yields a cost per amount of emission reduction ($/ton). Cost
effectiveness provides a value for each emission reduction option that
is comparable with other options and other facilities. Where multiple
control options exist for a given source or source category, States
should consider both the cost effectiveness (dollars per ton) of each
option, and the incremental cost effectiveness per ton between the
options (incremental increase in cost between options divided by the
incremental tons reduced).
---------------------------------------------------------------------------

    \31\ EPA Air Pollution Control Cost Manual--Sixth Edition (EPA
452/B-02-001), EPA Office of Air Quality Planning and Standards,
Research Triangle Park, NC, Jan 2002.
---------------------------------------------------------------------------

    In determining whether a given measure is reasonable, States may
consider costs per ton of other measures previously employed to reduce
that pollutant, but similar costs are not conclusive. As discussed
above, States may evaluate equity considerations in weighing the
economic feasibility of imposing a measure on a given source or source
category.
    We anticipate that States may decide upon RACT and RACM controls
that differ from State to State, based on the State's determination of
the most effective strategies given the relevant mixture of sources and
potential controls in the relevant nonattainment areas, and differences
in the difficulty of reaching attainment.
    In considering what level of control is reasonable, EPA is not
proposing a fixed dollar per ton cost threshold for RACT, consistent
with the views of multiple commenters. Areas with more serious air
quality problems typically will need to obtain greater levels of
emissions reductions from local sources than areas with less serious
problems. Where essential reductions are more difficult to achieve
(e.g., because many sources are already controlled), the cost per ton
of control may necessarily be higher.
    It is not appropriate to assume that the same cost per ton range is
reasonable for direct PM2.5 and different precursors,
because an equal amount of emission reduction in different pollutants
has a different impact on PM2.5 ambient levels. For example,
in a given nonattainment area, reductions of direct PM2.5
emissions may prove more expensive than reductions of NOX
emissions, but the resulting benefits of reductions of direct
PM2.5 might warrant the higher costs. A State should
consider this differential impact on ambient PM2.5 in
considering RACT for controlling different pollutants. During the SIP
process, States and regional planning organizations typically conduct
sensitivity modeling that can provide this information. Also, the PM
NAAQS RIA provides information on the differential impact of
PM2.5 and PM precursor reductions on ambient
PM2.5 levels in various areas.\32\
---------------------------------------------------------------------------

    \32\ See: U.S. EPA 2006. Regulatory Impact Analysis for the
Particulate Matter National Ambient Air Quality Standards. Air
Benefits and Cost Group, Office of Air Quality Planning and
Standards, Research Triangle Park, NC, October 6, 2006. Appendix A
provides an analysis of estimated benefits and costs of attaining
the 1997 PM NAAQS standards in 2015.
---------------------------------------------------------------------------

    One of the factors that could affect estimated compliance costs of
an emission reduction measure is the timing of its implementation.
Hypothetically, if a short compliance period were contemplated for a
set of sources, and if the short compliance

period resulted in high demand for a limited supply of labor or other
resources, compliance costs could be higher than if the same measure
were implemented by a later compliance date. In such a case it may be
reasonable for the State to find that the measure is reasonable only if
implemented by the later date.
    If a source contends that a source-specific RACT level should be
established because it cannot afford the technology that appears to be
RACT for other sources in its source category, the source can support
its claim with such information as:

--Fixed and variable production costs ($/unit)
--Product supply and demand elasticity,
--Product prices (cost absorption vs. cost pass-through),
--Expected costs incurred by competitors,
--Company profits once the technology or measure is in operation
(considering the annualized costs and the marginal costs of alternative
technologies and measures),
--Employment costs, and
--Any other unique factor(s) particular to the individual source.

    Finally, the EPA clarifies that if the State demonstrates through
economic analysis that the imposition of the measure would cause
unacceptable economic disruption for the local economy, that is, a
plant shutdown or a severe curtailment in plant employment or output, a
State may reject the measure as not reasonable to reach attainment as
expeditiously as practicable.
c. Comments and Responses
    Comment: Some commenters agreed with EPA's proposal not to
establish presumptive cost-effectiveness thresholds.
    Response: The EPA agrees with the commenters.
    Comment: A number of commenters expressed concerns over the
references to health benefits as a consideration in whether measures
are technically or economically available. Some commenters believed
this is a consideration not authorized by the CAA. Others believed that
consideration of benefits, in combination with EPA's estimates of
benefits per ton, would have the effect of converting RACT to more
stringent LAER levels. Some commenters expressed concerns whether
States had the resources or expertise to conduct cost-benefit analyses
for this purpose.
    Response: The EPA wishes to clarify that the reference to health
benefits does not mean that a cost-benefit, or a detailed health
benefits assessment, is a necessary part of a control strategy
demonstration. We also wish to clarify that EPA is not requiring that
the costs of all technologies and measures for PM2.5 and
precursors be deemed acceptable at any dollar/ton levels at or below
the calculated monetized benefits per ton of reduction. We do, however,
continue to believe that the significant benefits associated with
PM2.5 ambient reductions is a relevant consideration in
control strategy development. The EPA disagrees that this limited
consideration of benefits would convert the RACT process to the
equivalent of LAER.
    Comment: One commenter objected to EPA's proposed requirement that
States consider competitive factors such as production costs, demand
elasticity, product prices, and cost incurred by competitors in the
determination of RACT. The commenter believed that this information is
generally not accessible to States or industrial facility owners, and
is not necessary for a RACT determination.
    Response: The EPA generally disagrees that this type of information
is unavailable. For example, EPA calculates or reviews this type of
data on a regular basis as part of our work on MACT, NSPS, and other
emissions standards. A document that describes these types of analyses
and the data used to prepare them is the OAQPS Economic Resource Manual
found at http://www.epa.gov/ttn/ecas/analguid.html. EPA believes that

this issue is most relevant to category-wide RACT rules where a source
seeks a case-by-case exemption. Further, EPA believes most RACT
determinations will be developed through case-by-case analyses rather
than rules affecting entire source categories. Accordingly, this
analysis likely will be relevant in few cases.
6. What Specific Source Categories and Control Measures Should a State
Evaluate When Determining RACT and RACM for a Nonattainment Area?
a. Background
    Section 172 does not provide a specific list of source categories
and control measures that must be evaluated for RACT and RACM for
PM2.5. However, section 172(c)(3) indicates that the
attainment plan must include a ``comprehensive, accurate, current,
inventory of actual emissions from all sources of the relevant
pollutant.'' This indicates that States should look broadly at the
different types of sources in the nonattainment area. We recognize that
PM2.5 is a new NAAQS without a long history of
implementation as with ozone. Therefore, we included a list of
potential RACM measures in the preamble to the proposed rule, based
upon a review of information about the contribution of various sources
to emissions inventories and a review of potential control measures for
such sources. We requested comment on the specific sources and
potential control measures recommended for RACM analysis on this list.
Based on comments received and additional information available to EPA
since the proposal, we have made some changes to the list. We also
refer to this list of potential ``RACT and RACM'' measures for the
combined approach to RACT and RACM in the final rule.
    In the preamble to the proposed rule, EPA indicated that due to the
short time available, it does not plan to develop new control
techniques guidance (CTG) or ACT documents specifically for purposes of
PM2.5 implementation. The EPA indicated that other
information was available on control technologies, and EPA also
indicated its intention to maintain an updated list of references for
new PM2.5 control technology information.
b. Final Rule
    Emission reduction measures constituting RACM should be determined
on an area-by-area basis. We believe that a State should consider each
of the measures listed in this section to determine if each measure is
reasonably available in the applicable nonattainment area. However, we
do not presume that each of these measures is reasonably available in
each nonattainment area.
    We recommend that each State use the list of source categories in
this section as a starting point for identifying potentially available
control strategies (regulatory and voluntary) for a nonattainment area.
States are encouraged and expected to add other potentially available
measures to the list based on its knowledge of the particular universe
of emissions sources in the area and comments from the general public.
We expect that, depending on the potential measure being analyzed, the
State's degree of evaluation will vary as appropriate. Detailed
information on emission control technologies is available from a number
of sources.\33\ The EPA intends to maintain a website with links to
sources of information for

controlling emissions of direct particulate matter and PM precursors.
---------------------------------------------------------------------------

    \33\ There are a number of sources of information on
technologies for reducing emissions of PM2.5 and its
precursors. Links are provided to a number of national, state and
local air quality agency sites from EPA's PM2.5 Web site:
http://www.epa.gov/pm/measures.html.

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

    As discussed in section II.J.5. above, EPA recognizes that control
technology guidance for certain source categories has not been updated
for many years. Section 183(c) of the CAA, which addresses control
technologies to address ozone nonattainment problems, requires EPA to
``revise and update such documents as the Administrator determines
necessary.'' As new or updated information becomes available States
should consider the new information in their RACT determinations. A
State should consider the new information in any RACT determinations or
certifications that have not been issued by the State as of the time
such updated information becomes available.

Stationary Source Measures

--Stationary diesel engine retrofit, rebuild or replacement, with
catalyzed particle filter
--New or upgraded emission control requirements for direct
PM2.5 emissions at stationary sources (e.g., installation or
improved performance of control devices such as a baghouse or
electrostatic precipitator; revised opacity standard; improved
compliance monitoring methods)
--Improved capture of particulate emissions to increase the amount of
PM2.5 ducted to control devices, and to minimize the amount
of PM2.5 emitted to the atmosphere, for example, through
roof monitors
--New or upgraded emission controls for PM2.5 precursors at
stationary sources (e.g., SO2 controls such as wet or dry
scrubbers, or reduced sulfur content in fuel; desulfurization of coke
oven gas at coke ovens; improved sulfur recovery at refineries;
increasing the recovery efficiency at sulfuric acid plants)
--Energy efficiency measures to reduce fuel consumption and associated
pollutant emissions (either from local sources or distant power
providers)
--Measures to reduce fugitive dust from industrial sites

Mobile Source Measures

--Onroad diesel engine retrofits for school buses,\34\ trucks and
transit buses using EPA-verified technologies
---------------------------------------------------------------------------

    \34\ See Clean School Bus USA program at http://www.epa.gov/cleanschoolbus/.
 See also: ``What You Should Know About Diesel

Exhaust and School Bus Idling,'' (June 2003, EPA420-F-03-021) at
http://www.epa.gov/otaq/retrofit/documents/f03021.pdf.

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

--Nonroad diesel engine retrofit, rebuild or replacement, with
catalyzed particle filter \35\
---------------------------------------------------------------------------

    \35\ See EPA's voluntary diesel retrofit program Web site at
http://www.epa.gov/otaq/retrofit/overfleetowner.htm.

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

--Diesel idling programs for trucks, locomotive, and other mobile
sources \36\
---------------------------------------------------------------------------

    \36\ See EPA's voluntary diesel retrofit program Web site at
http://www.epa.gov/otaq/retrofit/idling.htm.

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

--Transportation control measures (including those listed in section
108(f) of the CAA as well as other TCMs), as well as other
transportation demand management and transportation systems management
strategies \37\
---------------------------------------------------------------------------

    \37\ See EPA's Web site on transportation control measures at
http://www.epa.gov/otaq/transp/traqtcms.htm.

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

--Programs to reduce emissions or accelerate retirement of high
emitting vehicles, boats, and lawn and garden equipment
--Emissions testing and repair/maintenance programs for onroad vehicles
--Emissions testing and repair/maintenance programs for nonroad heavy-
duty vehicles and equipment \38\
---------------------------------------------------------------------------

    \38\ See EPA's Web site on nonroad engines, equipment, and
vehicles at http://www.epa.gov/otaq/nonroad.htm.

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

--Programs to expand use of clean burning fuels \39\
---------------------------------------------------------------------------

    \39\ Fuels adopted in SIPs must be consistent with the Energy
Policy Act of 2005 and EPA guidance on SIP-approved boutique fuels
at 71 FR 78192 (December 28, 2006).
---------------------------------------------------------------------------

--Low emissions specifications for equipment or fuel used for large
construction contracts, industrial facilities, ship yards, airports,
and public or private vehicle fleets
--Opacity or other emissions standards for ``gross-emitting'' diesel
equipment or vessels

Area Source Measures

--New open burning regulations and/or measures to improve program
effectiveness such as programs to reduce or eliminate burning of land
clearing vegetation
--Programs to reduce emissions from woodstoves and fireplaces including
outreach programs, curtailments during days with expected high ambient
levels of PM2.5, and programs to encourage replacement of
woodstoves when houses are sold
--Controls on emissions from charbroiling or other commercial cooking
operations
--Reduced solvent usage or solvent substitution (particularly for
organic compounds with 7 carbon atoms or more, such as toluene, xylene,
and trimethyl benzene)
    Category-Specific Guidelines on innovative approaches. The EPA has
issued a number of category specific guidelines on approaches to taking
into account innovative approaches to emissions reductions for purposes
of SIPs. Categories currently covered by these guidelines include: (1)
Electric-sector Energy Efficiency and Renewable Energy Measures; (2)
Long Duration Switch Yard Locomotive Idling; (3) Long Duration Truck
Idling; (4) Clean Diesel Combustion Technology; and (5) Commuter Choice
Programs. See http://www.epa.gov/ttn/airinnovations/measure_specific.html.

c. Comments and Responses
    Comment: Some commenters recommended that EPA provide new CTGs or
other control technology review documents for purposes of assisting
States to address PM2.5 and its precursors, because the
information in some current documents is out-dated.
    Response: The EPA recognizes that issuance of new or updated CTGs
specifically tailored for PM2.5 would be useful.
Unfortunately, limitations on time and resources preclude EPA from
developing such CTGs in advance of the SIP submission date. The EPA
cannot delay the statutorily specified outer date for SIP submission.
However, EPA believes that there are already many sources of
information and guidance on key source categories. To the extent that
States need to examine potential control measures for sources never
addressed before in any area or other context for a previous NAAQS, EPA
anticipates that it will work closely with States during the process of
plan development and approval to ensure an appropriate approach.
    Comment: A number of commenters expressed concerns with references
to the STAPPA and ALAPCO Menu of Options document. Some commenters
believed that this document must be subject to formal review and
comment to ensure appropriate stakeholder input.
    Response: The language in the final preamble has been changed to
refer to a Web site EPA maintains that provides access to a variety of
information sources regarding control technologies that may be useful
to States to consider in developing their PM2.5 SIPs. These
links include evaluations developed by government and nongovernment
organizations. One such source with potentially useful information is
the STAPPA and ALAPCO Menu of Options. However, EPA is not specifically
endorsing any of the specific evaluations as being appropriate in any
specific situation. Rather, we think documents such as the

Menu of Options provide potentially useful ideas. Specifically, States
would need to assess which items on the menu are applicable in their
areas, and will have to assess the costs of applying controls locally.
Accordingly, there would be ample opportunity for public review of the
State's analysis of the local cost and air quality impacts of any
measure listed in the document which is included in a State's SIP. The
EPA is not requiring that States adhere to the list of measures in the
Menu of Options. The EPA does not in any way mean to imply that the
measures in the Menu of Options are presumed to be RACM, merely that
they are potential controls for areas to consider. The Menu of Options
has no regulatory significance and thus need not be issued through
notice-and-comment rulemaking. The EPA notes, however, that the Menu of
Options does provide a broad list of potential sources and measures
that can help inform States in the development of their plans.
Similarly, our own list of potential measures is not intended to be a
categorical list of measures which States must adopt, rather it is
intended to provide guidance about the types of sources and measures
that States can consider in constructing their attainment plans. The
EPA emphasizes that whether a source category or potential measure is
or is not on this list is simply not conclusive as to whether a given
measure is appropriate to consider in the RACT and RACM analysis. That
can be determined only through the State's development of the
attainment plan, and EPA's evaluation of such plan.
    Comment: A commenter representing the paper industry interpreted
the proposed rule as requiring electrostatic precipitator and tighter
sulfur-in-fuel requirements for the forest products industry. The
commenter believed that EPA was creating limits for such sources
without adequate rulemaking process.
    Response: The EPA disagrees that the listing of control
technologies in the table in the rule creates a ``rebuttable
presumption.'' Rather, the table identifies potential opportunities for
emissions reductions which should be reviewed in light of technical and
economic feasibility, and which a State should consider in a list of
possible RACT and RACM measures for purposes of attaining the standards
as expeditiously as practicable. The EPA is currently conducting a
sector-based approach to the paper industry. One of the goals of the
sector initiative on pulp and paper is to work with the industry to
identify reductions in SO2 and PM2.5 that will
assist us in meeting the NAAQS, considering facility locations,
magnitude of emissions, emission stream characteristics, and cost
effectiveness of controls.
    Comment: A number of commenters believed that EPA should develop
not only a list of measures to consider for RACM, but should develop a
list of mandatory measures that States should include, particularly for
areas with attainment dates more than 5 years after designation.
    Response: See discussion in section II.D.3 regarding rule
requirements for attainment date extensions and the issue of whether
certain measures should be mandatory in order for an area to receive an
extension.
    Comment: Some commenters believed that the list of possible
measures was deficient in not including sources of PM2.5 and
PM2.5 precursors from agricultural sources. One commenter
believed the list is incomplete without identifying the contribution of
ammonia emissions associated with livestock, poultry, and crop
fertilizers.
    Response: As we indicated in the proposal, we included a list of
potential RACM measures in the preamble to the proposed rule, based
upon a review of information about the contribution of various sources
to the emissions inventories and a review of potential control measures
for such sources. We did not identify emissions from agricultural
sources in this review. Because ammonia is not presumed to be a
PM2.5 precursor unless identified for a specific area by the
State or EPA, regulation of ammonia emissions from agricultural sources
may not be necessary.
    We also note that the agricultural industry presents unique
challenges to regulators given the nature of relevant emissions
sources. Moreover, we currently lack good methods to quantify
agricultural emissions, and we do not fully understand their
contribution to nonattainment problems. We have entered into an
agreement with several animal producer sectors to monitor animal
feeding operations to develop better tools to assess emissions from
this industry. Hopefully, these tools will enhance our knowledge of
agricultural emissions and their contribution to nonattainment
problems. Until emissions from these sources are better understood,
States should be judicious in determining whether any specific measure
is RACT/RACM for this industry.
    The EPA recognizes that the United States Department of Agriculture
(USDA) has been working with the agricultural community to develop
conservation systems and activities to control coarse particle
emissions. Based on current ambient monitoring information, these USDA-
approved conservation systems and activities have proven to be
effective in controlling these emissions in areas where coarse
particles emitted from agricultural activities have been identified as
a contributor to a violation of the PM10 NAAQS. The EPA has
found that where USDA-approved conservation systems and activities have
been implemented, these systems and activities have satisfied the
Agency's reasonably available control measure and best available
control measure requirements for areas needing to attain the
PM10 standards.
    The EPA believes that in the future, certain USDA-approved
conservation systems and activities that reduce agricultural emissions
of fine particles may be able to satisfy the requirements of applicable
sources to implement reasonably available control measures for purposes
of attaining the PM2.5 NAAQS. The EPA will work with States
to identify appropriate measures to meet their RACM requirements,
including site-specific conservation systems and activities. The EPA
will continue to work with USDA to prioritize the development of new
conservation systems and activities; demonstrate and improve, where
necessary, the control efficiencies of existing conservation systems
and activities; and ensure that appropriate criteria are used for
identifying the most effective application of conservation systems and
activities.
    Comment: Some commenters raised concerns about a statement in the
proposal that ``[i]n addressing a nonattainment area having military
training, testing and operational activities occurring within it, the
State should not need to target these activities for emission
reductions.'' Some commenters interpreted this statement as an
exemption from any emission reduction requirements for military
sources.
    Response: The statement in the proposal was not intended as an
exemption for all military activities. Emissions potentially
contributing to PM2.5 concentrations at military
installations originate from a variety of sources: basic operational
activities (such as power generation, other fuel combustion, and
transportation to and from residences, offices, and schools); and from
field training and testing activities (such as personnel training,
obscurants used in training, operation of nonroad vehicles and
equipment, and related prescribed burning operations). The EPA believes
that in evaluating emissions for a specific nonattainment

area having military activities occurring within it, the State should
consult with DOD for information on the nature of these activities and
their associated emissions.
    With regard to military training activities specifically, such
activities are periodic in nature, and when they do occur, the
principal type of emissions generated by these activities is dust (i.e.
inorganic direct PM emissions) from field operations. Other pollutants
may be emitted to a lesser degree from certain onroad and nonroad motor
vehicles. While military training activities may contribute some degree
of primary PM2.5 emissions to certain nonattainment area
inventories, the fugitive dust generated from military training
activities is predominantly composed of coarse PM rather than fine PM.
    Based on data from the PM2.5 speciation monitoring
network operated by EPA and the States, the contribution of inorganic
dust to total PM2.5 mass on an annual average basis is
relatively low in most nonattainment areas, on the order of 0.5 to 1.5
micrograms per cubic meter (generally 10% or less of total
PM2.5 mass). Dust from military training activities would be
a subset of these levels. Depending on the available information and
specific circumstances for a particular area, a State could find in its
SIP development analyses that direct PM2.5 emissions from
military training activities do not significantly contribute to
PM2.5 concentrations in the nonattainment area, and
therefore would not need to target military training activities for
emission reductions in its attainment plan.\40\
---------------------------------------------------------------------------

    \40\ Windblown dust from agricultural tilling activities also
can be a periodic source of inorganic PM in some areas. In some
cases such dust would be expected to be predominantly composed of
coarse PM rather than fine PM. Depending on the available
information and specific circumstances for a particular area, it is
possible that a State could find in its SIP development analyses
that direct PM2.5 emissions from agricultural tilling
activities do not significantly contribute to annual average
PM2.5 concentrations in the nonattainment area, and
therefore would not need to require emission reductions from
agricultural tilling activities in the plan for attaining the annual
standard. However, States should be mindful of the contribution of
these sources to 24-hour fine particle concentrations.
---------------------------------------------------------------------------

7. How Should States Consider EGU Reductions for CAIR in Meeting RACT/
RACM Requirements?
a. Background
    In section III.I.11 of the preamble to the proposed rule, we
discussed the nature of the SO2 and NOX RACT
obligations of electric generating unit (EGU) sources in states subject
to the CAIR emission reduction requirements. The CAIR rulemaking was
finalized in March 2005 and published at 70 FR 25221 (May 12, 2005).
CAIR requires 28 states and the District of Columbia to significantly
reduce emissions of SO2 and/or NOX. The 26
jurisdictions in the CAIR PM2.5 region are required to
reduce annual emissions of SO2 and NOX, and the
26 jurisdictions in the CAIR ozone region are required to reduce
seasonal emissions of NOX. These jurisdictions also have the
option of participating in EPA-administered annual SO2,
annual NOX, and seasonal NOX cap-and-trade
programs (the CAIR trading programs) to meet these emission reduction
requirements. In addition, in March 2006, EPA promulgated a Federal
implementation plan (FIP) to implement CAIR in these jurisdictions
until they have EPA approved CAIR SIPs in place (71 FR 25328, April 28,
2006). The FIP adopts, as the control measure, the CAIR trading
programs slightly modified to allow for Federal instead of State
implementation. When fully implemented, CAIR will reduce SO2
emissions in these jurisdictions by over 70 percent and NOX
emissions by over 60 percent from 2003 levels. This will result in $85
to $100 billion in health benefits and nearly $2 billion in visibility
benefits per year by 2015 and will substantially reduce premature
mortality in the eastern United States. The benefits will continue to
grow over time as the program is fully implemented (i.e., the
SO2 emission bank is depleted and the final cap is met), and
as growth in populations and the aging of the population continues
(which increases the susceptible population).
    Sources subject to cap-and-trade programs such as the CAIR trading
programs generally have the option of installing emissions control
technology, adopting some other strategy to reduce emissions, or
purchasing emissions allowances and thereby effectively paying other
sources covered by the cap to reduce emissions. In the proposal, we
noted that a number of EGUs expected to be covered by the CAIR trading
programs are located in nonattainment areas. Based on emissions
projections for 2010 and 2015 using the Integrated Planning Model
(IPM), some of these EGUs are expected to comply with CAIR by
purchasing allowances under the trading program and some are expected
to comply by installing emission controls.
    The proposal also described our past experience with the
implementation of the NOX SIP Call and our belief that many
power companies will develop their strategies for complying with CAIR
based, in part, on consultations with State and local air quality
officials in order to address local PM2.5 and ozone
attainment planning needs. The EPA suggested that consultations on
location of CAIR controls would be timely during State development of
the CAIR SIP, which is due in 2006, prior to the April 2008 deadline
for submitting PM2.5 nonattainment area SIPs.
    The EPA proposed a determination that in States that fulfill their
CAIR SO2 emission reductions entirely through EGU emission
reductions (i.e. without reductions from non-EGU sources or allowing
non-EGU sources to opt-in to the CAIR SO2 trading program),
participation in the CAIR SO2 trading program would satisfy
the SO2 RACT requirement for the EGU sources. The EPA also
proposed that in states that fulfill their CAIR NOX emission
reductions entirely through EGU emission reductions, CAIR would satisfy
NOX RACT for the EGU sources, provided that those sources
with existing selective catalytic reduction (SCR) emission control
technology installed on their boilers operate that technology on a
year-round basis beginning in 2009. Note that direct PM2.5
emissions are not addressed by the CAIR program, and EPA did not
propose any determination that compliance with CAIR would satisfy RACT
for direct PM2.5 emissions. The proposal included a
discussion of the rationale for these proposed determinations for
SO2 and NOX, and requested comments on the issue.
b. Final Rule
    As discussed in section II.F.2 on our overall policy for RACT and
RACM, we consider an area's obligation to implement RACT to be part of
the area's overall RACM obligation--to adopt those reasonably available
measures needed to reach PM2.5 attainment as expeditiously
as practicable. The final rule also reflects this combined RACT/RACM
approach regarding EGU control obligations under CAIR and the extent to
which meeting CAIR also satisfies a source's RACT and RACM requirements
for attainment.
    Specifically, the final rule includes a presumption that in States
that fulfill their CAIR SO2 emission reduction requirements
entirely through EGU emission reductions (i.e. without reductions from
non-EGU sources or allowing non-EGU sources to opt in to the CAIR
SO2 trading program), compliance by EGU sources with an EPA-
approved CAIR SIP or a CAIR FIP would satisfy their SO2
RACT/RACM requirements for attaining the fine particle NAAQS. This
section also includes a presumption that in States

that are subject to CAIR annual NOX emission reduction
requirements and fulfill these requirements entirely through EGU
emission reductions (i.e. without reductions from non-EGU sources or
allowing non-EGU sources to opt in to the CAIR annual NOX
trading program), compliance by EGU sources with an EPA-approved CAIR
SIP or a CAIR FIP would satisfy the NOX RACT/RACM
requirement for the PM2.5 NAAQS, provided that the sources
with existing selective catalytic reduction (SCR) emission control
technology installed on their boilers operate that technology on a
year-round basis beginning in 2009. This final position is based on a
number of factors identified in the proposal and discussed below.
    Many PM2.5 nonattainment areas are projected to achieve
significant SO2 and NOX reductions under the CAIR
program. We do not believe that requiring source-specific RACT/RACM
controls on specified EGUs in nonattainment areas would reduce total
SO2 and NOX emissions from sources covered by
CAIR below the regionwide levels that will be achieved under CAIR
alone. Nor do we believe that ``beyond CAIR'' EGU controls for
SO2 and NOX are ``reasonably available'' control
measures for most areas within the CAIR Region. Accordingly, most
States need not evaluate additional control measures on EGUs to satisfy
RACT/RACM requirements as explained above.
    As discussed previously, we are not requiring that States impose
RACT on any specific size or type of source. Instead, States must
conduct a RACT/RACM analysis considering measures that are ``reasonably
available'' to meet the overarching requirement to attain the standards
as expeditiously as practicable. Thus, the final rule imposes no
specific requirement on States to impose RACT/RACM on EGUs.
    Nonetheless, in evaluating RACT/RACM for EGUs, EPA believes it is
appropriate for States (states that achieve all reductions from EGUs)
to consider the special attributes of that group of facilities
including the unique interrelated nature of the power supply network,
and their participation in the CAIR program. For EGUs in the CAIR
region, based upon the presumption explained here, States may define
RACT/RACM as the CAIR level of control on the collective group of
sources in the region rather than impose a specific level of control on
an individual source. This approach is similar to the Agency's past
``bubble'' policy, as discussed in section (c) addressing comments on
the proposal.
    As discussed more fully in the CAIR final rulemaking notice, EPA
has set the 2009 and 2010 CAIR caps for SO2 and
NOX at a level that will require EGUs to install emission
controls on the maximum total capacity on which it is feasible to
install emission controls by those dates. The EPA concluded that the
CAIR compliance dates represent an aggressive schedule that reflects
the limitations of the labor pool, and equipment/vendor availability,
and need for electrical generation reliability for installation of
emission controls.
    Although the actual SO2 cap does not become effective
until 2010, we designed banking provisions in CAIR so that covered EGUs
will begin to reduce their SO2 emissions almost immediately
after CAIR is finalized, and will continue steadily to reduce their
emissions in anticipation of the 2010 cap and the more stringent cap
that becomes effective in 2015. The 2015 SO2 and
NOX caps are specifically designed to eliminate all
SO2 and NOX emissions from EGUs that are highly
cost effective to control (the first caps represent an interim step
toward that end).
    Moreover, we predicted that the majority of large coal-fired
utilities will install advanced control technologies under CAIR because
the larger and higher emitting source offer an opportunity to obtain
more cost-effective emissions reductions. We expect that the largest-
emitting sources will be the first to install SO2 and
NOX control technology and that such control technology will
gradually be installed on progressively smaller-emitting sources until
the ultimate cap is reached. As a result, few, if any coal-fired units
with greater than 600 MW of operating capacity should operate in
PM2.5 nonattainment areas without advanced control after
full implementation of CAIR. Of the remaining units operating without
advanced pollution controls, a great many of these units will have
operating capacities below 300 MW. We predict that these units ``will
be utilized less often,'' and ``typically have baghouses and
electrostatic precipitators for particulate control, have combustion
controls for NOX control, and burn low-sulfur coal.'' See
``Contributions of CAIR/CAMR/CAVR to NAAQS Attainment: Focus on Control
Technologies and Emission Reductions in the Electric Power Sector,''
Office of Air and Radiation, U.S. Environmental Protection Agency,
April 18, 2006 (available at http://www.epa.gov/airmarkets/cair/analyses/naaqsattainment.pdf
). In light of these expected results, we

generally believe that the cost to install additional controls on these
smaller units would be unreasonable.
    We are also concerned that if States require specific EGUs to
install advanced pollution control measures, it could interfere with
the market-based incentives inherent in the cap and trade program. This
could increase the cost of compliance and shift the location of the
units that would otherwise opt to install advanced emissions controls.
Such a result may be counterproductive to that State's attainment
efforts, as the State may forego a larger quantity of more beneficial
reductions in transported pollutants, in exchange for a smaller
quantity and less beneficial reduction in local emissions. Moreover, it
may reduce the benefits expected in other nonattainment areas as well.
Accordingly, even if a State found the cost to control an individual
unit acceptable on a cost per ton basis, the potential overall
disbenefit of control may nonetheless make imposition of the control
not ``reasonably available.''
    The EPA finds that the control installations projected to result
from CAIR NOX and SO2 caps in 2009 and 2010 are
as much as feasible from EGUS across the CAIR Region by those dates. In
fact, if states chose to require smaller-emitting sources in
nonattainment areas to meet source-specific RACT requirements by 2009,
they would likely use labor and other resources that would otherwise be
used for emission controls on larger sources. Because of economies of
scale, more boiler-makers may be required per megawatt of power
generation for smaller units than larger units. In this case, the
imposition of source-specific RACT/RACM on smaller emitting sources by
2009 could actually reduce the amount of banking that would otherwise
occur and result in higher SO2 emissions in 2009 as compared
to the level that would result from implementation of CAIR alone.
    In any event, the imposition of source-specific control
requirements on a limited number of sources also covered by a cap-and-
trade program would not reduce the total regionwide emissions from
sources subject to the program. Under a cap-and-trade program such as
CAIR, a given number of allowances are issued in order to achieve a
given emission level. Source-specific control requirements within the
CAIR program may affect the temporal distribution of emissions (by
reducing banking and thus delaying early reductions) or the spatial
distribution of emissions (by moving them around from one place to
another), but they would not affect total regional emissions under the
program. If source-specific requirements were targeted at the units

that could be controlled most cost-effectively, then the imposition of
source-specific controls would likely achieve the same result as the
cap-and-trade program. If not, however, the imposition of source-
specific requirements would make any given level of emission reduction
more costly than it would be under the cap-and-trade program alone.
Thus, the imposition of source-specific RACT on EGUs covered by CAIR
would not reduce total regionwide emissions, but would likely achieve
emission reductions under the program in a more costly way.
    Given the considerations described above, we think that in many
areas additional controls on EGUs generally would not be ``reasonably
available.'' Notwithstanding these conclusions, we recognize that
States are in the best position to determine how best to achieve
attainment with the PM2.5 NAAQS in light of local needs and
conditions. As we acknowledged in our proposed rule, power plant
operators typically have ongoing relationships with the State and local
officials involved in air quality planning. We expect that power plants
will continue to collaborate with State officials to determine how best
to address multiple air quality goals, and which plant locations to
control under CAIR, considering local PM2.5 and ozone
attainment needs.
    The EPA expects States and local air agencies to identify
reasonably available control measures that are necessary and reasonable
to attain the standards as expeditiously as practicable; and that after
consulting with power companies, the State may conclude that
establishing additional ``beyond CAIR'' emission control requirements
on specific sources in nonattainment areas is warranted to provide for
attainment as expeditiously as practicable. Nevertheless, in preparing
the overall attainment demonstration, States should be aware of the
expected benefits of the market-based incentives of the CAIR program,
the cost effectiveness of control, feasibility of implementation, and
any disbenefits that would result from requiring ``beyond CAIR''
controls on any specific EGU before concluding that additional controls
on EGUs are ``reasonably available'' and necessary to satisfy RACT/RACM
requirements.
    Year-round NOX controls. In the CAIR final rulemaking
notice, EPA found that the operation of existing SCRs on a year-round
basis, instead of operating them only during the ozone season, could
achieve NOX reductions at low cost relative to other
available NOX controls. The EPA projected that power
generators would employ this control measure to comply with CAIR SIPs.
Based on this control opportunity, EPA estimated the average cost of
non-ozone-season NOX control at $500/ton. These
considerations support a finding that RACT should include year-round
operation of existing SCRs that are located in PM2.5
nonattainment areas. Because all PM2.5 nonattainment areas
violate the annual form of the PM2.5 standard and public
health can be affected by high PM2.5 levels in the winter as
well as the summer, we believe that year-round operation of existing
SCR that are located in nonattainment areas where NOX is an
attainment plan precursor will provide additional health benefits for
relatively low dollar cost per ton of pollutant reduced.
    In the proposal notice, EPA proposed to define ``existing'' SCRs as
those units that were in place by the date of the proposed rule
(November 1, 2005). We selected this date rather than the final date to
avoid creating an incentive to delay installation of new SCR. Today, we
finalize our proposed approach with one clarification. To avoid
confusion over the proper interpretation of the phrase ``in place,'' we
are clarifying that an existing SCR is one which is fully installed and
capable of operation by November 1, 2005.
    We also proposed that these existing SCR begin year-round
operations no later than January 1, 2009 to qualify as RACT/RACM under
our presumptive approach. We noted that year round operation of
existing SCR involves little to no alteration of existing equipment,
and that EGUs could conduct any required work during normal outages.
Today, after taking these factors into account, we finalize our
proposed rule. The year-round operation requirement, however, will not
be federally enforceable to individual EGUs until EPA approves a
State's SIP including the requirement.
c. Comments and Responses
    Comment: Some commenters supported the proposed determination
described in section (a) that in States that fulfill their CAIR
SO2 emission reduction requirements entirely through EGU
emission reductions (i.e. without reductions from non-EGU sources or
allowing non-EGU sources to opt in to the CAIR SO2 trading
program), compliance by EGU sources with an EPA-approved CAIR SIP or a
CAIR FIP would satisfy the SO2 RACT requirement for the
sources; and in States that are subject to CAIR annual NOX
emission reduction requirements and fulfill these requirements entirely
through EGU emission reductions (i.e. without reductions from non-EGU
sources or allowing non-EGU sources to opt in to the CAIR annual
NOX trading program), compliance by EGU sources with an EPA-
approved CAIR SIP or a CAIR FIP would satisfy the NOX RACT
requirement for the sources, provided that the sources with existing
selective catalytic reduction (SCR) emission control technology
installed on their boilers operate that technology on a year-round
basis beginning in 2009. One commenter supported EPA's approach so long
as States may pursue additional reductions from EGUs if needed for
attainment as expeditiously as practicable. A number of other
commenters opposed the proposed determination regarding RACT for EGUs
based on a number of issues.
    Response: Based on the rationale described in the sections above,
the final rule includes a presumption that compliance with CAIR
satisfies SO2 and NOX RACT/RACM requirements for
EGUs in many areas. Nonetheless, States can require ``beyond CAIR'' EGU
controls if a State determines that it is a necessary and reasonable
means to attain the PM2.5 standards. Comments opposing this
approach are addressed in more detail below.
    Comment: A number of commenters objected to the proposed
determination, arguing that it would result in greater control
requirements and economic burden on non-EGU sources located in
nonattainment areas. These commenters urged EPA to adopt a final rule
that provides for implementing the most cost-effective controls
necessary to attain the standard. They assert that with the proposed
finding that compliance with CAIR satisfies RACT for EGUs, the proposed
rule would not provide for the most cost-effective approach to
attainment. They argue EPA and States should develop cost-effectiveness
guidance that includes all stationary source control measures and they
should develop SIPs based on the most economic means to attain the
standard. They make several arguments to support this position. The
commenters asserted that if an EGU control is more cost-effective than
a non-EGU control, the EGU should be subject to ``beyond-CAIR''
controls. They also asserted that if EPA chooses to consider the CAIR
rule as satisfying SO2 and NOX RACT for EGUs,
then other sources should not be subjected to control costs greater
than those found reasonable under CAIR (i.e., $800/ton). They believe
it would be inequitable to require smaller sources to pay a higher cost
for emissions reductions than larger sources, which are a more
significant

contributor to the problem and which may be able to make more cost-
effective emission reductions. One commenter also suggested that EPA
should authorize a presumption that emissions reductions required on
electric utilities under the CAIR will be equivalent to RACT only if a
particular source in a CAIR State has installed controls that achieve
the average level of control that EPA has projected will occur for the
particular pollutant under the CAIR requirements.
    Response: The EPA has determined that implementation of the CAIR
trading program represents highly cost-effective controls that will
achieve widespread regional SO2 and NOX emissions
reductions from EGUs and will provide significant air quality benefits
for ozone and PM2.5 nonattainment areas. In developing
attainment SIPs and identifying RACM, States will need to consider
additional cost-effective and reasonable controls to reach attainment
as expeditiously as practicable. The EPA does not agree with the
commenter's argument that controls on non-EGUs should be no more than
the projected cost of EGU controls under CAIR. The EPA expects that in
order to achieve attainment as expeditiously as practicable, some
States may need to adopt control measures for some sources which cost
more per ton but which still are considered to be reasonable and cost-
effective.
    In addition, States must consider the economic feasibility of
implementing a given control measure. Because of facility-specific
factors, EPA believes it would be inappropriate to establish a
threshold of control effectiveness (e.g. dollars per ton) based on
control of EGUs and apply this threshold to all source categories. The
ability of a source to cost-effectively reduce emissions is dependent
on case-specific factors, including the ability of the given source to
sustain the cost of control, and prevailing costs in the specific
geographical location. A direct correlation between the size of an
emissions source and the economic feasibility of controls for that
source and location does not necessarily exist.
    We also disagree with the commenter who suggests that RACT
requirements should only be satisfied if a source achieves an average
level of control that EPA projects to occur under CAIR. The EPA
maintains that the presumption that CAIR satisfies SO2 and
NOX RACT/RACM for EGUs in most areas is an appropriate
policy. As discussed further below, we have always recognized that
States could determine RACT for a single source or group of sources.
    Comment: A number of commenters opposed the proposed determination
that CAIR would satisfy the SO2 and NOX RACT
requirement for EGUs. The commenters argued that this determination is
unlawful, that it does not comply with section 172(c)(1) of the CAA
which requires RACT (i.e. controls that are technologically and
economically feasible) ``at a minimum'' for all existing sources in the
nonattainment area, that it would allow very large stationary sources
to escape cost-effective controls entirely, and that it is largely
based on the legally-irrelevant contention that CAIR will reduce
emissions more cost-effectively than RACT. They claim that EPA has no
authority to displace the Congressionally-mandated RACT requirement,
that CAIR was designed to address regional pollution transport (not to
be an attainment strategy), and that EPA should remove these proposed
provisions in the final rule. Commenters claim that the EPA's proposed
approach to allow EGU emissions to be addressed solely through CAIR
would undermine states' efforts to meet the Federal PM2.5
health standard, particularly when EGU sources are among the most cost-
effective to control. Another commenter claimed that EPA's proposal
allowing States that choose to fulfill their CAIR requirements entirely
through emission reductions from EGUs to also use CAIR to satisfy their
SO2 and NOX PM2.5 RACT requirements,
thereby equating these two requirements for the EGU sector, is flawed.
This commenter argued that allowing a cap-and-trade program, such as
the CAIR, to substitute for the RACT requirement undermines the
effectiveness of the controls by allowing facilities to use allowances
to offset emissions, rather than control them at the source. The
purchase of allowances, they assert, does not satisfy RACT
requirements.
    Response: The EPA disagrees with these comments. The final rule
does not displace the RACT requirement for any sources. Instead, EPA is
exercising its authority to interpret the section 172 RACT and RACM
requirements for the purposes of implementing the 1997 PM2.5
standards. For the reasons described in section (b) above, we believe
that States can rely on EPA's presumption that compliance with a CAIR
SIP or FIP, meeting certain requirements, will satisfy the RACT/RACM
requirement for certain EGU sources. The EPA historically issued
control technology guidelines setting forth presumptive levels of
emissions control that satisfy the RACT requirement for a given
industry. The final rule is similar to this practice in establishing a
presumption that SO2 and NOX reductions under the
CAIR program satisfy the RACT/RACM requirement for EGUs in CAIR States.
In identifying reasonably available control measures to ensure
attainment as expeditiously as practicable, States will need to take
CAIR reductions into account as well as any additional cost-effective
reductions that are technologically and reasonably available.
    We further find that the attempt by many commenters to characterize
CAIR as a strategy to address only regional pollution transport and not
an attainment strategy as overly simplistic. The EPA analyses for CAIR
show that there are significant air quality benefits projected for
individual nonattainment areas as a result of SO2 and
NOX reductions across the multistate CAIR region. The Act
does not prevent States from properly crediting measures that achieve
multiple objectives (e.g. regional transport or local nonattainment).
Moreover, Section 110(a)(2)(D) requires SIPs to contain adequate
provisions to assure that sources in the State do not contribute
significantly to nonattainment in any other State. The CAIR rule is an
integral element in meeting the States' Section 110 attainment
obligations. Accordingly, it is reasonable to incorporate this
consideration in determining what measures qualify as RACT/RACM.
    Finally, EPA does not interpret the provisions of Section 172(c)(1)
related to the RACT requirement as precluding States' use of a cap and
trade approach as a means of regulating existing sources and achieving
RACT/RACM reductions, especially in light of Congresses' expressed
authorization to auction emission rights in Section 172(c)(6).
    The EPA has long recognized that RACT need not apply to individual
sources. As stated earlier, our early guidance on RACT requirements
stated that States could establish RACT for an ``individual sources or
a group of sources.'' (emphasis added) See Memo. Strelow (Dec. 1976)
and 44 FR 71779. Importantly, Congress ratified the early
interpretations of RACT and RACM when it enacted the 1990 Amendments.
See 42 U.S.C. Section 7515 (Clean Air Act section 193). Our 1986
emissions trading policy also recognized a number of advantages offered
through application of a ``bubble'' approach including faster
compliance with RACT limits and earlier reductions. Moreover, Courts
have upheld EPA's approval of States' use of ``bubbling'' multiple
units to meet RACT requirements. See e.g.

Natural Resources Defense Council v. EPA, 941 F.2d 1207 (finding that
EPA need not adhere to a source specific RACT determination to satisfy
RACT requirements and acknowledging EPA's special knowledge and
expertise in the area.)
    Comment: The EPA's proposal to allow EGU emissions to be addressed
solely through CAIR undermines prospectively States' efforts to meet
the Federal PM2.5 health standard. EGU sources are among the
most cost-effective to control.
    Response: For the reasons described in section (b) above, EPA
believes that States can rely on EPA's presumption that compliance with
a CAIR SIP or FIP, meeting certain requirements, satisfies the
SO2 and NOX RACT/RACM requirement for certain EGU
sources. Areas can require ``beyond CAIR'' EGU controls if a State
determines that it is a necessary and reasonable means to attain as
expeditiously as practicable. Nonetheless, as discussed above, EPA
believes that implementation of the CAIR requirements will provide for
substantial progress in attaining the PM2.5 standards and
that States may presume that RACT/RACM requirements are equal to the
CAIR level of control.
    Comment: CAIR fails to address the need for short-term reductions
in PM2.5 and precursor emissions on high pollution days.
While RACT restricts emissions over a 1-hour to 24-hour period, CAIR
only provides for an annual or seasonal cap. Reliance on CAIR therefore
fails to recognize the importance of reducing short-term emissions,
which was recently highlighted by the EPA's own proposal to tighten the
24-hour PM2.5 health standard. Local and short-term adverse
air quality effects of PM2.5, must be addressed in the final
rule by requiring RACT for all major facilities in addition to CAIR.
    Response: The CAIR program is oriented toward reducing
SO2 and NOX emissions in order to reduce air
quality concentrations on an annual and seasonal basis. Because all
PM2.5 nonattainment areas were designated due to violations
of the annual standard (and the two designated areas in California also
violated the 24-hour standard), the focus of this implementation rule
is attainment of the annual standard. CAIR is projected to provide
significant air quality benefits in 2010 and 2015 for eastern
PM2.5 nonattainment areas on both an annual basis and on a
98th percentile 24-hour basis.\41\
---------------------------------------------------------------------------

    \41\ See the regulatory impact analysis chapter on air quality
for the 2006 PM NAAQS review at http://www.epa.gov/ttn/ecas/regdata/RIAs/Chapter%204-Air%20Quality.pdf
.

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

    Comment: The proposal is silent on the issue of whether EGUs are
subject to direct PM2.5 emissions RACT requirements. It is
critical that RACT be required for all facilities with respect direct
PM2.5 emissions, regardless of a facility's participation in
CAIR.
    Response: In the final rule and preamble, EPA has clarified that
all EGUs in nonattainment areas are subject to RACT/RACM for direct
PM2.5 emissions. The presumption described above applies
only to SO2 and NOX RACT/RACM, not RACT/RACM for
direct PM2.5 emissions from EGUs.
    Comment: The EPA fails to consider the geographical distributional
impacts of the emission reductions. Equating CAIR with RACT fails to
take into account the substantial contribution that emissions from EGUs
within a nonattainment area may make toward that area's
PM2.5 nonattainment problem. The EPA does not attempt to
explain how such a generalized determination satisfies RACT for
PM2.5.
    Response: The establishment of recommended levels for RACT/RACM is
an area Congress delegated to the specific expertise of the Agency.
Based on our analysis, we conclude that the CAIR emissions caps
presumptively represent the level of emissions control achievable
through application of ``reasonably available'' control technologies.
Nonetheless, in developing attainment plans, each State will evaluate
the impact of stationary sources located within the nonattainment area
in developing its attainment strategies for the local area.
    Comment: A few commenters stated that EPA should explain how this
proposal would be implemented for States that request an extension of
an attainment date because attaining in 5 years or less is
impracticable; i.e., whether EPA would still hold to its interpretation
that CAIR equals RACT for EGUs and not require additional reductions
from EGUs even if an area cannot attain in 5 years and controls on EGUs
could lead it to attain more expeditiously. These commenters argue
that, in considering if additional RACT is needed in states that obtain
extensions of the attainment deadline after 2010, EPA cannot ignore
potential RACT for electric generating units any more than they would
be allowed legally to avoid consideration of any other RACT candidates.
One commenter is particularly concerned that States would not include
EGUs in their RACT determinations and instead require smaller
industrial boilers or process heaters to control emissions.
    Response: The EPA's determination regarding CAIR and RACT is not
limited to areas attaining within five years. The Agency's rationale is
presented in the ``final rule'' section above. We disagree that the
CAIR-RACT presumptions necessarily shift emission control burdens from
EGUs to smaller industry boilers and process heaters because, in
implementing the RACM requirement, the State may include an evaluation
of control options on those sources as part of their RACT/RACM
analyses. As stated above, EPA concluded that the CAIR compliance dates
represent an aggressive schedule that reflects the limitations of the
labor pool, and equipment/vendor availability, and need for electrical
generation reliability for installation of emission controls.
Accordingly, additional controls on EGUs may not be a reasonably
available control measure that can be effectively implemented in a
manner that advances an area's attainment date.
    Comment: The EPA designated many partial counties nonattainment for
PM2.5 solely because the areas contained EGU emission
sources thought to cause or contribute to violations of the NAAQS. In
implementing attainment plans, it makes sense to consider further
control of these sources, and because they are located in nonattainment
areas, the ability to do so is provided for and legal under the CAA.
    Response: The EPA designated PM2.5 nonattainment
counties because they either had a violating monitor or they
contributed to a nearby air quality problem. Importantly, EPA
designated these areas without considering the air quality benefits
expected in the future from CAIR. Accordingly, the fact that an EGU is
located in a partial county and we included the partial county in the
nonattainment area because we believe that the EGU was causing or
contributing to the nonattainment violations, does not equate with a
finding that more than CAIR is required to remedy the nonattainment
problem. Nonetheless, EPA believes that States should evaluate the
impact of stationary sources in all designated counties, including
those partial counties noted by the commenter, in its assessment of
reasonably available control strategies to ensure attainment as
expeditiously as practicable.
    Comment: The EPA should adopt the Ozone Transport Commission's
(OTC's) approach to cap-and-trade programs. When the OTC developed its
NOX

Budget Program (which was the basis for EPA's NOX SIP call
and subsequently CAIR), it assumed that RACT was applied first. Thus
the cap-and-trade program operated in an environment that assumed RACT
was in force, not in lieu of RACT.
    Response: Under the ozone national ambient air quality standards,
NOX and VOC RACT have been implemented progressively for the
past 30 years or more, prior to development of the NOX SIP
call regional control program. In contrast, the PM2.5
implementation program is the first instance in which we have required
RACT/RACM specifically for fine particle pollution. For this reason,
the CAIR program is not operating with SO2 and
NOX RACT limits already in place for attainment of the
PM2.5 standards. Nonetheless, as discussed above, EPA
believes that implementation of the CAIR requirements will provide for
substantial progress in attaining the PM2.5 standards and
that States may presume that RACT/RACM requirements are equal to the
CAIR level of control.
    Comment: A few commenters stated that EPA should clarify and modify
the part of its proposal that explains why a State cannot rely on EPA's
determination that CAIR can satisfy the NOX RACT requirement
for PM2.5 if the State ``elect[s] to allow non-EGU sources
to voluntarily enter the EPA-administered CAIR trading program through
an opt-in provision in the CAIR model rule.'' (70 FR 66025 col. 3).
These commenters believe that this part of the proposal might be
construed to preclude States subject to both the NOX SIP
Call and included in the CAIR region for ozone from relying on the
NOX RACT determination for PM2.5 if the States
choose ``to bring their non-CAIR [including non-EGU] NOX SIP
Call trading sources into the CAIR ozone season NOX cap and
trade program.'' (70 FR 49708, 49728 col. 3) (August 24, 2005). The
commenters assert that EPA gave States the option of bringing non-EGU
NOX SIP Call sources into the CAIR seasonal NOX
trading program to ensure that non-CAIR sources, including non-EGUs,
that are subject to the NOX SIP Call rule would not be
``stranded,'' starting in 2009, by being left in an ozone season
NOX control program with no EGU trading partners. The
commenters argued that ``EGUs should not be penalized, in the form of
denial of CAIR-RACT treatment, as a result of States exercising their
option to avoid financial and compliance difficulties for non-EGUs that
otherwise would be left without allowance trading partners in the EGU
sector after the NOX SIP Call trading program ends in
2008.'' These commenters point to EPA's determination in the final
Phase 2 ozone implementation rule, that participation in the CAIR
trading programs can satisfy NOX RACT for ozone even if a
State brings non-EGUs in the NOX SIP Call trading program
into the trading program after 2008, see 70 FR 71657 col. 2, provided
the State retains an ``EGU [emission] budget under CAIR that is at
least as restrictive as the EGU budget that was set in the State's
NOX SIP call SIP,'' id. At 71658 col. 1. These commenters
argue that EPA should make a similar determination here regarding
NOX RACT for purposes of PM2.5 NAAQS
implementation.
    Response: All states with EPA approved CAIR SIPs or subject to a
CAIR FIP implementing the annual NOX emission reduction
requirements, and obtaining those reductions solely from EGUs may rely
on EPA's determination that CAIR presumptively satisfies NOX
RACT/RACM for PM2.5 for these sources. This determination is
unaffected by whether or not a State permits NOX SIP Call
non-EGUs to participate in the CAIR ozone season trading program. In
the final rule, we have included the presumption that NOX
RACT/RACM for PM2.5 is satisfied for EGUs complying with a
CAIR SIP or CAIR FIP implementing the annual CAIR NOX
emission reduction requirements (provided the State implementation of
the CAIR NOX annual trading program includes EGUs only).\42\
---------------------------------------------------------------------------

    \42\ EPA's CAIR-RACT presumption also would not apply if a State
required sources other than EGUs to achieve a portion of the
reductions required by CAIR (e.g., the State's CAIR SIP achieved
some reductions from EGUs but took credit for non-EGU reductions
achieved under new, more stringent requirements implemented to meet
NOX SIP call caps). Under the CAIR rule such a State
would not be eligible to participate in the EPA-administered CAIR
trading system.
---------------------------------------------------------------------------

    In the final ozone implementation rule, EPA addressed numerous
issues relating to the transition from the NOX SIP Call to
the CAIR ozone season trading program, including the impact of bringing
NOX SIP Call non-EGUs into the CAIR ozone season trading
program. Commenters' suggestion that these determinations are relevant
to this PM2.5 implementation rule ignores the fact that both
the NOX SIP Call and the CAIR ozone season trading program
are seasonal, not annual, trading programs. The NOX SIP Call
EGU and non-EGU budgets are seasonal NOX budgets and do not
address annual NOX emissions. As discussed above,
PM2.5 levels year-round contribute to an area's annual
average concentration, and NOX emissions during non-summer
months contribute to nitrate concentrations, which are typically
highest in cooler temperatures. For these reasons, EPA believes it
would be inappropriate to accept commenters' suggestion.
8. What Are the Required Dates for Submission and Implementation of
RACT?
a. Background
    The EPA requested comment on a general approach for the dates for
submission and implementation of RACT rules. The final rule retains the
proposed approach, as described in the following section.
b. Final Rule
    The final rule requires the following:
    (1) Date of submission. States must submit adopted RACT rules to
EPA within 3 years of designation, at the same time as the attainment
demonstration due in April 2008.
    (2) Dates for implementation of control measures. States should
also implement any measures determined to be RACT expeditiously, as
required by section 172. Implementation of RACT measures should in no
case start later than the beginning of the year before the nominal
attainment date. For example, if an area has an attainment date of
April 2010, then any required RACT measures should be in place and
operating no later than the beginning of 2009. This is intended to help
provide for clean air in calendar year 2009. As discussed in section
II.D, if other criteria are also met, EPA could then grant the area a
1-year attainment date extension if the air quality level in the 3rd of
the 3 years was below the level of the standard. If the area observes a
second year of clean air, EPA could grant a second 1-year attainment
date extension. In this case, the 2009 to 2011 period would then be
reviewed to assess whether the area attains the standards.
    (3) Provisions for a demonstration that additional time is needed.
While EPA expects that States will implement required RACT controls by
January 2009 in most situations, there may be cases where additional
time is needed to implement an innovative control measure or to achieve
a greater level of reduction through a phased approach. If a State has
provided an adequate demonstration showing that an attainment date
extension would be appropriate for an area, then the State may consider
phasing-in certain RACT controls after January 2009. The EPA would
allow the implementation of selected RACT controls after January 2009
if the State can show why additional time is needed for

implementation, and such delayed implementation still would need to be
on a schedule that provides for expeditious attainment. In no event
could the State wait to implement RACT controls until the last few
years prior to the attainment date without an adequate rationale for
why earlier implementation was not feasible.
c. Comments and Responses
    Comment: One commenter supported EPA's position that implementation
of RACT and RACM by January 1, 2009 is necessary to achieve the effect
on air quality for calendar year 2009.
    Response: The EPA agrees with this comment.
    Comment: Some commenters supported allowing for an implementation
schedule that allowed for implementation of RACT and RACM for a time
frame extending beyond 2009. These commenters favored such an approach
if States provided an adequate demonstration of why the measures cannot
be implemented earlier. Commenters noted that a phased approach to
emissions reductions in some cases could lead to additional reductions
that could not occur by 2009.
    Response: The EPA agrees with these comments.
    Comment: One commenter believed that so long as a State
demonstrates attainment by 2015, EPA should not require implementation
of any RACT measures. The commenter further asserted that it would be
bad policy to require costly emissions reductions through imposition of
RACT on areas expected to attain the standards through other means by
2015.
    Response: The EPA disagrees with this comment. The CAA requires
States to demonstrate that the attainment plan will attain the
standards as expeditiously as practicable and must include RACT and
RACM. The requirement for ``reasonable'' measures does not require that
any theoretical measure be implemented, but does require implementation
of those reasonable measures which could advance the attainment date by
at least 1 year. Given the health effects associated with
PM2.5, EPA believes this approach is sound public policy.
9. Which Pollutants Must Be Addressed by States in Establishing RACT
and RACM Limits in Their PM2.5 Attainment Plans?
a. Background
    In the proposed rule, and in the final rule as discussed in detail
in section II.A above, EPA discusses the pollutants which States must
address in the attainment plans, in particular with respect to RACT,
RACM and NSR. These pollutants include not only direct
PM2.5, but also gaseous precursors to the formation of
PM2.5. In general, the decisions that States and EPA make
with respect to which precursors are significant contributors to an
area's PM2.5 nonattainment problem define the pollutants and
sources to be addressed by States in developing RACT and RACM.
b. Final Rule
    In the final rule, in establishing RACT and RACM limits, those RACT
and RACM limits must address:

--Direct emissions of PM2.5
--SO2, a precursor to PM2.5 formation, and
--NOX, unless a State makes a finding that NOX
emissions from sources in the State do not significantly contribute to
the PM2.5 problem in a given nonattainment area.

    The EPA generally presumes that RACT and RACM limits are not needed
for ammonia or VOC unless that State or EPA determines otherwise for a
given nonattainment area. RACT and RACM limits are needed for ammonia
if a State or EPA makes a finding that ammonia emissions significantly
contribute to the PM2.5 problem in a given nonattainment
area, and thus finds that control of ammonia would help address the
PM2.5 problem. RACT and RACM limits are needed for VOC only
if a State or EPA makes a finding that VOC emissions significantly
contribute to the PM2.5 problem in a given nonattainment
area. (As a point of clarification, ``VOCs,'' which are gaseous organic
precursors to the chemical formation of secondary organic aerosol, are
treated differently from semivolatile or nonvolatile organic compounds
which are addressed as directly emitted PM2.5). Issues
related to the finding of ``significant contribution'' for these
pollutants are discussed in Section II.A above.
10. Under the PM2.5 Implementation Program, When Does a
State Need To Conduct a RACT Determination for an Applicable Source
That Already Has a RACT, BACT, LAER, or MACT Determination in Effect?
a. Background
    For PM2.5 nonattainment areas, States are required to
implement the RACT requirement to reduce emissions of direct
PM2.5 and PM2.5 precursors from applicable
sources. The EPA anticipates that for some sources located in
PM2.5 nonattainment areas, the State would have previously
conducted RACT determinations for VOC or NOX under the 1-
hour ozone standard, or for direct PM10 emissions under the
PM10 standards. Some of the RACT determinations established
under these other programs would be relatively recent while other
determinations may be more than 10 years old. In some cases, a new RACT
determination might reach the conclusion that the preexisting
determination is still valid and would require the installation of
similar control technology because the relevant pollutant was
addressed, the same emission points were reviewed, and the same
fundamental control techniques would still have similar costs. In other
cases, however, a new RACT analysis could determine, for example, that
better technology has become available, and that cost-effective
emission reductions are achievable.
    In the proposed rule, the EPA requested comments on a general
approach to taking prior RACT determinations into account, and within
the general approach, invited comments on two specific questions: (1)
Should new RACT determinations be required for all existing
determinations that are older than a specified amount of time (such as
10 years old)?; and (2) what supporting information should a State be
required to submit as part of its certification to demonstrate that a
previous RACT analysis meets the RACT requirement currently for
purposes of the PM2.5 program?
    In the proposed rule, EPA also noted that sources subject to RACT
may also have been subject to other prior technology determinations
such as BACT, LAER or MACT determinations. The proposed rule requested
comment on approaches to taking these prior technology determinations
into account.
b. Final Rule
    The EPA has determined that it is appropriate to follow the
approach in the proposed rule, which is described below. State RACT
SIPs for PM2.5 must assure that RACT is met, either through
a new RACT determination or a certification that previously required
RACT controls represent RACT for PM2.5.
    Where a State adopted and EPA approved a control measure as RACT
for a pollutant emitted from a specific stationary source or source
category under another NAAQS program, the State may submit as part of
its SIP revision a certification, with appropriate supporting
information, that the previous determination represents a current RACT
level of control for those emissions for purposes of the
PM2.5 program. Otherwise, the State should revise the SIP to
reflect a modified

RACT requirement for specific sources or source categories.
    In cases where the State's prior RACT analysis under another NAAQS
program concluded that no additional controls were necessary, a new
RACT determination is required for that source. In cases where the
previous RACT determination did not require any controls on the source,
it is more likely that a new review might find that emission controls
are now economically and technically feasible. This is because
emissions reductions from a potential control measure are likely to be
greater, and the cost per ton of emission reduction is likely to be
lower, than in the case of a source that previously installed controls
to meet RACT under another program.
    A RACT determination for a source or source category subject to a
prior RACT determination is also required for any pollutants that were
not the subject of the prior RACT determination, but which the State
has determined should be regulated for purposes of PM2.5.
The EPA advises that the State should closely review any existing RACT
determinations established under another NAAQS program. For RACT
certifications and determinations, States are to consider new
information that has become available since the earlier RACT
determination. For example, where updated information on control
technologies is presented as part of notice-and-comment rulemaking,
including a RACT SIP submittal for sources previously controlled,
States (and EPA) must consider the additional information as part of
that rulemaking. Existing EPA guidance on control technologies can be
used to help inform RACT decisions. However, EPA believes it may not be
sufficient for a State to rely on technology guidance that is several
years old and issued to provide recommendations on control measures and
levels for a different NAAQS in evaluating RACT for PM2.5.
    With respect to prior technology determinations other than RACT,
the final rule provides that:
    (1) Prior BACT and LAER Determinations. In many cases, but not all,
best available retrofit technology (BACT) or lowest achievable emission
rate (LAER) provisions for new sources would assure at least RACT level
controls on such sources. The BACT/LAER analyses do not automatically
ensure compliance with RACT since the regulated pollutant or source
applicability may differ and the analyses may be conducted many years
apart. States may, however, rely on information gathered from prior
BACT or LAER analyses for the purposes of showing that a source has met
RACT to the extent the information remains valid. We believe that the
same logic holds true for emissions standards for municipal waste
incinerators under CAA section 111(d) and NSR/PSD settlement
agreements. Where the State is relying on these standards to represent
a RACT level of control, the State should present its analysis with its
determination during the SIP adoption process.
    (2) Compliance With MACT Standards Affecting VOC. In situations
where the State has determined VOC to be a significant contributor to
PM2.5 formation in an area, compliance with MACT standards
may be considered in VOC RACT determinations. For VOC sources subject
to MACT standards, States may streamline their RACT analysis by
including a discussion of the MACT controls and relevant factors such
as whether VOCs are well controlled under the relevant MACT air toxics
standard, which units at the facility have MACT controls, and whether
any major new developments in technologies or costs have occurred
subsequent to establishment of the MACT standards. We believe that
there are many VOC sources that are well controlled (e.g., through add-
on controls or through substitution of non-VOC non-HAP materials for
VOC HAP materials) because they are regulated by the MACT standards,
which EPA developed under CAA section 112. Any source subject to MACT
standards must meet a level that is as stringent as the best-controlled
12 percent of sources in the industry. Examples of these HAP sources
that may effectively control VOC emissions include organic chemical
plants subject to the hazardous organic NESHAP (HON), pharmaceutical
production facilities, and petroleum refineries.\43\ We believe that,
in many cases, it will be unlikely that States will identify VOC
emission controls more stringent than the MACT standards that are not
prohibitively expensive and are thus unreasonable. We noted our view
that this will allow States, in many cases, to conclude that the
control measures implemented to meet MACT standards satisfy any
requirement for VOC RACT.
---------------------------------------------------------------------------

    \43\ There are some MACT categories for which it may not be
possible to determine the degree of VOC reductions from the MACT
standard without additional analysis; for example, the miscellaneous
metal parts and products (40 CFR part 60, subpart MMMM) due to the
uncertainty of the compliance method that will be selected.
---------------------------------------------------------------------------

    (3) Compliance With MACT Standards Affecting PM2.5
Emissions. Compliance with MACT standards may be considered in direct
PM2.5 RACT determinations. For direct PM2.5
sources subject to MACT standards, States may streamline their RACT
analysis by including a discussion of the MACT controls and relevant
factors such as whether PM2.5 emissions are well controlled
under the relevant MACT air toxics standard, which units at the
facility have MACT controls, and whether any major new developments in
technologies or costs have occurred subsequent to the MACT standards.
We believe that there are many direct PM2.5 sources that are
well controlled (e.g., through add-on controls that represent state-of-
the-art measures for PM2.5 reduction) because they are
regulated by the MACT standards which EPA developed under CAA section
112. For some MACT standards, PM2.5 is used as a surrogate
for achieving MACT for HAPs such as heavy metals. Any source subject to
MACT standards must meet a level that is as stringent as the best-
controlled 12 percent of sources in the industry. We believe that there
will be sources for which it will be unlikely that States will identify
emission controls more stringent than the MACT standards that are not
prohibitively expensive and are thus unreasonable. In addressing
whether a MACT standard represents best controls for PM2.5,
it is important that the State consider all PM2.5 sources at
a given facility and the nature of the PM limit (i.e., whether the
limit ensures control of the fine fraction of particulate matter).
Also, the State should evaluate the degree of capture of
PM2.5--that is, the amount of PM2.5 that is
collected and sent to a pollution control device in addition to the
efficiency of the device itself. This evaluation should consider the
PM2.5 emissions reductions that could be achieved by
improving the degree of capture.
    (4) Year-Round Controls for NOX. In some cases, sources
subject to NOX RACT for PM will also be subject to controls
under the NOX SIP Call. In the 8-hour ozone implementation
rule, EPA concluded that certain sources which have installed emission
controls to comply with the NOX SIP call would be deemed to
meet NOX RACT for the purposes of the 8-hour ozone
implementation program. Some of these sources subject to the
NOX SIP call may choose to control NOX emissions
only or primarily during the ozone season. For purposes of
PM2.5, however, EPA concludes that the operation of emission
controls only or primarily during the ozone season would not constitute
RACT for PM2.5 purposes. Indeed PM2.5 control
programs must address annual average concentrations, and in many

areas nitrate concentrations are generally highest in the winter.
Therefore, RACT for PM2.5 is year-round operation of
controls. For sources subject to both the NOX SIP call and
NOX RACT for PM, we believe that, in most cases, the
additional costs of running the NOX SIP call controls year-
round would impose only modest, reasonable additional costs and the
cost effectiveness would be better than the average cost effectiveness
for many other sources subject to PM RACT. (See further discussion in
section F.7 above related to EGU sources subject to CAIR requirements
for NOX).
c. Comments and Responses
    Comments: A number of commenters agreed with the requirement for
the State to conduct a new RACT determination for any source for which
the State's prior RACT analysis under another NAAQS program concluded
that RACT was defined as no additional controls. One commenter noted
that for a source having a previous RACT determination for ozone or
PM10 to show that its level of control currently meets RACT
for PM2.5 purposes, the source must provide supporting
documentation showing that the previous RACT determination was based on
the same universe of controls that are ``reasonably available'' for the
source in the present day.
    Response: The EPA agrees with these comments.
    Comments: A few commenters recommended that EPA clarify that RACT
determinations resulting only in ``operational changes'' should be
treated in an equivalent manner as those resulting in no controls. The
commenters suggested that, unlike ``physical modification,'' such
operational changes should always be revisited with a new RACT
determination.
    Response: The EPA does not agree with the implicit recommendation
to impose different RACT review requirements based on the types of
control previously implemented. The EPA believes that a reassessment of
RACT is warranted, irrespective of the type of control previously
implemented, to consider the reasonableness of modifying or adding
controls in the particular circumstances. Furthermore, we are concerned
that making such a distinction based upon the fairly broad term
``operational change'' would be difficult to interpret and implement,
and would invite unnecessary disputes concerning the application of the
term.
    Comment: Commenters differed on whether new RACT determinations
should be required for all existing determinations made before a
specific date, and on what that date should be. Some commenters
recommended that EPA allow States to rely on any previous RACT
determinations made after 1990, and one commenter recommended that EPA
require States to review only those older than 10-15 years, another
recommended 10 years. One commenter believed that a 15-year period
would be reasonable where previous controls were installed, to allow
for a 15-year amortization of the cost of those controls. Other
commenters recommended that new RACT determinations be made for any
RACT determinations older than 5 years. Another commenter recommended
that all RACT determinations should be reviewed.
    Response: The EPA has not included any specific time frame in the
final rule. The EPA agrees that the more recent the RACT determination,
the greater the probability that technology advances or decreases in
control cost will not have occurred. At the same time, technology
advances and decreases in control cost can and have occurred
frequently. Accordingly, we believe it is necessary for States to
review whether such technology advances or decreases in control cost
have occurred before relying on previous RACT determinations. We do not
believe there is any specific date or age that could be identified
after which States could ensure that no technology advances or
decreases in control cost will have occurred.
    Comment: A number of commenters expressed concerns with the
resources required to conduct the certifications required by the
proposed approach, and argued that expending the resources required to
review and to certify previous RACT determinations would not be
productive. One commenter recommended that EPA provide guidance on the
previous RACT categories for which old RACT determinations are believed
to be out of date. Another commenter asserted that the only possible
exception to the acceptability of previous RACT measures for purposes
of the ozone standards would be when the new RACT is year-round for an
existing ozone-season RACT measure.
    Response: The EPA believes that the proposed certification approach
strikes an appropriate balance in requiring States to verify whether
previous RACT determinations currently represent an appropriate RACT
level of control for PM2.5 purposes, while stopping short of
requiring an exhaustive re-analysis for all RACT sources. The EPA
believes that much of the resource concerns expressed in comments were
based upon concerns that VOC sources are very numerous, and that this
approach would require detailed review for these sources. As noted
previously, a RACT analysis for VOC sources is required only if a State
makes a finding that VOC sources significantly contribute to
nonattainment in the State. We believe the commenters likely
overestimate the resource implications of the certification process for
prior RACT determinations. Another mitigating factor is that many of
these same sources would be reviewed for purposes of implementing the
eight-hour ozone standard. On the other hand, where a State or EPA
determines that it is appropriate to regulate VOC sources for
PM2.5, EPA believes that it likely would be productive to
review the previous determination for such sources, some of which have
not been reviewed for many years.
    Comment: One commenter believed that EPA should acknowledge
detailed RACT and RACM analyses for the South Coast and San Joaquin
Valley in California prepared during the 1990s for purposes of
implementing the ozone and PM10 standards. The commenter
believes that EPA acceptance of these determinations as RACT for
PM2.5 would enable States to focus resources on developing
new measures needed for attainment.
    Response: The EPA agrees that States should focus resources on new
technologies and new developments. At the same time, EPA recognizes
that for most source categories, new technology continues to be
developed, and new information continues to be generated. Thus, even
recent RACT determinations for a given source category may be outdated.
Hence, the certification approach in the rule for the relevant sources
or source categories is a reasonable approach which is designed to
provide for the type of focused efforts suggested by the commenter.
    Comment: One commenter believed that a State certification should
only have to identify the existing RACT levels in a SIP and pollutants
affected, but the State should not be required to provide any
additional information.
    Response: The EPA disagrees with this comment. The EPA believes
that prior technology determinations should be taken into account in
the RACT determination process. In reviewing existing RACT
determinations, the State should provide supporting information to show
that the existing technology in use should still be considered RACT, or
it should show that there have been technology advances or cost
reductions that have occurred since the previous

RACT limits were developed that make lower emissions technically and
economically feasible in the context of RACT and would contribute to
advancing the attainment date by at least one year.
    Comment: Some commenters supported EPA's requirement for year-round
operation of NOX pollution control devices as RACT, given
that PM2.5 is an annual standard, while ozone is a
summertime problem.
    Response: The EPA agrees with these comments.
    Comment: One commenter concluded that BACT and LAER determinations
should be considered to satisfy RACT, regardless of the date they were
made, because BACT and LAER by definition are more stringent than RACT.
    Response: The EPA disagrees with this comment. The EPA believes
that in many cases, but not all, BACT and LAER would assure RACT level
of controls. Reasons that BACT and LAER might not satisfy RACT include:
The pollutant of concern could have been different, the applicability
threshold for BACT and LAER may have excluded smaller sources
potentially subject to RACT controls, and technology advances or
reductions in control costs may have occurred since the old
determination was conducted.
    Comment: One commenter recommended that EPA allow States to use
information gathered from prior BACT or LAER analyses to complete the
RACT determination, as was allowed in the 8-hour ozone NAAQS
implementation rule.
    Response: The final rule allows for use of such information, to the
extent it remains valid, to inform a certification by the State that
BACT or LAER technology continues to exceed what would currently be
considered RACT.
    Comment: Some commenters argued that any MACT determination that
controls the pollutants of concern should be more than sufficient to
satisfy RACT. Some commenters made similar recommendations regarding
specific standards where PM limits were developed as a surrogate for
HAPs, such as the MACT standard for integrated iron and steel mills,
the MACT standard for iron and steel foundries, and the section 129
standards for waste to energy facilities.
    Response: While agreeing that MACT controls are relevant, the EPA
disagrees that all MACT determinations should be automatically
considered to satisfy RACT. Reasons include: A MACT standard aimed at
toxics might not ensure that the relevant PM2.5 pollutant(s)
are well controlled, MACT applicability provisions might have excluded
units potentially subject to RACT, and technology advances or
reductions in control costs might have occurred since EPA conducted the
MACT analysis. The EPA believes that the State should review whether
technology advances have occurred including available ``beyond the MACT
floor'' technologies that may be reasonable in the context of RACT for
PM2.5 nonattainment, but which were not selected as MACT for
purposes of implementing section 112. The EPA believes that RACT
analyses should evaluate whether increased capture of PM2.5
could be achieved, and whether an increased efficiency in controlling
the fine fraction of particulate matter is reasonably available. The
EPA has, however, added a specific recognition that MACT standards can
reduce PM2.5 as well as VOC, and that PM2.5
information gathered for MACT standards development may inform a
State's conclusions on available technologies for direct
PM2.5 emissions.
    Comment: One commenter expressed a concern that EPA should not
presume that MACT represents RACT where the MACT rule allows for a
risk-based exemption from the control technology requirement.
    Response: The EPA agrees with this comment.
11. How Should Condensable Emissions Be Treated in RACT Determinations?
a. Background
    Certain commercial or industrial activities involving high
temperature processes (fuel combustion, metal processing, cooking
operations, etc.) emit gaseous pollutants into the ambient air which
rapidly condense into particle form. The constituents of these
condensed particles include, but are not limited to, organic material,
sulfuric acid, and metals. In general, condensable emissions are taken
into account wherever possible in emission factors used to develop
national emission inventories, and States are required under the
consolidated emissions reporting rule (CERR) \44\ to report condensable
emissions in each inventory revision. Currently, some States have
regulations requiring sources to quantify condensable emissions and to
implement control measures for them, and others do not. In 1990, EPA
promulgated Method 202 in Appendix M of 40 CFR Part 51 to quantify
condensable particulate matter emissions. In the proposed rule, EPA
discussed and requested comment on issues related to condensable
emissions in RACT determinations.
---------------------------------------------------------------------------

    \44\ The consolidated emissions reporting rule was published in
the Federal Register on June 10, 2002, pages 39602-39616.
---------------------------------------------------------------------------

    In the proposed rule, we noted that EPA is in the process of
developing detailed guidance on a new test method which quantifies and
can be used to characterize the constituents of the PM2.5
emissions including both the filterable and condensable portion of the
emissions stream. We also noted that when a source implements either of
these test methods addressing condensable emissions, the State will
likely need to revise the source's emissions limit to account for those
emissions that were previously unregulated. For the purposes of
determining RACT applicability and establishing RACT emission limits,
EPA indicated in the proposal that it intends to require the State to
adopt the new test method once EPA issues its detailed guidance. This
guidance would be for use by all sources within a PM2.5
nonattainment area that are required to reduce emissions as part of the
area's attainment strategy.
b. Final Rule
    Issues and comments related to test method and emissions limit
issues for direct PM2.5 for RACT, including discussion of
test methods for condensable PM2.5, are discussed in section
II.L.3 of this preamble. The EPA recognizes that in some cases
condensable emissions are more difficult to control than filterable
emissions. However, condensable emissions may be assumed to be almost
entirely in the 2.5 micrometer range and smaller, so these emissions
are inherently more significant for PM2.5 than for prior
particulate matter standards addressing larger particles. Therefore,
EPA encourages States to consider the potential for reducing
condensable emissions when evaluating potential measures for RACT.
12. What Criteria Should Be Met To Ensure Effective Regulations To
Implement RACT and RACM?
a. Final Rule
    After the State has identified a RACT or RACM measure for a
particular nonattainment area, it must then implement that measure
through a legally enforceable mechanism (e.g., a State rule approved
into the SIP). The legally enforceable mechanism must meet four
important criteria.
    First, the baseline emissions from the source or group of sources
and the future year projected emissions must be quantifiable so that
the projected emissions reductions from the sources can be attributed
to the specific

measures being implemented. It is important that the emissions from the
source category in question are accurately represented in the baseline
inventory so that emissions reductions are properly calculated. In
particular, it is especially important to ensure that both the
filterable and condensable components of PM2.5 are
accurately represented in the baseline since traditional Federal and
State test methods have not included the condensable component of
particulate matter emissions and have not required particle sizing of
the filterable component.
    Second, the control measures must be enforceable. This means that
they must specify clear, unambiguous, and measurable requirements. When
feasible, the measurable requirements for larger emitting facilities
should include periodic source testing to establish the capability of
such facilities to achieve the required emission level. Additionally,
to verify the continued performance of the control measure, specific
monitoring programs appropriate for the type of control measure
employed and the level of emissions must be included to verify the
continued performance of the control measure. The control measures and
monitoring program must also have been adopted according to proper
legal procedures.
    Third, the measures must be replicable. This means that where a
rule contains procedures for interpreting, changing, or determining
compliance with the rule, the procedures are sufficiently specific and
nonsubjective so that two independent entities applying the procedures
would obtain the same result.
    Fourth, the control measures must be accountable. This means, for
example, that source-specific emission limits must be permanent and
must reflect the assumptions used in the SIP demonstration. It also
means that the SIP must establish requirements to track emission
changes at sources and provide for corrective action if emissions
reductions are not achieved according to the plan.
b. Comments and Responses
    There were no comments on this section. The language above is very
similar to the language in the proposal.

G. Reasonable Further Progress (RFP)

1. Background
    Clean Air Act Section 172(c)(2) requires that plans for
nonattainment areas ``shall require reasonable further progress,''
which as defined in Section 171(1) ``means such annual incremental
reductions in emissions of the relevant air pollutant as are required
by this part or may reasonably be required by the Administrator for the
purpose of ensuring attainment of the applicable national ambient air
quality standard by the applicable date.'' This section describes the
requirements the Administrator is establishing for states to achieve
reasonable further progress.
    In general terms, the goal of these RFP requirements is for areas
to achieve generally linear progress toward attainment. The RFP
requirements were included in the Clean Air Act to assure steady
progress toward attaining air quality standards, as opposed to
deferring implementation of all measures until the end date by which
the standard is to be attained.
2. Requirements for Areas With Attainment Dates of 2010 or Earlier
a. Background
    In 40 CFR 51.1009(b)(1) of the proposed rule, EPA proposed that a
State which submits an implementation plan that demonstrates that an
area will achieve attainment by 2010 (i.e., achieves attainment level
emissions during 2009) would not be required to submit a separate
reasonable further progress plan for that area. In such cases, EPA
proposed that the attainment demonstration would also be considered to
demonstrate that the area is achieving RFP.
b. Final Rule
    In the final rule, EPA is maintaining the approach described in the
proposed rule. An area that demonstrates attainment by 2010 will be
considered to have satisfied the RFP requirement and need not submit
any additional material to satisfy the RFP requirement. The EPA will
view the attainment demonstration as also demonstrating that the area
is making reasonable further progress toward attainment.
c. Comments and Responses
    Comment: A number of commenters supported EPA's view that a
demonstration of attainment by 2010 would also demonstrate that the
area is making reasonable further progress toward attainment.
    Response: The EPA appreciates the support and is adopting the
supported approach.
    Comment: A set of commenters objects to EPA's proposal, arguing
that EPA cannot waive RFP requirements for areas where the state
purports to demonstrate attainment. These commenters believe that
Subpart 4 of Part D requires milestones prior to 2009, and these
commenters believe that even Subpart 1 requires a demonstration of
interim progress that EPA cannot waive.
    Response: In brief, EPA is not waiving the RFP requirements for any
area. Instead, EPA is concluding that a demonstration of attainment by
2010 also serves to demonstrate achievement of RFP. If the state
submittal purports to demonstrate attainment but does not adequately
make this demonstration, then the submittal also would not demonstrate
achievement of RFP. The nature of the RFP requirement would then depend
on whether the remedied attainment demonstration provides for
attainment by 2010. Finally, as discussed above, EPA believes that
Subpart 4 requirements do not apply to PM2.5 plans. More
detailed discussion of this comment and EPA's response are provided in
the response to comments document.
3. Requirements for Areas With Attainment Dates Beyond 2010
a. Background
    The proposed rule required a State to submit an RFP plan along with
its attainment demonstration and SIP due in April 2008 for any area for
which the State demonstrates that 2011 or later is the most expeditious
attainment date. EPA proposed that the 2008 RFP plan must provide
adequate emission reductions by 2009 \45\ and, in some cases, by 2012.
The plan must demonstrate that emissions will decline in a manner that
represents generally linear progress from the 2002 baseline year to the
attainment year.
---------------------------------------------------------------------------

    \45\ The RFP test uses inventories for the full year, e.g. the
year of 2009 or the year of 2012. EPA does not specifically require
that the relevant measures be implemented by the beginning of the
year, but RFP inventories must reflect the fact that measures that
are implemented later in the year have correspondingly less impact
on the year's annual total emissions.
---------------------------------------------------------------------------

b. Final Rule
    The final rule requires a State to submit an RFP plan along with
its attainment demonstration and SIP due in April 2008 for any area for
which the State justifies an extension of the attainment date beyond
2010. The RFP plan must provide emission reductions such that emissions
in 2009 represent generally linear progress from the 2002 baseline year
to the attainment year. Where the State justifies an extension of the
attainment deadline to 2014 or 2015, the state must additionally
provide emission reductions such that emissions in 2012 represent
generally linear progress from the 2002 baseline year to the attainment
year.

    If the State demonstrates that attainment will occur by 2010 or
earlier, EPA will consider the attainment demonstration to demonstrate
achievement of reasonable further progress, and the State will not be
required to submit an additional RFP plan for the area.
c. Comments and Responses
    Comment: For areas that demonstrate attainment by 2015 without
adopting additional measures, a commenter recommended that the
attainment demonstration be viewed as also demonstrating that the area
is achieving RFP. The commenter therefore recommended that the state
not be required to submit an RFP plan for such an area.
    Response: A submittal that demonstrates attainment at the latest
allowable date and does not address interim air quality fails to show
that the path to attainment will yield interim incremental air quality
improvements. States have ample opportunity to adopt measures that
would provide interim air quality improvement long before 2015. Indeed,
as discussed elsewhere as part of the discussion of attainment dates, a
submittal that only addresses 2015 would also fail the attainment
demonstration requirement, insofar as it would not be addressing
whether attainment is as expeditious as practicable, because the
submittal would fail to assess whether attainment could be achieved
earlier. Therefore, irrespective of whether additional measures are
needed to attain by 2015, the Clean Air Act mandates assessing progress
at reasonable interim dates as well as mandating attainment.
4. Generally Linear Progress and Associated Timeline
a. Background
    The EPA proposed that states with areas needing an extension of the
attainment deadline beyond 2010 would be required to submit a plan
demonstrating that emissions would be sufficiently reduced by 2009 to
achieve a generally linear incremental improvement in air quality. The
notice of proposed rulemaking provided an example calculation for an
area with a 2013 attainment date, i.e. an area that achieves attainment
level emissions in 2012. (See section III.G.4.b.iv of the proposal, 70
FR 66013.) In this example, the 2009 emissions year represents 7/10 of
the period extending from the baseline year of 2002 to the 2012 year of
attainment level emissions. Therefore, for this example, EPA's proposed
requirement would be for this area to achieve emission reductions by
2009 representing approximately 7/10 of the emission reductions needed
to attain the standards. For states with areas needing the attainment
deadline extended to 2014 or 2015, EPA proposed to require achievement
of generally linear emission reductions at two RFP milestone years--the
2009 and 2012 emission years.
    The EPA received several comments on various elements of its
proposed approach. Several commenters objected to EPA's proposed
requirement to achieve linear progress toward attainment, asserting
that EPA cannot reasonably expect states to achieve a significant
amount of progress within a short time after plan submittals are due.
Some commenters recommended requiring a specific emission reduction
percentage, similar to the rate of progress requirement for ozone.
These comments are addressed below.
b. Final Rule
    The EPA is requiring States with areas needing an extension of the
attainment deadline to submit RFP plans. These plans must demonstrate
that generally linear reductions in emissions will occur by 2009, i.e.
that emissions in 2009 will be reduced to the extent represented by a
generally linear progression from 2002 base year emissions to
attainment-level emissions. For any area that needs an extension of the
attainment deadline to 2014 or 2015, the State's RFP plan would also
need to demonstrate that generally linear reductions will be achieved
in the 2012 emissions year as well.
c. Comments and Responses
    Comment: Several commenters objected to EPA's proposed requirement
that states demonstrate linear progress toward attainment. For example,
a commenter stated that a ``generally linear reduction process may not
be practicable.'' A commenter stated that it ``agrees that areas should
be able to take credit for reductions from 2002 forward, [but] EPA
should allow for fewer reductions (as opposed to linear reductions)
prior to 2008.''
    A commenter noted that EPA's ``proposed approach ignores several
important realities about PM NAAQS implementation. First, * * * [n]ot
until SIP submittal in April 2008, some 6 years after the RFP baseline
date, will any local measures be finally adopted and approved. Under
[the example EPA provided in its proposed rulemaking], states will be
required to play `catch-up' by achieving 70 percent of the required
reductions in 2009. * * * Second, the `generally linear' approach
ignores that EPA intends for states to rely in large part on mobile
source reductions and reductions in NOX and SO2
from CAIR implementation to achieve attainment in many areas. These
measures fail a `generally linear' test since most of the reductions
they provide will not be realized until after 2009.'' This commenter
continues that the incremental reductions in emissions required in the
Clean Air Act need not be equal increments, that the absence of a
specific statutorily mandated increment (such as the 3 percent per year
requirement for ozone) allows EPA to be more flexible and to rely more
heavily on later reductions. The commenter also argues that EPA's
proposal is more stringent than the ozone RFP requirement, insofar as
the ozone RFP requirement provides for averaging over 3 years. Similar
comments were submitted by other commenters.
    Another commenter supported EPA's proposal. This commenter
supported requiring demonstrations that areas achieve emission
reductions that will yield incremental improvement in air quality on a
path toward expeditious attainment.
    Response: The EPA believes that the requirement for generally
linear reductions is reasonable because it allows States to take credit
for early reductions achieved due to federal, State, and local
programs. We find that it appropriately implements the RFP requirement
in the Clean Air Act. For these reasons, EPA is finalizing the
requirement that RFP plans for areas needing an attainment deadline
extension show generally linear progress in reducing emissions from the
base year through the 2009 emissions year. EPA is also requiring that
areas needing an attainment deadline extension to 2014 or 2015 (i.e.
attainment level emissions projected to start in 2013 or 2014) show
generally linear progress in reducing emissions through the 2012
emissions year.
    The commenters objecting to the requirement for generally linear
progress appear to be assuming that only minimal emission reductions
can be expected before 2008, so that a requirement for generally linear
progress would require plans submitted in 2008 to compensate by
achieving unrealistically high levels of emission reductions. The EPA
disagrees with this assumption.
    In fact, substantial emission reductions have occurred in the past
few years and can be expected to occur through the 2009 emissions year.
The EPA has promulgated significant mobile source rules recently that
will yield

substantial benefits in the coming years, and these benefits follow a
series of prior rules that provide a steady progression of emission
reductions as newer, cleaner vehicles replace older, dirtier vehicles.
For utilities, significant NOX reductions occurred in 2004
under the NOX SIP call, and substantial SO2
reductions are expected to occur under the CAIR trading program prior
to 2010 due to incentives for early reductions and the banking of
allowances.
    The EPA has also promulgated many other regulations that will
reduce particulate matter and particulate matter precursor emissions
before as well as after 2009. States have also been implementing a
variety of measures. With use of a 2002 baseline, the assessment of RFP
allows credit for these measures. The following is a partial list of
the measures that have been adopted and will contribute to achieving
generally linear reductions:
     NOX SIP Call.
     Tightened emission limits for new gasoline and diesel
vehicles.
     Numerous regulations requiring Maximum Achievable Control
Technology, including regulations for:

--Iron and steel plants, including coke plants
--Industrial boilers
--Cement plants
--Lime plants
--Primary aluminum plants

     Numerous consent decrees for refineries.
     Numerous consent decrees for power plants.
     The Clean Air Interstate Rule for utilities.
     Retrofitted controls on diesel vehicles, and related
programs for reducing diesel vehicle emissions.
     Closures of coke plants and other facilities (and, from a
national perspective, replacement with cleaner new facilities).
    While different control measures require various timelines for
implementation, EPA believes that many of the additional measures that
states might adopt for attainment planning purposes can be implemented
in a timely fashion for addressing RFP requirements. Thus, EPA believes
that states can reasonably be expected to assure that the combination
of existing measures and additional measures as necessary will provide
for generally linear progress in reducing emissions. Furthermore,
particularly with respect to the 2009 RFP milestone year, when EPA
evaluates whether the emission levels in a state plan represent
generally linear progress, EPA will consider the availability of
measures that can be implemented by 2009.
    It is difficult to compare the stringency of this RFP requirement
to the RFP requirement for ozone. The RFP requirement for ozone
measures one form of progress that occurs after 3 years, and the
requirement for PM2.5 measures a different form of progress
that occurs after 7 years (and for some areas also after 10 years).
That is, the ozone RFP requirement applies a fixed, universally
applicable emission reduction percentage for one pollutant (VOC),
whereas EPA is defining the PM2.5 RFP requirement as an
area-specific combination of emission reductions for multiple
pollutants, defined on the basis of each area's attainment
demonstration.
    The EPA believes that the Clean Air Act mandates not merely
eventual attainment by 2015 but also that states demonstrate that
emissions are being incrementally reduced in earlier years. (As
discussed elsewhere, states must also demonstrate attainment by earlier
than 2015 if feasible.) The requirement for RFP reflects Congressional
intent that areas make steady progress toward attainment in the years
before attainment occurs, and states have ample opportunity to assure
that reductions occur well before 2015.
    Comment: A commenter observes that the PM2.5
nonattainment areas in its state also violate the ozone standard. The
commenter observes, ``[i]n setting plan requirements, U.S. EPA should
choose options that best facilitate harmonization of fine particulate
and ozone control programs. This includes using a fixed percentage of
emission reductions per year for reasonable further progress (RFP). We
recommend the ozone RFP metric of three percent annual emission
reductions averaged over three years.'' Another commenter also supports
a more prescriptive RFP requirement, and comments that ``As suggested
by EPA, nonattainment areas must be required to achieve `a fixed
percentage reduction of the emissions of direct PM2.5 and
regulated PM2.5 precursors and in specific milestone years'
between the base year and the attainment year proposed in the
attainment demonstration.'' A third commenter supported establishing a
requirement for a fixed emission reduction percentage, set at ``no less
than the 3 percent rate'' in Section 182, with the possibility of
higher rates in areas with more severe air quality problems.
    Other commenters prefer the approach that EPA proposed. For example
one commenter states that it agrees with EPA's approach of using the
attainment demonstration to define the parameters for determining what
constitutes RFP, and the commenter supports the flexibility of EPA's
proposed approach ``rather than requiring fixed linear percentage
reductions.'' Regarding the proposed option to require 3 percent per
year emission reductions for areas classified as serious, some
commenters recommended against establishing classifications and a fixed
emission reduction percentage for any area.
    Response: Requiring a fixed annual emission reduction percentage
would impose a ``one-size-fits-all'' approach to address a range of
circumstances. Requiring a fixed annual emission reduction percentage
would overstate the reductions needed to achieve timely attainment in
some areas and would understate the reductions needed to achieve timely
attainment in other areas. The EPA believes that defining the RFP
requirement in terms of achieving generally linear progress toward the
emission reductions needed for timely attainment assures that each area
will achieve a steady rate of progress most appropriate for the area to
achieve timely attainment.
    The EPA recognizes that many areas are nonattainment for both
PM2.5 and ozone and that the control programs for the two
pollutants are sufficiently intertwined that harmonization of planning
for meeting requirements applicable to the two pollutants is important.
However, because the statutory requirements set forth in section 182 do
not apply to PM2.5 RFP plans, EPA believes it is neither
necessary nor appropriate to impose these requirements for
PM2.5. Indeed, given the multiple pollutants that contribute
to PM2.5 and the variations that exist in the nature and
composition of PM2.5 across the country, EPA believes that
the PM2.5 RFP requirements for generally linear reductions
are better defined to reflect these variations and thus better targeted
toward the emission reductions that in each area can be expected to
lead toward timely attainment. Further, EPA believes that application
of a different form of the RFP requirement does not cause conflicts in
implementation planning for the two standards. For example, reductions
of NOX emissions will generally reduce concentrations of
both ozone and PM2.5, and NOX emission reductions
are creditable for meeting both the ozone and the PM2.5 RFP
requirements.
    An important distinction between PM2.5 and ozone is that
fine particle formation is in general a more complex process, affected
by both direct emissions and numerous precursor pollutants. The EPA
does not believe

that RFP targets for PM2.5 should be the same as those used
for the ozone implementation program, nor should the same percentage
reduction be used for all PM2.5 related pollutants. Instead,
EPA believes that RFP plans should reflect an appropriate combination
of pollutant reductions that most effectively provides for attainment.
Therefore, EPA has defined an RFP requirement in which target emission
reductions are established in conjunction with the area's attainment
plan.
5. Geographic Coverage of Emissions Sources
a. Background
    PM2.5 concentrations reflect a combination of impacts
over a wide range of geographic scales. For some components of
PM2.5, observed concentrations typically arise predominantly
from sources within the nonattainment area. For other components,
PM2.5 concentrations may be influenced by sources across a
broad area extending outside the nonattainment area. The EPA's intent
is to define the RFP requirement in terms of emissions reductions that
can be expected to provide generally linear improvements in air quality
in the nonattainment area. For this purpose, EPA continues to believe
that RFP requirements for PM2.5 are best defined such that
states evaluate emissions of each pollutant throughout the area in
which the emissions substantially influence PM2.5
concentrations in the nonattainment area.
    As described in the proposed rulemaking, EPA expects each area's
attainment demonstration to identify many of the parameters used to
define the emission reductions that would represent RFP. First, the
attainment plan will identify the pollutants that are being reduced to
achieve attainment. Second, the attainment plan will identify the
amount of reduction of each pollutant and the date by which attainment
can be achieved. This information suffices to calculate a baseline set
of reductions to be achieved by 2009 to provide for RFP. Third, where a
state chooses to achieve RFP by reducing some pollutants earlier than
others, the attainment plan will provide the information needed to
assess whether the intended set of reductions can be expected to
provide a comparable level of air quality improvement. Fourth, if the
State intends to include emissions sources located outside the
nonattainment area in its RFP plan, the information necessary to
justify inclusion of such sources will likely be found in the
attainment plan.
    The EPA's proposed rulemaking identified several expectations
regarding regional versus local impacts. For directly emitted
PM2.5 (including organic and other carbonaceous particles as
well as miscellaneous inorganic particles and including condensable
particulate matter), EPA recognized that impacts are commonly
localized, and that direct emissions of PM2.5 outside the
nonattainment area should not be included in the RFP plan. Conversely,
EPA recognized the regional nature of secondarily-formed sulfate and
nitrate, and proposed that states could justify inclusion in the RFP
plan of SO2 and NOX emissions sources located
within 200 kilometers of the nonattainment area.
    The EPA recognizes that fine particles travel over long distances,
and that distant emissions of SO2 and NOX
emissions can influence a nonattainment area's air quality. At the same
time, distant sources can be expected to have less impact than sources
closer to the nonattainment area. EPA's procedures for assessing RFP
rely on a general assumption that all the sources included in the
assessment have a comparable impact per ton of emissions. For this
reason, it would be inappropriate to include distant emission sources
in the assessment. Indeed, limiting the consideration of SO2