit set-asides, and unit-level allocations.  EPA is
not requesting comment on those methodologies set forth in the final
Transport Rule.  For example, EPA is not seeking comment on the
methodology by which existing unit allocations are determined with
regard to any given Transport Rule state budget.

Moreover, EPA recognizes that parties may be aware of other
immediate-term unit-specific operational constraints not accounted for
in the final Transport Rule whose inclusion may warrant revisions in
state budgets, with associated revisions to the state assurance levels
and unit-level allocations for existing units.  EPA has already provided
several opportunities –- through the proposed Transport Rule and
subsequent notices of data availability -- for the public, including
stakeholders, to present unit-level information demonstrating
constraints on immediate-term operations.  However, EPA will accept –-
by the deadline for comment on this proposal –- submission of
additional unit-level operational information that would have a material
impact on the calculation of Transport Rule state budgets (with
associated impacts on corresponding assurance levels and unit-level
allocations for existing units).  For this purpose, EPA intends a
“material impact” to reflect a corresponding recalculation of the
relevant state budget that would be at least 1 percent different from
that budget’s value as calculated in the final Transport Rule (76 FR
48208, August 8, 2011).  EPA remains focused on successful
implementation of the Transport Rule programs and does not believe that
a change of less than 1 percent in a state’s budget would be a
meaningful action to further this goal.  As a result, EPA encourages
commenters to consider whether or not revisions to a given unit’s or
group of units’ input assumptions would yield a material impact of at
least a 1 percent difference in the calculation of the relevant state
budget before submitting this information to EPA for review.

EPA is therefore accepting for review information provided in comments
on this rulemaking specifically addressing the following topics for
specific electric generating units:

(1) Post-combustion pollution control equipment (such as SCRs and FGDs)
assumed in the final Transport Rule analyses to be present by 2012 at
the unit in question; and/or

(2) Immediate-term (i.e., binding on 2012) operational requirements
necessitating non-economic generation at the unit in question, including
data that demonstrate why the unit in question is required to generate
in the immediate term for reasons other than the regional economic sale
of electricity, and how often during the ozone season and during the
calendar year that such non-economic generation is necessitated from
that unit.

EPA will review information provided in comments addressing the topics
described above and will determine if any of the information merits a
subsequent proposal of revisions to the Transport Rule programs beyond
the actions presented in this proposal.

B.  Allowance Allocation Revisions to Units Covered by Existing Utility
Consent Decrees

After the final Transport Rule was published, EPA determined that while
the state budgets accurately incorporated the emission reduction
requirements of existing utility consent decrees, the unit-level
allowance allocations under the Transport Rule FIPs did not properly
account for provisions in those consent decrees that effectively require
the surrender, or restrict the trading, of “excess” Transport Rule
allowances.  As a result, Transport Rule allowance allocations to
certain units may unintentionally reduce the availability of some of
those allowances to other sources, given the restrictions on the use of
those allowances by the initial recipient unit imposed by the applicable
consent decree.

In today’s action, EPA is proposing to add a constraint on Transport
Rule unit-level allowance allocations designed to reflect the maximum
allowable emissions at the units affected by existing utility consent
decrees which contain annual tonnage limits and require the surrender or
restrict trading of Transport Rule allowances allocated in excess of
annual tonnage limits.  See “Assessment of Impact of Consent Decree
Annual Tonnage Limits on Transport Rule Allocations TSD” in the docket
for this rulemaking for information on the consent decrees covered by
the proposed addition of the new constraint for purposes of determining
unit-level allocations.

The addition of this constraint would align unit level allocations for
units described in several existing federally-enforceable consent
decrees with the annual tonnage limits in those decrees.  This
constraint would prevent heat input-based allocations from exceeding the
terms of federally-enforceable consent decrees that contain annual
tonnage limits for SO2 and/or NOX.  Because existing consent decrees
that establish annual tonnage limits for SO2 and/or NOX do so at the
system or facility level, EPA calculated unit-level annual tonnage limit
equivalents (unit-level caps) for purposes of allocating allowances to
individual units.  EPA is not seeking comment on any elements of the
allocation methodology finalized in the final Transport Rule (76 FR
48288-90).  Rather, EPA is seeking comment only on the addition of a
unit-level consent decree constraint and unit-level cap apportionment
methodology.

The proposed additional constraint would affect unit-level allocations
in six states -- Alabama, Indiana, Kansas, Kentucky, Ohio, and Tennessee
-- with units subject to existing federally-enforceable consent decree
annual tonnage limits.  These consent decree requirements have already
been accounted for in the determination of budgets for these states.
EPA is proposing to establish unit-level caps for 82 units covered by
annual tonnage limits in federally-enforceable consent decrees in these
six states.  The addition of this constraint would not alter any state
budget.  This additional constraint also would have no impact on
existing unit-level allocations in states that do not contain units
covered by a federally-enforceable consent decree with annual tonnage
limits.

EPA is proposing to revise the Transport Rule unit-level allocations for
the specific units subject to these consent decrees, such that allowance
allocations would be constrained by both historical emissions (as
described in the final Transport Rule (76 FR 48290)) and a unit-level
cap derived from the annual tonnage limit in the federally-enforceable
consent decree.  Although these revisions would not alter the state
budgets, they would have the effect of increasing the number of
allowances within the budget that are available for use for compliance
purposes and that would not otherwise be available without this proposed
change to the allocation of allowances –- such that the total number
of allowances available would equal the state’s emission budget, as
intended.  These proposed revisions are thus intended to revise the
application of the final Transport Rule’s unit-level allowance
allocation methodology to enable the proper implementation of state
budgets under the programs.  While EPA intends to perform this revision
to benefit program implementation, EPA does not believe resolution of
this issue is a necessary precondition for successful implementation of
and compliance with the Transport Rule programs in 2012, as
notwithstanding these proposed revisions, EPA will still be able to
distribute 99.7 percent of all existing unit allowances under the state
budgets established in the final Transport Rule by that rule’s
November 7 deadline.  See section IV of this preamble for further
information about allowance recordation.

EPA calculated unit-level caps for each unit subject to an SO2 and/or
NOX annual tonnage limit contained in a federally-enforceable consent
decree.  A unit-level cap is an apportionment of the applicable system-
or facility-wide consent decree annual tonnage limit.  The apportionment
of a system- or facility-wide consent decree annual tonnage limit to a
unit level is solely for the purposes of Transport Rule allocations and
does not modify, or create additional, consent decree requirements or
limitations.

EPA is not proposing to limit allocations to units covered by consent
decrees that do not contain annual SO2 and or NOX annual tonnage limits.
 The Agency determined that calculation of unit-level caps where annual
tonnage limits do not exist would require the use of unit-level
projections whose application in setting unit-level allocations would be
difficult to support and that, in any event, adjustment of unit—level
allocations using such unit-level caps would not be necessary.
Calculating a unit-level cap from other consent decree directives would
require projections about future utilization and emissions performance
of each unit involved, increasing the complexity and uncertainty of the
approach.  Further, EPA believes that there are few Transport Rule
allowances that might be rendered unavailable for compliance by the
consent decrees that contain trading restrictions or allowance surrender
requirements but that do not contain annual tonnage limits.

EPA is proposing to follow a two-step methodology to identify the
specific unit-level allocation constraints that would be associated with
this proposed additional constraint.  First, EPA would determine if the
annual tonnage limit in an existing federally-enforceable consent decree
that is already reflected in a state budget is more restrictive than the
unit-level allocations under the Transport Rule by comparing the
federally-enforceable consent decree annual tonnage limits for calendar
year 2012 and thereafter to aggregate unit-level allocations (as
determined using the approach finalized in the final Transport Rule) for
all units affected by the annual tonnage limit.  If in 2012 or
thereafter the collective unit-level allocations are greater than the
federally-enforceable consent decree annual tonnage limit, EPA would
apply unit-level caps equal, in aggregate, to the federally-enforceable
consent decree annual tonnage limit.

If a unit is shut down by a federally-enforceable consent decree or, in
the case of SO2, repowers to natural gas or shuts down, the unit-level
cap would be calculated as zero in any year following the required shut
down or repower when the unit would otherwise receive allocations using
the approach in the final Transport Rule (76 FR 48287 and 48289-90).

Second, EPA would calculate unit-level caps for 2012 and thereafter on
Transport Rule allowances for each unit covered by a system- or
facility-wide annual tonnage limit in a federally-enforceable consent
decree that is more restrictive than current allocations for the units
involved.  To accomplish this, EPA would first calculate a ratio,
expressed as a percentage, comparing the annual tonnage limit in the
federally-enforceable consent decree to the aggregate allocations listed
in the “Final Transport Rule Unit Level Allocations under the FIP” (
 HYPERLINK "http://www.epa.gov/crossstaterule/actions.html"
http://www.epa.gov/crossstaterule/actions.html ) for units covered by
the federally-enforceable consent decree annual tonnage limit to the
annual tonnage limit.  EPA would then multiply this ratio by the
unit-level allocation listed in the “Final Transport Rule Unit Level
Allocations under the FIP” (  HYPERLINK
"http://www.epa.gov/crossstaterule/actions.html"
http://www.epa.gov/crossstaterule/actions.html ) for each unit involved.
 The allocations for a given year would be limited to this unit-level
cap.  As noted above, in some situations the unit level cap for a 2012
or thereafter would be zero if a federally-enforceable consent decree
requires the shutdown or repowering of a unit.

An example of how EPA would determine unit level caps follows:

Step 1 – EPA determines that facility ABC consists of two units
subject to both a federally-enforceable consent decree annual tonnage
limit and the Transport Rule NOX annual program.  The consent decree
system-wide annual tonnage limit is 3,000 tons in calendar year 2012.
The NOX allowance heat input-based allocation (as described in the final
Transport Rule (76 FR 48288-90)) for the two units in calendar year 2012
is 4,000 allowances to Unit 1 and 2,000 allowances to Unit 2 – a total
of 6,000 allowances.  Because the total of the allowances allocated to
the two units is higher than the annual tonnage limit, EPA needs to
calculate unit-level caps for Unit 1 and Unit 2.

Step 2a – The consent decree system-wide annual tonnage limit of 3,000
tons is divided by the system-wide heat input-based allocations of 6,000
tons resulting in a ratio of 0.5, or 50 percent.

Step 2b – EPA calculates the unit-level cap for Unit 1 as 4,000
allowances x 50 percent, or 2,000 allowances, and for Unit 2 as 2,000
allowances x 50 percent, or 1,000 allowances.

EPA would apply this additional unit-level constraint when calculating
existing unit-level allocations under the final Transport Rule FIPs.
This additional unit level constraint would be applied in steps 9 and 10
of the methodology described in the preamble to the final Transport Rule
(76 FR 48290).  This additional constraint would be applied in step 9 to
limit allocations to existing units covered by consent decrees.  This
constraint would be applied in step 10 to ensure that any allowances
that cannot be allocated to existing units (because all existing units
are subject to either the constraint on maximum historical emissions or
this additional constraint) would be directed to the state’s new unit
set aside.  For example, EPA has determined that, if this additional
constraint is finalized as proposed, all the units in the state of
Tennessee would be constrained by either historical emissions or a
unit-level cap for the Transport Rule SO2 Group 1 program in calendar
years 2013, 2018, 2019, and each year thereafter.  As described above,
the new unit set aside for the state of Tennessee would increase in
2013, 2018, 2019, and each year thereafter, by 8,460, 3,173 and 5,225
tons respectively.

EPA is not seeking comment on any aspects of the allocation methodology
in the final Transport Rule (76 FR 48290).  EPA is only seeking comment
on the addition of the constraint described above to steps 9 and 10 of
that methodology.  See “Assessment of Impact of Consent Decree Annual
Tonnage Limits on Transport Rule Allocations TSD” in the docket for
this rulemaking for further information on the proposed addition of the
new constraint for purposes of determining unit-level allocations.

C. Amend the assurance penalty provisions to make them effective
starting in 2014

EPA is also proposing in this action to amend the effective date of the
Transport Rule assurance provisions to make them effective beginning on
January 1, 2014.  During outreach discussions with various stakeholders,
the application of assurance penalties at the outset of the program has
been raised as a major concern for compliance and market development in
the early years of the program.  Several stakeholders have expressed
concern that Transport Rule allowance market development may be delayed
by uncertainty over how each state will transition from 2010 and 2011
emission levels to meet the projected Transport Rule assurance levels in
2012 and 2013.

Under the assurance provisions, a state’s emissions for any control
period in a given year must not exceed the state assurance level, i.e.,
the state budget plus the state’s variability limit.  In order to
implement this requirement, EPA first determines whether, for the
control period, any state’s total emissions exceeded the state’s
assurance level.  If a state had emissions exceeding the state assurance
level, then EPA applies additional criteria to determine which owners
and operators of units in the state will be subject to the assurance
penalty, which is a requirement to surrender additional allowances.  In
applying the additional criteria, EPA identifies which groups of units
with a common designated representative (DR) in the state had emissions
exceeding the respective common DR’s share of the state assurance
level, and calculates what percentage each such group’s emissions
above the common DR’s share comprise of the state’s emissions above
the state assurance level.  The assurance penalty applied to the owners
and operators of each of those groups of units is the surrender of an
amount of allowances equal to the state’s emissions above the state
assurance level multiplied by the group’s percentage and multiplied by
two (in order to reflect the penalty of two allowances for each ton of
the state’s excess emissions).  EPA implements the assurance penalty
provisions through a series of notices of data availability that make
available the necessary calculations and provide an opportunity for
public objections to the calculations.  The requirements that owners and
operators comply with the assurance provisions, including where
appropriate the assurance penalty, and the procedures followed by the
Administrator are set forth in 40 CFR 97.406(c)(2) and 97.425 (for the
TR NOX annual program), 97.506(c)(2) and 97.525 (for the TR NOX ozone
season program), 97.606(c)(2) and 97.625 (for the TR SO2 Group 1
program), and 97.706(c)(2) and 97.725 (for the TR SO2 Group 2 program).

EPA proposes to determine that amending the assurance provisions to take
effect starting in 2014 is appropriate.  EPA believes that a limited
postponement of the effectiveness of these provisions is justified in
order to smooth the transition from the existing CAIR programs to the
new Transport Rule programs.

In line with the Court’s remand of CAIR, EPA designed the Transport
Rule to achieve necessary emission reductions by relevant NAAQS
attainment deadlines and to ensure that necessary reductions will be
achieved within each covered state.  As explained in the final Transport
Rule, EPA determined that it was appropriate for the Transport Rule
programs to address emissions in 2012 and beyond in order to ensure that
the deadlines in the rule were aligned, as legally required, with the
downwind nonattainment deadlines (76 FR 48277-48279).  CAIR remains in
effect to address emissions through the end of the 2011 control periods,
and the Transport Rule programs address emissions in 2012 and beyond.

EPA took several steps in the final Transport Rule to ease the
transition from the CAIR programs to the Transport Rule trading
programs.

The Transport Rule maintains programmatic elements that were
successfully implemented and recognizable to sources from compliance
experiences under CAIR while also addressing that rule’s legal
shortcomings identified by the Court.  Under both CAIR and the Transport
Rule, individual units have the flexibility to supplement their own
emission reductions with the acquisition from the marketplace of any
additional allowances needed to cover emissions under the Transport Rule
programs.  Robust markets (e.g., markets with a high level of liquidity
and accessibility of price information) for the CAIR annual NOX, CAIR
ozone-season NOX, and Acid Rain (SO2) program allowances have been in
existence for many years.  Sources covered by CAIR have relied on the
availability of these robust markets when developing compliance plans.
The Transport Rule (TR) creates new TR SO2 Group 1, TR SO2 Group 2, TR
NOX, and TR ozone-season NOX allowances.  Markets for these allowances
are developing now, and EPA is beginning to record the allowances in
allowance accounts and introduce the allowances into the marketplace
over a year before the Transport Rule programs’ first compliance
deadlines (December 1, 2012, for the 2012 ozone-season NOX program, and
March 1, 2013, for the 2012 annual NOX and SO2 programs).  However, with
the allocation revisions proposed in this rulemaking and the potential
for additional revisions based on additional information that might be
submitted in response to this rulemaking, some allowances would be
recorded and introduced into the marketplace at later dates.

Based on observed compliance planning behavior among sources
anticipating the 2012 control periods, and in light of the proposed
revisions in this rulemaking and the potential for additional revisions
based on additional information, EPA believes that amending the
effective date of the assurance provisions to apply in 2014 would ease
the transition from CAIR to Transport Rule compliance for parties across
the board by promoting the liquidity of, and accessibility of price
information in, new Transport Rule allowance markets and instilling
confidence that utilities can flexibly comply through a variety of
unit-level operational strategies that are not limited by initial
Transport Rule unit-level allowance allocations.

EPA believes that this change would accelerate the development of robust
Transport Rule allowance markets and facilitate a smooth transition to
the Transport Rule programs.  If, in response to concerns about when
robust markets will develop, utilities were to artificially constrain
2012 operational plans to not exceed initially allocated allowances, the
volume of early trading activity might be unnecessarily limited.  Early
trading activity is important for demonstrating market liquidity and
assisting in price discovery to inform compliance planning by affected
sources.  Actions by utilities to limit early trading activity,
therefore, could have negative impacts not only on those utilities, but
on all participants in the Transport Rule trading programs.  EPA
believes that amending the effectiveness of the assurance provisions in
2012 and 2013 would encourage greater confidence among utilities for
engaging immediately in cost-effective compliance planning that takes
into account the flexibility of a robust market for acquiring allowances
to cover emissions to the extent use of allowances is the most economic
approach for compliance under the Transport Rule programs.

	Amending the assurance provisions would not affect, in any way, the
requirements of the rule in 2014 and beyond.  EPA is proposing only a
short postponement of the assurance penalty provisions to ensure a
smooth transition from CAIR to the Transport Rule programs.  EPA
believes that, notwithstanding postponement of the assurance penalty
provisions, the states covered by the Transport Rule programs will still
achieve the emission reductions in 2012 and 2013 necessary to eliminate
each state’s significant contribution to nonattainment and
interference with maintenance identified in the final Transport Rule
(with the revisions included in this proposal).  The highly detailed
state-specific bases on which individual state budgets were determined
using the approach and methodologies developed in the final Transport
Rule, and included in the record for the Transport Rule, together with
the derivation of the variability limits from historic data reflecting
state-level year-to-year variation in power sector emissions, support
EPA’s belief.  EPA noted in the Transport Rule proposal that knowledge
about installed air pollution control equipment“[t]he locations of
existing and planned air pollution control retrofits on EGUs are known,
and this knowledge “…provides greater certainty of where [near-term]
reductions will occur and how these reductions should impact air quality
in downwind areas... Consequently, EPA believes that there is a high
level of certainty that emissions reductions projected for 2012–2013
with interstate trading would be achieved within the states where they
are projected to occur, making imposition of the assurance provisions
during 2012–2013 unnecessary” (75 FR 45314-45315).

In the final Transport Rule, EPA did not disavow the proposal’s
rationale for starting the assurance provisions in 2014; however, the
Agency chose to make the assurance provisions effective starting in 2012
with the intent to err on the side of providing “even further
assurance” of securing the targeted emission reductions in upwind
states (76 FR 48296).  EPA, therefore, has never concluded that starting
the assurance provisions in 2014 would fail to meet the 110(a)(2)(D)
obligation to eliminate significant contribution or interference with
maintenance in 2012 and 2013.  Moreover, this proposal’s revisions to
pollution control technology assumptions involve only 17 units of the
approximately 3,600 units whose known controls inform the Transport Rule
budgets.  EPA continues to believe that, because the immediate-term
Transport Rule state budgets for 2012 and 2013 (in contrast with the
budgets for 2014 and thereafter) are uniquely based on the ability of
the known existing fleet of EGUs and known existing or
soon-to-be-installed pollution control equipment to deliver emission
reductions in specific upwind states, there is a high level of certainty
that the state assurance levels will not be exceeded in 2012 and 2013.
EPA believes that this near-term certainty allows the Agency to postpone
the effectiveness of the Transport Rule’s assurance penalty provisions
until 2014 without sacrificing the Transport Rule’s ability to ensure
necessary near-term emission reductions in each upwind state, supported
by the calculation of each upwind state’s emission reduction potential
(informing the determination of state budgets) under the rule.

With the proposed, temporary postponement of the assurance provisions,
EPA believes that, in the near term (as well as in the long term),
Transport Rule allowance markets would provide compliance flexibility at
the unit level and incentivize cost-effective, unit-level emission
reductions.  In the aggregate, these flexibilities and reductions at the
unit level would result in achievement in each state of the state-level
cost-effective emission reductions projected in the final Transport Rule
(with the revisions included in this proposal).  In other words, EPA is
only proposing to postpone temporarily the assurance penalty provisions
to address the ability of owners and operators of individual units to
make the cost-effective emission reductions in 2012 and 2013 on which
EPA’s state-level emission projections relied in determining each
state’s amount of significant contribution and interference with
maintenance under the final Transport Rule.  Consequently, EPA believes
that this proposal to postpone temporarily the assurance provisions will
not yield substantially different state-level emission outcomes under
the Transport Rule programs in 2012 or 2013 than the state-level
emissions reflected in the state-specific budgets and assurance levels
in the respective Transport Rule program.

EPA believes that a two year postponement of the effective date of the
assurance penalty provisions is sufficient to guarantee robust market
development, is consistent with the D.C. Circuit's decision leaving CAIR
in place during the transition to a new rule, and will not interfere
with the air quality objectives of the program.  EPA does not, at this
time, believe a longer postponement would be justified.  EPA requests
comment on all aspects of this proposal including the length of the
postponement.

Since under this proposal, the assurance provisions would continue to be
effective for 2014 and thereafter, EPA maintains that the Transport
Rule, revised consistent with this proposal, would continue to address
and meet the Court’s concerns in North Carolina.

Any revisions to state budgets from this proposal that are finalized
would also include corresponding revisions to the relevant assurance
levels that would apply in 2014 with this proposed postponement.

D. Correct Typographical Errors

EPA is proposing to correct typographical errors in certain sections of
rule text in parts 52 and 97 in the final Transport Rule.  Specifically,
EPA proposes to change an erroneous reference in 40 CFR 52.39(i)(1)(ii)
to “TR SO2 Group 1 allowances” to refer instead to “TR SO2 Group 2
allowances” and to redesignate sections 52.745 and 52.746 in 40 CFR
part 52, subpart O as sections 52.731 and 52.732 and redesignate section
52.2241 in 40 CFR part 52, subpart VV as section 52.2441.  EPA also
proposes to remove some redundant words in 40 CFR 97.406(e)(2),
97.606(e)(2), and 97.706(E)(2).  EPA requests comment concerning only
the specific corrections and not concerning any other aspect of the
provisions in which these corrections would be made.

IV. Recordation of Transport Rule Allowances

Impacts on Allocations to Existing Units

	EPA recognizes that successful implementation of the Transport Rule
programs in 2012 depends in part on the development of robust allowance
markets, in which covered sources can locate and purchase any additional
allowances necessary to comply with the rule.  As such, EPA intends to
allocate as many 2012 Transport Rule allowances as possible as early as
possible to assist implementation and compliance planning.  While none
of the actions presented in this proposal would reduce any state’s
total number of allowances issued under that state’s budgets, some of
the actions presented in this proposal would slightly alter unit level
allocations.  For example, as described above, allocations to certain
units covered by consent decrees would be limited.  EPA does not believe
it would be prudent or reasonable to record in allowance accounts,
before taking final action on this proposal, allowance allocations in
excess of the amount any given unit would receive if this proposal is
finalized as proposed.  EPA proposes towill record by November 7, 2011
for each unit, the lesser of the amount that unit would receive under
the allocation scheme finalized in the Transport Rule or the amount the
unit would receive if this proposal is finalized as proposed.  This
approach would will allow EPA to allocate over 99.7 percent of all
existing unit allowances under the state budgets established in the
final Transport Rule by that rule’s November 7 deadline (76 FR 48398,
48424, 48450, and 48475, August 8, 2011).  During this timeframe, the
only units that will receive substantially fewer allowances under this
approach than under the allocations as finalized in the Transport Rule
are units already subject to legally binding consent decrees that limit
their emissions; therefore, EPA does not believe this approach will have
any negative impact on compliance planning at sources in anticipation of
the implementation of the Transport Rule programs.  EPA is proposing to
allocate the remaining 0.3 percent of the allowances no later than 7
days after finalization of this action is legally effective.  In
addition, if EPA finalizes the proposed actions that yield increases to
state budgets, the Agency will act swiftly to record these additional
allowances and thereby put them into the marketplace as quickly as
possible following this rule’s finalization, so that the allowances
would be available significantly in advance of the compliance deadlines
for the 2012 control periods (i.e., the allowance transfer deadlines of
December 1, 2012 (for the NOX ozone season program) and March 1, 2013
(for the NOX and SO2 annual programs)).  See the “Transport Rule
Allowance Recordation Schedule TSD” in the docket for this rulemaking
for a demonstration of how many allowances EPA will record by November
7, 2011 in each state.

V. Statutory and Executive Order Reviews

A.  Executive Order 12866: Regulatory Planning and Review and Executive
Order 13563: Improving Regulation and Regulatory Review

Under Executive Order 12866   SEQ CHAPTER \h \r 1 (58 FR 51735, October
4, 1993), this action is a "significant regulatory action.”   SEQ
CHAPTER \h \r 1   Accordingly, EPA submitted this action to the Office
of Management and Budget (OMB) for review under Executive Orders 12866
and 13563 (76 FR 3821, January 21, 2011) and any changes made in
response to OMB recommendations have been documented in the docket for
this action.

B.  Paperwork Reduction Act

This action does not impose any new information collection burden. This
action makes relatively minor revisions to the emission budgets and
allowance allocations or allowance allocations only in certain states in
the final Transport Rule and corrects minor technical errors which are
ministerial.  However, the Office of Management and Budget (OMB) has
previously approved the information collection requirements contained in
the final Transport Rule under the provisions of the Paperwork Reduction
Act, 44 U.S.C. 3501 et seq. and has assigned OMB control number
2060-0667. The OMB control numbers for EPA's regulations in 40 CFR are
listed in 40 CFR part 9.

C.  Regulatory Flexibility Act

The Regulatory Flexibility Act (RFA) generally requires an agency to
prepare a regulatory flexibility analysis of any rule subject to notice
and comment rulemaking requirements under the Administrative Procedure
Act or any other statute unless the agency certifies that the rule will
not have a significant economic impact on a substantial number of small
entities.  Small entities include small businesses, small organizations,
and small governmental jurisdictions.

For purposes of assessing the impacts of today’s rule on small
entities, small entity is defined as: (1) a small business as defined by
the Small Business Administration’s (SBA) regulations at 13 CFR
121.201; (2) a small governmental jurisdiction that is a government of a
city, county, town, school district or special district with a
population of less than 50,000; and (3) a small organization that is any
not-for-profit enterprise which is independently owned and operated and
is not dominant in its field.

After considering the economic impacts of today’s action on small
entities, I certify that this action will not have a significant
economic impact on a substantial number of small entities.  The small
entities directly regulated by this action are electric power generators
whose ultimate parent entity has a total electric output of 4 million
megawatt-hours (MWh) or less in the previous fiscal year.  We have
determined that the changes considered in this proposed rulemaking pose
no additional burden for small entities.  The proposed revision to the
new unit set-asides in Arkansas and Texas would yield an extremely small
change in unit-level allowance allocations to existing units, including
small entities, such that it would not affect the analysis conducted on
small entity impacts under the finalized Transport Rule.  In all other
states, the revisions proposed in this rulemaking would yield additional
allowance allocations to all units, including small entities, without
increasing program stringency, such that it is not possible for the
impact to small entities to be any larger than that already considered
and reviewed in the finalized Transport Rule.

D. Unfunded Mandates Reform Act

This action does not contain a Federal mandate that may result in
expenditures of $100 million or more for State, local, and tribal
governments, in the aggregate, or the private sector in any one year.
This action is increasing the budgets and increasing the total number of
allowances or maintaining the same budget but revising unit-level
allocations in several other states in the Transport Rule. Thus, this
rule is not subject to the requirements of sections 202 or 205 of UMRA.

In developing the final Transport Rule, EPA consulted with small
governments pursuant to a plan established under section 203 of UMRA to
address impacts of regulatory requirements in the rule that might
significantly or uniquely affect small governments.

E.  Executive Order 13132:  Federalism

This action does not have federalism implications.  It will not have
substantial direct effects on the States, on the relationship between
the national government and the States, or on the distribution of power
and responsibilities among the various levels of government, as
specified in Executive Order 13132.  This action makes relatively minor
revisions to the emissions budgets and allowance allocations or
allowance allocations only in certain states in the final Transport
Rule. Thus, Executive Order 13132 does not apply to this rule.   EPA did
provide information to state and local officials during development of
both the proposed and final Transport Rule.

F.  Executive Order 13175:  Consultation and Coordination with Indian
Tribal Governments

This action does not have tribal implications, as specified in Executive
Order 13175 (65 FR 67249, November 9, 2000).  This action makes
relatively minor revisions to the emissions budgets and allowance
allocations in several states in the final Transport Rule and helps ease
the transition from CAIR. Indian country new unit set-asides will
increase slightly or remain unchanged in the states affected by this
action. Thus, Executive Order 13175 does not apply to this action.  EPA
consulted with tribal officials during the process of promulgating the
final Transport Rule to permit them to have meaningful and timely input
into its development.

G.  Executive Order 13045:  Protection of Children from Environmental
Health and Safety Risks

This action is not subject to EO 13045 (62 FR 19885, April 23, 1997)
because it is not economically significant as defined in EO 12866, and
because the Agency does not believe the environmental health or safety
risks addressed by this action present a disproportionate risk to
children. Analyses by EPA that show how the emission reductions from the
strategies in the final Transport Rule will further improve air quality
and children’s health can be found in the final Transport Rule RIA.

H.  Executive Order 13211:  Actions Concerning Regulations that
Significantly Affect Energy Supply, Distribution, or Use

This action is not a “significant energy action” as defined in
Executive Order 13211 (66 FR 28355 (May 22, 2001)), because it is not
likely to have a significant adverse effect on the supply, distribution,
or use of energy.  EPA believes that there is no meaningful impact to
the energy supply beyond that which is reported for the Transport Rule
program in the final Transport Rule.

I.  National Technology Transfer and Advancement Act

Section 12(d) of the National Technology Transfer and Advancement Act of
1995 (“NTTAA”), Public Law No. 104-113, 12(d) (15 U.S.C. 272 note)
directs EPA to use voluntary consensus standards in its regulatory
activities unless to do so would be inconsistent with applicable law or
otherwise impractical. Voluntary consensus standards are technical
standards (e.g., materials specifications, test methods, sampling
procedures, and business practices) that are developed or adopted by
voluntary consensus standards bodies.  NTTAA directs EPA to provide
Congress, through OMB, explanations when the Agency decides not to use
available and applicable voluntary consensus standards.

As described in section XII.I of the preamble to the final Transport
Rule, the Transport Rule program requires all sources to meet the
applicable monitoring requirements of 40 CFR part 75. Part 75 already
incorporates a number of voluntary consensus standards. This action,
however, does not involve technical standards. Therefore, EPA did not
consider the use of any voluntary consensus standards.

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

Executive Order (EO) 12898 (59 FR 7629 (Feb. 16, 1994)) establishes
federal executive policy on environmental justice.  Its main provision
directs federal agencies, to the greatest extent practicable and
permitted by law, to make environmental justice part of their mission by
identifying and addressing, as appropriate, disproportionately high and
adverse human health or environmental effects of their programs,
policies, and activities on minority populations and low-income
populations in the United States.

EPA has determined that this action will not have disproportionately
high and adverse human health or environmental effects on minority or
low-income populations because it does not affect the level of
protection provided to human health or the environment.  EPA believes
that the vast majority of communities and individuals in areas covered
by the Transport Rule program inclusive of this action, including
numerous low-income, minority, and tribal individuals and communities in
both rural areas and inner cities in the eastern and central U.S., will
see significant improvements in air quality and resulting improvements
in health. EPA’s assessment of the effects of the final Transport Rule
program on these communities is detailed in section XII.J of the
preamble to the final Transport Rule.

List of Subjects

40 CFR Part 52

Administrative practice and procedure, Air pollution control,
Incorporation by reference, Intergovernmental relations, Nitrogen
oxides, Ozone, Particulate matter, Regional haze, Reporting and
recordkeeping requirements, Sulfur dioxide.

40 CFR Part 97

Administrative practice and procedure, Air pollution control, Electric
utilities, Nitrogen oxides, Reporting and recordkeeping requirements,
Sulfur dioxide.

Revisions to Federal Implementation Plans to Reduce Interstate
Transport of Fine Particulate Matter and Ozone

(page 83 of 84)

Dated: ____________________

______________________________________________________

Lisa P. Jackson

Administrator.

For the reasons set forth in the preamble, parts 52 and 97 of chapter I
of title 40 of the Code of Federal Regulations are proposed to be
amended as follows:

PART 52—[AMENDED]

1. The authority citation for Part 52 continues to read as follows:

Authority: 42 U.S.C. 7401, et seq.

Subpart A--General Provisions

2. Section 52.39 is amended by revising paragraph

(i)(1)(ii) by removing the words "Group 1" and adding, in

their place, the words "Group 2".

Subpart O--Illinois

3. Section 52.745 is redesignated as §52.731.

4. Section 52.746 is redesignated as §52.732.

Subpart VV--Virginia

5. Section 52.2241 is redesignated as §52.2441.

PART 97—[AMENDED]

6. The authority citation for Part 97 continues to read as follows:

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

7. Section 97.406 is amended by:

a. Revising paragraph (c)(3) by removing the words “paragraphs (c)(1)
and (2)”, adding in their place the words “paragraph (c)(1)”, and
designating the first sentence as paragraph (i);

b. Adding a new paragraph (c)(3)(ii); and

c. Revising paragraph (e)(2) by removing the words “or or” and
adding, in their place, the word “or” to read as follows:

§ 97.406  Standard requirements.

*  *  *  *  *  *

(c) *  *  *

(3) *  *  *

(ii) A TR NOX Annual unit shall be subject to the requirements under
paragraph (c)(2) of this section for the control period starting on the
later of January 1, 2014 or the deadline for meeting the unit's monitor
certification requirements under §97.430(b) and for each control period
thereafter.

8. Section 97.410 is revised to read as follows:

§ 97.410  State NOX Annual trading budgets, new unit set-asides,
Indian country new unit set-aside, and variability limits.

(a)  The State NOX Annual trading budgets, new unit set-asides, and
Indian country new unit set-asides for allocations of TR NOX Annual
allowances for the control periods in 2012 and thereafter are as
follows:

State	NOX Annual trading budget (tons)*

for 2012 and 2013	New unit set-aside (tons)

for 2012 and 2013	Indian country new unit set-aside (tons)

for 2012 and 2013

	Alabama	72,691	1,454	---

Georgia	62,010	1,240	---

Illinois	47,872	3,830	---

Indiana	109,726	3,292	---

Iowa	38,335	729	38

Kansas	30,714	583	31

Kentucky	85,086	3,403	---

Maryland	16,633	333	---

Michigan	65,421	1,243	65

Minnesota	29,572	561	30

Missouri	52,374	1,571	---

Nebraska	30,039	1772	30

New Jersey	7,686	154	---

New York	21,028	400	21

North Carolina	50,587	2,984	51

Ohio	92,703	1,854	---

Pennsylvania	119,986	2,400	---

South Carolina	32,498	617	33

Tennessee	35,703	714	---

Texas	134,970	5,264	135

Virginia	33,242	1,662	---

West Virginia	59,472	2,974	---

Wisconsin	34,101	2,012	34

State	NOX Annual trading budget (tons)*

for 2014 and thereafter	New unit set-aside (tons)

for 2014 and thereafter	Indian country new unit set-aside (tons)

for 2014 and thereafter

	Alabama	71,962	1,439	---

Georgia	40,540	811	---

Illinois	47,872	3,830	---

Indiana	108,424	3,253	---

Iowa	37,498	712	38

Kansas	25,560	485	26

Kentucky	77,238	3,090	---

Maryland	16,574	331	---

Michigan	63,040	1,198	63

Minnesota	29,572	561	30

Missouri	48,717	1,462	---

Nebraska	30,039	1,772	30

New Jersey	7,378	148	---

New York	21,028	400	21

North Carolina	41,553	2,451	42

Ohio	87,493	1,750	---

Pennsylvania	119,194	2,384	---

South Carolina	32,498	617	33

Tennessee	19,337	387	---

Texas	134,970	5,264	135

Virginia	33,242	1,662	---

West Virginia	54,582	2,729	---

Wisconsin	32,871	1,939	33

* Each trading budget includes the new unit set-aside and, where
applicable, the Indian country new unit set-aside and does not include
the variability limit.

(b) The States’ variability limits for the State NOX Annual trading
budgets for the control periods in 2014 and thereafter are as follows:

State

Variability limits

for 2014 and thereafter

	Alabama	12,953

Georgia	7,297

Illinois	8,617

Indiana	19,516

Iowa	6,750

Kansas	4,601

Kentucky	13,903

Maryland	2,983

Michigan	11,347

Minnesota	5,323

Missouri	8,769

Nebraska	5,407

New Jersey	1,328

New York	3,785

North Carolina	7,480

Ohio	15,749

Pennsylvania	21,455

South Carolina	5,850

Tennessee	3,481

Texas	24,295

Virginia	5,984

West Virginia	9,825

Wisconsin	5,917

9. Section 97.425 is amended by, in paragraph (b)(1), removing the word
“2013” and adding, in its place, the word “2015”.

10. Section 97.506 is amended by:

a. Revising paragraph (c)(3) by removing the words “paragraphs (c)(1)
and (2)”, adding in their place the words “paragraph (c)(1)”, and
designating the first sentence as paragraph (i); and

b. Adding a new paragraph (c)(3)(ii) to read as follows:

§ 97.506  Standard requirements.

*  *  *  *  *  *

(c) *  *  *

(3) *  *  *

(ii) A TR NOX Ozone Season unit shall be subject to the requirements
under paragraph (c)(2) of this section for the control period starting
on the later of May 1, 2014 or the deadline for meeting the unit's
monitor certification requirements under §97.530(b) and for each
control period thereafter.

11. Section 97.510 is revised to read as follows:

§ 97.510  State NOX Ozone Season trading budgets, new unit
set-asides, Indian country new unit set-aside, and variability limits.

(a)  The State NOX Ozone Season trading budgets, new unit set-asides,
and Indian country new unit set-asides for allocations of TR NOX Ozone
Season allowances for the control periods in 2012 and thereafter are as
follows:

State	NOX Ozone Season trading budget (tons)*

for 2012 and 2013	New unit set-aside (tons)

for 2012 and 2013	Indian country new unit set-aside (tons)

for 2012 and 2013

	Alabama	31,746	635	---

Arkansas	15,037	752	---

Florida	28,644	544	29

Georgia	27,944	559	---

Illinois	21,208	1,697	---

Indiana	46,876	1,406	---

Kentucky	36,167	1,447	---

Louisiana	17,663	512	18

Maryland	7,179	144	---

Mississippi	12,296	234	12

New Jersey	3,974	79	---

New York	10,242	195	10

North Carolina	22,168	1,308	22

Ohio	40,063	801	---

Pennsylvania	52,201	1,044	---

South Carolina	13,909	264	14

Tennessee	14,908	298	---

Texas	64,418	2,513	64

Virginia	14,452	723	---

West Virginia	25,283	1,264	---

State	NOX Ozone Season trading budget (tons)*

for 2014 and thereafter	New unit set-aside (tons)

for 2014 and thereafter	Indian country new unit set-aside (tons)

for 2014 and thereafter

	Alabama	31,499	630	---

Arkansas	15,037	752	---

Florida	27,825	529	28

Georgia	18,279	366	---

Illinois	21,208	1,697	---

Indiana	46,175	1,385	---

Kentucky	32,674	1,307	---

Louisiana	17,663	512	18

Maryland	7,179	144	---

Mississippi	12,296	234	12

New Jersey	3,577	72	---

New York	10,242	195	10

North Carolina	18,455	1,089	18

Ohio	37,792	756	---

Pennsylvania	51,912	1,038	---

South Carolina	13,909	264	14

Tennessee	8,016	160	---

Texas	64,418	2513	64

Virginia	14,452	723	---

West Virginia	23,291	1,165	---

* Each trading budget includes the new unit set-aside and, where
applicable, the Indian country new unit set-aside and does not include
the variability limit.

(b) The States’ variability limits for the State NOX Ozone Season
trading budgets for the control periods in 2014 and thereafter are as
follows:

State

Variability limits

for 2014 and thereafter

	Alabama	6,615

Arkansas	3,158

Florida	5,843

Georgia	3,839

Illinois	4,454

Indiana	9,697

Kentucky	6,862

Louisiana	3,709

Maryland	1,508

Mississippi	2,582

New Jersey	751

New York	2,151

North Carolina	3,876

Ohio	7,936

Pennsylvania	10,902

South Carolina	2,921

Tennessee	1,683

Texas	13,528

Virginia	3,035

West Virginia	4,891

12. Section 97.525 is amended by, in paragraph (b)(1), removing the word
“2013” and adding, in its place, the word “2015”.

13. Section 97.606 is amended by:

a. Revising paragraph (c)(3) by removing the words “paragraphs (c)(1)
and (2)”, adding in their place the words “paragraph (c)(1)”, and
designating the first sentence as paragraph (i);

b. Adding a new paragraph (c)(3)(ii); and

c. Revising paragraph (e)(2) by removing the words “or or” and
adding, in their place, the word “or” to read as follows:

§ 97.606  Standard requirements.

*  *  *  *  *  *

(c) *  *  *

(3) *  *  *

(ii) A TR SO2 Group 1 unit shall be subject to the requirements under
paragraph (c)(2) of this section for the control period starting on the
later of January 1, 2014 or the deadline for meeting the unit's monitor
certification requirements under §97.630(b) and for each control period
thereafter.

14. Section 97.610 is revised to read as follows:

§ 97.610  State SO2 Group 1 trading budgets, new unit set-asides,
Indian country new unit set-aside, and variability limits.

(a)  The State SO2 Group 1 trading budgets, new unit set-asides, and
Indian country new unit set-asides for allocations of TR SO2 Group 1
allowances for the control periods in 2012 and thereafter are as
follows:

State	SO2 Group 1 trading budget (tons)*

for 2012 and 2013	New unit set-aside (tons)

for 2012 and 2013	Indian country new unit set-aside (tons)

for 2012 and 2013

	Illinois	234,889	11,744	---

Indiana	285,424	8,563	---

Iowa	107,085	2,035	107

Kentucky	232,662	13,960	---

Maryland	30,120	602	---

Michigan	229,303	4,357	229

Missouri	207,466	4,149	---

New Jersey	7,670	153	---

New York	30,852	586	31

North Carolina	136,881	10,813	137

Ohio	310,230	6,205	---

Pennsylvania	278,651	5,573	---

Tennessee	148,150	2,963	---

Virginia	70,820	2,833	---

West Virginia	146,174	10,232	---

Wisconsin	79,480	3,099	80

State	SO2 Group 1 trading budget (tons)*

for 2014 and thereafter	New unit set-aside (tons)

for 2014 and thereafter	Indian country new unit set-aside (tons)

for 2014 and thereafter

	Illinois	124,123	6,206	---

Indiana	161,111	4,833	---

Iowa	75,184	1,429	75

Kentucky	106,284	6,377	---

Maryland	28,203	564	---

Michigan	143,995	2,736	144

Missouri	165,941	3,319	---

New Jersey	5,574	111	---

New York	22,112	420	22

North Carolina	57,620	4,552	58

Ohio	137,077	2,742	---

Pennsylvania	112,021	2,240	---

Tennessee	58,833	1,177	---

Virginia	35,057	1,402	---

West Virginia	75,668	5,297	---

Wisconsin	47,883	1867	48

* Each trading budget includes the new unit set-aside and, where
applicable, the Indian country new unit set-aside and does not include
the variability limit.

(b) The States’ variability limits for the State SO2 Group 1 trading
budgets for the control periods in 2014 and thereafter are as follows:

State

Variability limits

for 2014 and thereafter

	Illinois	22,342

Indiana	29,000

Iowa	13,533

Kentucky	19,131

Maryland	5,077

Michigan	25,919

Missouri	29,869

New Jersey	1,003

New York	3,980

North Carolina	10,372

Ohio	24,674

Pennsylvania	20,164

Tennessee	10,590

Virginia	6,310

West Virginia	13,620

Wisconsin	8,619

15. Section 97.625 is amended by, in paragraph (b)(1), removing the word
“2013” and adding, in its place, the word “2015”.

16. Section 97.706 is amended by:

a. Revising paragraph (c)(3) by removing the words “paragraphs (c)(1)
and (2)”, adding in their place the words “paragraph (c)(1)”, and
designating the first sentence as paragraph (i);

b. Adding a new paragraph (c)(3)(ii); and

c. Revising paragraph (e)(2) by removing the words “or or” and
adding, in their place, the word “or” to read as follows:

§ 97.706  Standard requirements.

*  *  *  *  *  *

(c) *  *  *

(3) *  *  *

(ii) A TR SO2 Group 2 unit shall be subject to the requirements under
paragraph (c)(2) of this section for the control period starting on the
later of January 1, 2014 or the deadline for meeting the unit's monitor
certification requirements under §97.730(b) and for each control period
thereafter.

14. Section 97.710 is revised to read as follows:

§ 97.710  State SO2 Group 2 trading budgets, new unit set-asides,
Indian country new unit set-aside, and variability limits.

(a)  The State SO2 Group 2 trading budgets, new unit set-asides, and
Indian country new unit set-asides for allocations of TR SO2 Group 2
allowances for the control periods in 2012 and thereafter are as
follows:

State	SO2 Group 2 trading budget (tons)*

for 2012 and 2013	New unit set-aside (tons)

for 2012 and 2013	Indian country new unit set-aside (tons)

for 2012 and 2013

	Alabama	216,033	4,321	---

Georgia	158,527	3,171	---

Kansas	41,528	789	42

Minnesota	41,981	798	42

Nebraska	65,052	2,537	65

South Carolina	88,620	1,683	89

Texas	314,021	15,387	314

State	SO2 Group 2 trading budget (tons)*

for 2014 and thereafter	New unit set-aside (tons)

for 2014 and thereafter	Indian country new unit set-aside (tons)

for 2014 and thereafter

	Alabama	213,258	4,265	---

Georgia	95,231	1,905	---

Kansas	41,528	789	42

Minnesota	41,981	798	42

Nebraska	65,052	2,537	65

South Carolina	88,620	1,683	89

Texas	314,021	15,387	314

* Each trading budget includes the new unit set-aside and, where
applicable, the Indian country new unit set-aside and does not include
the variability limit.

(b) The States’ variability limits for the State SO2 Group 2 trading
budgets for the control periods in 2014 and thereafter are as follows:

State

Variability limits

for 2014 and thereafter

	Alabama	38,386

Georgia	17,142

Kansas	7,475

Minnesota	7,557

Nebraska	11,709

South Carolina	15,952

Texas	56,524

15. Section 97.725 is amended by, in paragraph (b)(1), removing the word
“2013” and adding, in its place, the word “2015”.

 Corporate Sustainability Report”, CPS Energy, 2010.  P.57.  Retrieved
from http://www.cpsenergy.com/files/Sustainability_Report.pdf

 Business Wire, (2006). NRG Announces Comprehensive Repowering
Initiative [Press release].  Retrieved from
http://phx.corporate-ir.net/phoenix.zhtml?c=121544&p=irol-newsArticle_Pr
int&ID=874575&highlight

 Further, EPA notes that the proposed rule text includes tables that are
complete in that they show, for each Transport Rule trading program,
both (i) the amounts for certain state budgets, new unit set-asides,
Indian country set-asides, and state variability limits that reflect
proposed revisions discussed in this notice; and (ii) the amounts for
other state budgets, new unit set-asides, Indian country set-asides, and
state variability limits amounts that do not reflect any proposed
revisions discussed in this notice.  Except as discussed below in this
section of the notice, EPA is not requesting comment on those budgets,
new unit set-asides, Indian country set-asides, and variability limits
that are shown in the proposed rule text tables but that do not reflect
the proposed revisions discussed in this notice.  For example, the
budget and new unit set-aside revisions discussed in this section of the
notice involve only a limited number of states (i.e., Arkansas, Florida,
Louisiana, Michigan, Mississippi, Nebraska, New Jersey, New York, Texas,
and Wisconsin).  Except as discussed below in this section of the
notice, EPA is not reopening, or requesting comment on, amounts in the
proposed rule text tables for any other states.  By further example,
this section of the notice discusses a revision of Arkansas’ new unit
set-aside, but not of Arkansas’ budget.  Except as discussed below in
this section of the notice, EPA is not requesting comment on the amount
of Arkansas’ budget.

*** E.O. 12866 Review – Draft – Do Not Cite, Quote, or Release
During Review***

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