through a period of power sector transition. None of commenters'
arguments against the EPA's authority to implement these enhancements
are persuasive.
    First, the EPA is not mandating that any EGU must install SCR
technology. All but one of the enhancements to the trading program
continue to be implemented through allowance-holding requirements under
the mass-based emissions budget and trading system, including the
backstop rate. (The secondary emissions limitation, which is not
implemented through allowance-holding requirements under the mass-based
emissions budget and trading system, and which is discussed in section
VI.B.1.c.ii of this document, merely establishes a stronger deterrent
for a type of conduct that was already strongly discouraged under the
pre-existing trading program regulations). Nonetheless, the EPA does
have the authority to impose unit-specific emissions limits under the
exercise of its FIP authority, and it has done so in this action for
non-EGU industrial sources. This authority is distinct from the EPA's
title I permitting authority as discussed by certain commenters, and
the scope of that permitting authority is not relevant to this action.
    The quantification of emissions budgets in an allowance-based
emissions trading program is one of multiple potential Step 4
implementation program design choices that states and the EPA have
authority to select in securing the emissions reductions deemed
necessary under Step 3. See CAA section 110(a)(2)(A). The EPA and the
states routinely determine control stringency on an emissions rate
basis in line with demonstrated pollution control opportunities, and
both the EPA and the states have implementation program design
discretion to determine what compliance requirements, whether expressed
on a rate, mass, concentration, or percentage basis, will assure an
emissions performance that reflects the control stringency required.
Dynamic budgets in the Step 4 implementation of this rule are simply to
ensure the trading program continues to incentivize the implementation
of the EGU control strategies we find are necessary to eliminate
significant contribution at Step 3. The key distinction between dynamic
budget approaches and preset budget approaches is not one in stringency
or authority, but rather in timing and data resources for determining
the suitable mass-based limits that are as well-matched as possible to
expected emissions of the affected EGUs achieving the emissions rate-
based control stringency deemed necessary under Step 3 to eliminate
significant contribution to nonattainment and interference with
maintenance of the NAAQS.
    The EPA does not agree that the administrative mechanisms by which
it will implement ``dynamic budgeting'' conflict with CAA section
307(d) or the Administrative Procedure Act. The EPA is promulgating a
complete FIP in this action, and the codified language of that FIP will
not need to be modified as budgets are adjusted. This is because the
FIP establishes the formula by which the budgets will be calculated
each year (with preset budgets functioning as a floor from 2026 through
2029). This is no different than how the EPA has implemented other
calculations such as updating allocations using a rolling set of data
in its prior CSAPR trading programs. See, e.g., 87 FR 10786. We view
these actions as fundamentally ministerial in nature in that no
exercise of Agency discretion is required. This process will rely on
notices of availability of the relevant data in the Federal Register,
coupled with an opportunity for the public to correct any errors they
may identify in the data before the EPA sets each updated budget. See
section VI.B.4 for more detail on how the EPA intends to implement
dynamic budgeting. As in prior transport rules, this rule provides the
opportunity for administrative appeal should an interested party
identify some flaw in the EPA's updated data. See 40 CFR 78.1(b)(19)(i)
(2023). That process is coupled with the availability of judicial
review should the party remain dissatisfied with the EPA's resolution
of complaints. See 40 CFR 78.1(a)(2) (requiring administrative
adjudication as a prerequisite for judicial review). This
administrative process has worked well throughout the history of
implementing good neighbor trading programs under Part 97, and no such
disputes have necessitated judicial resolution.
    Further, because the dynamic budgets simply implement the
stringency level reflective of the emissions control performance the
EPA has determined at Step 3 for the covered EGUs, the EPA does not
agree that any ``potential variables'' that are unforeseeable now could
upset the basis for the formula the EPA is establishing in this action.
The EPA has adjusted the role of dynamic budgeting in this final rule
as compared to the proposal. See sections VI.B.1 and VI.B.4 of the
preamble. In particular, the EPA is applying an approach to budget
setting through 2029 that will use the greater of either a preset
budget based on information known to the Agency at the time of this
action, or the dynamic budget to be calculated based upon future data
yet to be reported. Thus, through 2029 the imposition of a dynamic
budget would only increase rather than diminish the emissions allowed
for that control period compared to the preset budgets established in
this action. In addition, the EPA will determine each state's dynamic
budget based on a rolling 3-year average of the state's heat input,
thus smoothing out trends to account for interannual variability in
demand and heat input and provide greater certainty and predictability
as the budget updates from year to year.
    Moreover, the EPA does not agree that the EPA is constrained by the
statute to only implement good neighbor obligations through fixed,
unchanging, mass-based emissions budgets. See section III.B.1 of this
document. The EPA finds good reason based on its experience with
trading programs using fixed budgets why this approach does not
necessarily ensure the elimination of significant contribution in
perpetuity. The EPA has already once adjusted its historical approach
to better account for known, upcoming changes in the EGU fleet to
ensure mass-based emissions budgets adequately incentivize the control
strategy determined at Step 3. This adjustment was introduced in the
Revised CSAPR Update. See 82 FR

23121-22.\96\ The EPA now believes it is appropriate to ensure in a
more comprehensive manner, and in perpetuity, that the mass-based
emissions budget incentivize continuing implementation of the Step 3
control strategies to ensure significant contribution is eliminated in
all upwind states and remains so. The dynamic budget-setting process
preserves these incentives over time by calculating the state emissions
budgets for each future control period so as to reflect the Step 3
control stringency finalized in this rule as applied to the most
current information regarding the composition of the power sector in
the control period. This is fully analogous in material respect to an
approach to implementation at Step 4 that relies on application of
unit-specific emissions rates that apply in perpetuity. The
availability of unit-specific emissions rates as a means to eliminate
significant contribution is discussed in further detail in section
III.B.1 of this document. The EPA also explained this in the proposal.
See 87 FR 20095-96. The EPA does not agree that either dynamic
budgeting or the backstop rate results in overcontrol. See section
V.D.4 of this document.
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    \96\ Further, in the Revised CSAPR Update, the EPA acknowledged
that a mechanism like dynamic budgeting could be appropriate for a
transport rule with longer time horizons. We stated in response to
comments that we were not ``in this action, including an adjustment
mechanism to further adjust state emission budgets to account for
currently unknown or uncertain retirements after the finalization of
this rule . . . . EPA observes that the commenter's proposed
mechanism would become increasingly valuable for rules where the
timeframe extends further into the future where retirement
uncertainty is higher.'' Revised CSAPR Update Response to Comments,
EPA-HQ-OAR-2020-0272-219, at 153.
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    The EPA is enhancing the trading program to help reconcile the
approach of using mass-based budgets to achieve the elimination of
significant contribution with the Wisconsin directive to provide a
complete remedy under the good neighbor provision. This approach also
better accords with ensuring measures to attain and maintain the NAAQS
are permanent and enforceable. The dynamic budget approach recognizes
that the uncertainty around future fleet conditions increases the
further into the future one looks (and the EPA must look further under
the ``full remedy'' directive). To preserve its ability to successfully
implement its identified Step 3 stringency, the EPA is designing the
implementation of this rule's emissions control program to benefit from
the future availability of better data from the regulated sources to
inform its application of its stringency measures identified in this
rule.
    The EPA does not agree with commenters who suggest that these
enhancements are undertaken for the purpose of a non-statutory
``environmental justice'' objective. As explained in section VI.B of
this document, certain enhancements to the trading program ensure that
each EGU is adequately incentivized to continuously operate its
emissions controls once those controls are installed. One commenter
contends that the backstop emissions rate is not authorized based on
environmental justice considerations, since it is not necessary and is
overcontrol with respect to the EPA's statutory authority to address
good neighbor obligations. But the EPA disagrees with the premise that
these enhancements are unrelated to the statutory obligation to
eliminate significant contribution. Taking measures to ensure that each
upwind source covered by an emissions trading program to eliminate
significant contribution is operating its installed pollution controls
on a more continuous and consistent basis throughout the ozone season
is entirely appropriate in light of the daily nature of the ozone
problem, the impacts to public health and the environment from ozone
that can occur through short-term exposure (e.g., over a course of
hours), the fact that the 2015 ozone NAAQS is expressed as an 8-hour
average, and that only a small number of days in excess of the ozone
NAAQS are necessary to place a downwind area in nonattainment,
resulting in continuing and/or increased regulatory burden on the
downwind jurisdiction. See section III.A of this document.
    Further, the D.C. Circuit has held that the EPA must ensure that
its good neighbor program has eliminated each state's sources from
continuing to significantly contribute to nonattainment or interfere
with maintenance in downwind states. See North Carolina, 531 F.3d at
921. The commenters neglect to acknowledge the scenario that has
frequently borne out in prior programs, in which future fleet changes
that were not known at the time of initial setting of state emissions
budgets produce unexpected ``hot air'' in the budget that, if
unaccounted for, other units can exploit to forgo identified cost-
effective mitigation measures deemed necessary to eliminate significant
contribution to nonattainment and interference with maintenance of the
NAAQS.
    The EPA's experience is that fixed mass-based budgets that are
determined based only on the profile of the power sector at the time
the rule is promulgated, and without any additional requirement for
pollution controls operation, can become quickly obsolete if the
composition of the group of affected EGUs changes notably over time. As
some sources retire, other sources relax their operation of
NOX controls in response to a growing surplus of allowances,
even though the EPA had concluded that ongoing operation of those
controls is necessary to meet the statutory good neighbor requirements.
For instance, under the CSAPR Update, in the 2018-2020 period, the
fixed budget approach enabled large, frequently run units with existing
SCR controls to not optimize those controls even though the EPA's
assessment (as reflected in the CSAPR Update) was that the optimization
of those controls was necessary to eliminate significant contribution.
This deterioration in emission rate at SCR-controlled coal plants was
widely observed across the CSAPR Update geography as the program
advanced into later years and allowance price deteriorated. Whereas
coal sources with SCR performed, on average, at a 0.086 lb/mmBtu rate
in 2017, that same set of sources saw their environmental performance
worsen to a 0.099 lb/mmBtu rate in 2020. A Congressional Research
Service Report on EPA prior CSAPR trading programs indicated low prices
observed in later years ``could lead to some decisions not to run some
pollution controls at maximum output. This would, in turn, lead to
higher emissions''.\97\
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    \97\ Shouse, Kate. ``The Clean Air Act's Good Neighbor
Provision: Overview of Interstate Air Pollution Control''.
Congressional Research Services. August 30, 2018. Available at
https://sgp.fas.org/crs/misc/R45299.pdf.
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    In the case of individual units, this deterioration in performance
can be quite pronounced and can occur as quickly as the second or third
control period, as in the case of Miami Fort Unit 7 in Ohio in 2019,
discussed in section V.B of this document. The absence of a sufficient
incentive under the trading program to implement the identified control
strategy at Step 3 can even result in collective emissions that exceed
state-wide assurance levels. The EPA established these levels beginning
with CSAPR, above which enhanced allowance-surrender requirements are
triggered, in an effort to ensure sources in each state are held to
eliminate their own significant contribution, which the D.C. Circuit
has held is legally required, see North Carolina, 531 F.3d 896, 906-08
(D.C. Cir. 2008). In four instances over the course of the 2019, 2020,
and

2021 control periods under the CSAPR Update, sources in Mississippi and
Missouri collectively exceeded their state-wide assurance levels in
part due to deterioration in emissions performance that can be
attributed to a glut of allowances within the CSAPR Update. See section
VI.B.8 of the preamble.
    Thus, while this trading program structure may achieve some
environmental benefit through fixed emissions budgets for initial
control periods, over time those fixed budgets cease to have their
intended effect, and remaining operating facilities can, and have,
increased emissions or even discontinued the operation of their
emissions controls. This, in turn, can lead to the continuation (or re-
emergence) of significant contribution in terms of a recurrence of
excessive emissions that had been slated for permanent elimination
under the EPA's determinations at Step 3. Although the EPA has always
intended for its trading programs to provide flexibility, the Agency
did not expect and has certainly never endorsed the use of that
flexibility to stop the operation of controls that have already been
installed. See, e.g., 76 FR 48256-57 (``[I]t would be inappropriate for
a state linked to downwind nonattainment or maintenance areas to stop
operating existing pollution control equipment (which would increase
their emissions and contribution).''). Despite the EPA's expectations
in CSAPR, the historical data establishes a real risk of ``under-
control'' if the existing trading framework is not improved upon. See
EME Homer City, 572 U.S. at 523 (``[T]he Agency also has a statutory
obligation to avoid `under-control,' i.e., to maximize achievement of
attainment downwind.'').
    This result is also inconsistent with the statutory mandate to
``prohibit'' significant contribution and interference with maintenance
of the NAAQS in downwind states, as evidenced most clearly in CAA
section 126, which makes it unlawful for a source ``to operate more
than three months after [a finding that the source emits or would emit
in violation of the good neighbor provision] has been made with respect
to it.'' 42 U.S.C. 7426(c)(2) (emphasis added). See also North
Carolina, 531 F.3d at 906-08 (each state must be held to the
elimination of its own significant contribution). The purpose of the
Agency's interstate trading programs under the good neighbor provision
is to afford sources some flexibility in achieving region-wide
emissions reductions; however, there is no justification that can be
sustained within that framework for sources in certain areas within
that region, or during periods of high ozone when good emissions
performance is most essential, to emit at levels well in excess of the
EPA's Step 3 determinations of significant contribution. Significant
contribution, according to the statute, must be ``prohibited.'' CAA
section 110(a)(2)(D)(i).
    Thus, these trading program enhancements are within the EPA's
authority under CAA section 110(a)(2)(D)(i)(I) to eliminate interstate
ozone pollution that significantly contributes to nonattainment or
interferes with maintenance in downwind states. These enhancements
ensure the elimination of significant contribution across all upwind
states and throughout each ozone season. We observe in the Ozone
Transport Policy Analysis Final Rule TSD, section E, that the trading
program enhancements may also benefit underserved and overburdened
communities downwind of EGUs in the covered geography of the final
rule. See section VI.B of this document. This does not detract from the
statutorily-authorized basis for these changes, and the EPA finds
nothing impermissible in acknowledging the reality of these potential
benefits for underserved and overburdened communities.
    The EPA appreciates a commenter's concern that our actions be
legally defensible. The EPA acknowledges that the changes to the
trading program structure for implementing good neighbor obligations
discussed here constitute a change in the policy underlying its prior
transport-rule trading programs for EGUs. However, the EPA is confident
that these changes are in compliance with the holdings in judicial
decisions reviewing prior transport rules. The fact that the EPA is
making changes does not somehow render these enhancements legally
impermissible or even subject to a heightened standard of review. See
FCC v. Fox Television Stations, 556 U.S. 502, 514 (2009) (``We find no
basis in the Administrative Procedure Act or in our opinions for a
requirement that all agency change be subjected to more searching
review.''). We have explained previously and elsewhere in the record
that there are ``good reasons'' for the ``new policy.'' See id. at 515.
And, we are of course fully aware that we have changed our position.
See id. at 514-15. Specifically, we have gone from previously treating
fixed, mass-based budgets as sufficient to eliminate significant
contribution, to an approach for purposes of the 2015 ozone NAAQS
reflecting a more nuanced understanding of how an emissions trading
program that does not properly anticipate future fleet conditions at
Step 4 may fail to achieve the elimination of emissions that should be
prohibited based on our findings at Step 3. Further, we find there to
be no ``serious reliance interests'' that have been or even could have
been ``engendered'' by any prior policy on these issues, see id. at
515-16. The EPA is implementing these enhancements for the first time
with respect to a new obligation--good neighbor requirements for the
2015 ozone NAAQS. No party reasonably could have invested substantial
resources to-date to comply with an obligation that was heretofore
undefined; and no commenter has supplied any information to the
contrary.
2. FIP Authority for Each State Covered by the Rule
    On October 26, 2015, the EPA promulgated a revision to the 2015 8-
hour ozone NAAQS, lowering the level of both the primary and secondary
standards to 0.070 parts per million (ppm).\98\ These revisions of the
NAAQS, in turn, established a 3-year deadline for states to provide SIP
submissions addressing infrastructure requirements under CAA sections
110(a)(1) and CAA 110(a)(2), including the good neighbor provision, by
October 1, 2018. If the EPA makes a determination that a state failed
to submit a SIP, or if EPA disapproves a SIP submission, then the EPA
is obligated under CAA section 110(c) to promulgate a FIP for that
state within 2 years. For a more detailed discussion of CAA section 110
authority and timelines, refer to section III.C of this document.
---------------------------------------------------------------------------

    \98\ National Ambient Air Quality Standards for Ozone, Final
Rule, 80 FR 65292 (Oct. 26, 2015). Although the level of the
standard is specified in the units of ppm, ozone concentrations are
also described in parts per billion (ppb). For example, 0.070 ppm is
equivalent to 70 ppb.
---------------------------------------------------------------------------

    The EPA is finalizing this FIP action now to address 23 states'
good neighbor obligations for the 2015 ozone NAAQS.\99\ For each state
for which the EPA is finalizing this FIP, the EPA either issued final
findings of failure to submit or has issued a final disapproval of that
state's SIP submission.
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    \99\ The EPA notes that it is subject to, and has met through
this action, a consent decree deadline to promulgate FIPs addressing
2015 ozone NAAQS good neighbor obligations for the states of
Pennsylvania, Utah, and Virginia. See Sierra Club et al. v. Regan,
No. 3:22-cv-01992-JD (N.D. Cal. entered January 24, 2023).
---------------------------------------------------------------------------

    Several commenters asserted that the sequence of the EPA's actions,
and in particular, the timing of its proposed FIP (which was signed on
February 28,

2022, and published on April 6, 2022) in relation to the timing of its
proposed SIP disapprovals (most of which were published on February 22,
2022, four of which were published on May 24, 2022, and one of which
was published on October 25, 2022), was either unlawful or unreasonable
in light of the sequence of steps required under CAA section 110(k) and
(c).
    These commenters are incorrect. As an initial matter, concerns
about the timing or substance of the EPA's actions on the SIP
submittals are beyond the scope of this action. Nor are the timing or
contents of merely proposed actions to be considered final agency
actions or subject to judicial review. See In re Murray Energy, 788
F.3d 330 (D.C. Cir. 2015). With these principles in mind, the timing of
this final action is lawful under the Act. First, the EPA is not
required to wait to propose a FIP until after the Agency proposes or
finalizes a SIP disapproval or makes a finding of failure to
submit.\100\ CAA section 110(c) authorizes the EPA to promulgate a FIP
``at any time within 2 years'' of a SIP disapproval or making a finding
of failure to submit. The Supreme Court recognized in EME Homer City
that the EPA is not obligated to first define a state's good neighbor
obligations or give the state an additional opportunity to submit an
approvable SIP before promulgating a FIP: ``EPA is not obliged to wait
two years or postpone its action even a single day: The Act empowers
the Agency to promulgate a FIP `at any time' within the two-year
limit.'' \101\ Thus, the EPA may promulgate a FIP contemporaneously
with or immediately following predicate final SIP disapproval (or
finding no SIP was submitted). To accomplish this, the EPA must
necessarily be able to propose a FIP prior to taking final action to
disapprove a SIP or make a finding of failure to submit.
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    \100\ The EPA notes there are three consent decrees to resolve
three deadline suits related to EPA's duty to act on good neighbor
SIP submissions for the 2015 ozone NAAQS. In New York et al. v.
Regan, et al. (No. 1:21-CV-00252, S.D.N.Y.), the EPA agreed to take
final action on the 2015 ozone NAAQS good neighbor SIP submissions
from Indiana, Kentucky, Michigan, Ohio, Texas, and West Virginia by
April 30, 2022; however, if the EPA proposes to disapprove any SIP
submissions and proposes a replacement FIP by February 28, 2022,
then EPA's deadline to take final action on that SIP submission is
extended to December 30, 2022. In Downwinders at Risk et al. v.
Regan (No. 21-cv-03551, N.D. Cal.), the EPA agreed to take final
action on the 2015 ozone NAAQS good neighbor SIP submissions from
Alabama, Arkansas, Connecticut, Florida, Georgia, Illinois, Indiana,
Iowa, Kansas, Kentucky, Louisiana, Maryland, Michigan, Minnesota,
Mississippi, New Jersey, New York, North Carolina, Ohio, Oklahoma,
South Carolina, Tennessee, Texas, West Virginia, and Wisconsin by
April 30, 2022; however, if the EPA proposes to disapprove any of
these SIP submissions and proposes a replacement FIP by February 28,
2022, then the EPA's deadline to take final action on that SIP
submission is December 30, 2022. In this CD, the EPA also agreed to
take final action on Hawaii's SIP submission by April 30, 2022, and
to take final action on the SIP submissions of Arizona, California,
Montana, Nevada, and Wyoming by December 15, 2022. In Our Children's
Earth Foundation v. EPA (No. 20-8232, S.D.N.Y.), the EPA agreed to
take final action on the 2015 ozone NAAQS good neighbor SIP
submission from New York by April 30, 2022; however, if the EPA
proposes to disapprove New York's SIP submission and proposes a
replacement FIP by February 28, 2022, then the EPA's deadline to
take final action on New York's SIP submission is extended to
December 30, 2022. By stipulation of the parties, the December 15,
2022, date in all three of these consent decrees was extended to
January 31, 2023. By further stipulation of the parties in the
Downwinders at Risk case, the January 31, 2023, date was further
extended to December 15, 2023 for the EPA to act on the SIP
submissions from the states of Arizona, Tennessee, and Wyoming.
    \101\ See EPA v. EME Homer City Generation, L.P., 572 U.S. 489,
509 (2014) (citations omitted).
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    Second, and more importantly, the EPA has established predicate
authority to promulgate FIPs for all of the covered states through its
action with respect to the relevant SIP submittals. A brief history of
these actions follows:
    On February 22, 2022, the EPA proposed to disapprove 19 good
neighbor SIP submissions (Alabama, Arkansas, Illinois, Indiana,
Kentucky, Louisiana, Maryland, Michigan, Minnesota, Mississippi,
Missouri, New Jersey, New York, Ohio, Oklahoma, Tennessee, Texas, West
Virginia, Wisconsin).\102\ Alabama subsequently withdrew its SIP
submission and re-submitted a SIP submission on June 22, 2022. The EPA
proposed to disapprove that SIP submittal on October 25, 2022.\103\ The
EPA proposed to disapprove good neighbor SIP submissions for four
additional states, California, Nevada, Utah, and Wyoming, on May 24,
2022.\104\
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    \102\ See 87 FR 9463 (Maryland); 87 FR 9484 (New Jersey, New
York); 87 FR 9498 (Kentucky); 87 FR 9516 (West Virginia); 87 FR 9533
(Missouri); 87 FR 9545 (Alabama, Mississippi, Tennessee); 87 FR 9798
(Arkansas, Louisiana, Oklahoma, Texas); 87 FR 9838 (Illinois,
Indiana, Michigan, Minnesota, Ohio, Wisconsin).
    \103\ See 87 FR 64412.
    \104\ See 87 FR 31443 (California); 87 FR 31485 (Nevada); 87 FR
31470 (Utah); 87 FR 31495 (Wyoming).
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    Subsequently, on January 31, 2023, the EPA Administrator signed a
single disapproval action for all of the above states, with the
exception of Tennessee and Wyoming.\105\ This action established the
EPA's authority to promulgate FIPs for the disapproved states. (As
explained in section IV.F of this document, the Agency is deferring
action at this time for Tennessee and Wyoming with respect to its
proposed FIP actions for those states. As discussed in section IV.F of
this document, the EPA's most recent modeling and air quality analysis
indicates that several states may be linked to downwind receptors for
which we had not previously proposed disapproval or FIP action. The EPA
anticipates addressing remaining interstate transport obligations for
the 2015 ozone NAAQS for these in a subsequent rulemaking.)
---------------------------------------------------------------------------

    \105\ See 88 FR 9336.
---------------------------------------------------------------------------

    Additionally, the EPA has taken action that has triggered the EPA's
obligation under CAA section 110(c) to promulgate FIPs addressing the
good neighbor provision for several downwind states. On December 5,
2019, the EPA published a rule finding that seven states (Maine, New
Mexico, Pennsylvania, Rhode Island, South Dakota, Utah, and Virginia)
failed to submit or otherwise make complete submissions that address
the requirements of CAA section 110(a)(2)(D)(i)(I) for the 2015 ozone
NAAQS.\106\ This finding triggered a 2-year deadline for the EPA to
issue FIPs to address the good neighbor provision for these states by
January 6, 2022. As the EPA has subsequently received and taken final
action to approve good neighbor SIPs from Maine, Rhode Island, and
South Dakota,\107\ the EPA currently has authority under the December
5, 2019, findings of failure to submit to issue FIPs for New Mexico,
Pennsylvania, Utah, and Virginia. In this final rule, the EPA is
issuing FIP requirements for Pennsylvania, Utah, and Virginia.\108\
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    \106\ Findings of Failure To Submit a Clean Air Act Section 110
State Implementation Plan for Interstate Transport for the 2015
Ozone National Ambient Air Quality Standards (NAAQS), 84 FR 66612
(December 5, 2019, effective January 6, 2020).
    \107\ Air Plan Approval; Maine and New Hampshire; 2015 Ozone
NAAQS Interstate Transport Requirements, 86 FR 45870 (August 17,
2021); Air Plan Approval; Rhode Island; 2015 Ozone NAAQS Interstate
Transport Requirements, 86 FR 70409 (December 10, 2021);
Promulgation of State Implementation Plan Revisions; Infrastructure
Requirements for the 2015 Ozone National Ambient Air Quality
Standards; South Dakota; Revisions to the Administrative Rules of
South Dakota, 85 FR 29882 (May 19, 2020).
    \108\ WildEarth Guardians v. Regan, No. 1:22-cv-00174 (D.N.M.
entered Aug. 16, 2022); Sierra Club et al. v. EPA, No. 3:22-cv-01992
(N.D. Cal. entered Jan. 24, 2023).
---------------------------------------------------------------------------

    Further information on the procedural history establishing the
EPA's authority for this final rule is provided in a document in the
docket.\109\
---------------------------------------------------------------------------

    \109\ See ``Final Rule: Status of CAA Section 110(a)(2)(D)(i)(I)
SIP Submissions for the 2015 Ozone NAAQS for States Covered by the
Proposed Federal Implementation Plan Addressing Regional Ozone
Transport for the 2015 Ozone National Ambient Air Quality
Standards.'' This document updates a prior document of the same
title provided at proposal (Document no. EPA-HQ-OAR-2021-0668-0131).

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

    While the EPA's previous actions are sufficient to establish that
the EPA's promulgation of this FIP action at this time is lawful, the
timing of this action is all the more reasonable in light of the need
for the EPA to address good neighbor obligations consistent with the
rest of title I of the CAA. In particular, the D.C. Circuit in
Wisconsin held that states and the EPA are obligated to fully address
good neighbor obligations for ozone ``as expeditiously as practical''
and in no event later than the next relevant downwind attainment dates
found in CAA section 181(a).\110\ In Maryland v. EPA, the D.C. Circuit
made clear that Wisconsin's and North Carolina's holdings are fully
applicable to the Marginal area attainment date for the 2015 ozone
NAAQS,\111\ which fell on August 3, 2021.\112\ As discussed in section
VI.A of this document, by finalizing this action now, the EPA is able
to implement initial required emissions reductions to eliminate
significant contribution by the 2023 ozone season, which is the last
full ozone season before the next attainment date, the Moderate area
attainment date of August 3, 2024. The Wisconsin court emphasized that
the EPA has the authority under CAA section 110 to structure and time
its actions in a manner such that the Agency can ensure necessary
reductions are achieved in alignment with the downwind attainment
schedule, and that is precisely what the EPA is doing here.\113\ The
EPA provides further response to the comments on this issue in section
1 of the RTC document.
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    \110\ Wisconsin v. EPA, 938 F.3d 303, 313-14 (D.C. Cir. 2019)
(citing North Carolina v. EPA, 531 F.3d 896, 911-13 (D.C. Cir.
2008).
    \111\ Maryland v. EPA, 958 F.3d 1185, 1203-04 (D.C. Cir. 2020).
    \112\ See CAA section 181(a); 40 CFR 51.1303; Additional Air
Quality Designations for the 2015 Ozone National Ambient Air Quality
Standards, 83 FR 25776 (June 4, 2018, effective August 3, 2018).
    \113\ 938 F.3d at 318 (``When EPA determines a State's SIP is
inadequate, EPA presumably must issue a FIP that will bring that
State into compliance before upcoming attainment deadlines, even if
the outer limit of the statutory timeframe gives EPA more time to
formulate the FIP.'') (citing Sierra Club v. EPA, 294 F.3d 155, 161
(D.C. Cir. 2002)).
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C. Other CAA Authorities for This Action

1. Withdrawal of Proposed Error Correction for Delaware
    The EPA proposed at 87 FR 20036 to make an error correction under
CAA section 110(k)(6) of its May 1, 2020, approval at 85 FR 25307 of
the interstate transport elements for Delaware's October 11, 2018, and
December 26, 2019, ozone infrastructure SIP submissions as satisfying
the requirements of CAA section 110(a)(2)(D)(i)(I) for the 2015 ozone
NAAQS. The EPA proposed to determine that the basis for the prior SIP
approval was invalidated by the Agency's more recent technical
evaluation of air quality modeling performed in support of the proposed
rule,\114\ and that Delaware had unresolved interstate transport
obligations for the 2015 ozone NAAQS. The EPA also proposed to issue a
FIP for Delaware given these unresolved interstate transport
obligations. However, based on the updated air quality modeling
described in section IV.F. of this document and the technical
assessment that informs this final rule, the EPA finds that Delaware is
not projected to be linked to any downwind receptor above the 1 percent
of the NAAQS threshold in 2023. Thus, based on the record before the
Agency now, the original approval of Delaware's SIP submission was not
in error, and the EPA is withdrawing its proposed error correction and
proposed FIP for Delaware.
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    \114\ See the Air Quality Modeling Proposed Rule TSD in the
docket for this rule.
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2. Application of Rule in Indian Country and Necessary or Appropriate
Finding
    The EPA is finalizing its determination that this rule will be
applicable in all areas of Indian country (as defined at 18 U.S.C.
1151) within the covered geography of the final rule, as defined in
this section. Certain areas of Indian country within the geography of
the rule are or may be subject to state implementation planning
authority. Other areas of Indian country within that geography are
subject to tribal planning authority, although none of the relevant
tribes have as yet sought eligibility to administer a tribal plan to
implement the good neighbor provision.\115\ As described later, the EPA
is including all areas of Indian country within the covered geography,
notwithstanding whether those areas are currently subject to a state's
implementation planning authority or the potential planning authority
of a tribe.
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    \115\ We note that, consistent with the EPA's prior good
neighbor actions in California, the regulatory ozone monitor located
on the Morongo Band of Mission Indians (``Morongo'') reservation is
a projected downwind receptor in 2023. See monitoring site 060651016
in Table IV.D.-1. We also note that the Temecula, California,
regulatory ozone monitor is a projected downwind receptor in 2023
and in past regulatory actions has been deemed representative of air
quality on the Pechanga Band of Luise[ntilde]o Indians
(``Pechanga'') reservation. See, e.g., Approval of Tribal
Implementation Plan and Designation of Air Quality Planning Area;
Pechanga Band of Luise[ntilde]o Mission Indians, 80 FR 18120, at
18121-18123 (April 3, 2015); see also monitoring site 060650016 in
Table IV.D-1. The presence of receptors on, or representative of,
the Morongo and Pechanga reservations does not trigger obligations
for the Morongo and Pechanga Tribes. Nevertheless, these receptors
are relevant to the EPA's assessment of any linked upwind states'
good neighbor obligations. See, e.g., Approval and Promulgation of
Air Quality State Implementation Plans; California; Interstate
Transport Requirements for Ozone, Fine Particulate Matter, and
Sulfur Dioxide, 83 FR 65093 (December 19, 2018). Under 40 CFR
49.4(a), tribes are not subject to the specific plan submittal and
implementation deadlines for NAAQS-related requirements, including
deadlines for submittal of plans addressing transport impacts.
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a. Indian Country Subject to Tribal Jurisdiction
    With respect to areas of Indian country not currently subject to a
state's implementation planning authority--i.e., Indian reservation
lands (with the partial exception of reservation lands located in the
State of Oklahoma, as described further in this section) and other
areas of Indian country over which the EPA or a tribe has demonstrated
that a tribe has jurisdiction--the EPA here makes a ``necessary or
appropriate'' finding that direct Federal implementation of the rule's
requirements is warranted under CAA section 301(d)(4) and 40 CFR
49.11(a) (the areas of Indian country subject to this finding will be
referred to as the CAA section 301(d) FIP areas). Indian Tribes may,
but are not required to, submit tribal plans to implement CAA
requirements, including the good neighbor provision. Section 301(d) of
the CAA and 40 CFR part 49 authorize the Administrator to treat an
Indian Tribe in the same manner as a state (i.e., TAS) for purposes of
developing and implementing a tribal plan implementing good neighbor
obligations. See 40 CFR 49.3; see also ``Indian Tribes: Air Quality
Planning and Management,'' hereafter ``Tribal Authority Rule'' (63 FR
7254, February 12, 1998). The EPA is authorized to directly implement
the good neighbor provision in the 301(d) FIP areas when it finds,
consistent with the authority of CAA section 301--which the EPA has
exercised in 40 CFR 49.11--that it is necessary or appropriate to do
so.\116\
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    \116\ See Arizona Pub. Serv. Co. v. U.S. E.P.A., 562 F.3d 1116,
1125 (10th Cir. 2009) (stating that 40 CFR 49.11(a) ``provides the
EPA discretion to determine what rulemaking is necessary or
appropriate to protect air quality and requires the EPA to
promulgate such rulemaking''); Safe Air For Everyone v. U.S. Env't
Prot. Agency, No. 05-73383, 2006 WL 3697684, at *1 (9th Cir., Dec.
15, 2006) (``The statutes and regulations that enable EPA to
regulate air quality on Indian reservations provide EPA with broad
discretion in setting the content of such regulations.'').

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    The EPA hereby finds that it is both necessary and appropriate to
regulate all new and existing EGU and industrial sources meeting the
applicability criteria set forth in this rule in all of the 301(d) FIP
areas that are located within the geographic scope of coverage of the
rule. For purposes of this finding, the geographic scope of coverage of
the rule means the areas of the United States encompassed within the
borders of the states the EPA has determined to be linked at Steps 1
and 2 of the 4-step interstate transport framework.\117\ For EGU
applicability criteria, see section VI.B of this document; for
industrial-source applicability criteria, see section VI.C of this
document. To EPA's knowledge, only one existing EGU or industrial
source is located within the CAA section 301(d) FIP areas: the Bonanza
Power Plant, an EGU source, located on the Uintah and Ouray
Reservation, geographically located within the borders of Utah.
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    \117\ With respect to any industrial sources located in the CAA
section 301(d) FIP areas, the geographic scope of coverage of this
rule does not include those states for which the EPA finds, based on
air quality modeling, that no further linkage exists by the 2026
analytic year at Steps 1 and 2. The states in this rule not linked
in 2026 are Alabama, Minnesota, and Wisconsin.
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    This finding is consistent with the EPA's prior good neighbor
rules. In prior rulemakings under the good neighbor provision, the EPA
has included all areas of Indian country within the geographic scope of
those FIPs, such that any new or existing sources meeting the rules'
applicability criteria would be subject to the rule irrespective of
whether subject to state or tribal underlying CAA planning authority.
In CSAPR, the CSAPR Update, and the Revised CSAPR Update, the scope of
the emissions trading programs established for EGUs extended to cover
all areas of Indian country located within the geographic boundaries of
the covered states. In these rules, at the time of their promulgation,
no existing units were located in the covered areas of Indian country;
under the general applicability criteria of the trading programs,
however, any new sources locating in such areas would become subject to
the programs. Thus, the EPA established a separate allowance allocation
that would be available for any new units locating in any of the
relevant areas of Indian country. See, e.g., 76 FR 48293 (describing
the CSAPR methodology of allowance allocation under the ``Indian
country new unit set-aside'' provisions); see also id. at 48217
(explaining the EPA's source of authority for directly regulating in
relevant areas of Indian country as necessary or appropriate). Further,
in any action in which the EPA subsequently approved a state's SIP
submittal to partially or wholly replace the provisions of a CSAPR FIP,
the EPA has clearly delineated that it will continue to administer the
Indian country new unit set aside for sources in any areas of Indian
country geographically located within a state's borders and not subject
to that state's CAA planning authority, and the state may not exercise
jurisdiction over any such sources. See, e.g., 82 FR 46674, 46677
(October 6, 2017) (approving Alabama's SIP submission establishing a
state CSAPR trading program for ozone season NOX, but
providing, ``The SIP is not approved to apply on any Indian reservation
land or in any other area where EPA or an Indian tribe has demonstrated
that a tribe has jurisdiction.'').
    In this rule, the EPA is taking an approach similar to the prior
CSAPR rulemakings with respect to regulating sources in the CAA section
301(d) FIP areas.\118\ The EPA believes this approach is necessary and
appropriate for several reasons. First, the purpose of this rule is to
address the interstate transport of ozone on a national scale, and the
technical record establishes that the nonattainment and maintenance
receptors located throughout the country are impacted by sources of
ozone pollution on a broad geographic scale. The upwind regions
associated with each receptor typically span at least two, and often
far more, states. Within the broad upwind region covered by this rule,
the EPA is applying--consistent with the methodology of allocating
upwind responsibility in prior transport rules going back to the
NOX SIP Call--a uniform level of control stringency (as
determined separately for linkages existing in 2023, and linkages
persisting in 2026). (See section V of this document for a discussion
of EPA's determination of control stringency for this rule.) Within
this approach, consistency in rule requirements across all
jurisdictions is vital in ensuring the remedy for ozone transport is,
in the words of the Supreme Court, ``efficient and equitable,'' 572
U.S. 489, 519. In particular, as the Supreme Court found in EME Homer
City Generation, allocating responsibility through uniform levels of
control across the entire upwind geography is ``equitable'' because, by
imposing uniform cost thresholds on regulated States, the EPA's rule
subjects to stricter regulation those States that have done relatively
less in the past to control their pollution. Upwind States that have
not yet implemented pollution controls of the same stringency as their
neighbors will be stopped from free riding on their neighbors' efforts
to reduce pollution. They will have to reduce their emissions by
installing devices of the kind in which neighboring States have already
invested. Id.
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    \118\ See section VI.B.9 of this document for a discussion of
revisions that are being made in this rulemaking regarding the point
in the allowance allocation process at which the EPA would establish
set-asides of allowances for units in Indian country not subject to
a state's CAA implementation planning authority.
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    In the context of addressing regional-scale ozone transport in this
rule, the importance of a uniform level of stringency that extends to
and includes the CAA section 301(d) FIP areas geographically located
within the boundaries of the linked upwind states carries significant
force. Failure to include all such areas within the scope of the rule
creates a significant risk that these areas may be targeted for the
siting of facilities emitting ozone-precursor pollutants, to avoid the
regulatory costs that would be imposed under this rule in the
surrounding areas of state jurisdiction. Electricity generation or the
production of other goods and commodities may become more cost-
competitive at any EGU or industrial sources not subject to the rule
but located in a geography where the same types of sources are subject
to the rule. For instance, the affected EGU source located on the
Uintah and Ouray Reservation of the Ute Tribe is in an area that is
interconnected with the western electricity grid and is owned and
operated by an entity that generates and provides electricity to
customers in several states. It is both necessary and appropriate, in
the EPA's view, to avoid creating, via this rule, a structure of
incentives that may cause generation or production--and the associated
NOX emissions--to shift into the CAA section 301(d) FIP
areas to escape regulation needed to eliminate interstate transport
under the good neighbor provision.
    The EPA finds it is appropriate to directly implement the rule's
requirements in the CAA section 301(d) FIP areas in this action rather
than at a later date. Tribes have the opportunity to seek treatment as
a state (TAS) and to undertake tribal implementation plans under the
CAA. To date, the one tribe which could develop and seek approval of a
tribal implementation plan to address good neighbor obligations with
respect to an existing EGU in the CAA section 301(d) FIP areas for the
2015 ozone NAAQS (or for any other NAAQS), the Ute Indian Tribe of the
Uintah and Ouray Reservation, has not

expressed an intent to do so. Nor has the EPA heard such intentions
from any other tribe, and it would not be reasonable to expect tribes
to undertake that planning effort, particularly when no existing
sources are currently located on their lands. Further, the EPA is
mindful that under court precedent, the EPA and states bear an
obligation to fully implement any required emissions reductions to
eliminate significant contribution under the good neighbor provision as
expeditiously as practicable and in alignment with downwind areas'
attainment schedule under the Act. As discussed in section VI.A of this
document, the EPA is implementing certain required emissions reductions
by the 2023 ozone season, the last full ozone season before the 2024
Moderate area attainment date, and other key additional required
emissions reductions by the 2026 ozone season, the last full ozone
season before the 2027 Serious area attainment date. Absent the
application of this FIP in the CAA section 301(d) FIP areas,
NOX emissions from any existing or new EGU or non-EGU
sources located in, or locating in, the CAA section 301(d) FIP areas
within the covered geography of the rule would remain unregulated for
purposes of CAA section 110(a)(2)(D)(i)(I) for the 2015 ozone NAAQS and
could continue or potentially increase. This would be inconsistent with
the EPA's overall goal of aligning good neighbor obligations with the
downwind areas' attainment schedule and to achieve emissions reductions
as expeditiously as practicable.
    Further, the EPA recognizes that Indian country, including the CAA
section 301(d) FIP areas, is often home to communities with
environmental justice concerns, and these communities may bear a
disproportionate level of pollution burden as compared with other areas
of the United States. The EPA's Fiscal Year 2022-2026 Strategic Plan
\119\ includes an objective to promote environmental justice at the
Federal, Tribal, state, and local levels and states: ``Integration of
environmental justice principles into all EPA activities with Tribal
governments and in Indian country is designed to be flexible enough to
accommodate EPA's Tribal program activities and goals, while at the
same time meeting the Agency's environmental justice goals.'' As
described in section X.F of this document, the EPA offered Tribal
consultation to 574 Tribes in April of 2022 and received no requests
for Tribal consultation after publication of the proposed rulemaking.
By including all areas of Indian country within the covered geography
of the rule, the EPA is advancing environmental justice, lowering
pollution burdens in such areas, and preventing the potential for
``pollution havens'' to form in such areas as a result of facilities
seeking to locate there to avoid the requirements that would otherwise
apply outside of such areas under this rule.
---------------------------------------------------------------------------

    \119\ https://www.epa.gov/system/files/documents/2022-03/fy-2022-2026-epa-strategic-plan.pdf.
---------------------------------------------------------------------------

    Therefore, to ensure timely alignment of all needed emissions
reductions within the timetables of this rule, to ensure equitable
distribution of the upwind pollution reduction obligation across all
upwind jurisdictions, to avoid perverse economic incentives to locate
sources of ozone-precursor pollution in the CAA section 301(d) FIP
areas, and to deliver greater environmental justice to tribal
communities in line with Executive Order 13985: Advancing Racial Equity
and Support for Underserved Communities Through the Federal
Government,\120\ the EPA finds it both necessary and appropriate that
all existing and new EGU and industrial sources that are located in the
CAA section 301(d) FIP areas within the geographic boundaries of the
covered states, and which would be subject to this rule if located
within areas subject to state CAA planning authority, should be
included in this rule. The EPA issues this finding under CAA section
301(d)(4) of the Act and 40 CFR 49.11. Further, to avoid ``unreasonable
delay'' in promulgating this FIP, as required under section 49.11, the
EPA makes this finding now, to align emissions reduction obligations
for any covered new or existing sources in the CAA section 301(d) FIP
areas with the larger schedule of reductions under this rule. Because
all other covered EGU and non-EGU sources within the geography of this
rule would be subject to emissions reductions of uniform stringency
beginning in the 2023 ozone season, and as necessary to fully and
expeditiously address good neighbor obligations for the 2015 ozone
NAAQS, there is little benefit to be had by not including the CAA
section 301(d) FIP areas in this rule now and a potentially significant
downside to not doing so.
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    \120\ Executive Order 13985 (January 20, 2021) (86 FR 7009
(January 25, 2021)): https://www.govinfo.gov/content/pkg/FR-2021-01-25/pdf/2021-01753.pdf.
---------------------------------------------------------------------------

    The Agency recognizes that Tribal governments may still choose to
seek TAS to develop a Tribal plan with respect to the obligations under
this rule, and this determination does not preclude the tribes from
taking such actions. Although the formal tribal consultation process
associated with this action has concluded, the EPA is willing and
available to engage with any tribe as this rule is implemented.
b. Indian Country Subject to State Implementation Planning Authority
    Following the U.S. Supreme Court decision in McGirt v. Oklahoma,
140 S. Ct. 2452 (2020), the Governor of the State of Oklahoma requested
approval under section 10211(a) of the Safe, Accountable, Flexible,
Efficient Transportation Equity Act of 2005: A Legacy for Users, Public
Law 109-59, 119 Stat. 1144, 1937 (August 10, 2005) (``SAFETEA''), to
administer in certain areas of Indian country (as defined at 18 U.S.C.
1151) the State's environmental regulatory programs that were
previously approved by the EPA for areas outside of Indian country. The
State's request excluded certain areas of Indian country further
described later. In addition, the State only sought approval to the
extent that such approval is necessary for the State to administer a
program in light of Oklahoma Dept. of Environmental Quality v. EPA, 740
F.3d 185 (D.C. Cir. 2014).\121\
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    \121\ In ODEQ v. EPA, the D.C. Circuit held that under the CAA,
a state has the authority to implement a SIP in non-reservation
areas of Indian country in the state, where there has been no
demonstration of tribal jurisdiction. Under the D.C. Circuit's
decision, the CAA does not provide authority to states to implement
SIPs in Indian reservations. ODEQ did not, however, substantively
address the separate authority in Indian country provided
specifically to Oklahoma under SAFETEA. That separate authority was
not invoked until the State submitted its request under SAFETEA, and
was not approved until the EPA's decision, described in this
section, on October 1, 2020.
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    On October 1, 2020, the EPA approved Oklahoma's SAFETEA request to
administer all the State's EPA-approved environmental regulatory
programs, including the Oklahoma SIP, in the requested areas of Indian
country.\122\ As requested by Oklahoma, the EPA's approval under
SAFETEA does not include Indian country lands, including rights-of-way
running through the same, that: (1) qualify as Indian allotments, the
Indian titles to which have not been extinguished, under 18 U.S.C.
1151(c); (2) are held in trust by the United States on behalf of an
individual Indian or Tribe; or (3) are owned in fee by a Tribe, if the
Tribe (a) acquired that fee title to such land, or an area that
included such land, in accordance with a treaty with the United States
to which such Tribe was a party, and (b) never allotted the land to a
member or citizen of the Tribe

(collectively ``excluded Indian country lands'').
---------------------------------------------------------------------------

    \122\ Available in the docket for this rulemaking.
---------------------------------------------------------------------------

    The EPA's approval under SAFETEA expressly provided that to the
extent EPA's prior approvals of Oklahoma's environmental programs
excluded Indian country, any such exclusions are superseded for the
geographic areas of Indian country covered by the EPA's approval of
Oklahoma's SAFETEA request.\123\ The approval also provided that future
revisions or amendments to Oklahoma's approved environmental regulatory
programs would extend to the covered areas of Indian country (without
any further need for additional requests under SAFETEA).
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    \123\ The EPA's prior approvals relating to Oklahoma's SIP
frequently noted that the SIP was not approved to apply in areas of
Indian country (consistent with the D.C. Circuit's decision in ODEQ
v. EPA) located in the state. See, e.g., 85 FR 20178, 20180 (April
10, 2020). Such prior expressed limitations are superseded by the
EPA's approval of Oklahoma's SAFETEA request.
---------------------------------------------------------------------------

    In a Federal Register document published on February 13, 2023 (88
FR 9336), the EPA disapproved the portion of an Oklahoma SIP submittal
pertaining to the state's interstate transport obligations under CAA
section 110(a)(2)(D)(i)(I) for the 2015 ozone NAAQS. Consistent with
the D.C. Circuit's decision in ODEQ v. EPA and with the EPA's October
1, 2020 SAFETEA approval, the EPA has authority under CAA section
110(c) to promulgate a FIP as needed to address the disapproved aspects
of Oklahoma's good neighbor SIP submittal.\124\ In accordance with the
previous discussion, the EPA's FIP authority in this circumstance
extends to all Indian country in Oklahoma, other than the excluded
Indian country lands, as described previously.\125\ Because--per the
State's request under SAFETEA--EPA's October 1, 2020 approval does not
displace any SIP authority previously exercised by the State under the
CAA as interpreted in ODEQ v. EPA, the EPA's FIP authority under CAA
section 110(c) also applies to any Indian allotments or dependent
Indian communities located outside of an Indian reservation over which
there has been no demonstration of tribal authority. The EPA's FIP
authority under CAA section 110(c) similarly applies to Indian
allotments or dependent Indian communities located outside of an Indian
reservation over which there has been no demonstration of tribal
authority located in any other state within the geographic scope of
this rule.
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    \124\ The antecedent fact that the state had the authority and
jurisdiction to implement requirements under the good neighbor
provision, in the EPA's view, supplies the condition necessary for
the Agency to exercise its FIP authority to the extent the EPA has
disapproved the state's SIP submission with respect to those
requirements. Under CAA section 110(c), the EPA ``stands in the
shoes of the defaulting state, and all of the rights and duties that
would otherwise fall to the state accrue instead to the EPA.''
Central Ariz. Water Conservation Dist. v. EPA, 990 F.2d 1531, 1541
(9th Cir. 1993).
    \125\ With respect to those areas of Indian country constituting
``excluded Indian country lands'' in the State of Oklahoma, as
defined supra, the EPA applies the same necessary or appropriate
finding as set forth above with respect to all other 301(d) FIP
areas within the geographic scope of coverage of the rule.
---------------------------------------------------------------------------

    In light of the relevant legal authorities discussed above
regarding the scope of the State of Oklahoma's regulatory jurisdiction
under the CAA, the EPA has FIP authority under CAA section 110(c) with
respect to all Indian country in Oklahoma other than excluded Indian
country lands. To the extent any change occurs in the scope of
Oklahoma's SIP authority in Indian country following finalization of
this rule, and such change affects the exercise of FIP authority
provided under section 110(c) of the Act,\126\ then, to the extent any
such areas would fall more appropriately within the CAA section 301(d)
FIP areas as described in section III.C.2.a of this document, the EPA's
necessary or appropriate finding as set forth above with respect to all
other CAA section 301(d) FIP areas within the geographic scope of
coverage of the rule would apply.
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    \126\ On December 22, 2021, the EPA proposed to withdraw and
reconsider the October 1, 2020, SAFETEA approval. See https://www.epa.gov/ok/proposed-withdrawal-and-reconsideration-and-supporting-information. The EPA is engaging in further consultation
with tribal governments and expects to have discussions with the
State of Oklahoma as part of this reconsideration. The EPA also
notes that the October 1, 2020, approval is the subject of a pending
challenge in Federal court. Pawnee Nation of Oklahoma v. Regan, No.
20-9635 (10th Cir.).
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D. Severability

    The EPA regards this action as a complete remedy, which will as
expeditiously as practicable implement good neighbor obligations for
the 2015 ozone NAAQS for the covered states, consistent with the
requirements of the Act. See North Carolina v. EPA, 531 F.3d 896, 911-
12 (D.C. Cir. 2008); Wisconsin v. EPA, 938 F.3d 303, 313-20 (D.C. Cir.
2019); Maryland v. EPA, 958 F.3d 1185, 1204 (D.C. Cir. 2020); New York
v. EPA, 964 F.3d 1214, 1226 (D.C. Cir. 2020); New York v. EPA, 781 Fed.
App'x 4, 7-8 (D.C. Cir. 2019) (all holding that the EPA must address
good neighbor obligations as expeditiously as practicable and by no
later than the next applicable attainment date). Yet should a court
find any discrete aspect of this document to be invalid, the Agency
believes that the remaining aspects of this rule can and should
continue to be implemented to the extent possible. In particular, this
action promulgates a FIP for each covered state (and, pursuant to CAA
section 301(d), for each area of tribal jurisdiction within the
geographic boundaries of those states). Should any jurisdiction-
specific aspect of the final rule be found invalid, the EPA views this
rule as severable along those state and/or tribal jurisdictional lines,
such that the rule can continue to be implemented as to any remaining
jurisdictions. This action promulgates discrete emissions control
requirements for the power sector and for each of seven other
industries. Should any industry-specific aspect of the final rule be
found invalid, the EPA views this rule as severable as between the
different industries and different types of emissions control
requirements. This is not intended to be an exhaustive list of the ways
in which the rule may be severable. In the event any part of it is
found invalid, our intention is that the remaining portions should
continue to be implemented consistent with any judicial ruling.
    The EPA's conclusion that this rule is severable also reflects the
important public health and environmental benefits of this rulemaking
in eliminating significant contribution and to ensure to the greatest
extent possible the ability of both upwind states and downwind states
and other relevant stakeholders to be able to rely on this final rule
in their planning. Cf. Wisconsin, 938 F.3d at 336-37 (``As a general
rule, we do not vacate regulations when doing so would risk significant
harm to the public health or the environment.''); North Carolina v.
EPA, 550 F.3d 1176, 1178 (D.C. Cir. 2008) (noting the need to preserve
public health benefits); EME Homer City v. EPA, 795 F.3d 118, 132 (D.C.
Cir. 2015) (noting the need to avoid disruption to emissions trading
market that had developed).

IV. Analyzing Downwind Air Quality Problems and Contributions From
Upwind States

A. Selection of Analytic Years for Evaluating Ozone Transport
Contributions to Downwind Air Quality Problems

    In this section, the EPA describes its process for selecting
analytic years for air quality modeling and analyses performed to
identify nonattainment and maintenance receptors and identify upwind
state linkages. For this final rule, the EPA evaluated air quality to
identify receptors at Step 1 for two

analytic years: 2023 and 2026. The EPA evaluated interstate
contributions to these receptors from individual upwind states at Step
2 for these two analytic years. In selecting these years, the EPA views
2023 and 2026 to constitute years by which key emissions reductions
from EGUs and non-EGUS can be implemented ``as expeditiously as
practicable.'' In addition, these years are the last full ozone seasons
before the Moderate and Serious area attainment dates for the 2015
ozone NAAQS (ozone seasons run each year from May 1-September 30). To
demonstrate attainment by these deadlines, downwind states would be
required to rely on design values calculated using ozone data from 2021
through 2023 and 2024 through 2026, respectively. By focusing its
analysis, and, potentially, achieving emissions reductions by, the last
full ozone seasons before the attainment dates (i.e., in 2023 or 2026),
this final rule can assist the downwind areas with demonstrating
attainment or receiving extensions of attainment dates under CAA
section 181(a)(5). (The EPA explains in detail in sections V and VI of
this document its determinations regarding which emissions reduction
strategies can be implemented by 2023, and which emissions reduction
strategies require additional time beyond that ozone season, or the
2026 ozone season.)
    It would not be logical for the EPA to analyze any earlier year
than 2023. The EPA continues to interpret the good neighbor provision
as forward-looking, based on Congress's use of the future-tense
``will'' in CAA section 110(a)(2)(D)(i), an interpretation upheld in
Wisconsin, 938 F.3d at 322. It would be ``anomalous,'' id., for the EPA
to impose good neighbor obligations in 2023 and future years based
solely on finding that ``significant contribution'' had existed at some
time in the past. Id.
    Applying this framework in the proposal, the EPA recognized that
the 2021 Marginal area attainment date had already passed. Further,
based on the timing of the proposal, it was not possible to finalize
this rulemaking before the 2022 ozone season had also passed. Thus, the
EPA has selected 2023 as the first appropriate future analytic year for
this final rule because it reflects implementation of good neighbor
obligations as expeditiously as practicable and coincides with the
August 3, 2024, Moderate area attainment date established for the 2015
ozone NAAQS.
    The EPA conducted additional analysis for 2026 to ensure a complete
Step 3 analysis for future ozone transport contributions to downwind
areas. As noted above, 2023 and 2026 coincide with the last full ozone
seasons before future attainment dates for the 2015 ozone NAAQS. In
addition, 2026 coincides with the ozone season by which key additional
emissions reductions from EGUs and non-EGUs become available. Thus, the
EPA analyzed additional years beyond 2023 to determine whether any
additional emissions reductions that are impossible to obtain by the
2024 attainment date could still be necessary to fully address
significant contribution. In all cases, implementation of necessary
emissions reductions is as expeditiously as practicable, with all
possible emissions reductions implemented by the next applicable
attainment date.
    The timing framework and selection of analytic years set forth
above comports with the D.C. Circuit's direction in Wisconsin that
implementing good neighbor obligations beyond the dates established for
attainment may be justified on a proper showing of impossibility or
necessity. See 938 F.3d at 320.
    Comment: A commenter claims that the EPA has not followed the
holdings of Wisconsin v. EPA, 938 F.3d 303 (D.C. Cir. 2019), North
Carolina v. EPA, 550 F.3d 1176 (D.C. Cir. 2008), and Maryland v. EPA,
958 F. 3d 1185 (D.C. Cir. 2020) in the selection of analytic years, in
that commenter interprets those decisions as holding that the EPA must
``harmonize'' the exact timing of upwind emissions reductions with when
downwind states implement their required reductions. Commenter also
points to the EPA's proposed action on New York's Good Neighbor SIP
submission specifically to argue that the EPA is treating upwind and
downwind states dissimilarly. Commenter also cites CAA sections 172,
177, and 179 to argue the EPA did not properly align upwind and
downwind obligations. Several commenters believe the EPA should defer
implementing good neighbor requirements until downwind receptor areas
have first implemented their own emissions control strategies.
    Response: The EPA maintains that 2023 is an appropriate analytic
year and comports with the relevant caselaw. Section VI.A further
discusses the compliance schedule for emissions reductions under this
rule. Commenter misreads the North Carolina, Wisconsin, and Maryland
decisions as calling for good neighbor analysis and emissions controls
to be aligned with the timing of the implementation of nonattainment
controls by downwind states. However, the D.C. Circuit has held that
the statutory attainment dates are the relevant downwind deadlines the
EPA must align with in implementing the good neighbor provision. In
Wisconsin, the court held, ``In sum, under our decision in North
Carolina, the Good Neighbor Provision calls for elimination of upwind
States' significant contributions on par with the relevant downwind
attainment deadlines.'' Wisconsin, 938 F.3d. at 321 (emphasis added).
    After that decision, the EPA interpreted Wisconsin as limited to
the attainment dates for Moderate or higher classifications under CAA
section 181 on the basis that Marginal nonattainment areas have reduced
planning requirements and other considerations. See, e.g., 85 FR 29882,
29888-89 (May 19, 2020) (proposed approval of South Dakota's 2015 ozone
NAAQS good neighbor SIP). However, on May 19, 2020, the D.C. Circuit in
Maryland v. EPA, 958 F.3d 1185 (D.C. Cir. 2020), applying the Wisconsin
decision, rejected that argument and held that the EPA must assess air
quality at the next downwind attainment date, including Marginal area
attainment dates under CAA section 181, in evaluating the basis for the
EPA's denial of a petition under CAA section 126(b). 958 F.3d at 1203-
04. After Maryland, the EPA acknowledged that the Marginal attainment
date is the first attainment date to consider in evaluating good
neighbor obligations. See, e.g., 85 FR 67653, 67654 (Oct. 26, 2020)
(final approval of South Dakota's 2015 ozone NAAQS good neighbor SIP).
    The D.C. Circuit again had occasion to revisit the Agency's
interpretation of North Carolina, Wisconsin, and Maryland, in a
challenge to the Revised CSAPR Update brought by the Midwest Ozone
Group (MOG). The court declined to entertain similar arguments to those
presented by commenters here and instead in a footnote explained that
it had ``exhaustively summarized the regulatory framework governing
EPA's conduct'' and that it ``[drew] on those decisions and incorporate
them herein by reference,'' citing, among other cases, Maryland, 958
F.3d 1185, and New York, 781 F. App'x 4. MOG v. EPA, No. 21-1146 (D.C.
Cir. March 3, 2023), Slip Op. at 3 n.1.
    The relevance of CAA sections 172, 177, and 179 to the selection of
the analytic year in this action is not clear. Commenter cites these
provisions to conclude that the EPA did not appropriately consider
downwind attainment deadlines and the timing of upwind good neighbor
obligations. These provisions are found in subpart I, and while they
may have continuing

relevance or applicability to aspects of ozone nonattainment planning
requirements, the nonattainment dates for the 2015 ozone NAAQS flow
from subpart 2 of title I of the CAA, and specifically CAA section
181(a). Applying that statutory schedule to the designations for the
2015 ozone NAAQS, the EPA has promulgated the applicable attainment
dates in its regulations at 40 CFR 51.1303. The effective date of the
initial designations for the 2015 ozone NAAQS was August 3, 2018 (83 FR
25776, June 4, 2018, effective August 3, 2018).\127\ Thus, the first
deadline for attainment planning under the 2015 ozone NAAQS was the
Marginal attainment date of August 3, 2021, and the second deadline for
attainment planning is the Moderate attainment date of August 3, 2024.
If a Marginal area fails to attain by the attainment date it is
reclassified, or ``bumped up,'' to Moderate. Indeed, the EPA has just
completed a rulemaking action reclassifying many areas of the country
from Marginal to Moderate nonattainment, including all of the areas
where downwind receptors have been identified in our 2023 modeling as
well as many other areas of the country. 87 FR 60897, 60899 (Oct. 7,
2022).
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    \127\ September 24, 2018, for the San Antonio area. 83 FR 35136
(July 25, 2018).
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    Other than under the narrow circumstances of CAA section 181(a)(5)
(discussed further in this section), the EPA is not permitted under the
CAA to extend the attainment dates for areas under a given
classification. That is, no matter when or if the EPA finalizes a
determination that an area failed to attain by its attainment date and
reclassifies that area, the attainment date remains fixed, based on the
number of years from the area's initial designation. See, e.g., CAA
section 182(i) (authorizing the EPA to adjust any applicable deadlines
for newly reclassified areas ``other than attainment dates''). As the
D.C. Circuit has repeatedly made clear, the statutory attainment
schedule of the downwind nonattainment areas under subpart 2 is
rigorously enforced and is not subject to change based on policy
considerations of the EPA or the states.

    [T]he attainment deadlines, the Supreme Court has said, are
``the heart'' of the Act. Train v. Nat. Res. Def. Council, 421 U.S.
60, 66, 95 S.Ct. 1470, 43 L.Ed.2d 731 (1975); see Sierra Club v.
EPA, 294 F.3d 155, 161 (D.C. Cir. 2002) (``the attainment deadlines
are central to the regulatory scheme'') (alteration and internal
quotation marks omitted). The Act's central object is the
``attain[ment] [of] air quality of specified standards [within] a
specified period of time.'' Train, 421 U.S. at 64-65, 95 S.Ct. 1470.

Wisconsin, 938 F.3d at 316. See also Natural Resources Defense Council
v. EPA, 777 F.3d 456, 466-68 (D.C. Cir. 2014) (holding the EPA cannot
adjust the section 181 attainment schedule to run from any other date
than from the date of designation); id. at 468 (``EPA identifies no
statutory provision giving it free-form discretion to set Subpart 2
compliance deadlines based on its own policy assessment concerning the
number of ozone seasons within which a nonattainment area should be
expected to achieve compliance.'') (citing and quoting Whitman v.
American Trucking Ass'ns, 531 U.S. 457, 484, (2001) (``The principal
distinction between Subpart 1 and Subpart 2 is that the latter
eliminates regulatory discretion that the former allowed.'').
Furthermore, as the court in NRDC noted, ``[T]he `attainment deadlines
. . . leave no room for claims of technological or economic
infeasibility.' '' 777 F.3d at 488 (quoting Sierra Club, 294 F.3d at
161) (internal quotation marks and brackets omitted).
    With the exception of the Uinta Basin, which is not an identified
receptor in this action, no Marginal nonattainment area met the
conditions of CAA section 181(a)(5) to obtain a one-year extension of
the Moderate area attainment date. 87 FR 60899. Thus, all Marginal
areas (other than Uinta) that failed to attain have been reclassified
to Moderate. Id. (And the New York City Metropolitan nonattainment area
was initially classified as Moderate (see following text for further
details).) Even if the EPA had extended the attainment date for any of
the downwind areas, it is not clear that it would necessarily follow
that the EPA must correspondingly extend or delay the implementation of
good neighbor obligations. While the Wisconsin court recognized
extensions under CAA section 181(a)(5) as a possible source of timing
flexibility in implementing the good neighbor provision, 938 F.3d at
320, the EPA and the states are still obligated to implement good
neighbor reductions as expeditiously as practicable and are also
obligated under the good neighbor provision to address ``interference
with maintenance.'' Areas that have obtained an extension under CAA
section 181(a)(5) or which are not designated as in nonattainment could
still be identified as struggling to maintain the NAAQS, and the EPA is
obligated under the good neighbor provision to eliminate upwind
emissions interfering with the ability to maintain the NAAQS, as well.
North Carolina, 531 F.3d at 908-11. Thus, while an extension under CAA
section 181(a)(5) may be a source of flexibility for the EPA to
consider in the timing of implementation of good neighbor obligations,
as Wisconsin recognized, it is not the case that the EPA must delay or
defer good neighbor obligations for that reason, and neither the D.C.
Circuit nor any other court has so held.
    Commenter is therefore incorrect to the extent that they argue the
selection of 2023 as an analytic year for upwind obligations results in
the misalignment of downwind and upwind state obligations. To the
contrary, both downwind and upwind state obligations are driven by the
statutory attainment date of August 3, 2024 for Moderate areas, and the
last year that air quality data may impact whether nonattainment areas
are found to have attained by the attainment date is 2023. That is why,
in the recent final rulemaking determinations that certain Marginal
areas failed to attain by the attainment date, bumping those areas up
to Moderate, and giving them SIP submission deadlines, reasonably
available control measures (RACM), and reasonably RACT implementation
deadlines, the EPA set the attainment SIP submission deadlines for the
bumped up Moderate areas to be January 1, 2023. See 87 FR 60897, 60900
(Oct. 7, 2022). The implementation deadline for RACM and RACT is also
January 1, 2023. Id. This was in large part driven by the EPA's ozone
implementation regulations, 40 CFR 51.1312(a)(3)(i), which previously
established a RACT implementation deadline for initially classified
Moderate as no later than January 1, 2023, and the modeling and
attainment demonstration requirements in 40 CFR 51.1308(d), which
require a state to provide for implementation of all control measures
needed for attainment no later than the beginning of the attainment
year ozone season (i.e., 2023). Given this regulatory history, the EPA
can hardly be accused of letting states with nonattainment areas for
the 2015 ozone NAAQS avoid or delay their mandatory CAA obligations.
    Commenter's proposal that the EPA align good neighbor obligations
with the actual implementation of measures in downwind areas is
untethered from the statute, as discussed above. It is also unworkable
in practice. It would necessitate coordinating the activities of
multiple states and EPA regional and headquarters offices to an
impossible degree and effectively could preclude the implementation of
good neighbor obligations altogether. Commenter does not explain how
the EPA or upwind states should coordinate upwind emissions control
obligations for states

linked to multiple downwind receptors whose states may be implementing
their requirements on different timetables. Less drastic mechanisms
than subjecting people living in downwind receptor areas to continuing
high levels of air pollution caused in part by upwind-state pollution
are available if the actual implementation of mandatory CAA
requirements in the downwind areas is delayed: CAA section 304(a)(2)
provides for judicial recourse where there is an alleged failure by the
Agency to perform a nondiscretionary duty; that recourse is for the
Agency to be placed on a court-ordered deadline to address the relevant
obligations. See Oklahoma v. U.S. EPA, 723 F.3d 1201, 1223-24 (10th
Cir. 2013); Montana Sulphur and Chemical Co. v. U.S. EPA, 666 F.3d
1174, 1190-91 (9th Cir. 2012). Commenter focuses on the EPA's
evaluation of New York's Good Neighbor SIP submission to argue the EPA
is treating upwind and downwind states dissimilarly. The argument
conflates New York's role as both a downwind and an upwind state. In
evaluating the Good Neighbor SIP submission that New York submitted,
the EPA identified as a basis for disapproval that none of the state
emissions control programs New York cited included implementation
timeframes to achieve the reductions, let alone ensure they were
achieved by 2023. 87 FR 9484, 9494 (Feb. 22, 2022). The EPA conducted
the same inquiry into other states' claims regarding their existing or
proposed state laws or other emissions reductions claimed in their SIP
submissions. See, e.g., 87 FR 9472-73 (evaluating claims regarding
emissions reductions anticipated under Maryland's state law); 87 FR
9854 (evaluating claims regarding emissions reductions anticipated
under Illinois' state law). Consistent with its treatment of the other
upwind states included in this action, the EPA in a separate action
disapproved New York's good neighbor SIP submission for the 2015 ozone
NAAQS because its arguments did not demonstrate that it had fully
prohibited emissions significantly contributing to out of state
nonattainment or maintenance problems.
    Commenter attempts to contrast this evaluation with what it
believes is the EPA's permissive attitude toward delays by downwind
states, specifically claiming that ``certain nonattainment areas have
delayed implementation of nonattainment controls until 2025 and
beyond.'' This apparently references New York's simple cycle and
regenerative combustion turbines (SCCT) controls, which commenter cited
elsewhere in its comments. New York's SCCT controls were not included
by New York in its good neighbor SIP submission, nor was the prior
approval of the SCCT controls reexamined by the EPA or reopened for
consideration by the Agency in this action. Although not part of this
rulemaking, the EPA notes that the SCCT controls were approved by the
EPA as a SIP strengthening measure and not to satisfy any specific
planning requirements for the 2015 ozone NAAQS under CAA section 182.
86 FR 43956, 43958 (Aug. 11, 2021). The SCCT controls submitted to the
EPA were already a state rule, and the only effect under the CAA of the
EPA approving them into New York's SIP was to make them federally
enforceable. 86 FR 43956, 43959 (Aug. 11, 2021). In other words,
approval of the SCCT controls did not relieve New York of its
nonattainment planning obligations for the 2015 ozone NAAQS.
    The EPA notes that the New York-Northern New Jersey-Long Island,
NY-NJ-CT nonattainment area was initially designated as Moderate
nonattainment. 83 FR 25776 (June 4, 2018). Pursuant to this
designation, New York was required to submit a RACT SIP submission and
an attainment demonstration no later than 24 months and 36 months,
respectively, after the effective date of the Moderate designation. CAA
section 182; 40 CFR 51.1308(a), 51.1312(a)(2). New York submitted a
RACT SIP for the 2015 ozone standards on January 29, 2021,\128\ and the
EPA is currently evaluating that submission. New York has not yet
submitted its attainment demonstration, which was due August 3, 2021.
Further, the New York-Northern New Jersey-Long Island, NY-NJ-CT
nonattainment area remains subject to the Moderate nonattainment area
date of August 3, 2024. If it fails to attain the 2015 ozone NAAQS by
August 3, 2024, it will be reclassified to Serious nonattainment,
resulting in additional requirements on the New York nonattainment
area.
---------------------------------------------------------------------------

    \128\ https://edap.epa.gov/public/extensions/S4S_Public_Dashboard_2/S4S_Public_Dashboard_2.html.
---------------------------------------------------------------------------

    In any case, regardless of the status of New York's and the EPA's
efforts in relation to the New York-Northern New Jersey-Long Island,
NY-NJ-CT nonattainment area (which are outside the scope of this
action), the EPA's evaluation of 2023 as the relevant analytic year in
assessing New York's and other states' good neighbor obligations is
consistent with the statutory framework and court decisions calling on
the agency to align these obligations with the downwind areas'
statutory attainment schedule. The EPA further responds to these
comments in the RTC document in the docket.
    The remainder of this section includes information on (1) the air
quality modeling platform used in support of the final rule with a
focus on the base year and future year base case emissions inventories,
(2) the method for projecting design values in 2023 and 2026, and (3)
the approach for calculating ozone contributions from upwind states.
The Agency also provides the design values for nonattainment and
maintenance receptors and the largest predicted downwind contributions
in 2023 and 2026 from each state. The 2016 base period and 2023 and
2026 projected design values and contributions for all ozone monitoring
sites are provided in the docket for this rule. The ``Air Quality
Modeling Technical Support Document for the Federal Good Neighbor Plan
for the 2015 Ozone National Ambient Air Quality Standards Final
Rulemaking'' (Mar. 2023), hereinafter referred to as the Air Quality
Modeling Final Rule TSD, in the docket for this final rule contains
more detailed information on the air quality modeling aspects of this
rule.

B. Overview of Air Quality Modeling Platform

    The EPA used version 3 of the 2016-based modeling platform (i.e.,
2016v3) for the air quality modeling for this final rule. This modeling
platform includes 2016 base year emissions from anthropogenic and
natural sources and anthropogenic emissions projections for 2023 and
2026. The emissions data contained in this platform represent an update
to the 2016 version 2 inventories used for the proposal modeling.
    The air quality modeling for this final rule was performed for a
modeling region (i.e., modeling domain) that covers the contiguous 48
states using a horizontal resolution of 12 x 12 km. The EPA used the
CAMx version 7.10 for air quality modeling which is the same model that
EPA used for the proposed rule air quality modeling.\129\ Additional
information on the 2016-based air quality modeling platform can be
found in the Air Quality Modeling Final Rule TSD.
---------------------------------------------------------------------------

    \129\ Ramboll Environment and Health, January 2021, https://www.camx.com.
---------------------------------------------------------------------------

    Comment: Commenters noted that the 2016 base year summer maximum
daily average 8-hour (MDA8) ozone predictions from the proposal
modeling were biased low compared to the corresponding measured
concentrations in certain locations. In this regard, commenters said
that model

performance statistics for a number of monitoring sites, particularly
those in portions of the West and in the area around Lake Michigan,
were outside the range of published performance criteria for normalized
mean bias (NMB) and normalized mean error (NME) of less than 15 percent and less than 25 percent, respectively (Emory, et al.,
2017).\130\ The commenters said EPA must investigate the factors
contributing to low bias and make necessary corrections to improve
model performance in the final rule modeling. Some commenters said that
EPA should include NOX emissions from lightning strikes and
assess the treatment of other background sources of ozone to improve
model performance for the final rule. Additional information on the
comments on model performance can be found in the RTC document for this
final rule.
---------------------------------------------------------------------------

    \130\ Christopher Emery, Zhen Liu, Armistead G. Russell, M.
Talat Odman, Greg Yarwood & Naresh Kumar (2017) Recommendations on
statistics and benchmarks to assess photochemical model performance,
Journal of the Air & Waste Management Association, 67:5, 582-598,
DOI: 10.1080/10962247.1265027.
---------------------------------------------------------------------------

    Response: In response to these comments EPA examined the temporal
and spatial characteristics of model under prediction to investigate
the possible causes of under prediction of MDA8 ozone concentrations in
different regions of the U.S. in the proposal modeling. EPA's analysis
indicates that the under prediction was most extensive during May and
June with less bias during July and August in most regions of the U.S.
For example, in the Upper Midwest region model under prediction was
larger in May and June compared to July through September.
Specifically, in the proposal modeling, the normalized mean bias for
days with measured concentrations >=60 ppb improved from a 21.4 percent
under prediction for May and June to a 12.6 percent under prediction in
the period July through September. As described in the Air Quality
Modeling Final Rule TSD, the seasonal pattern in bias in the Upper
Midwest region improves somewhat gradually with time from the middle of
May to the latter part of June. In view of the seasonal pattern in bias
in the Upper Midwest and in other regions of the U.S., EPA focused its
investigation of model performance on model inputs that, by their
nature, have the largest temporal variation within the ozone season.
These inputs include emissions from biogenic sources and lightning
NOX, and contributions from transport of international
anthropogenic emissions and natural sources into the U.S. Both biogenic
and lightning NOX emissions in the U.S. dramatically
increase from spring to summer.131 132 In contrast, ozone
transported into the U.S. from international anthropogenic and natural
sources peaks during the period March through June, with lower
contributions during July through September.133 134 To
investigate the impacts of these sources, EPA conducted sensitivity
model runs which focused on the effects on model performance of adding
NOX emissions from lightning strikes, updating biogenic
emissions, and using an alternative approach for quantifying transport
of ozone and precursor pollutants into the U.S. from international
anthropogenic and natural sources. The development of lightning
NOX emissions and the updates to biogenic emissions, are
described in section IV.C of this document. In the proposal modeling
the amount of transport from international anthropogenic and natural
sources was based on a simulation of the hemispheric version of the
Community Multi-scale Air Quality Model (H-CMAQ) for 2016.\135\ The
outputs from this hemispheric modeling were then used to provide
boundary conditions for national scale air quality modeling at
proposal.\136\ Overall, H-CMAQ tends to under-predict daytime ozone
concentrations at rural and remote monitoring sites across the U.S.
during the spring of 2016 whereas the predictions from the GEOS-Chem
global model \137\ were generally less biased.\138\ During the summer
of 2016 both models showed varying degrees of over prediction with
GEOS-Chem showing somewhat greater over-prediction, compared to H-CMAQ.
In view of those results, EPA examined the impacts of using GEOS-Chem
as an alternative to H-CMAQ for providing boundary conditions for the
final rule modeling.
---------------------------------------------------------------------------

    \131\ Guenther, A.B., 1997. Seasonal and spatial variations in
natural volatile organic compound emissions. Ecol. Appl. 7, 34-45.
https://doi.org/10.1890/1051-0761(1997)007[0034:SASVIN]2.0.CO;2.
Guenther, A., Hewitt, C.N., Erickson, D., Fall, R.
    \132\ Kang D, Mathur R, Pouliot GA, Gilliam RC, Wong DC.
Significant ground-level ozone attributed to lightning-induced
nitrogen oxides during summertime over the Mountain West States. NPJ
Clim Atmos Sci. 2020 Jan 30;3:6. doi: 10.1038/s41612-020-0108-2.
PMID: 32181370; PMCID: PMC7075249.
    \133\ Jaffe DA, Cooper OR, Fiore AM, Henderson BH, Tonnesen GS,
Russell AG, Henze DK, Langford AO, Lin M, Moore T. Scientific
assessment of background ozone over the U.S.: Implications for air
quality management. Elementa (Wash DC). 2018;6(1):56. doi: 10.1525/
elementa.309. PMID: 30364819; PMCID: PMC6198683.
    \134\ Henderson, B.H., P. Dolwick, C. Jang, A., Eyth, J.
Vukovich, R. Mathur, C. Hogrefe, N. Possiel, G. Pouliot, B. Timin,
K.W. Appel, 2019. Global Sources of North American Ozone. Presented
at the 18th Annual Conference of the UNC Institute for the
Environment Community Modeling and Analysis System (CMAS) Center,
October 21-23, 2019.
    \135\ Mathur, R., Gilliam, R., Bullock, O.R., Roselle, S.,
Pleim, J., Wong, D., Binkowski, F., and 1 Streets, D.: Extending the
applicability of the community multiscale air quality model to 2
hemispheric scales: motivation, challenges, and progress. In: Steyn
DG, Trini S (eds) Air 3 pollution modeling and its applications,
XXI. Springer, Dordrecht, pp 175-179, 2012.
    \136\ Boundary conditions are the concentrations of pollutants
along the north, east, south, and west boundaries of the air quality
modeling domain. Boundary conditions vary in space and time and are
typically obtained from predictions of global or hemispheric models.
Information on how boundary conditions were developed for the final
rule modeling can be found in the Air Quality Modeling Final Rule
TSD.
    \137\ I. Bey, D.J. Jacob, R.M. Yantosca, J.A. Logan, B.D. Field,
A.M. Fiore, Q. Li, H.Y. Liu, L.J. Mickley, M.G. Schultz. Global
modeling of tropospheric chemistry with assimilated meteorology:
model description and evaluation. J. Geophys. Res. Atmos., 106
(2001), pp. 23073-23095, 10.1029/2001jd000807.
    \138\ Henderson, B.H., P. Dolwick, C. Jang, A., Eyth, J.
Vukovich, R. Mathur, C. Hogrefe, G., N. Possiel, B. Timin, K.W.
Appel, 2022. Meteorological and Emission Sensitivity of Hemispheric
Ozone and PM2.5. Presented at the 21st Annual Conference
of the UNC Institute for the Environment Community Modeling and
Analysis System (CMAS) Center, October 17-19, 2022.
---------------------------------------------------------------------------

    For the lightning NOX, biogenics, and GEOS-Chem
sensitivity runs, EPA reran the proposal modeling using each of these
inputs, individually. Results from these sensitivity runs indicate that
each of the three updates provides an improvement in model performance.
However, by far the greatest improvement in model performance is
attributable to the use of GEOS-Chem. In view of these results EPA has
included lightning NOX emissions, updated biogenic
emissions, and international transport from GEOS-Chem in the final rule
air quality modeling. Details on the results of the individual
sensitivity runs can be found in the Air Quality Modeling Final Rule
TSD. For the air quality modeling supporting this final action, model
performance based on days in 2016 with measured MDA8 ozone >=60 ppb is
considerably improved (i.e., less bias and error) compared to the
proposal modeling in nearly all regions of the U.S. For example, in the
Upper Midwest, which includes monitoring sites along Lake Michigan, the
normalized mean bias improved from a 19 percent under prediction to a
6.9 percent under prediction and in the Southwest region, which
includes monitoring sites in Denver and Salt Lake City, normalized mean
bias improved from a 13.6 percent under prediction to a 4.8 percent
under prediction.\139\ In all regions, the

normalized mean bias and normalized mean error statistics for high
ozone days based on the final rule modeling are within the range of
performance criteria benchmarks (i.e., < 15 percent for
normalized mean bias and <25 percent for normalized mean error).\140\
Additional information on model performance is provided in the Air
Quality Modeling Final Rule TSD. In summary, EPA included emissions of
lightning NOX, as requested by commenters, and investigated
and addressed concerns about model performance for the final rule
modeling.
---------------------------------------------------------------------------

    \139\ A comparison of model performance from the proposal
modeling to the final modeling for individual monitoring sites can
be found in the docket for this final rule.
    \140\ Christopher Emery, Zhen Liu, Armistead G. Russell, M.
Talat Odman, Greg Yarwood & Naresh Kumar (2017) Recommendations on
statistics and benchmarks to assess photochemical model performance,
Journal of the Air & Waste Management Association, 67:5, 582-598,
DOI: 10.1080/10962247.1265027.
---------------------------------------------------------------------------

C. Emissions Inventories

    The EPA developed emissions inventories to support air quality
modeling for this final rule, including emissions estimates for EGUs,
non-EGU point sources (i.e., stationary point sources), stationary
nonpoint sources, onroad mobile sources, nonroad mobile sources, other
mobile sources, wildfires, prescribed fires, and biogenic emissions
that are not the direct result of human activities. The EPA's air
quality modeling relies on this comprehensive set of emissions
inventories because emissions from multiple source categories are
needed to model ambient air quality and to facilitate comparison of
model outputs with ambient measurements.
    Prior to air quality modeling, the emissions inventories were
processed into a format that is appropriate for the air quality model
to use. To prepare the emissions inventories for air quality modeling,
the EPA processed the emissions inventories using the Sparse Matrix
Operator Kernel Emissions (SMOKE) Modeling System version 4.9 to
produce the gridded, hourly, speciated, model-ready emissions for input
to the air quality model. Additional information on the development of
the emissions inventories and on data sets used during the emissions
modeling process are provided in the document titled, ``Technical
Support Document (TSD): Preparation of Emissions Inventories for the
2016v3 North American Emissions Modeling Platform'' (Jan. 2023),
hereafter known as the 2016v3 Emissions Modeling TSD. This TSD is
available in the docket for this rule.\141\
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    \141\ See 2016v3 Emissions Modeling TSD, also available at
https://www.epa.gov/air-emissions-modeling/2016v3-platform.
---------------------------------------------------------------------------

1. Foundation Emissions Inventory Data Sets
    The 2016v3 emissions platform is comprised of data from various
sources including data developed using models, methods, and source
datasets that became available in calendar years 2020 through 2022, in
addition to data retained from the Inventory Collaborative 2016 version
1 (2016v1) Emissions Modeling Platform, released in October 2019. The
2016v1 platform was developed through a national collaborative effort
between the EPA and state and local agencies along with MJOs. The
2016v2 platform used to support the proposed action included updated
data from the 2017 NEI along with updates to models and methods as
compared to 2016v1. The 2016v3 platform includes updates to the 2016v2
platform implemented in response to comments along with other updates
to the 2016v2 platform such as corrections and the incorporation of
updated data sources that became available prior to the 2016v3
inventories being developed. Several commenters noted that the 2016v2
platform did not include NOX emissions that resulted from
lightning strikes. To address this, lightning NOX emissions
were computed and included in the 2016v3 platform.
    For this final rule, the EPA developed emissions inventories for
the base year of 2016 and the projected years of 2023 and 2026. The
2023 and 2026 inventories represent changes in activity data and of
predicted emissions reductions from on-the-books actions, planned
emissions control installations, and promulgated Federal measures that
affect anthropogenic emissions.\142\ The 2016 emissions inventories for
the U.S. primarily include data derived from the 2017 National
Emissions Inventory (2017 NEI) \143\ and data specific to the year of
2016. The following sections provide an overview of the construct of
the 2016v3 emissions and projections. The fire emissions were unchanged
between the 2016v2 and 2016v3 emissions platforms. For the 2016v3
platform, the biogenic emissions were updated to use the latest
available versions of the Biogenic Emissions Inventory System and
associated land use data to help address comments related to a
degradation in model performance in the 2016v2 platform as compared to
the 2016v1 platform. Details on the construction of the inventories are
available in the 2016v3 Emissions Modeling TSD. Details on how the EPA
responded to comments related to emissions inventories are available in
the RTC document for this rule.
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    \142\ Biogenic emissions and emissions from wildfires and
prescribed fires were held constant between 2016 and the future
years because (1) these emissions are tied to the 2016
meteorological conditions and (2) the focus of this rule is on the
contribution from anthropogenic emissions to projected ozone
nonattainment and maintenance.
    \143\ https://www.epa.gov/air-emissions-inventories/2017-national-emissions-inventory-nei-technical-support-document-tsd.
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2. Development of Emissions Inventories for EGUs
a. EGU Emissions Inventories Supporting This Final Rule
    Development of emissions inventories for annual NOX and
SO2 emissions for EGUs in the 2016 base year inventory are
based primarily on data from continuous emissions monitoring systems
(CEMS) and other monitoring systems allowed for use by qualifying units
under 40 CFR part 75, with other EGU pollutants estimated using
emissions factors and annual heat input data reported to the EPA. For
EGUs not reporting under Part 75, the EPA used data submitted to the
NEI by the state, local, and tribal agencies. The Air Emissions
Reporting Rule (80 FR 8787; February 19, 2015), requires that Type A
point sources large enough to meet or exceed specific thresholds for
emissions be reported to the EPA every year, while the smaller Type B
point sources must only be reported to EPA every 3 years. Emissions
data for EGUs that did not have data submitted to the NEI specific to
the year 2016 were filled in with data from the 2017 NEI. For more
information on the details of how the 2016 EGU emissions were developed
and prepared for air quality modeling, see the 2016v3 Emissions
Modeling TSD.
    The EPA projected 2023 and 2026 baseline EGU emissions using the
version 6--Updated Summer 2021 Reference Case of the Integrated
Planning Model (IPM). IPM, developed by ICF Consulting, is a state-of-
the-art, peer-reviewed, multi-regional, dynamic, deterministic linear
programming model of the contiguous U.S. electric power sector. It
provides forecasts of least cost capacity expansion, electricity
dispatch, and emissions control strategies while meeting energy demand
and environmental, transmission, dispatch, and reliability constraints.
The EPA has used IPM for over two decades, including all prior
implemented CSAPR rulemakings, to better understand power sector
behavior under future business-

as-usual conditions and to evaluate the economic and emissions impacts
of prospective environmental policies. The model is designed to reflect
electricity markets as accurately as possible. The EPA uses the best
available information from utilities, industry experts, gas and coal
market experts, financial institutions, and government statistics as
the basis for the detailed power sector modeling in IPM. The model
documentation provides additional information on the assumptions
discussed here as well as all other model assumptions and inputs.\144\
The EPA relied on the same model platform at final as it did at
proposal, but made substantial updates to reflect public comments on
near-term fossil fuel market price volatility and updated fleet
information reflecting Summer 2022 U.S. Energy Information Agency (EIA)
860 data, unit-level comments, and additional updates to the National
Electric Energy Data System (NEEDS) inventory.
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    \144\ Detailed information and documentation of EPA's Base Case,
including all the underlying assumptions, data sources, and
architecture parameters can be found on EPA's website at: https://www.epa.gov/airmarkets/epas-power-sector-modeling-platform-v6-using-ipm-summer-2021-reference-case.
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    The IPM version 6--Updated Summer 2021 Reference Case incorporated
recent updates through the Summer of 2022 to account for updated
Federal and state environmental regulations (including Renewable
Portfolio Standards (RPS), Clean Energy Standards (CES) and other state
mandates), fleet changes (committed EGU retirements and new builds),
electricity demand, technology cost and performance assumptions from
recent data (for renewables adopting from National Renewable Energy Lab
(NREL's) Annual Technology Baseline 2020 and for fossil sources from
EIA's Annual Energy Outlook (AEO) 2020. Natural gas and coal price
projections reflect data developed in Fall 2020 but updated in summer
of 2022 to capture near-term price volatility and current market
conditions. The inventory of EGUs provided as an input to the model was
the NEEDS fall 2022 version and is available on EPA's website.\145\
This version of NEEDS reflects announced retirements and under-
construction new builds known as of early summer 2022. This projected
base case accounts for the effects of the finalized Mercury and Air
Toxics Standards rule, CSAPR, the CSAPR Update, the Revised CSAPR
Update, NSR enforcement settlements, the final ELG Rule, CCR Rule, and
other on-the-books Federal and state rules (including renewable energy
tax credit extensions from the Consolidated Appropriations Act of 2021)
through early 2021 impacting SO2, NOX, directly
emitted particulate matter, CO2, and power plant operations.
It also includes final actions the EPA has taken to implement the
Regional Haze Rule and best available retrofit technology (BART)
requirements. Documentation of IPM version 6 and NEEDS, along with
updates, is in Docket ID No. EPA-HQ-OAR-2021-0668 and available online
at https://www.epa.gov/airmarkets/power-sector-modeling. IPM has
projected output years for 2023 and 2025. IPM year 2025 outputs were
adjusted for known retirements to be reflective of year 2026, and IPM
year 2030 outputs were used for the year 2032 as is specified by the
mapping of IPM output years to specific years.
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    \145\ Available at https://www.epa.gov/airmarkets/national-electric-energy-data-system-needs-v6.
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    Additional 2023 through 2026 EGU emissions baseline levels were
developed through engineering analytics as an alternative approach that
did not involve IPM. The EPA developed this inventory for use in Step 3
of this final rule, where it determines emissions reduction potential
and corresponding state-level emissions budgets. IPM includes
optimization and perfect foresight in solving for least cost dispatch.
Given that this final rule will likely become effective immediately
prior to the start of the 2023 ozone season, the EPA adopted a similar
approach to the CSAPR Update and the Revised CSAPR Update where it
utilized historical data and an engineering analytics approach in Step
3 to avoid overstating optimization and dispatch decisions in state-
emissions budget quantification that may not be possible in a short
time frame. The EPA does this by starting with unit-level reported data
and only making adjustments to reflect known baseline changes such as
planned retirements and new builds (for the base case scenarios) and
also identified mitigation strategies for determining state emissions
budgets. In both the CSAPR Update and in this rule at Step 3, the EPA
complemented that projected IPM EGU outlook with an historical (e.g.,
engineering analytics) perspective based on historical data that only
factors in known changes to the fleet. This 2023 engineering analytics
data set is described in more detail in the Ozone Transport Policy
Analysis Final Rule TSD and corresponding Appendix A: State Emissions
Budgets Calculations and Underlying Data. The Engineering Analysis used
in Step 3 is also discussed further in section VII.B of this document.
    Both IPM and the Engineering Analytics tools are valuable for
estimating future EGU emissions and examining the cone of uncertainty
around any future sector-level inventory estimate. A key difference
between the two tools is that IPM reflects both announced and projected
changes in fleet operation, whereas the Engineering Analytics tool only
reflects announced changes. By not including projected regional changes
that are anticipated in response to market forces and fleet trends, the
Engineering Analysis deliberately creates future estimates of the power
sector where state estimates are limited to known changes. Throughout
all of the CSAPR rules to date, and prior interstate transport actions,
the EPA has used IPM at Steps 1 and 2 as it is best suited for
projecting emissions in an airshed, at projecting emissions for time
horizons more than a few years out (for which changes would not yet be
announced and thus projecting changes is critical), and for scenarios
where the assumed change in emissions is not being codified into a
state emissions reduction requirement. Using IPM at Steps 1 and 2 helps
the EPA avoid overstating the current analytic year receptor values
(Step 1) and future year linkages (Step 2) by reflecting reductions
anticipated to occur within the airshed in the relevant timeframe.
    Engineering analytics has been a useful tool for Step 3 state-level
emissions reduction estimates in CSAPR rulemaking, because at that step
the EPA is dealing with more geographic granularity (state-level as
opposed to regional air shed), more near-term (as opposed to medium-
term) assessments, and scenarios where reduction estimates are codified
into regulatory requirements. Using the Engineering Analytics tool at
this step ensures that the EPA is not codifying into the base case, and
consequently into state emissions budgets, changes in the power sector
that are merely modeled to occur rather than announced by real-world
actors.
    Finally, both in the Revised CSAPR Update and in this rule, the EPA
was able to use the Air Quality Assessment Tool to determine that
regardless of which EGU inventory is used, the 2023 geography of the
program is not impacted. In other words, regardless of whether a
stakeholder takes a more comprehensive view of the EGU future (IPM) or
one limited to current data and known changes (Engineering Analysis),
the states that are linked to receptors at Steps 1 and 2 would be the
same. This finding is consistent with the observation that EGUs are now
less than

10 percent of the total ozone-season NOX inventory and the
degree of near-term difference between the IPM and Engineering Analytic
regional projections is relatively small on the regional level. The EPA
continues to believe that IPM is best suited for Step 1 and Step 2, and
engineering analytics is best suited for Step 3 efforts in this
rulemaking. The Ozone Transport Policy Analysis Final Rule TSD contains
data on 2023 and 2026 AQ impacts of each dataset.
    Comment: Some commenters express concern that using IPM for Step 1
and Step 2 captures generation shifting across state lines, which
exceeds the EPA's authority. Moreover, the commenters suggest that the
resulting proposed baseline EGU inventory may understate emissions
levels as it projects economic retirements that are not yet announced
or firm. Other commenters more generally allege that the EPA is using
different modeling tools at different steps in its analysis, and this
introduces confusion or uncertainty into the basis for the EPA's
regulatory conclusions.
    Response: The EPA believes the first aspect of this comment, in
regards to its focus on generation shifting, is misguided in several
ways. For Step 1 and Step 2, the EPA models no incremental generation
shifting attributable to the implementation of an emissions control
policy at Step 3. Rather, any generation patterns are merely a
reflection of the model's projection of how regional load requirements
will be met with the generation sources serving that region in the
baseline. The EPA is not modeling any additional generation shifting,
but merely capturing the expected generation dispatch under anticipated
baseline market conditions. Electricity generated in one state
regularly is transmitted across state boundaries and is used to serve
load in other states; IPM is not incentivizing or requiring any
additional generation transfer across state lines in this scenario but
is merely projecting the pattern of this behavior in the future.
Moreover, as noted previously, the EPA affirms its geographic findings
at Step 2 (states contributing over 1 percent of the NAAQS to a
downwind receptor) using historical data (engineering analysis) in a
sensitivity analysis. These historical data reflect the actual
generation patterns observed to meet regional load. Therefore, any
suggestion by the commenter that the EPA's projected view of baseline
grid dispatch is unreasonable, is mooted by the fact that the use of
historical reported generation patterns produces the same result.
Additionally, at the time of the proposal's analysis, the 2023 ozone
season was still nearly two years away. Therefore, it was appropriate
for EPA's modeling to project economic retirements as those
retirements--which are regularly occurring--are often not firm or
announced two years in advance. However, for this final rule, the 2023
analytic year was close enough to the period in which EPA was
conducting its analysis that such retirements would likely be
announced. Therefore, the EPA was able to incorporate those announced
and firm retirements to occur in the 2023 year. Further, in recognition
of this very near timeframe, we deactivated IPM's ability to project
additional economic retirements for the 2023 year (reflecting the
notion that any retirements occurring by 2023 would be known at this
point). This adjustment further accommodates the commenters' concern
that the baseline overstates generation shifting (driven by
retirements) in the near term, and consequently understates emissions
levels. Finally, with respect to comments that the EPA is using
different modeling tools at different steps in the framework, we
previously explained why these techniques are appropriate for the
purposes at each step of the analysis, and they are not incompatible
nor do they produce results so different as to call into question their
reliability or the bases for our regulatory determinations (EPA notes
that the nationwide projected ozone season total NOX
emissions vary by less than 1 percent in the 2023 analytic year).
Nonetheless, we also observe that the effect of using engineering
analytics to inform analysis at Steps 1 and 2 would tend to produce
higher assumed emissions from EGUs in the baseline than IPM would
project in 2026 and beyond and therefore only strengthen and further
affirm the Step 1 and Step 2 geographic findings. EPA's use of
different tools to project EGU scenarios is not inconsistent, but
rather it is carefully explained as a deliberate measure taken to
preserve--not introduce--consistency across each of the Steps in the 4-
step framework. By using IPM at Step 1 and 2, EPA is selecting the more
conservative approach for identifying the degree of nonattainment and
geography of states contributing above 1 percent. By using Engineering
Analytics at Step 3, EPA is selecting the more conservative value to
codify into state-level budgets.
b. Impact of the Inflation Reduction Act on EGU Emissions
    The EGU modeling used to construct the EGU emissions inventories
used to inform the modeling projections for 2023 and 2026 was conducted
prior to the passage of the Inflation Reduction Act (IRA), Public Law
117-169. The EPA did not have time to incorporate updated EGU
projections reflecting the passage of the IRA into the primary air
quality modeling for this final rule. However, the EPA was able to
perform a sensitivity analysis reflecting the IRA in its EGU
NOX emissions inventories. The results from this scenario
were run through AQAT and demonstrated that the status of states
identified as linked at the 1 percent of NAAQS contribution threshold
(based on the modeling and air quality analysis described in this
section) would not change regardless of which inventory (with or
without IRA) is used. This sensitivity analysis is presented in the
Regulatory Impact Analysis accompanying this rule, and that discussion
provides additional detail on the emissions consequences of including
the IRA in a baseline EGU inventory. The air quality impact of
including the IRA in EPA's emissions inventories and in its Step 3
scenarios is discussed in Appendix K of the Ozone Transport Policy
Analysis Final Rule TSD.
    The results of this analysis are not surprising and accord with
what is generally understood to be the overall effect of the IRA over
the short to long term. While the IRA is anticipated to have a
potentially dramatic effect on reducing both GHG and conventional
pollutant emissions from the power sector, it is likely to have a more
substantial impact later in the forecast period (i.e., beyond the
attainment deadlines by which the emissions reductions under this final
rule must occur). This timing reflects a realistic assessment of
utilities', regulators', and transmission authorities' planning
requirements associated with the addition of substantial new renewable
and storage capacity to the grid, as well as the time needed to
integrate that capacity and retire existing capacity. Additionally, the
IRA incentives span a longer time period (for example, certain tax
incentives for clean energy sources are available until the later of
2032 or the year in which power sector emissions are 75 percent below
2022 levels) and therefore there is no IRA-related deadline to build
cleaner generation by 2026. Recent analysis by the Congressional Budget
Office supports the finding that the majority of power sector EGU
emissions reductions expected from the IRA occur well after the 2023
and 2026 analytic years relevant to the attainment dates and this

rulemaking.\146\ While the report focuses on CO2 rather than
NOX, the drivers of the emissions reductions (primarily
increased zero-emitting generation) would generally have a downward
impact on both pollutants.
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    \146\ ``Emissions of Carbon Dioxide In the Electric Power
Sector,'' Congressional Budget Office. December 2022. Available at
https://www.cbo.gov/publication/58860.
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    We note that important uncertainties remain at this time in the
implementation of the IRA that further counsel against over-assuming
short-term emissions reductions for purposes of this rule. The
legislation provides economic incentives for shifting to cleaner forms
of power generation but does not mandate emissions reductions through
an enforceable regulatory program. The strength of those incentives
will vary to some extent depending on other key market factors (such as
the cost of natural gas or renewable energy technologies). Further,
some incentives, such as tax credits for carbon capture and storage,
could lead EGUs to remain in operation longer, which could in turn
result in greater NOX emissions, if those emissions are not
also well controlled.
    Nonetheless, while we find that the passage of the IRA does not
affect the geography of the rule in terms of which states we identify
as linked, the Agency is confident that the incentives toward clean
technology provided in the IRA will, in the longer run beyond the 2015
ozone NAAQS attainment deadlines, facilitate ongoing EGU compliance
with the emissions reduction requirements of this rule and will reduce
costs borne by EGUs and their customers as the U.S. power sector
transitions. As discussed in greater detail in section VI.B of this
document, we have made several adjustments in the final rule to provide
greater flexibility to EGU owners and operators to integrate this
rule's requirements with and facilitate the accelerating transition to
an overall cleaner electricity-generating sector, which the IRA
represents. Despite the uncertainties inherent in the implementation of
the IRA at this time, the EPA also has performed a sensitivity analysis
on the final rule to confirm that our finding of no overcontrol is
robust to a future with the IRA in effect.
3. Development of Emissions Inventories for Stationary Industrial Point
Sources
    Non-EGU point source emissions are mostly consistent with those in
the proposal modeling except where they were updated in response to
comments. Several commenters mentioned that point source emissions
carried forward from 2014 NEI were not the best estimates of 2017
emissions. Thus, emissions sources in 2016v2 that had been projected
from the 2014 NEI in the proposal were replaced with emissions based on
the 2017 NEI. Point source emissions submitted to the 2016 NEI or to
the 2016v1 platform development process specifically for the year 2016
were retained in 2016v3. Other 2016 non-EGU updates in 2016v3 include a
few sources being moved to the EGU inventory, the addition of some
control efficiency information for the year 2016, the replacement of
most emissions projected from 2014 NEI with data from 2017 NEI, and the
inclusion of point source data for solvent processes that had not been
included in the 2016v2 non-EGU inventory.
    The 2023 and 2026 non-EGU point source emissions were grown from
2016 to those years using factors based on the AEO 2022 and reflect
emissions reductions due to known national and local rules, control
programs, plant closures, consent decrees, and settlements that could
be computed as reductions to specific units by July 2022.
    Aircraft emissions and ground support equipment at airports are
represented as point sources and are based on adjustments to emissions
in the January 2021 version of the 2017 NEI. The EPA developed and
applied factors to adjust the 2017 airport emissions to 2016, 2023 and
2026 based on activity growth projected by the Federal Aviation
Administration Terminal Area Forecast 2021 \147\ data, the latest
available version at the time the factors were developed. By basing the
factors on the latest available Terminal Area Forecast that was
released following the most significant pandemic impacts on the
aviation sector, the reduction and rebound impacts of the pandemic on
aircraft and ground support equipment were reflected in the 2023 and
2026 airport emissions.
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    \147\ https://www.faa.gov/data_research/aviation/taf/.
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    Emissions at rail yards were represented as point sources. The 2016
rail yard emissions are largely consistent with the 2017 NEI rail yard
emissions. The 2016 and 2023 rail yard emissions were developed through
the 2016v1 Inventory Collaborative process, with the 2026 emissions
interpolated between the 2023 and 2028 emissions from 2016v1 rail yard
emissions were interpolated from the 2016 and 2023 emissions. Class I
rail yard emissions were projected based on the AEO freight rail energy
use growth rate projections for 2023, and 2026 with the fleet mix
assumed to be constant throughout the period.
    The EPA made multiple updates to point source oil and gas emissions