[Federal Register Volume 86, Number 82 (Friday, April 30, 2021)]
[Rules and Regulations]
[Pages 23054-23235]
[FR Doc No: 2021-05705]

Vol. 86

Friday,

No. 82

April 30, 2021

Part II

Environmental Protection Agency

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40 CFR Parts 51, 52, 78, et al.

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

Federal Register / Vol. 86 , No. 82 / Friday, April 30, 2021 / Rules
and Regulations

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 51, 52, 78, and 97

[EPA-HQ-OAR-2020-0272; FRL-10021-34-OAR]
RIN 2060-AU84

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

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: The U.S. Environmental Protection Agency (EPA) is taking this
action to address interstate transport of ozone pollution under the
``good neighbor provision'' of the Clean Air Act (CAA). This final
action is taken in response to the United States Court of Appeals for
the District of Columbia Circuit's (D.C. Circuit) remand of the Cross-
State Air Pollution Rule (CSAPR) Update in Wisconsin v. EPA on
September 13, 2019. The CSAPR Update finalized Federal Implementation
Plans (FIPs) for 22 states to address their good neighbor obligations
for the 2008 ozone National Ambient Air Quality Standards (NAAQS). The
D.C. Circuit found that the CSAPR Update, which was published on
October 26, 2016 as a partial remedy to address upwind states'
obligations prior to the 2018 Moderate area attainment date under the
2008 ozone NAAQS, was unlawful to the extent it allowed those states to
continue their significant contributions to downwind ozone problems
beyond the statutory dates by which downwind states must demonstrate
their attainment of the air quality standards. On the same grounds, the
D.C. Circuit also vacated the CSAPR Close-Out in New York v. EPA on
October 1, 2019. This final rule resolves 21 states' outstanding
interstate ozone transport obligations with respect to the 2008 ozone
NAAQS.
    This action finds that for 9 of the 21 states for which the CSAPR
Update was found to be only a partial remedy (Alabama, Arkansas, Iowa,
Kansas, Mississippi, Missouri, Oklahoma, Texas, and Wisconsin), their
projected ozone precursor emissions in the 2021 ozone season and
thereafter do not significantly contribute to a continuing downwind
nonattainment and/or maintenance problem, and therefore the states'
CSAPR Update FIPs (or the SIPs subsequently approved to replace certain
states' CSAPR Update FIPs) fully address their interstate ozone
transport obligations with respect to the 2008 ozone NAAQS. This action
also finds that for the 12 remaining states (Illinois, Indiana,
Kentucky, Louisiana, Maryland, Michigan, New Jersey, New York, Ohio,
Pennsylvania, Virginia, and West Virginia), their projected 2021 ozone
season nitrogen oxides (NOX) emissions significantly
contribute to downwind states' nonattainment and/or maintenance
problems for the 2008 ozone NAAQS. In this final action, EPA is issuing
new or amended FIPs for these 12 states to replace their existing CSAPR
NOX Ozone Season Group 2 emissions budgets for electricity
generating units (EGUs) with revised budgets via a new CSAPR
NOX Ozone Season Group 3 Trading Program. EPA is requiring
implementation of the revised emission budgets beginning with the 2021
ozone season. Based on EPA's assessment of remaining air quality issues
and additional emission control strategies for EGUs and other emissions
sources in other industry sectors (non-EGUs), EPA is further
determining that these NOX emission reductions fully
eliminate these states' significant contributions to downwind air
quality problems for the 2008 ozone NAAQS. In this action, EPA is also
finalizing an error correction of its June 2018 approval of Kentucky's
good neighbor SIP.

DATES: This final rule is effective on June 29, 2021.

ADDRESSES: EPA has established a docket for this action under Docket ID
No. EPA-HQ-OAR-2020-0272. All documents in the docket are listed on the
www.regulations.gov website. Although listed in the index, some
information is not publicly available, e.g., Confidential Business
Information or other information whose disclosure is restricted by
statute. Certain other material, such as copyrighted material, is not
placed on the internet and will be publicly available only in hard copy
form. Publicly available docket materials are available electronically
through www.regulations.gov.

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

Preamble Glossary of Terms and Abbreviations

    The following are abbreviations of terms used in the preamble.

4-step good neighbor framework 4-step framework
AEO Annual Energy Outlook
AQAT Air Quality Assessment Tool
AQM TSD Air Quality Modeling Technical Support Document
CAA or Act Clean Air Act
CAIR Clean Air Interstate Rule
CAMx Comprehensive Air Quality Model with Extensions
CBI Confidential Business Information
CEMS Continuous Emission Monitoring System(s)
CFR Code of Federal Regulations
CMDb Control Measures Database
CMV Commercial Marine Vehicle
CoST Control Strategy Tool
CRA Congressional Review Act
CSAPR Cross-State Air Pollution Rule
EGU Electric Generating Unit
EISA Energy Independence and Security Act
EPA U.S. Environmental Protection Agency
FIP Federal Implementation Plan
FR Federal Register
HDGHG Greenhouse Gas Emissions Standards and Fuel Efficiency
Standards for Medium- and Heavy-Duty Engines and Vehicles
IC Internal Combustion
ICI Industrial, Commercial, and Institutional
ICR Information Collection Request
IPM Integrated Planning Model
iSIP Infrastructure State Implementation Plan
km Kilometer
lb/mmBtu Pounds per Million British Thermal Units
LEC Low Emission Combustion
LNB Low-NOX Burners
MJO Multi-Jurisdictional Organizations
mmBtu Million British Thermal Units
MOVES Motor Vehicle Emission Simulator
MSAT2 Mobile Source Air Toxic Rule
NAAQS National Ambient Air Quality Standard
NEI National Emission Inventory
NESHAP National Emission Standards for Hazardous Air Pollutants
NOX Nitrogen Oxides
NODA Notice of Data Availability
Non-EGU Non-electric Generating Unit
NSPS New Source Performance Standard
NUSA New Unit Set-Aside
OSAT/APCA Ozone Source Apportionment Technology/Anthropogenic
Precursor Culpability Analysis
OMB Office of Management and Budget
OTC Ozone Transport Commission
OTR Ozone Transport Region
PEMS Predictive Emissions Monitoring System
PM2.5 Fine Particulate Matter
ppb Parts Per Billion
RACT Reasonably Available Control Technology
RIA Regulatory Impact Analysis
RICE Reciprocating Internal Combustion Engines
RRF Relative Response Factor
RTC Document Response to Comment Document
SCR Selective Catalytic Reduction
SIP State Implementation Plan
SMOKE Sparse Matrix Operator Kernel Emissions
SNCR Selective Non-catalytic Reduction

SO2 Sulfur Dioxide
TIP Tribal Implementation Plan
TSD Technical Support Document
tpy Ton Per Year
ULNB Ultra-low NOX Burner
VOC Volatile Organic Compound
WRF Weather Research and Forecasting Model

Table of Contents

I. Executive Summary
    A. Purpose of Regulatory Action
    B. Summary of the Major Provisions of the Regulatory Action
    C. Costs and Benefits
II. General Information
    A. Does this action apply to me?
III. EPA's Legal Authority for the Final Rule
    A. Statutory Authority
    B. Prior Good Neighbor Rulemakings Addressing Regional Ozone
IV. Air Quality Issues Addressed and Overall Approach for the Final
Rule
    A. The Interstate Ozone Transport Challenge
    1. Nature of Ozone and the Ozone NAAQS
    2. Ozone Transport
    3. Health and Environmental Effects
    B. Relationship Between This Regulatory Action and the 2015
Ozone NAAQS
    C. Approach To Address the Remanded Transport Obligations for
the 2008 Ozone NAAQS
    1. Events Affecting Application of the Good Neighbor Provision
for the 2008 Ozone NAAQS
    2. FIP Authority for Each State Covered by the Final Rule
    3. The 4-Step Good Neighbor Framework
V. Analyzing Downwind Air Quality and Upwind-State Contributions
    A. Overview of Air Quality Modeling Platform
    B. Emission Inventories
    1. Foundation Emission Inventory Data Sets
    2. Development of Emission Inventories for EGUs
    3. Development of Emission Inventories for Non-EGU Point Sources
    4. Development of Emission Inventories for Onroad Mobile Sources
    5. Development of Emission Inventories for Commercial Marine
Vessels
    6. Development of Emission Inventories for Other Nonroad Mobile
Sources
    7. Development of Emission Inventories for Nonpoint Sources
    C. Air Quality Modeling To Identify Nonattainment and
Maintenance Receptors
    D. Pollutant Transport From Upwind States
    1. Air Quality Modeling To Quantify Upwind State Contributions
    2. Application of Screening Threshold
VI. Quantifying Upwind-State NOX Reduction Potential To
Reduce Interstate Ozone Transport for the 2008 NAAQS
    A. The Multi-Factor Test
    B. Identifying Levels of Control Stringency
    1. EGU NOX Mitigation Strategies
    2. Non-EGU NOX Mitigation Strategies
    3. Mobile Source NOX Mitigation Strategies
    C. Emission Reduction Potential of Control Stringencies
    1. EGU Emission Reduction Potential
    2. Non-EGU Emission Reduction Potential
    D. Assessing Cost, EGU and Non-EGU NOX Reductions,
and Air Quality
    1. EGU Assessment
    2. Non-EGU Assessment
    3. Overcontrol Analysis
VII. Implementation of Emission Reductions
    A. Regulatory Requirements for EGUs
    B. Quantifying State Emissions Budgets
    C. Elements of New Trading Program
    1. Applicability
    2. State Budgets, Variability Limits, Assurance Levels, and
Penalties
    3. Unit-Level Allocations of Emission Allowances
    4. Transitioning From Existing CSAPR NOX Ozone Season
Group 2 Trading Program
    5. Compliance Deadlines
    6. Monitoring and Reporting
    7. Recordation of Allowances
    8. Conforming Revisions to Regulations for Existing Trading
Programs
    D. Submitting a SIP
    1. SIP Option To Modify 2022 Allocations
    2. SIP Option To Modify Allocations in 2023 and Beyond
    3. SIP Revisions That Do Not Use the New Group 3 Trading Program
    4. No SIP Option for Additional States To Participate in the New
Trading Program
    E. Title V Permitting
    F. Relationship to Other Emission Trading and Ozone Transport
Programs
    1. Existing Trading Programs
    2. Title IV Interactions
    3. NOX SIP Call Interactions
VIII. Costs, Benefits, and Other Impacts of the Final Rule
IX. Summary of Changes to the Regulatory Text for the Federal
Implementation Plans and Trading Programs
    A. Amended CSAPR Update FIP Provisions
    B. New CSAPR NOX Ozone Season Group 3 Trading Program
Provisions
    C. Transitional Provisions
    D. Conforming Revisions, Corrections, and Clarifications to
Existing Regulations
X. Statutory and Executive Order Reviews
    A. Executive Order 12866: Regulatory Planning and Review and
Executive Order 13563: Improving Regulation and Regulatory Review
    B. Paperwork Reduction Act (PRA)
    C. Regulatory Flexibility Act (RFA)
    D. Unfunded Mandates Reform Act (UMRA)
    E. Executive Order 13132: Federalism
    F. Executive Order 13175: Consultation and Coordination With
Indian Tribal Governments
    G. Executive Order 13045: Protection of Children From
Environmental Health Risks and Safety Risks
    H. Executive Order 13211: Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution or Use
    I. National Technology Transfer and Advancement Act (NTTAA)
    J. Executive Order 12898: Federal Actions To Address
Environmental Justice in Minority Populations and Low-Income
Populations
    K. Congressional Review Act
    L. Determinations Under CAA Section 307(b)(1) and (d)

I. Executive Summary

    This final rule resolves the interstate transport obligations of 21
states under the good neighbor provision of the Clean Air Act (CAA or
the Act), CAA section 110(a)(2)(D)(i)(I), for the 2008 ozone National
Ambient Air Quality Standards (NAAQS). The 2008 ozone NAAQS is an 8-
hour standard that was set at 75 parts per billion (ppb).\1\ The U.S.
Environmental Protection Agency (EPA or the Agency) published the
Cross-State Air Pollution Rule (CSAPR) Update on October 26, 2016,
which, among other things, partially addressed the interstate transport
of emissions from 21 states with respect to the 2008 ozone NAAQS.\2\
See 81 FR 74504. On December 21, 2018, EPA published the CSAPR Close-
Out Rule, which found that the CSAPR Update was a complete remedy for
20 of those states based on air quality analysis of the year 2023.\3\
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    \1\ See 73 FR 16436 (March 27, 2008).
    \2\ In the CSAPR Update, EPA found that the finalized Tennessee
emission budget fully addressed Tennessee's good neighbor obligation
with respect to the 2008 ozone NAAQS. See 81 FR 74504, 74508 n. 19
(Oct. 26, 2016).
    \3\ See 83 FR 65878 (Dec. 21, 2018).
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    On September 13, 2019, the United States Court of Appeals for the
District of Columbia Circuit (D.C. Circuit) remanded the CSAPR Update,
concluding that it was invalid in one respect because it unlawfully
allowed upwind states to continue their significant contributions to
downwind air quality problems beyond the statutory dates by which
downwind States must demonstrate their attainment of ozone air quality
standards. Wisconsin v. EPA, 938 F.3d 303, 318-20 (D.C. Cir. 2019)
(Wisconsin) (per curiam); see also id. 336-37 (concluding that remand
without vacatur was appropriate). Subsequently, on October 1, 2019, in
a judgment order, the D.C. Circuit vacated the CSAPR Close-Out on the
same grounds on which it had remanded without vacatur the CSAPR Update
in Wisconsin. New York v. EPA, 781 Fed. App'x 4, 7 (D.C. Cir. 2019)
(New York). The court found the CSAPR Close-Out inconsistent with the
Wisconsin holding because the rule analyzed the year 2023 rather than
2021 and failed to demonstrate that it was an impossibility to address
significant contribution by the 2021 Serious area attainment date
(``the next applicable attainment date''). To address the Wisconsin and
New York decisions, EPA proposed this rule in the Federal

Register on October 30, 2020 to revise the CSAPR Update (85 FR
68964).\4\
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    \4\ On July 28, 2020, the U.S. District Court for the Southern
District of New York issued a decision establishing a deadline of
March 15, 2021, for EPA to issue a final rule fully resolving good
neighbor obligations under the 2008 ozone NAAQS for seven upwind
states. New Jersey v. Wheeler, No. 1:20-cv-01425 (S.D.N.Y. July 28,
2020).
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    In this final rule, in accordance with Wisconsin and New York, EPA
has aligned its analysis and the implementation of emission reductions
required to address significant contribution with the 2021 ozone
season, which corresponds to the July 20, 2021 Serious area attainment
date for the 2008 ozone NAAQS. EPA has further determined which
emission reductions are impossible to achieve by the 2021 attainment
date and whether any such additional emission reductions should be
required beyond that date. See Wisconsin, 938 F.3d at 320; New York,
781 Fed. App'x at 7.
    In this action on remand, EPA is not reopening any determinations,
findings, or statutory or regulatory interpretations that are not
required to address the Wisconsin remand, unless the Agency has
explicitly so stated. This final action addressing the remand of the
CSAPR Update in Wisconsin also has the effect of addressing the
outstanding obligations that resulted from the D.C. Circuit's vacatur
of the CSAPR Close-Out in New York. See New York, 781 Fed. App'x at 7.

A. Purpose of the Regulatory Action

    The purpose of this rulemaking is to protect public health and
welfare by eliminating emissions in certain upwind states that
significantly contribute to nonattainment, or interfere with
maintenance, of the 2008 ozone NAAQS in the U.S. Ground-level ozone
causes a variety of negative effects on human health, vegetation, and
ecosystems. In humans, acute and chronic exposure to ozone is
associated with premature mortality and a number of morbidity effects,
such as asthma exacerbation. Ozone exposure can also negatively impact
ecosystems, for example, by limiting tree growth. Studies have
established that ozone transport occurs on a regional scale (i.e.,
hundreds of miles) over much of the eastern U.S., with elevated
concentrations occurring in rural as well as metropolitan
areas.5 6 As discussed in more detail in section IV.A.1,
assessments of ozone control approaches have concluded that nitrogen
oxides (NOX) control strategies are effective to reduce
regional-scale ozone transport.\7\
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    \5\ Bergin, M.S. et. al. (2007) Regional air quality: Local and
interstate impacts of NOX and SO2 emissions on
ozone and fine particulate matter in the eastern United States.
Environmental Sci & Tech. 41: 4677-4689.
    \6\ Liao, K. et. al. (2013) Impacts of interstate transport of
pollutants on high ozone events over the Mid-Atlantic United States.
Atmospheric Environment 84, 100-112.
    \7\ See also 82 FR 51238, 51248 (Nov. 3, 2017) (citing 76 FR
48208, 48222 (Aug. 8, 2011)) and 63 FR 57381 (Oct. 27, 1998).
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    Clean Air Act section 110(a)(2)(D)(i)(I), which is also known as
the ``good neighbor provision,'' requires states to prohibit emissions
that will contribute significantly to nonattainment or interfere with
maintenance in any other state with respect to any primary or secondary
NAAQS.\8\ The statute vests states with the primary responsibility to
address this ``interstate transport'' of air pollutants through the
development of good neighbor State Implementation Plans (SIPs), which
are one component of larger SIP submittals typically required three
years after EPA promulgates a new or revised NAAQS. These larger SIPs
are often referred to as ``infrastructure'' SIPs or iSIPs. See CAA
section 110(a)(1) and (2). EPA supports state efforts to submit good
neighbor SIPs for the 2008 ozone NAAQS and has shared information with
states to facilitate such SIP submittals. However, the CAA also
requires EPA to fill a backstop role by issuing Federal Implementation
Plans (FIPs) where states fail to submit good neighbor SIPs or EPA
disapproves a submitted good neighbor SIP. See generally CAA section
110(k) and 110(c).
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    \8\ 42 U.S.C. 7410(a)(2)(D)(i)(I).
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    On October 26, 2016, EPA published the CSAPR Update, which
finalized FIPs for 22 states that EPA found failed to submit a complete
good neighbor SIP (15 states) \9\ or for which EPA issued a final rule
disapproving their good neighbor SIP (7 states).\10\ The FIPs
promulgated for these states included new NOX ozone season
emission budgets for electric generating units (EGUs) to reduce
interstate transport for the 2008 ozone NAAQS. These emission budgets
took effect in 2017 in order to assist downwind states with attainment
of the 2008 ozone NAAQS by the 2018 Moderate area attainment date. EPA
acknowledged at the time that the FIPs promulgated for 21 of the 22
states only partially addressed good neighbor obligations under the
2008 ozone NAAQS. The 22 states for which EPA promulgated FIPs to
reduce interstate ozone transport as to the 2008 ozone NAAQS are listed
in Table I.A-1.
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    \9\ Alabama, Arkansas, Illinois, Iowa, Kansas, Maryland,
Michigan, Mississippi, Missouri, New Jersey, Oklahoma, Pennsylvania,
Tennessee, Virginia, and West Virginia.
    \10\ Indiana, Kentucky, Louisiana, New York, Ohio, Texas, and
Wisconsin.

 Table I.A-1--List of 22 Covered States for the 2008 8-Hour Ozone NAAQS
                           in the CSAPR Update
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                                  State
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 Alabama
 Arkansas
 Illinois
 Indiana
 Iowa
 Kansas
 Kentucky
 Louisiana
 Maryland
 Michigan
 Mississippi
 Missouri
 New Jersey
 New York
 Ohio
 Oklahoma
 Pennsylvania
 Tennessee
 Texas
 Virginia
 West Virginia
 Wisconsin
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    In response to the D.C. Circuit's remand of the CSAPR Update in
Wisconsin and the court's vacatur of the CSAPR Close-Out in New York,
this rule finds that 12 of the 22 states listed in Table I.A-1 require
further ozone season NOX emission reductions to address the
good neighbor provision as to the 2008 ozone NAAQS. As such, EPA is
promulgating new or revised FIPs for these states that include new EGU
NOX ozone season emission budgets, with implementation of
these emission budgets beginning with the 2021 ozone season.\11\ The 12
states for which EPA is promulgating new or revised FIPs to reduce
interstate ozone transport as to the 2008 ozone NAAQS in this
rulemaking are listed in Table I.A-2.
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    \11\ As discussed in section IV.C.2.c., in 2018 EPA approved a
SIP revision for Indiana replacing the state's CSAPR Update FIP with
equivalent state regulations. This SIP revision, like the CSAPR
Update FIP it replaced, was partial in nature. EPA is issuing a new
FIP rather than a revised FIP for Indiana in this action.

 Table I.A-2--List of 12 Covered States for the 2008 8-Hour Ozone NAAQS
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                                  State
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 Illinois
 Indiana
 Kentucky
 Louisiana
 Maryland
 Michigan

 New Jersey
 New York
 Ohio
 Pennsylvania
 Virginia
 West Virginia
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    The enhanced control stringency represented by the new EGU NOx
ozone season emission budgets for these states will take effect 60 days
after publication in the Federal Register, which corresponds to the
effective date of the rule as a whole.\12\ This date will fall before
the July 20, 2021, Serious area attainment date for the 2008 ozone
NAAQS. EPA has determined that it is feasible for the EGUs subject to
this rule to comply with the enhanced stringency of the budgets and
that there is sufficient time before the effective date to prepare to
meet these budgets by either undertaking the emission control measures
EPA has identified in this action, or by taking advantage of compliance
flexibilities available through the new interstate emissions trading
program EPA is establishing.\13\ As explained in greater detail below,
due to timing considerations, one aspect of EPA's selected EGU control
stringency--installation of state-of-the-art combustion controls--will
not take effect until the 2022 ozone season, and this is accounted for
in EPA's budget-setting process.
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    \12\ As discussed in section VII.C.4.a, EPA is ensuring that the
enhanced control stringency represented by the new budgets will not
take effect until the rule's effective date by issuing supplemental
allowances for the portion of the 2021 ozone season occurring before
the rule's effective date.
    \13\ In general, throughout this notice, where EPA refers to
``addressing good neighbor obligations,'' ``implementing
reductions,'' or ``compliance feasibility'' by or in the 2021 ozone
season (or similar formulations), this does not refer to the
beginning of the ozone season on May 1, but rather to the effective
date of this action, which is when the enhanced control stringency
represented by the new EGU NOx ozone season emission budgets will
take effect.
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    EPA is further adjusting these states' emission budgets for each
ozone season from 2022 to 2024 to incentivize ongoing operation of
identified emission controls to address significant contribution, until
such time that air quality projections demonstrate resolution of the
downwind nonattainment and/or maintenance problems for the 2008 ozone
NAAQS. No further budget adjustments will be made after that time
(i.e., after the 2024 ozone season). EPA is implementing the new state-
level ozone season emission budgets through a new CSAPR NOX
Ozone Season Group 3 Trading Program. Based on EPA's assessment of
remaining air quality issues and additional emission controls, EPA is
further determining that these NOX emission reductions fully
eliminate these states' significant contribution to nonattainment and
interference with maintenance of the 2008 ozone NAAQS in other states.
    As discussed in more detail in section IV.C.2.b below, for one
state, Kentucky, EPA is making an error correction under CAA section
110(k)(6) of its June 2018 approval of the Commonwealth's SIP, which
had concluded that the CSAPR Update was a complete remedy based on
modeling of the 2023 analytic year. EPA finds that the basis for that
conclusion was invalidated by the decisions in Wisconsin and New York.
With finalization of this error correction and disapproval of
Kentucky's SIP, Kentucky's good neighbor obligations are outstanding.
In light of the Wisconsin remand of Kentucky's FIP and EPA's error
correction, the Agency has the necessary authority to amend the CSAPR
Update FIP for Kentucky.
    For the nine remaining states with FIPs promulgated under the CSAPR
Update that EPA previously found partially addressed good neighbor
obligations for the 2008 ozone NAAQS (Alabama, Arkansas, Iowa, Kansas,
Mississippi, Missouri, Oklahoma, Texas, and Wisconsin), EPA's updated
air quality and contributions analysis shows that these states are not
linked to any downwind air quality problems in 2021.\14\ Therefore, EPA
finds that the existing CSAPR Update FIPs (or the SIP revisions later
approved to replace the CSAPR Update FIPs) for these states satisfy
their good neighbor obligations for the 2008 ozone NAAQS.\15\
Consequently, EPA is not requiring additional emission reductions from
sources in these states in this final rule.
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    \14\ EPA's use of a contribution threshold to determine, without
further analysis of potential emission reduction opportunities, that
certain states have no remaining good neighbor obligations with
respect to a given NAAQS is part of the analytic approach that was
followed in the CSAPR rulemaking and upheld by the Supreme Court.
See EPA v. EME Homer City Generation, L.P., 572 U.S. 489, 521-22
(2014).
    \15\ As discussed in section IV.C.2.c., in 2017 and 2019 EPA
approved SIP revisions for Alabama and Missouri replacing the
states' CSAPR Update FIPs with equivalent state regulations. These
SIP revisions, like the CSAPR Update FIPs they replaced, were
partial in nature. EPA is therefore determining in this action that
the states' existing SIP provisions satisfy these states' good
neighbor obligations for the 2008 ozone NAAQS.
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B. Summary of the Major Provisions of the Regulatory Action

    To reduce interstate ozone transport under the authority provided
in CAA section 110(a)(2)(D)(i)(I), this rule further limits ozone
season (May 1 through September 30) NOX emissions from EGUs
in 12 states using the same framework EPA used in the CSAPR and other
good neighbor rules (the 4-step good neighbor framework or 4-step
framework). The 4-step good neighbor framework provides a process to
address the requirements of the good neighbor provision for ground-
level ozone NAAQS: (1) Identifying downwind receptors that are expected
to have problems attaining or maintaining the NAAQS; (2) determining
which upwind states contribute to these identified problems in amounts
sufficient to ``link'' them to the downwind air quality problems (i.e.,
here, a contribution threshold equal to or greater than 1 percent of
the NAAQS); (3) for states linked to downwind air quality problems,
identifying upwind emissions that significantly contribute to downwind
nonattainment or interfere with downwind maintenance of the NAAQS; and
(4) for states that are found to have emissions that significantly
contribute to nonattainment or interfere with maintenance of the NAAQS
downwind, implementing the necessary emission reductions through
enforceable measures. In this final rule, EPA applies this 4-step
framework to respond to the D.C. Circuit's remand in Wisconsin and to
revise the CSAPR Update with respect to the 2008 ozone NAAQS.
    In order to apply the first step of the 4-step framework to the
2008 ozone NAAQS, EPA performed air quality modeling coupled with
ambient measurements in an interpolation technique to project ozone
concentrations at air quality monitoring sites in 2021.\16\
(``Interpolation'' is a

numerical method for constructing new data points within the range of a
discrete set of known data points, in this case the known data are the
2016 measured-based and 2023 modeling-based ozone concentrations.) EPA
evaluated 2021 projected ozone concentrations at individual monitoring
sites and considered current ozone monitoring data at these sites to
identify receptors that are anticipated to have problems attaining or
maintaining the 2008 ozone NAAQS. Such monitoring sites are referred to
as nonattainment and/or maintenance receptors. Based on EPA's analysis,
the Agency identified four nonattainment and/or maintenance receptors
in 2021 (i.e., three receptors in Connecticut and one in Texas). EPA
received comments on its approach to identify nonattainment and/or
maintenance receptors in 2021. A summary of these comments, as well as
EPA's responses, can be found in section V and in the Response to
Comments (RTC) document for this final rule.
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    \16\ The next relevant attainment date for the 2008 ozone NAAQS
is July 20, 2021, for Serious nonattainment areas. 80 FR 12264,
12268; 40 CFR 51.1103. As discussed in section V, historically, EPA
has considered the full ozone season prior to the attainment as
supplying an appropriate analytic year for assessing good neighbor
obligations. While this would be 2020 for a July 2021 attainment
date (which falls within the 2021 ozone season running from May 1 to
September 30), in this circumstance, because the 2020 ozone season
is wholly in the past, it is appropriate to focus on 2021 in order
to address good neighbor obligations to the extent possible by the
2021 attainment date. It would not be appropriate to select an
analytical year that is wholly in the past, because the agency
interprets the good neighbor provision as forward looking. See 85 FR
at 68981; see also Wisconsin, 938 F.3d at 322. Consequently, in this
action EPA uses the analytic year 2021.
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    To apply the second step of the framework, EPA used an air quality
modeling-based technique to quantify the contributions in 2021 from
upwind states to ozone concentrations at individual monitoring sites,
as described in section V. Once quantified, EPA then evaluated these
contributions relative to a screening threshold of 1 percent of the
NAAQS (i.e., 0.75 ppb) for those monitoring sites identified as
nonattainment and/or maintenance receptors in step 1. States with
contributions that equal or exceed 1 percent of the NAAQS were
identified as warranting further analysis for significant contribution
to nonattainment or interference with maintenance. States with
contributions below 1 percent of the NAAQS were considered to not
significantly contribute to nonattainment or interfere with maintenance
of the NAAQS in downwind states. Based on EPA's updated air quality and
contribution analysis using 2021 as the analytic year, EPA is
determining that the following 12 states have contributions that equal
or exceed 1 percent of the 2008 ozone NAAQS, and thereby warrant
further analysis for significant contribution to nonattainment or
interference with maintenance: Illinois, Indiana, Kentucky, Louisiana,
Maryland, Michigan, New Jersey, New York, Ohio, Pennsylvania, Virginia,
and West Virginia. EPA received comments on its approach to quantify
interstate contributions and the use of a 1 percent of the NAAQS
screening threshold. A summary of these comments, as well as EPA's
responses, can be found in section V and in the RTC document for this
final rule.
    At the third step of the 4-step framework, EPA applied the multi-
factor test used in the CSAPR Update, which evaluates cost, available
emission reductions, and downwind air quality impacts to determine the
amount of linked upwind states' emissions that ``significantly''
contribute to downwind nonattainment or maintenance receptors. In this
action, EPA applied the multi-factor test to both EGU and non-EGU
source categories and assessed potential emission reductions in all
years for which there is a potential remaining interstate ozone
transport problem (i.e., through 2025), in order to ensure a full
remedy in accordance with the Wisconsin decision.
    In the proposed rule, EPA identified a control stringency that
reflects the optimization of existing selective catalytic reduction
(SCR) controls and installation of state-of-the-art NOX
combustion controls at EGUs, represented by a cost of $1,600 per ton of
NOX reduced. In this final rule, EPA is determining that
optimization of existing selective non-catalytic reduction (SNCR)
controls should also be included in EPA's identified EGU control
stringency. As discussed in further detail in Section VI, EPA adjusted
its representative cost for optimizing existing SNCR controls to $1,800
per ton in response to comments received on the proposed rule, as well
as further EPA review of available information. EPA views $1,600 per
ton for optimization of existing SCR controls and installation of
state-of-the-art NOX combustion controls and $1,800 per ton
for optimization of existing SNCRs as comparable for policy purposes.
In addition, other considerations beyond marginal cost and air quality
improvement, as outlined in the section VI.D discussion of the multi-
factor test, support inclusion of emission reduction potential from
optimization of existing SNCR controls in EPA's identified EGU control
stringency in this rule.
    At the selected control stringency in this final rule, downwind
ozone air quality improvements continue to be maximized relative to a
representative marginal cost. That is, the ratio of emission reductions
to marginal cost and the ratio of ozone improvements to marginal cost
are maximized relative to the other control stringency levels
evaluated. EPA finds that these cost-effective EGU NOX
reductions will make meaningful and timely improvements in downwind
ozone air quality to address interstate ozone transport for the 2008
ozone NAAQS, as discussed in section VI.D.1 below. Further, this
evaluation shows that emission budgets reflecting the optimization of
existing SCRs and SNCRs, and installation of state-of-the-art
NOX combustion controls at EGUs do not over-control upwind
states' emissions relative to either the downwind air quality problems
to which they are linked at step 1 or the 1 percent contribution
threshold that triggers further evaluation at step 2 of the 4-step
framework.
    EPA notes that two of these EGU emission controls (optimization of
existing SCR controls and installation of state-of-the-art
NOX combustion controls) were also selected in the CSAPR
Update for the 2017 ozone season, and which at that time EPA
characterized as only a partial remedy. For this rule, EPA extends its
evaluation of the reduction potential from these emission controls to
years beyond 2017 in order to assess a full remedy. EPA's updated
analysis, as discussed in more detail in section VI, leads the Agency
to find that these emission controls can provide additional cost-
effective emission reductions for the 2021 through 2024 ozone seasons.
While EPA's analysis indicates that the majority of EGUs implemented
these emission controls in response to the CSAPR Update, changes in the
power sector since the 2017 ozone season and updated air quality and
contribution analysis show that there is a demonstrated need to update
the emission budgets for these 12 states to incentivize ongoing
operation of identified emission controls to fully eliminate
significant contribution and interference with maintenance. Likewise,
EPA finds that many EGUs are already operating their existing SNCR
controls to some extent but that additional cost-effective emission
reductions for the 2021 through 2024 ozone seasons are available. Taken
together, the emission budgets established in this final rule reflect
EPA's identified EGU control stringency of optimization of all existing
post-combustion controls (SCRs and SNCRs) by the 2021 ozone season, and
the installation of state-of-the-art NOX combustion controls
by the 2022 ozone season.
    For non-EGU industry sectors and emissions sources, EPA applied the
step 3 multi-factor test to determine whether any emission reductions
should be required from non-EGU sources to address significant
contribution under the 2008 ozone NAAQS. EPA acknowledged in the
proposed rule that its current datasets with information on emissions,
existing controls on

emissions sources, emission-reduction potential, and air quality
impacts for these sources are not as well developed as the datasets it
has for EGUs. Nonetheless, using the best information currently
available to the Agency, including some additional analysis conducted
between the proposed rule and this final action, EPA is concluding that
there are relatively fewer emission reductions available at a cost
threshold comparable to the cost threshold selected for EGUs. In EPA's
reasoned judgment, the Agency concludes such reductions are estimated
to have a much smaller effect on any downwind receptor in the year by
which EPA finds such controls could be installed. For these reasons,
EPA is finding that limits on ozone season NOX emissions
from non-EGU sources are not required to eliminate significant
contribution or interference with maintenance under the 2008 ozone
NAAQS (see section VI.D.2).
    Based on EPA's analysis at step 3, the Agency is promulgating EGU
NOX ozone season emission budgets developed using a uniform
control stringency of optimization of existing SCRs and SNCRs, and
installation of state-of-the-art NOX combustion controls.
EPA is determining that with implementation of this control stringency,
the 12 states in Table I.A-2 will have fully addressed significant
contribution under the good neighbor provision for the 2008 ozone
NAAQS. EPA is aligning implementation of emission budgets with relevant
attainment dates for the 2008 ozone NAAQS, consistent with CAA
requirements and the D.C. Circuit's decision in Wisconsin v. EPA.\17\
As EPA's final 2008 Ozone NAAQS SIP Requirements Rule \18\ established
the attainment date of July 20, 2021, for ozone nonattainment areas
currently designated as Serious, EPA is establishing emission budgets
and implementation of these emission budgets starting with the 2021
ozone season as shown in Table I.B-1.\19\
---------------------------------------------------------------------------

    \17\ See 938 F.3d 303, 320 (D.C. Cir. 2019) (holding that EPA
must align interstate transport compliance deadlines with downwind
attainment deadlines unless EPA can demonstrate an impossibility or
other necessity).
    \18\ 80 FR 12264, 12268; 40 CFR 51.1103.
    \19\ As discussed in section VII.C.4.a, EPA is ensuring that the
enhanced control stringency represented by the new budgets will not
take effect until the rule's effective date by issuing supplemental
allowances for the portion of the 2021 ozone season occurring before
the rule's effective date. Those supplemental allowances are not
reflected in the 2021 Budget column in Table I.B-1.

                               Table I.B-1--EGU NOX Ozone Season Emission Budgets
                                            [Ozone Season NOX Tons] *
----------------------------------------------------------------------------------------------------------------
                      State                         2021 Budget     2022 Budget     2023 Budget     2024 Budget
----------------------------------------------------------------------------------------------------------------
Illinois........................................           9,102           9,102           8,179           8,059
Indiana.........................................          13,051          12,582          12,553           9,564
Kentucky........................................          15,300          14,051          14,051          14,051
Louisiana.......................................          14,818          14,818          14,818          14,818
Maryland........................................           1,499           1,266           1,266           1,348
Michigan........................................          12,727          12,290           9,975           9,786
New Jersey......................................           1,253           1,253           1,253           1,253
New York........................................           3,416           3,416           3,421           3,403
Ohio............................................           9,690           9,773           9,773           9,773
Pennsylvania....................................           8,379           8,373           8,373           8,373
Virginia........................................           4,516           3,897           3,980           3,663
West Virginia...................................          13,334          12,884          12,884          12,884
                                                 ---------------------------------------------------------------
    Total.......................................         107,085         103,705         100,526          96,975
----------------------------------------------------------------------------------------------------------------
* Note--The 2022 and beyond budgets incorporate the installation of state-of-the-art NOX combustion controls,
  whereas the 2021 budgets do not. Additionally, the 2024 emissions budget applies to 2024 and each year
  thereafter.

    EPA further determined which emission reductions are impossible to
achieve by the 2021 attainment date and whether any such additional
emission reductions should be required beyond that date.\20\ See
Wisconsin, 938 F.3d at 320. EPA estimates that one part of the selected
control stringency--installation of state-of-the-art NOX
combustion controls--requires approximately one to six months depending
on the unit. Recognizing that the final rule will become effective
slightly after the start of the 2021 ozone season, EPA determined it is
not possible to install state-of-the-art NOX combustion
controls on a regional scale by the 2021 ozone season. Therefore, the
2021 ozone season emission budgets reflect only the optimization of
existing SCR and SNCR controls at the affected EGUs, but the emission
budgets for the 2022 ozone season and beyond reflect both the continued
optimization of existing SCR and SNCR controls and installation of
state-of-the-art NOX combustion controls. Detailed
installation-timing information for this technology is available in
section VI.B and the EGU NOX Mitigation Strategies Final
Rule TSD.
---------------------------------------------------------------------------

    \20\ As described in detail in sections VI.B and VI.C, some
mitigation efforts that require the installation of significant new
plant hardware (e.g., combustion control upgrade, selective
catalytic reduction, and non-selective catalytic reduction) are not
possible by the 2021 attainment date. However, EPA factored some of
these measures (i.e., combustion controls) into its quantification
of significant contribution starting at the later date of the start
of the 2022 ozone season.
---------------------------------------------------------------------------

    As discussed in section VI.D.1, EPA's air quality projections
anticipate that with the implementation of the identified control
stringency for EGUs, downwind nonattainment and maintenance problems
for the 2008 ozone NAAQS will persist through the 2024 ozone season.
Therefore, EPA is adjusting emission budgets for upwind states that
remain linked to downwind nonattainment and maintenance problems
through the 2024 ozone season to incentivize the continued optimization
of existing SCR and SNCR controls, and installation of state-of-the-art
NOX combustion controls. The 2024 emission budgets will then
continue to apply in each year thereafter.
    To apply the fourth step of the 4-step framework (i.e.,
implementation), EPA is including enforceable measures in the
promulgated FIPs to achieve the required emission reductions in each of
the 12 states. Specifically, the FIPs require power plants in the 12
states to participate in a new CSAPR NOX Ozone Season Group
3 Trading Program that largely replicates the existing CSAPR
NOX Ozone Season Group 2 Trading

Program with the main differences being the geography and budget
stringency. This final rule leaves unchanged the budget stringency of
the existing CSAPR NOX Ozone Season Group 1 and Group 2
trading programs for the states that remain covered by those programs.
    EPA is finalizing the proposed feature of the budget-setting
process in which budgets are adjusted in 2022, 2023, and 2024 to
account for future unit retirements and construction of new units that
are known with sufficient certainty as of this final action. As
discussed in section VII.C.3.b, in response to comments, EPA has made
the methodology for allocating allowances to existing units in this
final rule more consistent with the budget-setting process by
eliminating allocations to units following their retirements in
instances where the future retirements were scheduled in advance with
sufficient certainty to be taken into account in the budget-setting
process.
    As proposed, to promote compliance flexibility without relaxing the
program stringency identified as appropriate to address states'
obligations under CAA section 110(a)(2)(D)(i)(I), EPA is creating a
limited initial bank of allowances for use in the new Group 3 trading
program by converting allowances banked in 2017-2020 under the existing
Group 2 trading program at a formula-based conversion ratio. The target
bank amount is based on the sum of the states' ``variability limits''--
that is, the amounts by which emissions from a given state's units can
exceed the state's emission budget before incurring a penalty surrender
ratio. As discussed in section VII.C.4.b, in response to comments
requesting greater certainty, in the final rule EPA has modified the
proposed conversion ratio formula so as to yield an expected fixed
conversion ratio of 8:1 (i.e., eight Group 2 allowances must be
exchanged for each Group 3 allowance). Participation in the conversion
process is mandatory for the sources in states covered by the Group 3
trading program and, if the Group 3 sources' accounts collectively do
not hold enough Group 2 allowances to exchange for the entire target
bank amount, for holders of Group 2 allowances in non-source accounts
as well.\21\
---------------------------------------------------------------------------

    \21\ Compliance accounts of sources in states that continue to
be covered by the existing Group 2 trading program will not be
included in the conversion process.
---------------------------------------------------------------------------

    As discussed in section VII.C.4.c, the final rule also provides a
second opportunity for sources to create an additional limited number
of Group 3 allowances through the voluntary conversion of additional
Group 2 allowances at an 18:1 conversion ratio (known as a ``safety
valve''). Any 2017-2020 Group 2 allowances that have not already been
exchanged for Group 3 allowances through the process of creating the
initial bank may be used to obtain additional Group 3 allowances
through the safety valve mechanism. The availability of the starting
bank and any additional allowances converted using this ``safety
valve'' ensures that compliance with the rule is feasible and addresses
any market liquidity concerns raised by commenters.
    The remainder of this preamble is organized as follows: section III
describes EPA's legal authority for this final action; section IV
describes the human health and environmental context, as well as EPA's
approach for addressing interstate transport for the 2008 ozone NAAQS;
section V describes EPA's assessment of downwind receptors of concern
and upwind state ozone contributions to those receptors, including the
air quality modeling platform and emission inventories that EPA used;
section VI describes EPA's application of the multifactor test at step
3 of the 4-step framework to EGU and non-EGU sources, quantification of
upwind state obligations in the form of final EGU NOX
emission budgets, and assessment of overcontrol; section VII details
the implementation requirements including key elements of the CSAPR
NOX Ozone Season Group 3 Trading Program and deadlines for
compliance; section VIII describes the expected costs, benefits, and
other impacts of this final rule; section IX discusses changes to the
existing regulatory text; and section X discusses the statutes and
executive orders affecting this final rule. Each section includes a
summary of the principal comments received with respect to that topic,
as well as EPA's responses. The Revised Cross State Air Pollution
Update Rule--Response to Comment document (RTC), which includes a
compilation of all comments received and EPA's responses, has been
included in the docket for this action.

C. Costs and Benefits

    A summary of the key results of the cost-benefit analysis that was
prepared for this final rule is presented in Table I.C-1. Table I.C-1
presents estimates of the present values (PV) and equivalent annualized
values (EAV), calculated using discount rates of 3 and 7 percent as
directed by OMB's Circular A-4, of the health benefits, climate
benefits, compliance costs, and net benefits of the final rule, in 2016
dollars, discounted to 2021. The estimated net benefits are the
estimated benefits minus the estimated costs of the final rule.

 Table I.C-1--Estimated Health Benefits, Climte Benefits, Compliance Costs, and Net Benefits of the Final Rule,
                                                2021 Through 2040
                                      [Millions 2016$, discounted to 2021]
----------------------------------------------------------------------------------------------------------------
                                                3% Discount rate                      7% Discount rate
----------------------------------------------------------------------------------------------------------------
Present Value:
    Health Benefits b..............  $4,800 and $37,000...................  $3,200 and $25,000.
    Climate Benefits b.............  $4,400...............................  $4,400.
    Compliance Costs c.............  $370.................................  $260.
                                    ----------------------------------------------------------------------------
        Net Benefits...............  $8,800 and $41,000...................  $7,300 and $29,000.
                                    ----------------------------------------------------------------------------
Equivalent Annualized Value:
    Health Benefits................  $320 and $2,500......................  $300 and $2,400.
    Climate Benefits...............  $290.................................  $290.
    Compliance Costs...............  $25..................................  $25.
                                    ----------------------------------------------------------------------------
        Net Benefits...............  $590 and $2,800......................  $570 and $2,700.
----------------------------------------------------------------------------------------------------------------
a Numbers may not sum due to independent rounding.

b The health benefits are associated with several point estimates and are presented at real discount rates of 3
  and 7 percent. The two benefits estimates are separated by the word ``and'' to signify that they are two
  separate estimates. The estimates do not represent lower- and upper-bound estimates and should not be summed.
  Climate benefits are based on changes (reductions) in CO2 emissions and are calculated using four different
  estimates of the social cost of carbon (SC-CO2) (model average at 2.5 percent, 3 percent, and 5 percent
  discount rates; 95th percentile at 3 percent discount rate). For the presentational purposes of this table, we
  show the climate benefits associated with the average SC-CO2 at a 3 percent discount rate, but the Agency does
  not have a single central SC-CO2 point estimate. We emphasize the importance and value of considering the
  benefits calculated using all four SC-CO2 estimates; the additional benefit estimates are presented in Table
  VIII.5 in Section VIII. As discussed in Chapter 5 of the Regulatory Impact Analysis for the Final Revised
  Cross-State Air Pollution Rule Update for the 2008 Ozone NAAQS, a consideration of climate benefits calculated
  using discount rates below 3 percent, including 2 percent and lower, are also warranted when discounting
  intergenerational impacts.
cTo estimate these annualized costs, EPA uses a conventional and widely accepted approach that applies a capital
  recovery factor (CRF) multiplier to capital investments and adds that to the annual incremental operating
  expenses. Annual costs were calculated using a 4.25% real discount rate consistent with the rate used in IPM's
  objective function for cost-minimization.

    As shown in Table I.C-1, the PV of the health benefits of this
final rule, discounted at a 3-percent discount rate, is estimated to be
about $4,800 million and $37,000 million, with an EAV of about $320
million and $2,500 million. At a 7-percent discount rate, the PV of the
health benefits is estimated to be $3,200 million and $25,000 million,
with an EAV of about $300 million and $2,400 million. The two health
benefits estimates for each discount rate reflect alternative ozone and
PM2.5 mortality risk estimates. The PV of the climate
benefits of this final rule, discounted at a 3-percent rate, is
estimated to be about $4,400 million, with an EAV of about $290
million. The PV of the compliance costs, discounted at a 3-percent
rate, is estimated to be about $370 million, with an EAV of about $25
million. At a 7-percent discount rate, the PV of the compliance costs
is estimated to be about $260 million, with an EAV of about $25
million.

II. General Information

A. Does this action apply to me?

    This final rule affects EGUs, and regulates the groups identified
in Table II.A-1:

                     Table II.A-1--Regulated Groups
------------------------------------------------------------------------
                        Industry group                          NAICS *
------------------------------------------------------------------------
Fossil fuel-fired electric power generation..................     221112
------------------------------------------------------------------------
* North American Industry Classification System.

    This table is not intended to be exhaustive, but rather provides a
guide for readers regarding entities likely to be regulated by this
action. This table lists the types of entities that EPA is now aware
are regulated by this action. Other types of entities not listed in the
table could also be regulated. To determine whether your EGU entity is
regulated by this action, you should carefully examine the
applicability criteria found in 40 CFR 97.1004, as promulgated in this
final action. If you have questions regarding the applicability of this
action to a particular entity, consult the person listed in the FOR
FURTHER INFORMATION CONTACT section.

III. EPA's Legal Authority for the Final Rule

A. Statutory Authority

    The statutory authority for this final action is provided by the
CAA as amended (42 U.S.C. 7401 et seq.). Specifically, sections 110 and
301 of the CAA provide the primary statutory underpinnings for this
action. The most relevant portions of CAA section 110 are subsections
110(a)(1), 110(a)(2) (including 110(a)(2)(D)(i)(I)), 110(c)(1), and
110(k)(6).
    CAA section 110(a)(1) provides that states must make SIP
submissions ``within 3 years (or such shorter period as the
Administrator may prescribe) after the promulgation of a national
primary ambient air quality standard (or any revision thereof),'' and
that these SIP submissions are to provide for the ``implementation,
maintenance, and enforcement'' of such NAAQS.\22\ The statute directly
imposes on states the duty to make these SIP submissions, and the
requirement to make the submissions is not conditioned upon EPA taking
any action other than promulgating a new or revised NAAQS.\23\
---------------------------------------------------------------------------

    \22\ 42 U.S.C. 7410(a)(1).
    \23\ See EPA v. EME Homer City Generation, L.P., 572 U.S. 489,
509-10 (2014).
---------------------------------------------------------------------------

    EPA has historically referred to SIP submissions made for the
purpose of satisfying the applicable requirements of CAA sections
110(a)(1) and 110(a)(2) as ``infrastructure SIP'' or ``iSIP''
submissions. CAA section 110(a)(1) addresses the timing and general
requirements for iSIP submissions, and CAA section 110(a)(2) provides
more details concerning the required content of these submissions.\24\
It includes a list of specific elements that ``[e]ach such plan''
submission must address.\25\
---------------------------------------------------------------------------

    \24\ 42 U.S.C. 7410(a)(2).
    \25\ EPA's general approach to infrastructure SIP submissions is
explained in greater detail in individual notices acting or
proposing to act on state infrastructure SIP submissions and in
guidance. See, e.g., Memorandum from Stephen D. Page on Guidance on
Infrastructure State Implementation Plan (SIP) Elements under Clean
Air Act Sections 110(a)(1) and 110(a)(2) (Sept. 13, 2013).
---------------------------------------------------------------------------

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

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

    CAA section 110(a)(2)(D)(i)(I), also known as the ``good neighbor''
provision, provides the primary basis for this final action.\27\ It
requires that each state SIP include provisions sufficient to
``prohibit[ ], consistent with the provisions of this subchapter, any
source or other type of emissions activity within the State from
emitting any air pollutant in amounts which will--(I) contribute
significantly to nonattainment in, or interfere with maintenance by,
any other State with respect to any [NAAQS].'' \28\ EPA often refers to
the emission reduction requirements under this provision as ``good
neighbor obligations'' and submissions addressing these requirements as
``good neighbor SIPs.''
---------------------------------------------------------------------------

    \27\ 42 U.S.C. 7410(a)(2)(D)(i)(I).
    \28\ Id.
---------------------------------------------------------------------------

    Once EPA promulgates a NAAQS, EPA must designate areas as being in
``attainment'' or ``nonattainment'' of the NAAQS, or
``unclassifiable.'' CAA section 107(d).\29\ For ozone, nonattainment is
further split into five classifications based on the severity of the
violation--Marginal, Moderate, Serious, Severe, or Extreme. Higher
classifications provide states with progressively more time to attain
while imposing progressively more stringent control requirements. See
CAA sections 181, 182.\30\ In general, states with nonattainment areas
classified as Moderate or higher must submit plans to EPA to bring
these areas into

attainment according to the statutory schedule. CAA section 182.\31\ If
an area fails to attain the NAAQS by the attainment date associated
with its classification, it is ``bumped up'' to the next
classification. CAA section 181(b).\32\
---------------------------------------------------------------------------

    \29\ 42 U.S.C. 7407(d).
    \30\ 42 U.S.C. 7511, 7511a.
    \31\ 42 U.S.C. 7511a.
    \32\ 42 U.S.C. 7511(b).
---------------------------------------------------------------------------

    Section 301(a)(1) of the CAA also gives the Administrator the
general authority to prescribe such regulations as are necessary to
carry out functions under the Act.\33\ Pursuant to this section, EPA
has authority to clarify the applicability of CAA requirements and
undertake other rulemaking action as necessary to implement CAA
requirements. In this final rule, among other things, EPA is clarifying
the applicability of CAA section 110(a)(2)(D)(i)(I) with respect to the
2008 ozone NAAQS. In particular, EPA is using its authority under CAA
sections 110 and 301 to issue new or amended FIPs to revise
NOX ozone season emission budgets for 12 states to eliminate
their significant contribution to nonattainment or interference with
maintenance of the 2008 ozone NAAQS in another state, and EPA is making
findings as to 9 additional states that the CSAPR Update FIPs (or SIP
revisions later approved to replace those FIPs) are a complete remedy
and need no further revision.\34\ In addition, EPA is addressing its
obligation to respond to the D.C. Circuit's remand of the CSAPR Update
in Wisconsin v. EPA, 938 F.3d 303, with respect to the 21 states for
which the FIPs created by that rule were found to be only a partial
remedy. This final rule wholly resolves the Agency's obligations on
remand. Finally, CAA section 301 \35\ affords the Agency any additional
authority that may be needed in order to make certain other changes to
its regulations under 40 CFR parts 51, 52, 78, and 97, in order to
effectuate the purposes of the Act. Such changes are discussed in
section VII of this preamble.
---------------------------------------------------------------------------

    \33\ 42 U.S.C. 7601(a)(1).
    \34\ 42 U.S.C. 7410, 7601.
    \35\ 42 U.S.C. 7601.
---------------------------------------------------------------------------

B. Prior Good Neighbor Rulemakings Addressing Regional Ozone

    EPA has issued several rules interpreting and clarifying the
requirements of CAA section 110(a)(2)(D)(i)(I) with respect to the
regional transport of ozone for states in the eastern United States.
These rules, and the associated court decisions addressing these rules,
summarized here, provide important direction regarding the requirements
of CAA section 110(a)(2)(D)(i)(I).
    The NOX SIP Call, promulgated in 1998, addressed the
good neighbor provision for the 1979 1-hour ozone NAAQS.\36\ The rule
required 22 states and the District of Columbia to amend their SIPs to
reduce NOX emissions that contribute to ozone nonattainment
in downwind states. EPA set ozone season NOX budgets for
each state, and the states were given the option to participate in a
regional trading program, known as the NOX Budget Trading
Program.\37\ The D.C. Circuit largely upheld the NOX SIP
Call in Michigan v. EPA, 213 F.3d 663 (D.C. Cir. 2000), cert. denied,
532 U.S. 904 (2001).
---------------------------------------------------------------------------

    \36\ 63 FR 57356 (Oct. 27, 1998). As originally promulgated, the
NOX SIP Call also addressed good neighbor obligations
under the 1997 8-hour ozone NAAQS, but EPA subsequently stayed and
later rescinded the rule's provisions with respect to that standard.
See 84 FR 8422 (March 8, 2019).
    \37\ ``Allowance Trading,'' sometimes referred to as ``cap and
trade,'' is an approach to reducing pollution that has been used
successfully to protect human health and the environment. Trading
programs have two key components: Emissions budgets (the sum of
which provide a cap on emissions), and tradable allowances equal to
the budgets that authorize allowance holders to emit a specific
quantity (e.g., one ton) of the pollutant. This approach ensures
that the environmental goal is met while the tradable allowances
provide flexibility for individual participants to establish and
follow their own compliance path. Because allowances can be bought
and sold in an allowance market, these programs are often referred
to as ``market-based.''
---------------------------------------------------------------------------

    EPA's next rule addressing the good neighbor provision, the Clean
Air Interstate Rule (CAIR), was promulgated in 2005 and addressed both
the 1997 fine particulate matter (PM2.5) NAAQS and 1997
ozone NAAQS.\38\ CAIR required SIP revisions in 28 states and the
District of Columbia to reduce emissions of sulfur dioxide
(SO2) and/or NOX--important precursors of
regionally transported PM2.5 (SO2 and annual
NOX) and ozone (summer-time NOX). As in the
NOX SIP Call, states were given the option to participate in
regional trading programs to achieve the reductions. When EPA
promulgated the final CAIR in 2005, EPA also issued findings that
states nationwide had failed to submit SIPs to address the requirements
of CAA section 110(a)(2)(D)(i) with respect to the 1997
PM2.5 and 1997 ozone NAAQS.\39\ On March 15, 2006, EPA
promulgated FIPs to implement the emission reductions required by
CAIR.\40\ CAIR was remanded to EPA by the D.C. Circuit in North
Carolina v. EPA, 531 F.3d 896 (D.C. Cir. 2008), modified on reh'g, 550
F.3d 1176. For more information on the legal issues underlying CAIR and
the D.C. Circuit's holding in North Carolina, refer to the preamble of
the CSAPR rule.\41\
---------------------------------------------------------------------------

    \38\ 70 FR 25162 (May 12, 2005).
    \39\ 70 FR 21147 (April 25, 2005).
    \40\ 71 FR 25328 (April 28, 2006).
    \41\ 76 FR 48208, 48217 (Aug. 8, 2011).
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    In 2011, EPA promulgated the CSAPR to address the issues raised by
the remand of CAIR. The CSAPR addressed the two NAAQS at issue in CAIR
and additionally addressed the good neighbor provision for the 2006
PM2.5 NAAQS.\42\ The CSAPR required 28 states to reduce
SO2 emissions, annual NOX emissions, and/or ozone
season NOX emissions that significantly contribute to other
states' nonattainment or interfere with other states' abilities to
maintain these air quality standards.\43\ To align implementation with
the applicable attainment deadlines, EPA promulgated FIPs for each of
the 28 states covered by the CSAPR. The FIPs require EGUs in the
covered states to participate in regional trading programs to achieve
the necessary emission reductions. Each state can submit a good
neighbor SIP at any time that, if approved by EPA, would replace the
CSAPR FIP for that state.
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    \42\ 76 FR 48208.
    \43\ The CSAPR was revised by several rulemakings after its
initial promulgation in order to revise certain states' budgets and
to promulgate FIPs for five additional states addressing the good
neighbor obligation for the 1997 ozone NAAQS. See 76 FR 80760 (Dec.
27, 2011); 77 FR 10324 (Feb. 21, 2012); 77 FR 34830 (June 12, 2012).
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    The CSAPR was the subject of an adverse decision by the D.C.
Circuit in August 2012.\44\ However, this decision was reversed in
April 2014 by the Supreme Court, which largely upheld the rule,
including EPA's approach to addressing interstate transport in the
CSAPR. EPA v. EME Homer City Generation, L.P., 572 U.S. 489 (2014) (EME
Homer City I). The rule was remanded to the D.C. Circuit to consider
claims not addressed by the Supreme Court. Id. In July 2015 the D.C.
Circuit generally affirmed EPA's interpretation of various statutory
provisions and EPA's technical decisions. EME Homer City Generation,
L.P. v. EPA, 795 F.3d 118 (2015) (EME Homer City II). However, the
court remanded the rule without vacatur for reconsideration of EPA's
emissions budgets for certain states, which the court found may have
over-controlled those states' emissions with respect to the downwind
air quality problems to which the states

were linked. Id. at 129-30, 138. For more information on the legal
issues associated with the CSAPR and the Supreme Court's and D.C.
Circuit's decisions in the EME Homer City litigation, refer to the
preamble of the CSAPR Update.\45\
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    \44\ On August 21, 2012, the D.C. Circuit issued a decision in
EME Homer City Generation, L.P. v. EPA, 696 F.3d 7 (D.C. Cir. 2012),
vacating the CSAPR. EPA sought review with the D.C. Circuit en banc
and the D.C. Circuit declined to consider EPA's appeal en banc. EME
Homer City Generation, L.P. v. EPA, No. 11-1302 (D.C. Cir. January
24, 2013), ECF No. 1417012 (denying EPA's motion for rehearing en
banc).
    \45\ 81 FR 74504, 74511 (Oct. 26, 2016).
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    In 2016, EPA promulgated the CSAPR Update to address interstate
transport of ozone pollution with respect to the 2008 ozone NAAQS.\46\
The final rule updated the CSAPR ozone season NOX emissions
budgets for 22 states to achieve cost-effective and immediately
feasible NOX emission reductions from EGUs within those
states.\47\ EPA aligned the analysis and implementation of the CSAPR
Update with the 2017 ozone season in order to assist downwind states
with timely attainment of the 2008 ozone NAAQS.\48\ The CSAPR Update
implemented the budgets through FIPs requiring sources to participate
in a revised CSAPR NOX ozone season trading program
beginning with the 2017 ozone season. As under the CSAPR, each state
could submit a good neighbor SIP at any time that, if approved by EPA,
would replace the CSAPR Update FIP for that state. The final CSAPR
Update also addressed the remand by the D.C. Circuit of certain states'
CSAPR phase 2 ozone season NOX emissions budgets in EME
Homer City II. Further details regarding the CSAPR Update are discussed
in sections IV.C.1.a and IV.C.1.b below.
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    \46\ 81 FR 74504.
    \47\ One state, Kansas, was made newly subject to the CSAPR
ozone season NOX requirement by the CSAPR Update. All
other CSAPR Update states were already subject to ozone season
NOX requirements under the CSAPR.
    \48\ 81 FR 74516. EPA's final 2008 Ozone NAAQS SIP Requirements
Rule, 80 FR 12264, 12268 (Mar. 6, 2015), revised the attainment
deadline for ozone nonattainment areas designated as Moderate to
July 20, 2018. See 40 CFR 51.1103. In order to demonstrate
attainment by this deadline, states were required to rely on design
values calculated using ozone season data from 2015 through 2017,
since the July 20, 2018, deadline did not afford enough time for
measured data of the full 2018 ozone season.
---------------------------------------------------------------------------

    In December 2018, EPA promulgated the CSAPR ``Close-Out,'' which
determined that no further enforceable reductions in emissions of
NOX were required with respect to the 2008 ozone NAAQS for
20 of the 22 eastern states covered by the CSAPR Update, and reflected
that determination in revisions to the existing state-specific sections
of the CSAPR Update regulations for those states.\49\ Further details
on the CSAPR Close-Out are discussed in section IV.C.1.c below.
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    \49\ 83 FR 65878, 65882 (Dec. 21, 2018). After promulgating the
CSAPR Update and before promulgating the CSAPR Close-Out, EPA
approved a SIP from Kentucky resolving the Commonwealth's good
neighbor obligations for the 2008 ozone NAAQS. 83 FR 33730 (July 17,
2018). In this action, EPA is making an error correction under CAA
section 110(k)(6) to convert this approval to a disapproval, because
the Kentucky approval relied on the same analysis which the D.C.
Circuit determined to be unlawful in the CSAPR Close-Out. Our action
with respect to Kentucky is discussed in section IV.C.2.b. below.
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    The CSAPR Update and the CSAPR Close-Out were both subject to legal
challenges in the D.C. Circuit. Wisconsin v. EPA, 938 F.3d 303 (D.C.
Cir. 2019) (Wisconsin); New York v. EPA, 781 Fed. App'x 4 (D.C. Cir.
2019) (New York). As discussed in greater detail in section IV.C.1.d
below, in September 2019, the D.C. Circuit upheld the CSAPR Update in
virtually all respects, but remanded the rule because it was partial in
nature and did not fully eliminate upwind states' significant
contribution to nonattainment or interference with maintenance of the
2008 ozone NAAQS by ``the relevant downwind attainment deadlines'' in
the CAA. Wisconsin, 938 F.3d at 313-15. In October 2019, the D.C.
Circuit vacated the CSAPR Close-Out on the same grounds that it
remanded the CSAPR Update in Wisconsin, specifically that the Close-Out
rule did not address good neighbor obligations by ``the next applicable
attainment date'' of downwind states. New York, 781 Fed. App'x at 7.

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

A. The Interstate Ozone Transport Challenge

    Interstate transport of NOX emissions poses significant
challenges with respect to the 2008 ozone NAAQS in the eastern U.S. and
thus presents a threat to public health and welfare.
1. Nature of Ozone and the Ozone NAAQS
    Ground-level ozone is not emitted directly into the air but is
created by chemical reactions between NOX and volatile
organic compounds (VOC) in the presence of sunlight. Emissions from
electric utilities and industrial facilities, motor vehicles, gasoline
vapors, and chemical solvents are some of the major sources of
NOX and VOC.
    Because ground-level ozone formation increases with temperature and
sunlight, ozone levels are generally higher during the summer.
Increased temperature also increases emissions of volatile man-made and
biogenic organics and can indirectly increase NOX emissions
as well (e.g., increased electricity generation for air conditioning).
    The 2008 primary and secondary ozone standards are both 75 ppb as
an 8-hour level.\50\ Specifically, the standards require that the 3-
year average of the fourth highest 24-hour maximum 8-hour average ozone
concentration may not exceed 75 ppb as a truncated value (i.e., digits
to right of decimal removed).\51\ In general, areas that exceed the
ozone standard are designated as nonattainment areas, pursuant to the
designations process under CAA section 107 and are subject to
heightened planning requirements depending on the degree of severity of
their nonattainment classification, see CAA sections 181, 182.
---------------------------------------------------------------------------

    \50\ 73 FR 16436 (Mar. 27, 2008).
    \51\ 40 CFR part 50, Appendix P to part 50.
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2. Ozone Transport
    Studies have established that ozone formation, atmospheric
residence, and transport occur on a regional scale (i.e., thousands of
kilometers) over much of the eastern U.S.\52\ While substantial
progress has been made in reducing ozone in many areas, interstate
ozone transport is still an important component of peak ozone
concentrations during the summer ozone season.
---------------------------------------------------------------------------

    \52\ Bergin, M.S. et al. (2007) Regional air quality: Local and
interstate impacts of NOX and SO2 emissions on
ozone and fine particulate matter in the eastern United States.
Environmental Sci & Tech. 41: 4677-4689.
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    EPA has previously concluded in the NOX SIP Call, CAIR,
and the CSAPR that, for reducing regional-scale ozone transport, a
NOX control strategy would be most effective. NOX
emissions can be transported downwind as NOX or, after
transformation in the atmosphere, as ozone. As a result of ozone
transport, in any given location, ozone pollution levels are impacted
by a combination of local emissions and emissions from upwind sources.
The transport of ozone pollution across state borders compounds the
difficulty for downwind states in meeting health-based air quality
standards (i.e., NAAQS). Assessments of ozone, for example those
conducted for the October 2015 Regulatory Impact Analysis of the Final
Revisions to the National Ambient Air Quality Standards for Ground-
Level Ozone (EPA-452/R-15-007), continue to show the importance of
NOX emissions for ozone transport. This analysis is in the
docket for this final rule and can be also found at EPA's website at:
https://www.epa.gov/ttnecas1/docs/20151001ria.pdf.
    Further, studies have found that EGU NOX emission
reductions can be effective in reducing individual 8-hour peak ozone
concentrations and in

reducing 8-hour peak ozone concentrations averaged across the ozone
season. For example, a study that evaluates the effectiveness on ozone
concentrations of EGU NOX reductions achieved under the
NOX Budget Trading Program (i.e., the NOX SIP
Call) shows that regulating NOX emissions in that program
was highly effective in reducing both ozone and dry-NO3
concentrations during the ozone season. Further, this study indicates
that EGU emissions, which are generally released higher in the air
column through tall stacks and are significant in quantity, may
disproportionately contribute to long-range transport of ozone
pollution on a per-ton basis.\53\
---------------------------------------------------------------------------

    \53\ Butler, et al., ``Response of Ozone and Nitrate to
Stationary Source Reductions in the Eastern USA''. Atmospheric
Environment, 2011.
---------------------------------------------------------------------------

    Previous regional ozone transport efforts, including the
NOX SIP Call, CAIR, and the CSAPR, required ozone season
NOX reductions from EGUs to address interstate transport of
ozone. EPA took comment on regulating EGU NOX emissions to
address interstate ozone transport in the notice-and-comment process
for these rulemakings. EPA received some comments suggesting it modify
its pollutant focus to either include VOCs in addition to
NOX, or apply a more granular time scale. However, EPA did
not modify its proposed approach in this final rule. These comments, as
well as EPA's responses, are addressed in section VI.A and VII.B.
    As described in section VI, EPA's analysis finds that the power
sector continues to be capable of making NOX reductions at
reasonable cost that reduce interstate transport with respect to
ground-level ozone. EGU NOX emission reductions can be made
in the near-term under this final rule by fully operating existing EGU
NOX post-combustion controls (i.e., SCRs and SNCRs)--
including optimizing NOX removal by existing operational
controls and turning on and optimizing existing idled controls;
installation of (or upgrading to) state-of-the-art NOX
combustion controls; and shifting generation to units with lower
NOX emission rates. Further, additional assessment reveals
that these available EGU NOX reductions would make
meaningful and timely improvements in ozone air quality.
    EPA also observes that significant emission reduction potential
from EGUs is available through post-combustion control retrofits (e.g.,
new SCRs and new SNCRs). These controls reduce emissions and can have a
meaningful air quality impact, but, in contrast to the controls
discussed above, they are only available on a longer time frame
(reflecting the time required to develop, construct, and install the
technology) that exceeds the expected downwind nonattainment and
maintenance problems for the 2008 ozone NAAQS and are estimated to have
a higher cost.
3. Health and Environmental Effects
    Exposure to ambient ozone causes a variety of negative effects on
human health, vegetation, and ecosystems. In humans, acute and chronic
exposure to ozone is associated with premature mortality and a number
of morbidity effects, such as asthma exacerbation. In ecosystems, ozone
exposure causes visible foliar injury, decreases plant growth, and
affects ecosystem community composition. See EPA's October 2020
Regulatory Impact Analysis for the Proposed Revised Cross-State Air
Pollution Rule (CSAPR) Update for the 2008 Ozone NAAQS (EPA-452/P-20-
003), in the docket for this rule and available on EPA's website at:
https://www.epa.gov/sites/production/files/2020-10/documents/revised_csapr_update_ria_proposal.pdf, for more information on the
human health and welfare and ecosystem effects associated with ambient
ozone exposure.

B. Relationship Between This Regulatory Action and the 2015 Ozone NAAQS

    On October 1, 2015, EPA strengthened the ground-level ozone NAAQS
to 70 ppb on an eight-hour averaging time.\54\ While reductions
achieved by this rule may have the effect of aiding in attainment and
maintenance of the 2015 standard, this action is taken solely with
respect to EPA's authority to address remaining CAA good neighbor
obligations under the 2008 ozone NAAQS. EPA and states are working
outside of this final action to address the CAA good neighbor provision
for the 2015 ozone NAAQS, including consideration of any necessary
control requirements for EGU and non-EGU sources.
---------------------------------------------------------------------------

    \54\ 80 FR 65291 (Oct. 26, 2015). On December 20, 2020, EPA
published its decision, based on the air quality criteria, to retain
the existing 8-hour NAAQS for ozone. See https://www.epa.gov/ground-level-ozone-pollution/ozone-national-ambient-air-quality-standards-naaqs.
---------------------------------------------------------------------------

    EPA received several comments regarding the relationship of this
rule to the 2015 ozone NAAQS and the schedule for implementation of
good neighbor obligations related to that NAAQS. These comments are out
of the scope of this action, which considers states' obligations under
2008 ozone NAAQS in response to the Wisconsin remand and the New York
vacatur. Wisconsin v. EPA, 938 F.3d 303 (D.C. Cir. 2019). New York v.
EPA, 781 F. App'x 4 (D.C. Cir. 2019). This action does not address any
state's obligations under the 2015 ozone NAAQS. Nonetheless, the
emission reductions and associated improvement in ozone levels achieved
by this action are beneficial toward reducing ozone for purposes of the
2015 ozone NAAQS and its associated attainment planning and good
neighbor requirements. In some cases, the reductions necessary to
address significant contribution or interference with maintenance at
receptors identified in this action for purposes of the 2008 ozone
NAAQS will have the effect of incidentally improving ozone levels at
potential receptors under the 2015 ozone NAAQS.

C. Approach To Address the Remanded Transport Obligations for the 2008
Ozone NAAQS

1. Events Affecting Application of the Good Neighbor Provision for the
2008 Ozone NAAQS
    EPA is taking this action to address the remand of the CSAPR Update
in Wisconsin v. EPA, 938 F.3d 303 (D.C. Cir. 2019). This section will
discuss the key, relevant aspects of the CSAPR Update, the related
CSAPR Close-Out, and the D.C. Circuit's decisions in Wisconsin and New
York v. EPA, 781 Fed. App'x 4 (D.C. Cir. 2019) (the latter of which
vacated the Close-out Rule based on the same reasoning as the Wisconsin
decision remanding the Update). The basis for EPA's authority under CAA
section 110(c) (42 U.S.C. 7410(c)) to promulgate good neighbor FIPs for
the 21 states subject to this action on remand is discussed in sections
III and IV.C.2.
a. The CSAPR Update
    On October 26, 2016, the CSAPR Update was published in the Federal
Register. 81 FR 74504. The purpose of the CSAPR Update was to address
the good neighbor provision for the 2008 ozone NAAQS, as well as
address the remanded CSAPR obligations for the 1997 ozone NAAQS. The
CSAPR Update required EGUs in 22 states to reduce ozone season
NOX emissions that significantly contribute to other states'
nonattainment or interfere with other states' abilities to maintain the
2008 ozone NAAQS.
    To establish and implement the CSAPR Update emissions budgets, EPA
followed the same 4-step analytic process that it used in the CSAPR, an

approach which reflects the evolution of the Agency's prior regional
interstate transport rulemakings related to ozone NAAQS. The 4-step
framework is described in more detail in sections IV.C.3 and VI.A.
    In the CSAPR Update, to evaluate the scope of the interstate ozone
transport problem at step 1, EPA identified downwind areas that were
expected to have problems attaining and maintaining the 2008 ozone
NAAQS using modeling that projected air quality to a future compliance
year. See 81 FR 74517. EPA aligned the analysis and implementation of
the CSAPR Update with the 2017 ozone season (May 1-September 30) in
order to assist downwind states with attainment of the 2008 ozone NAAQS
by the 2018 Moderate area attainment date. Id. at 74516. (EPA's final
2008 Ozone NAAQS SIP Requirements Rule established the attainment
deadline of July 20, 2018, for ozone nonattainment areas classified as
Moderate.\55\) Because the attainment date fell during the 2018 ozone
season, the 2017 ozone season was the last full season from which data
could be used to determine attainment of the NAAQS by that date.
---------------------------------------------------------------------------

    \55\ See 80 FR 12264, 12268 (Mar. 6, 2015); 40 CFR 51.1103.
---------------------------------------------------------------------------

    At step 2, EPA identified upwind states that collectively
contribute to these identified downwind areas. In the CSAPR Update, EPA
used a screening threshold of 1 percent of the NAAQS to identify states
``linked'' to downwind ozone problems sufficient for further evaluation
for significant contribution to nonattainment or interference with
maintenance of the NAAQS under the good neighbor provision. 81 FR
74518. This same threshold for analysis was used in the CSAPR as to the
1997 ozone NAAQS. See 76 FR at 48237-38.
    At step 3, EPA quantified emissions from upwind states that would
significantly contribute to nonattainment or interfere with maintenance
by first evaluating various levels of uniform NOX control
stringency, each represented by an estimated representative marginal
cost per ton of NOX reduced. EPA then applied the same
multi-factor test that was used in the CSAPR to evaluate cost,
available emission reductions, and downwind air quality impacts to
determine the appropriate level of uniform NOX control
stringency that addressed the impacts of interstate transport on
downwind nonattainment or maintenance receptors. EPA used this multi-
factor assessment to gauge the extent to which emission reductions
could be implemented in the future compliance year (i.e., 2017) and to
evaluate the potential for over- and under-control of upwind state
emissions.
    Within the multi-factor test, EPA identified a ``knee in the
curve,'' i.e., a point at which the cost-effectiveness of the emission
reductions was maximized, so named for the discernable turning point
observable in a multi-factor (i.e., multi-variable) curve. See 81 FR
74550. EPA concluded that this was at the point where emissions budgets
reflected a uniform NOX control stringency represented by an
estimated marginal cost of $1,400 per ton (2011$) of NOX
reduced. This cost threshold in turn represented a control strategy of
installing or upgrading combustion controls and optimizing existing SCR
controls. In light of this multi-factor test, EPA determined this level
of stringency in emissions budgets represented the level at which
incremental EGU NOX reduction potential and corresponding
downwind ozone air quality improvements were maximized--relative to
other control stringencies evaluated--with respect to marginal cost.
That is, the ratio of emission reductions to marginal cost and the
ratio of ozone improvements to marginal cost were maximized relative to
the other levels of control stringency evaluated. EPA found that
feasible and cost-effective EGU NOX reductions were
available to make meaningful and timely improvements in downwind ozone
air quality to address interstate ozone transport for the 2008 ozone
NAAQS for the 2017 ozone season. Id. at 74508. Further, the Agency's
evaluation showed that emissions budgets reflecting the $1,400 per ton
cost threshold did not over-control upwind states' emissions relative
to either the downwind air quality problems to which they were linked
or the 1 percent contribution threshold in step 2 that triggered their
further evaluation in step 3. Id. at 74551-52.
    At step 4, EPA finalized EGU ozone season NOX emissions
budgets developed using uniform control stringency represented by
$1,400 per ton. These budgets represented emissions remaining in each
state after elimination of the amounts of emissions that EPA identified
would significantly contribute to nonattainment or interfere with
maintenance of the 2008 ozone NAAQS in downwind states. EPA promulgated
FIPs requiring the covered power plants in the 22 covered states to
participate in the CSAPR NOX Ozone Season Group 2 Trading
Program starting in 2017.\56\
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    \56\ The NOX ozone season trading program created
under the CSAPR was renamed the CSAPR NOX Ozone Season
Group 1 Trading Program and now applies only to sources in Georgia.
In the CSAPR Update, EPA found that Georgia did not contribute to
interstate transport with respect to the 2008 ozone NAAQS, but the
state has an ongoing ozone season NOX requirement under
the CSAPR with respect to the 1997 ozone NAAQS.
---------------------------------------------------------------------------

b. Partial Nature of the CSAPR Update
    At the time it promulgated the CSAPR Update, EPA considered the
FIPs to be ``partial'' and that the rule ``may not be sufficient to
fully address these states' good neighbor obligations'' for the 2008
ozone NAAQS for 21 of the 22 states included in that rule. 81 FR 74508,
74521 (Oct. 26, 2016). Based on information available at the time of
the rule's promulgation, EPA was unable to conclude that the CSAPR
Update fully addressed most of the covered states' good neighbor
obligations for the 2008 ozone NAAQS. Id. at 74521. Information
available at the time indicated that, even with the CSAPR Update
implementation, several downwind receptors were expected to continue
having problems attaining and maintaining this NAAQS and that emissions
from upwind states were expected to continue to contribute greater than
or equal to 1 percent of the NAAQS to these areas during the 2017 ozone
season. Id. at 74551-52. Further, EPA could not conclude at that time
whether additional EGU and non-EGU reductions implemented on a longer
timeframe than 2017 would be needed to address states' good neighbor
obligations for this NAAQS.
    Additionally, EPA determined it was not feasible to complete an
emissions control analysis that may otherwise have been necessary to
evaluate full elimination of each state's significant contribution to
nonattainment or interference with maintenance and also ensure that
emission reductions already quantified in the rule would be achieved by
2017. Id. at 74522. EPA was unable to fully consider both non-EGU ozone
season NOX reductions and further EGU reductions that may
have been achievable after 2017. Id. at 74521. See section IV.D.3
below.
    Thus, EPA also could not make an emission reduction-based
conclusion that the CSAPR Update would fully resolve states' good
neighbor obligations with respect to the 2008 ozone NAAQS because the
reductions evaluated and required by the CSAPR Update were limited in
scope (both by technology and sector). As a result of the remaining air
quality problems and the limitations

on EPA's analysis, for all but one of the 22 affected states, EPA did
not determine in the CSAPR Update that the rule fully addressed those
states' downwind air quality impacts under the good neighbor provision
for the 2008 ozone NAAQS. Id. at 74521. For one state, Tennessee, EPA
determined in the final CSAPR Update that Tennessee's emissions budget
fully eliminated the state's significant contribution to downwind
nonattainment and interference with maintenance of the 2008 ozone NAAQS
because the downwind air quality problems to which the state was linked
were projected to be resolved with implementation of the CSAPR Update.
Id. at 74552.
c. The CSAPR Close-Out
    Following implementation of the CSAPR Update and the approval of
Kentucky's SIP (under a court-ordered deadline),\57\ on December 21,
2018, EPA issued the CSAPR ``Close-Out'' to address any good neighbor
obligations that remained for the 2008 ozone NAAQS for the 20 remaining
states in the CSAPR Update region. See 83 FR 65878 (Dec. 21, 2018). The
CSAPR Close-Out made a determination that, based on additional
information and analysis, the CSAPR Update fully addressed the
remaining 20 affected states' good neighbor obligations for the 2008
ozone NAAQS. In particular, EPA determined that 2023 was an appropriate
future analytic year considering relevant attainment dates and the time
EPA estimated to be necessary to implement new NOX control
technologies at EGUs. Based on EPA's analysis of projected air quality
in that year, EPA determined that, for the purposes of addressing good
neighbor obligations for the 2008 ozone NAAQS, there would be no
remaining nonattainment or maintenance receptors in the eastern U.S. As
a result of this determination, EPA found that, with continued
implementation of the CSAPR Update, these 20 states would no longer
contribute significantly to nonattainment in, or interfere with
maintenance by, any other state with respect to the 2008 ozone NAAQS.
Id.
---------------------------------------------------------------------------

    \57\ See 83 FR 33730 (July 17, 2018) (approval of Kentucky's SIP
for the 2008 ozone NAAQS). See section IV.C.2.b. for discussion of
the final action regarding Kentucky in this notice.
---------------------------------------------------------------------------

d. D.C. Circuit Decisions in Wisconsin v. EPA and New York v. EPA
    The CSAPR Update was subject to petitions for judicial review, and
the D.C. Circuit issued its opinion in Wisconsin v. EPA on September
13, 2019. 938 F.3d 303. The D.C. Circuit upheld the CSAPR Update in all
respects save one: The court concluded that the CSAPR Update was
inconsistent with the CAA to the extent that it was partial in nature
and did not fully eliminate upwind states' significant contribution to
nonattainment or interference with maintenance of the 2008 ozone NAAQS
by the downwind states' 2018 Moderate attainment date. Id. at 313.
    The court identified three bases for this holding: (1) The D.C.
Circuit's prior opinion in North Carolina v. EPA, 531 F.3d 896 (2008),
which held, in the context of CAIR, that the good neighbor provision
requires states to eliminate significant contribution ``consistent with
the provisions'' of Title I of the CAA, including the attainment dates
applicable in downwind areas, 938 F.3d at 314 (citing 531 F.3d at 912);
(2) the unreasonableness of EPA's interpretation of the phrase
``consistent with the provisions [of Title I]'' in the good neighbor
provision as allowing for variation from the attainment schedule in CAA
section 181 because it would enable significant contribution from
upwind states to continue beyond that statutory timeframe, 938 F.3d at
315-18; and (3) the court's finding that the practical obstacles EPA
identified regarding why it needed more time to implement a full remedy
did not rise to the level of an ``impossibility,'' id. at 318-20. With
respect to the third basis, the court also found EPA must make a higher
showing of uncertainty regarding non-EGU point-source NOX
mitigation potential before declining to regulate such sources. Id. at
318-20.
    However, the court identified flexibilities that EPA retains in
administering the good neighbor provision, acknowledging that EPA has
latitude in defining which upwind contribution ``amounts'' count as
significant and thus must be abated, permitting EPA to consider, among
other things, the magnitude of upwind states' contributions and the
cost associated with eliminating them. 938 F.3d at 320. The court
further noted that, in certain circumstances, EPA can grant extensions
of the attainment deadlines under the Act; for instance, the court
cited CAA section 181(a)(5), which allows EPA to grant one-year
extensions from attainment dates under certain circumstances. Id.
Finally, the court noted that EPA can attempt to show
``impossibility.'' Id. The court also recognized that the statutory
command that compliance with the good neighbor provision must be
achieved consistent with Title I might be read, upon a sufficient
showing of necessity, to allow some deviation from downwind deadlines,
so long as it is rooted in Title I's framework and provides a
sufficient level of protection to downwind States. Id.
    The court in Wisconsin remanded but did not vacate the CSAPR
Update, finding that vacatur of the rule could cause harm to public
health and the environment or disrupt the trading program EPA had
established and that the obligations imposed by the rule may be
appropriate and sustained on remand. Id. at 336. The court also
rejected petitioners' request to place EPA on a six-month schedule to
address the remand, noting the availability of ``mandamus'' relief
before the D.C. Circuit should EPA fail to ``modify the rule in a
manner consistent with our opinion.'' Id. at 336-37.
    On October 1, 2019, in a judgment order, the D.C. Circuit vacated
the CSAPR Close-Out on the same grounds that it remanded the Update in
Wisconsin. New York v. EPA, 781 Fed. App'x 4 (D.C. Cir. 2019). Because
the Close-Out analyzed the year 2023 rather than 2021 (``the next
applicable attainment date'') and failed to demonstrate that it was
impossible to address significant contribution by the 2021 attainment
date, the court found the rule ran afoul of the Wisconsin holding. Id.
at 7. ``As the EPA acknowledges, the Close-Out Rule `relied upon the
same statutory interpretation of the Good Neighbor Provision' that we
rejected in Wisconsin. Thus, the Agency's defense of the Close-Out Rule
in these cases is foreclosed.'' Id. at 6-7 (internal citation omitted).
The court left open the possibility that the flexibilities identified
in Wisconsin, 938 F.3d at 320, and outlined above, may be available to
EPA on remand. Id.
    Following Wisconsin and New York, EPA on remand must address good
neighbor obligations for the 21 states within the CSAPR Update region
for which the Update was only a partial remedy. As explained in the
following section, EPA already retains FIP authority as to 20 of these
states. In addition, EPA is taking action pursuant to CAA section
110(k)(6) (42 U.S.C. 7410(k)(6)) to find that Kentucky's SIP was
approved in error and is thus promulgating a FIP for Kentucky
consistent with the obligations for the other remaining CSAPR Update
region states.
2. FIP Authority for Each State Covered by the Final Rule
    On March 12, 2008, EPA promulgated a revision to the ozone NAAQS,
lowering both the primary and

secondary standards to 75 ppb. See National Ambient Air Quality
Standards for Ozone, Final Rule, 73 FR 16436 (March 27, 2008).
Specifically, the standards require that an area may not exceed 0.075
parts per million (75 ppb) using the 3-year average of the fourth
highest 24-hour maximum 8-hour rolling average ozone concentration.
These revisions of the NAAQS, in turn, triggered a 3-year deadline for
states to submit SIP revisions addressing infrastructure requirements
under CAA sections 110(a)(1) and 110(a)(2), including the good neighbor
provision. Several events affected the timely application of the good
neighbor provision for the 2008 ozone NAAQS, including reconsideration
of the 2008 ozone NAAQS and legal developments pertaining to the CSAPR,
which created uncertainty surrounding EPA's statutory interpretation
and implementation of the good neighbor provision.\58\ Notwithstanding
these events, EPA ultimately affirmed that states' good neighbor SIPs
were due on March 12, 2011.
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    \58\ These events are described in detail in section IV.A.2 of
the CSAPR Update. See 81 FR 74515.
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a. FIP Authority for the CSAPR Update States
    EPA subsequently took several actions that triggered EPA's
obligation under CAA section 110(c) to promulgate FIPs addressing the
good neighbor provision for several states.\59\ First, on July 13,
2015, EPA published a rule finding that 24 states failed to make
complete submissions that address the requirements of section
110(a)(2)(D)(i)(I) related to the interstate transport of pollution as
to the 2008 ozone NAAQS. See 80 FR 39961 (effective August 12, 2015).
This finding triggered a two-year deadline for EPA to issue FIPs to
address the good neighbor provision for these states by August 12,
2017. The CSAPR Update finalized FIPs for 13 of these states (Alabama,
Arkansas, Illinois, Iowa, Kansas, Michigan, Mississippi, Missouri,
Oklahoma, Pennsylvania, Tennessee, Virginia, and West Virginia),
requiring their participation in a NOX trading program. EPA
also determined in the CSAPR Update that the Agency had no further FIP
obligation as to nine additional states identified in the finding of
failure to submit because these states did not contribute significantly
to nonattainment in, or interfere with maintenance by, any other state
with respect to the 2008 ozone NAAQS. See 81 FR 74506.\60\ \61\ On June
15, 2016, and July 20, 2016, EPA published additional rules finding
that Maryland and New Jersey, respectively, also failed to submit
transport SIPs for the 2008 ozone NAAQS. See 81 FR 38963 (June 15,
2016) (New Jersey, effective July 15, 2016); 81 FR 47040 (July 20,
2016) (Maryland, effective August 19, 2016). The finding actions
triggered two-year deadlines for EPA to issue FIPs to address the good
neighbor provision for Maryland by August 19, 2018, and for New Jersey
by July 15, 2018. The CSAPR Update also finalized FIPs for these two
states.
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    \59\ This section of the preamble focuses on SIP and FIP actions
for those states addressed in the CSAPR Update. EPA has also acted
on SIPs for other states not mentioned in this action. The
memorandum, ``Proposed Action, Status of 110(a)(2)(D)(i)(I) SIPs for
the 2008 Ozone NAAQS,'' more fully describes the good neighbor SIP
status for the 2008 ozone NAAQS and is available in the docket for
this rule.
    \60\ The nine states were Florida, Georgia, Maine,
Massachusetts, Minnesota, New Hampshire, North Carolina, South
Carolina, and Vermont. These determinations were not challenged in
Wisconsin, and EPA is not reopening these determinations in this
rule.
    \61\ The two remaining states addressed in the findings of
failure to submit (California and New Mexico) were not part of the
CSAPR Update or the CSAPR Close-Out analysis and are not addressed
in this rule.
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    In addition to these findings, EPA finalized disapproval or partial
disapproval actions for good neighbor SIPs submitted by Indiana,
Kentucky, Louisiana, New York, Ohio, Texas, and Wisconsin.\62\ These
disapprovals triggered EPA's obligation to promulgate FIPs to implement
the requirements of the good neighbor provision for those states within
two years of the effective date of each disapproval or, in the case of
Kentucky, within two years of the issuance of the judgment in a
subsequent Supreme Court decision.\63\ EPA promulgated FIPs in the
CSAPR Update for each of these states.
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    \62\ See the following actions: Indiana (81 FR 38957, June 15,
2016); Kentucky (78 FR 14681, March 7, 2013); Louisiana (81 FR
53308, August 12, 2016); New York (81 FR 58849, August 26, 2016);
Ohio (81 FR 38957, June 15, 2016); Texas (81 FR 53284, August 12,
2016); and Wisconsin (81 FR 53309, August 12, 2016).
    \63\ In the 2013 disapproval action for Kentucky, EPA stated
that it had no mandatory duty to issue a FIP because of the D.C.
Circuit's holding in EME Homer City Generation, L.P. v. EPA, 696
F.3d 7 (D.C. Cir. 2012), that EPA cannot impose good neighbor FIPs
without first quantifying states' obligations. See 78 FR 14681. In
2014, the Supreme Court reversed the D.C. Circuit's holding. EPA v.
EME Homer City Generation, L.P., 572 U.S. 489, 509-10 (2014). In
light of the Supreme Court's decision, on review of our 2013
disapproval action for Kentucky in the Sixth Circuit, EPA requested,
and the court granted, a vacatur and remand of the portion of EPA's
final action that determined that a FIP obligation was not
triggered. See Order, Sierra Club v. EPA, No. 13-3546, ECF No. 74-1
(6th Cir. Mar. 13, 2015). On remand, EPA determined that its FIP
obligation as to Kentucky was triggered as of June 2, 2014, the date
of issuance of the Supreme Court's judgment. See 81 FR 74513.
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    As discussed in more detail above in section IV.C.1, in issuing the
CSAPR Update, EPA could not determine that it had entirely addressed
EPA's outstanding CAA obligations to implement the good neighbor
provision with respect to the 2008 ozone NAAQS for 21 of 22 states
covered by that rule. Accordingly, the CSAPR Update did not fully
satisfy EPA's obligation under CAA section 110(c) to address the good
neighbor provision requirements for those states by approving SIPs,
issuing FIPs, or some combination of those two actions. EPA found that
the CSAPR Update FIPs fully addressed the good neighbor provision for
the 2008 ozone NAAQS only with respect to Tennessee.
b. Correction of EPA's Determination Regarding Kentucky's SIP Revision
and Its Impact on EPA's FIP Authority for Kentucky
    After promulgating the CSAPR Update and before promulgating the
CSAPR Close-Out, EPA approved a SIP submission from Kentucky resolving
the Commonwealth's good neighbor obligations for the 2008 ozone NAAQS
based on a demonstration that no further emission reductions were
needed from Kentucky with the CSAPR Update FIP for Kentucky in place.
See 83 FR 33730 (July 17, 2018). The action was separate from the CSAPR
Close-Out because it was taken in response to a May 23, 2017 order from
the U.S. District Court for the Northern District of California
requiring EPA to take a final action fully addressing the good neighbor
obligation for the 2008 ozone NAAQS for Kentucky by June 30, 2018.\64\
EPA was obligated to address the outstanding obligation by either
approving a SIP revision submitted by Kentucky or promulgating a FIP to
address any remaining obligation.\65\
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    \64\ See Order, Sierra Club v. Pruitt, No. 3:15-cv-04328 (N.D.
Cal. May 23, 2017).
    \65\ The obligation ultimately derives from EPA's 2013 action
disapproving Kentucky's SIP addressing the 2008 ozone NAAQS on the
basis that Kentucky relied on the CAIR program for the 2008 ozone
NAAQS good neighbor obligation. However, as previously discussed,
the trigger for the timing of the obligation was the 2014 issuance
of the Supreme Court's judgment in EPA v. EME Homer City Generation,
L.P., 572 U.S. 489 (2014). See supra note 63.
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    On May 10, 2018, Kentucky submitted a final SIP revision to EPA, on
which the Agency finalized approval consistent with the court-ordered
deadline. See 83 FR 33730. The Kentucky SIP revision that EPA approved
relied on the reductions from the CSAPR Update FIP for Kentucky and
provided a technical analysis, including emission projections and air
quality modeling for 2023, showing that

with the CSAPR Update level of reductions, the receptors to which
Kentucky was linked were attaining and maintaining the 2008 ozone NAAQS
in 2023. This allowed EPA to conclude that Kentucky did not have any
further obligation for the 2008 ozone NAAQS, and EPA approved the SIP
revision. The SIP revision from Kentucky was an analytical
demonstration only, and it did not replace the CSAPR Update FIP;
rather, the CSAPR Update FIP was left in place for Kentucky and was
relied on in the state's demonstration.
    The approval relied on the same rationale and technical analysis--
including the use of a 2023 analytic year--that was eventually used for
the other CSAPR Update FIP states in the CSAPR Close-Out. EPA's
approval stated:

``no additional emission reductions are necessary to address the
good neighbor provision for the 2008 ozone NAAQS beyond those
required by the Cross-State Air Pollution Rule Update (CSAPR Update)
federal implementation plan (FIP). Accordingly, EPA is approving
Kentucky's submission because it partially addresses the
requirements of the good neighbor provision for the 2008 ozone
NAAQS, and it resolves any obligation remaining under the good
neighbor provision after promulgation of the CSAPR Update FIP. The
approval of Kentucky's SIP submission and the CSAPR Update FIP,
together, fully address the requirements of the good neighbor
provision for the 2008 ozone NAAQS for Kentucky.''

83 FR 33730.
    Subsequent to EPA's approval of the Kentucky SIP submission, EPA
issued the CSAPR Close-Out, which concluded that, based on essentially
the same analysis used for Kentucky, none of the other 20 CSAPR Update
states had further good neighbor obligations to address the 2008 8-hour
ozone NAAQS. In the Fall of 2019, the D.C. Circuit issued the Wisconsin
and New York decisions remanding the CSAPR Update Rule and vacating the
CSAPR Close-Out (see section IV.C.1.d.).
    Kentucky's CSAPR Update FIP, which Kentucky relied on (and did not
replace) in its SIP revision, is part of the CSAPR Update remand, and
EPA must address it in this action. Further, the D.C. Circuit's review
of the CSAPR Close-Out found fault with, and vacated, the same
rationale for other states that EPA had used to approve Kentucky's SIP
submission in June 2018.
    Therefore, in light of the remand of Kentucky's CSAPR Update FIP in
Wisconsin and vacatur of the CSAPR Close-Out in New York, EPA is
determining in this final action that its approval of Kentucky's SIP
revision as fully resolving the state's 2008 ozone NAAQS good neighbor
obligations was in error. Section 110(k)(6) of the CAA (42 U.S.C.
7410(k)(6)) gives the Administrator authority, without any further
submission from a state, to revise certain prior actions, including
actions to approve SIPs, upon determining that those actions were in
error. The court's remand of the partial FIP for Kentucky in Wisconsin
and the vacatur of EPA's conclusions for states identically situated to
Kentucky in the CSAPR Close-Out means that EPA's approval of Kentucky's
SIP was in error. EPA is compelled on remand to act consistently with
the court's opinion and has reassessed Kentucky's good neighbor
obligations under the 2008 ozone NAAQS here. In doing so, EPA's
analysis identifies an additional emission reduction obligation for
Kentucky. Therefore, EPA is correcting the error in Kentucky's SIP
approval through this final rulemaking, as allowed by the CAA when a
prior SIP approval was in error. This error correction under CAA
section 110(k)(6) revises the approval of Kentucky's SIP to a
disapproval and rescinds any statements that the SIP submission fully
addresses the requirements of the good neighbor provision for the 2008
ozone NAAQS for Kentucky. The Kentucky approval relied on the same
analysis that the D.C. Circuit determined to be unlawful in the CSAPR
Close-Out: It only addressed conditions in 2023, ignoring the 2021
attainment date without a showing of impossibility or necessity in
doing so. Kentucky's remanded partial FIP has been reassessed in this
action, consistent with EPA's methodology to address the other 20
states with remanded CSAPR Update FIPs, and consistent with the D.C.
Circuit's direction in Wisconsin and New York. As discussed in greater
detail in the sections that follow, EPA is determining that there are
additional emission reductions that are required for Kentucky to fully
satisfy its good neighbor obligations for the 2008 ozone NAAQS. The
analysis on which EPA reaches this conclusion for Kentucky is the same,
regionally consistent analytical framework on which the Agency is
taking action for all of the other CSAPR Update states with remanded
FIPs.
    Comment: The Agency received several comments regarding its error
correction for Kentucky from the state and from sources in Kentucky.
The commenters generally disagreed with EPA's use of CAA section
110(k)(6) to correct the error in the SIP approval based on the
Wisconsin and New York decisions. Commenters did not agree that the
court decisions are applicable to the Kentucky action or that EPA had
any other basis to determine that Kentucky has outstanding good
neighbor obligations under the 2008 ozone NAAQS. Two commenters also
argued that EPA overestimated emissions from Kentucky in the modeling
released with the proposed rule of this action.
    Response: EPA disagrees that there is no basis to correct its error
in approving Kentucky's SIP revision or to find that Kentucky has
outstanding good neighbor obligations under the 2008 ozone NAAQS.
Wisconsin and New York require the state or EPA to analyze the
interstate impacts of Kentucky's emissions by the 2021 Serious
attainment date. The Kentucky SIP approval is based on analysis of the
2023 ozone season. Further, the Kentucky SIP approval relies on
reductions achieved from Kentucky's CSAPR Update FIP, which was
remanded by Wisconsin. The information provided by commenters on
emissions from Kentucky was already reflected in EPA's modeling and did
not present information with regard to Kentucky that changed EPA's 2021
analysis, which shows Kentucky has further good neighbor obligations
under the 2008 ozone NAAQS. Comments related to EPA's technical basis
for concluding that Kentucky has further obligations, including
comments regarding alleged additional emission reductions achieved by
Kentucky sources, are addressed in the RTC document.
c. CSAPR Update SIP Revisions That Do Not Affect FIP Authority
    Subsequent to the promulgation of the CSAPR Update, EPA approved
SIPs fully replacing the CSAPR Update FIPs for Alabama, Indiana, and
Missouri.\66\ In those SIP approvals and consistent with the
conclusions of the CSAPR Update, EPA found that the SIPs partially
satisfy Alabama's, Indiana's, and Missouri's good neighbor obligations
for the 2008 ozone NAAQS. Thus, EPA continues to have an obligation to
fully address good neighbor requirements for the 2008 ozone NAAQS with
respect to Alabama and Missouri, stemming from the July 13, 2015,
findings of failure to submit, and Indiana, due to the June 15, 2016,
disapproval of the state's good neighbor SIP. See 80 FR 39961; 81 FR
38957. Other states have also submitted 2008 ozone NAAQS good neighbor
SIPs or SIPs to replace their CSAPR FIPs, some of which EPA has
approved and some

of which still remain pending. These circumstances do not affect the
scope or basis for this rulemaking.
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    \66\ See 82 FR 46674 (Oct. 6, 2017) (Alabama); 83 FR 64472 (Dec.
17, 2018) (Indiana); 84 FR 66316 (Dec. 4, 2019) (Missouri).
---------------------------------------------------------------------------

d. Summary of Authority for FIPs for This Action
    Table IV.C-1 summarizes the statutory deadline for EPA to address
its FIP obligation under CAA section 110(c) and the event that
activated EPA's obligation for each of the 21 CSAPR Update states that
are the subject of this final action. For more information regarding
the actions triggering EPA's FIP obligation and EPA's action on SIPs
addressing the good neighbor provision for the 2008 ozone NAAQS, see
the memorandum, ``Final Action, Status of 110(a)(2)(D)(i)(I) SIPs for
the 2008 Ozone NAAQS,'' in the docket for this action.

                       Table IV.C-1--Actions That Activated EPA's Statutory FIP Deadlines
----------------------------------------------------------------------------------------------------------------
                                                                                Statutory FIP
                  State                          Type of action (Federal Register citation,          deadline
                                                             publication date)                       [dagger]
----------------------------------------------------------------------------------------------------------------
Alabama..................................  Finding of Failure to Submit (80 FR 39961, 7/13/2015)       8/12/2017
Arkansas.................................  Finding of Failure to Submit (80 FR 39961, 7/13/2015)       8/12/2017
Illinois.................................  Finding of Failure to Submit (80 FR 39961, 7/13/2015)       8/12/2017
Indiana..................................  SIP disapproval (81 FR 38957, 6/15/2016).............       7/15/2018
Iowa.....................................  Finding of Failure to Submit (80 FR 39961, 7/13/2015)       8/12/2017
Kansas...................................  Finding of Failure to Submit (80 FR 39961, 7/13/2015)       8/12/2017
Kentucky.................................  SIP disapproval (78 FR 14681, 3/7/2013)..............        6/2/2016
Louisiana................................  SIP disapproval (81 FR 53308, 8/12/2016).............       9/12/2018
Maryland.................................  Finding of Failure to Submit (81 FR 47040, 7/20/2016)       8/19/2018
Michigan.................................  Finding of Failure to Submit (80 FR 39961, 7/13/2015)       8/12/2017
Mississippi..............................  Finding of Failure to Submit (80 FR 39961, 7/13/2015)       8/12/2017
Missouri.................................  Finding of Failure to Submit (80 FR 39961, 7/13/2015)       8/12/2017
New Jersey...............................  Finding of Failure to Submit (81 FR 38963, 6/15/2016)       7/15/2018
New York.................................  SIP disapproval (81 FR 58849, 8/26/2016).............       9/26/2018
Ohio.....................................  SIP disapproval (81 FR 38957, 6/15/2016).............       7/15/2018
Oklahoma.................................  Finding of Failure to Submit (80 FR 39961, 7/13/2015)       8/12/2017
Pennsylvania.............................  Finding of Failure to Submit (80 FR 39961, 7/13/2015)       8/12/2017
Texas....................................  SIP disapproval (81 FR 53284, 8/12/2016).............       9/12/2018
Virginia.................................  Finding of Failure to Submit (80 FR 39961, 7/13/2015)       8/12/2017
West Virginia............................  Finding of Failure to Submit (80 FR 39961, 7/13/2015)       8/12/2017
Wisconsin................................  Partial SIP disapproval as to prong 2 (81 FR 53309, 8/      9/12/2018
                                            12/2016).
----------------------------------------------------------------------------------------------------------------
[dagger] For states other than Kentucky, the FIP deadline is two years from the effective date of the SIP
  disapproval or Finding of Failure to Submit, which generally trails the publication date by 30 days. For
  Kentucky, the FIP deadline is two years after the issuance of the Supreme Court's judgment in EPA v. EME Homer
  City Generation, L.P., 572 U.S. 489 (2014). See supra note 63.

3. The 4-Step Good Neighbor Framework
    The CSAPR and the subsequent CSAPR Update, building on EPA's prior
methodologies in the NOX SIP Call and CAIR, established a 4-
step process to address the requirements of the good neighbor
provision.\67\ In this final action to address the remand of the CSAPR
Update, EPA follows the same steps. These steps are: (1) Identifying
downwind receptors that are expected to have problems attaining or
maintaining the NAAQS; (2) determining which upwind states contribute
to these identified problems in amounts sufficient to ``link'' them to
the downwind air quality problems; (3) for states linked to downwind
air quality problems, identifying upwind emissions that significantly
contribute to downwind nonattainment or interfere with downwind
maintenance of the NAAQS; and (4) for states that are found to have
emissions that significantly contribute to nonattainment or interfere
with maintenance of the NAAQS downwind, implementing the necessary
emission reductions through enforceable measures.
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    \67\ See CSAPR, Final Rule, 76 FR 48208, 48248-48249 (Aug. 8,
2011); CSAPR Update, Final Rule, 81 FR 74504, 74517-74521 (Oct. 26,
2016).
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    Step 1--In the CSAPR, downwind air quality problems were assessed
using modeled future air quality concentrations for a year aligned with
attainment deadlines for the NAAQS considered in that rulemaking. The
assessment of future air quality conditions generally accounts for on-
the-books emission reductions and the most up-to-date forecast of
future emissions in the absence of the transport policy being evaluated
(i.e., base case conditions). The locations of downwind air quality
problems are identified as those with receptors that are projected to
be unable to attain (i.e., nonattainment receptor) or maintain (i.e.,
maintenance receptor) the NAAQS. In the CSAPR Update, EPA also
considered current monitored air quality data to further inform the
projected identification of downwind air quality problems. These same
considerations are included for this final rule. EPA is not reopening
the definition of nonattainment and maintenance receptors promulgated
in the CSAPR Update. Further details and application of step 1 for this
rule are described in section V.
    Step 2--The CSAPR and the CSAPR Update used a screening threshold
of 1 percent of the NAAQS to identify upwind states that were
``linked'' to downwind air pollution problems. States with
contributions greater than or equal to the threshold for at least one
downwind problem receptor (i.e., nonattainment or maintenance receptor
identified in step 1) were identified as needing further evaluation for
actions to address transport if their air quality was impacted.\68\ EPA
evaluated a given state's contribution based on the average relative
downwind impact calculated over multiple days.\69\ States whose air

quality impacts to all downwind problem receptors were below this
threshold did not require further evaluation for actions to address
transport--that is, these states were determined to not contribute to
downwind air quality problems and therefore had no emission reduction
obligations under the good neighbor provision. EPA has used this
threshold because a notable portion of the transport problem in the
eastern half of the United States can result from relatively small
contributions from a number of upwind states. Use of the 1 percent
threshold for the CSAPR is discussed in the preambles to the proposed
and final CSAPR rules. See 75 FR 45237 (Aug. 2, 2010); 76 FR 48238
(Aug. 8, 2011). The same metric is discussed in the CSAPR Update Rule.
See 81 FR 74538. While EPA has updated its air quality data for
determining contributions, the Agency is not reopening the use of the 1
percent threshold in this action to address the remand of the CSAPR