In the Preamble to the CATR/FIP, EPA stated: A state's emissions budget is the quantity of emissions that would remain in that state from covered sources after elimination of that portion of each state's significant contribution and interference with maintenance that EPA has identified in today's proposal, before accounting for the inherent variability in power system operations ... In other words, it provides a quantity of emissions to use in developing a remedy (e.g., the remedy should be designed to achieve the budget in an average year. Because the budget represents emissions that would remain without accounting for variability, it also represents the amount of emissions that would remain after significant contribution and interference with maintenance have been addressed, in an average year.[EPA-HQ-OAR-2009-0491-2841.1,p.4]
Thus, when the Base Case v. 4.10 projection shows a value below the budget, it is clear that significant contribution and interference no longer exist. [EPA-HQ-OAR-2009-0491-2841.1,p.4]
EPA's revised IPM v. 4.10 Base Case 2012 modeling shows that even without implementation of the CATR/FIP (or CAIR), reductions from Louisiana are already greater than those required reductions. The following table demonstrates this finding: [EPA-HQ-OAR-2009-0491-2841.1,p.4] [[See Docket Number EPA-HQ-OAR-2009-0491-2841.1, p.4 for the table.]]
Because 'significant contribution' and 'interference with maintenance' have been removed as shown by this revised IPM modeling, there is no basis for a CATR/FIP for annual SO2 or NOx control for Louisiana sources, as the level required to remove interference with maintenance will have already been achieved. [EPA-HQ-OAR-2009-0491-2841.1, p.5]
3. EPA's own modeling shows that the reductions in estimated Louisiana ozone season NOx emissions from the Transport Rule Base Case v. 3.02 to the Base Case v. 4.10 are greater than what EPA stated was needed to remove 'significant contribution' and 'interference with maintenance' in Texas. EPA indicated that the difference between the TR Base Case 2012 v. 3.02 and TR Limited Trading Option case represents the amount necessary for a state to reduce emissions in order to remove significant interference or and interference with maintenance.  EPA's revised IPM v. 4.10 Base Case 2012 modeling shows that even without implementation of the CATRJFIP (or CAIR), reductions from Louisiana are already greater than those required reductions. The following table demonstrates this finding: [EPA-HQ-OAR-2009-0491-2841.1,pp.7-8] [[See Docket Number EPA-HQ-OAR-2009-0491-2841.1, p.8  for the table.]]
Because 'significant contribution' and 'inteiference with maintenance' have been removed as shown by this revised IPM modeling, there is no basis for a CATR/FIP for ozone season NOx control for Louisiana sources. [EPA-HQ-OAR-2009-0491-2841.1,p.8]
Response:
There are five states for 2012 ozone season NOx that have budgets equal to their base case emissions.  See section VI.D of the preamble for an explanation of why budgets were set at baseline emissions levels for these states.  For all other covered TR states in all other TR programs, the state budget in 2012 and/or in 2014 is less than baseline emissions.
Organization: Florida Electric Power Coordinating Group, Inc. (FCG)
Comment:
Florida Electric Power Coordinating Group, Inc. (FCG)
EPA proposes to set state emission budgets for annual and ozone season NOx and for S02 based on the quantity of emissions that remain after elimination of significant contribution to nonattainment and interference with maintenance, but before accounting for variability. In its technical support document (TSD) addressing state budgets, EPA explains that it calculated state budgets using a combination of emissions and heat input data reported to EPA as of 2009 and projections by the Integrated Planning Model ('I PM') for 2012, each adjusted to reflect emissions control equipment projected to be in place by 2012. See 'State Budgets, Unit Allocations, and Unit Emissions Rates' TSD at 3,5. [EPA-HQ-OAR-2009-0491-2658.1, p.7]
In that TSD, EPA notes that in creating the state budgets for annual and ozone season NOx, it 'rebased' annual and ozone season NOx emissions for units reporting emissions data to EPA by using 2008 rather than 2009 heat input. According to EPA, this adjustment was made 'to account for unusually low utilization in 2009.' However, EPA did not make a similar adjustment for reported S02 emissions. EPA does not provide an explanation for this differential treatment of the issue as between the two pollutants. EPA must clarify and explain more fully why it chose to use 2008 instead of 2009 data for NOx and explain why it did not do the same for S02 data reported to EPA. [EPA-HQ-OAR-2009-0491-2658.1,p.7]
Response:
EPA has modified the proposed methodology for determining the state emission budgets.  The revised methodology obviates the need for any adjustments to account for unusually low utilization in 2009 as it relies on projected 2012 and 2014 state emission levels instead of adjusted historic data.
Organization: Louisiana Energy and Power Authority (LEPA)
PowerSouth Energy Cooperative
Comment:
Louisiana Energy and Power Authority (LEPA)
If, however, Louisiana is not excluded, then EPA should revisit and revise the process and methodology by which state budgets and unit allocations were determined. That process was unsound, provided insufficient opportunity for public participation, failed to consider local reliability concerns, and denied states a feasible opportunity to develop state implementation plans ('SIPs') before the January 1, 2012 effective date. [EPA-HQ-OAR-2009-0491-2700.1, p.2]
PowerSouth Energy Cooperative
The emissions budgets in the Proposal are convoluted. The Integrated Planning Model (IPM) modeling and related assumptions EPA used to analyze interstate transport and arrive at state budgets is the basis for this regulatory action.  The underlying methodology and assumptions are convoluted and complex.  PowerSouth participates in a number of utility industry groups in a concerted effort to understand and participate in the rulemaking process.  Despite our best efforts, PowerSouth does not understand the IPM modeling and assumptions that EPA used to arrive at its proposed remedy.  EPA has failed to provide states and the regulated community the opportunity and resources necessary to review and comment on the very basis of this Proposal.  [EPA-HQ-OAR-2009-0491-2693.1,pp.2-3]
Response:
In the final Transport Rule, EPA has improved the process for determining state emission budgets.  The final approach used to determine state budgets is more transparent and less complex.  It is described in section VI of the preamble.  By relying on state level projected emissions to determine budgets, EPA does inherently consider reliability concerns.  The IPM model has regional reserve margin constraints that capture system reliability requirements by defining a minimum margin of reserve capacity (in megawatts) per year.  See EPA IPMv.4.10 documentation for additional details.
Organization: Massachusetts Department of Environmental Protection
National Association of Clean of Air Agencies (NACAA)
NextEra Energy, Inc.
PSEG Services Corporation
Mothers and Others for Clean Air
Comment:
Massachusetts Department of Environmental Protection
While we are pleased with the proposed state annual S02 budgets, we believe that the NOx budgets EPA has proposed for the annual and ozone season trading programs are too high and will not result in the emissions reductions from upwind power plants that are needed to achieve clean ail' in Massachusetts. MassDEP supports a 900,000 ton annual NOx cap and a proportional  [EPA-HQ-OAR-2009-0491-2787.2 p.1]
Mothers and Others for Clean Air
[These comments were submitted as testimony at the Atlanta, Georgia public hearing on September 1, 2010.  See Docket Number EPA-HQ-OAR-0491-1939, p.23.]
We also ask that EPA work as quickly as possible to reevaluate emission budgets in the Transport Rule as the standard for fine particulate matter is reviewed and possibly strengthened in coming years.
National Association of Clean of Air Agencies (NACAA)
The 2014 NOx Emissions Cap Should Be Tightened
The NOx emissions caps in the proposed Transport Rule are not stringent enough. EPA admits that there are 10 states for which the agency has "only quantified a minimum amount of emissions reductions needed to make measurable progress towards eliminating their significant contribution and interference with maintenance with respect to" the 1997 ozone standard. 2 Furthermore, while EPA proposes to lower the SO2 cap in 2014, the agency makes no such adjustment for NOx. Although EPA says it will address the NOx reductions needed to meet the soon-to-be promulgated revised ozone standard in Transport Rule II, it is imperative that the agency include in this Transport Rule a second, tighter annual NOx cap in 2014 to assist states in attaining the 1997 ozone standard (85 parts per billion) and 2006 PM2.5 standards. 3 Analysis by NACAA and the Ozone Transport Commission suggests a 900,000 ton annual NOx cap in 2014 is technologically feasible and cost-effective, and EPA's analysis confirms the cost-effectiveness of additional NOx reductions. 4 [EPA-HQ-OAR-2009-0491-2771.1, p.3]
Emissions of Other Sources Also Need to Be Reduced to Eliminate Transport
The Transport Rule Fails to Completely Eliminate Transport The proposed Transport Rule does not completely satisfy section 110(a)(2)(D)'s requirements to eliminate emissions that significantly contribute to downwind nonattainment [EPA-HQ-OAR-2009-0491-2771.1, p.3] or interfere with maintenance. As mentioned previously, there are dozens of states 5 that will need to do more in order to satisfy their Clean Air Act obligation to address transport, unless EPA reduces the NOx and SO2 emissions caps. We are disappointed that after spending a year-and-a-half to analyze interstate transport, EPA presents us with an incomplete solution. [EPA-HQ-OAR-2009-0491-2771.1, p.4] The 2014 NOx Emissions Cap Should Be Tightened
The NOx emissions caps in the proposed Transport Rule are not stringent enough. EPA admits that there are 10 states for which the agency has "only quantified a minimum amount of emissions reductions needed to make measurable progress towards eliminating their significant contribution and interference with maintenance with respect to" the 1997 ozone standard. Furthermore, while EPA proposes to lower the SO2 cap in 2014, the agency makes no such adjustment for NOx. Although EPA says it will address the NOx reductions needed to meet the soon-to-be promulgated revised ozone standard in Transport Rule II, it is imperative that the agency include in this Transport Rule a second, tighter annual NOx cap in 2014 to assist states in attaining the 1997 ozone standard (85 parts per billion) and 2006 PM2.5 standards. Analysis by NACAA and the Ozone Transport Commission suggests a 900,000 ton annual NOx cap in 2014 is technologically feasible and cost-effective, and EPA's analysis confirms the cost-effectiveness of additional NOx reductions. [EPA-HQ-OAR-2009-0491-2771.1, p.3]
[These comments were submitted as testimony at the Chicago, Illinois public hearing on August 19, 2010.  See Docket Number EPA-HQ-OAR-0491-1746, pp.106-107.]
NACAA also supports the Agency's use of air quality factors and a health benefits assessment calculating states' emissions budgets, rather than basing the budget solely on the availability of cost-effective controls.
[These comments were submitted as testimony at the Philadelphia, Pennsylvania public hearing on August 26, 2010.  See Docket Number EPA-HQ-OAR-2009-0491-1938, p.80.]
Furthermore, at this time the proposed SO2 caps especially the tightened 2014 cap appear to be sufficiently stringent to meet most states needs.

Footnote:
2 75 Federal Register 45214.
3 We believe a tighter annual NOx cap is called for because (1) ozone seasons vary in states, and states experience ozone problems outside the months covered by EPA's seasonal NOx program; and (2) research in the Midwest points to nitrates driving wintertime PM2.5 attainment problems. Jaemeen Beck, et al, "Episodic Air Pollution in Wisconsin (LADCO Winter Nitrate Study) and Georgia (SEARCH Network) During Jan-Mar 2009," (forthcoming 2010).
4 Senator Thomas Carper (D-DE) asked EPA to analyze the impacts of a 900,000 ton NOx cap in the East beginning in 2015 as a possible alternative to the 1.3 million ton cap in 2015 in his bill, the Clean Air Act Amendments of 2010 (S. 2995). The more stringent NOx caps provided between $3-10 billion in additional benefits each year at a cost of $1.5 billion. "EPA Analysis of Alternative NOx and SO2 Caps for Senator Carper" (July 16, 2010).
5 There are ten eastern states for which EPA has not completely quantified the total significant contribution or interference with maintenance with respect to the 1997 ozone NAAQS and 15 states for which EPA has not completely quantified total significant contribution or interference with maintenance with respect to the 2006 PM2.5 NAAQS. 75 Federal Register 45214.
While the ultimate responsibility for attaining the ozone and PM2.5 National Ambient Air Quality Standards (NAAQS) lies with state and local clean air agencies, federal control measures limiting emissions of NOx and SO2 are critical, due to the overwhelming transport problem in the Northeast, Mid- Atlantic, Southeast and Midwest (i.e., the region covered by the proposed Transport Rule). Accordingly, EPA needs to promulgate a strong timely Transport Rule. [EPA-HQ-OAR-2009-0491-2771.1, p.1]
NextEra Energy, Inc.
NextEra Ellergy supports EPA's preferred methodology for developing state budgets. From NextEra Energy's perspective, EPA appropriately uses a multi-step process that includes both air quality and cost modeling to calculate state contributions to downwind nonattainment and interference with maintenance. As EPA discusses in the preamble to the proposed Transport Rule, it is important to require that emission reductions are achieved as expeditiously as possible. Under EPA's preferred methodology for determining the 2012 state budgets, the Agency uses a mix of Integrated Planning Model (IPM) modeling,reported emissions, and adjustments to both modeled and reported emissions based on pollution control technologies installed or projected to be installed before 2012. By using this methodology, EPA intends to avoid backsliding from the progress made in response to CAIR in the control of emissions from units in the Transport Rule region. Under the unique circumstances resulting from the vacatur of CAIR, NextEra Energy supports this methodology for establishing initial state budgets for annual NOx, ozone season NOx, and2012 S02 in botll Group 1 and 2 states. In our view, this methodology would not be appropriate for future rule makings because it would not result in the most cost-effective emissions reductions. However, NextEra Energy understands that  vacatur of CAIR creates a unique situation for EPA and agrees that the proposed approach is appropriate for the initial state budgets. [EPA-HQ-OAR-2009-0491-0298.1 p.2]
NextEra Energy also supports EPA's exclusive use ofIPM runs to set state budgets for 2014 Group 1 S02emissions using pollution control cost thresholds. NextEra Energy understands and supports that this methodology would be the basis for establishing any revised state budgets in any of the four programs (e.g.,ozone season NOx, annual NOx, Groups 1 and 2 S02) as necessary to comply with future NAAQS revisions.[EPA-HQ-OAR-2009-0491-0298.1 p.2]
NextEra Energy supports EPA's preferred methodology for developing state budgets.
From NextEra Energy's perspective, EPA appropriately uses a multi-step process that includes both air quality and cost modeling to calculate state contributions to downwind nonattainment and interference with maintenance. As EPA discusses in the preamble to the proposed Transport Rule, it is important to require that emission reductions are achieved as expeditiously as possible. Under EPA's preferred methodology for determining the 2012 state budgets, the Agency uses a mix of Integrated Planning Model (IPM) modeling, reported emissions, and adjustments to both modeled and reported emissions based on pollution control technologies installed or projected to be installed before 2012. By using this methodology, EPA intends to avoid backsliding from the progress made in response to CAIR in the control of emissions from units in the Transport Rule region. Under the unique circumstances resulting from the vacatur of CAIR, NextEra Energy supports this methodology for establishing initial state budgets for annual NOx, ozone season NOx, and 2012 SO2 in both Group 1 and 2 states. In our view, this methodology would not be appropriate for future rulemakings because it would not result in the most cost-effective emissions reductions. However, NextEra Energy understands that the vacatur of CAIR creates a unique situation for EPA and agrees that the proposed approach is appropriate for the initial state budgets. [EPA-HQ-OAR-2009-0491-2718.1, p.2]
NextEra Energy also supports EPA's exclusive use of IPM runs to set state budgets for 2014 Group 1 SO2 emissions using pollution control cost thresholds. NextEra Energy understands and supports that this methodology would be the basis for establishing any revised state budgets in any of the four programs (e.g., ozone season NOx, annual NOx, Groups 1 and 2 SO2) as necessary to comply with future NAAQS revisions. [EPA-HQ-OAR-2009-0491-2718.1, p.2]
PSEG Services Corporation
PSEG supports EPA's preferred methodology for developing state budgets. [EPA-HQ-OAR-2009-0491-2726.1, p.2]
PSEG supports EPA's preferred methodology for developing state budgets. EPA appropriately uses a multi-step process that includes both air quality modeling and cost modeling to calculate state contributions to downwind nonattainment and interference with maintenance. As EPA discusses in the preamble to the proposed rule, it is important to require that emission reductions are achieved as expeditiously as possible. By using the preferred methodology for determining the 2012 state budgets, EPA avoids backsliding from CAIR in the control of emissions from units in the Transport Rule region. PSEG supports this methodology for establishing state budgets for annual NOx, ozone season NOx, and 2012 SO2 in proposed Group 1 and 2 states. [EPA-HQ-OAR-2009-0491-2726.1, p.5]
Response:
In the final Transport Rule, EPA does not use historic emissions data to set the Transport Rule state budgets, but instead relies on projected emissions data under the marginal cost thresholds selected to define significant contribution and interference with maintenance.  EPA uses the same budget-setting methodology in the final rule on all pollutants analyzed (including ozone-season NOx, annual NOx, and SO2).  EPA believes this budget-setting methodology is more clear and easier to understand in connection with the Agency's modeling projections.  EPA believes the state budgets set under the final Transport Rule are an accurate reflection of its modeling of the removal of emissions identified as significant contribution and interference with maintenance from the states controlled.  For a discussion of this method and its results, please refer to section VI of the preamble for the final Transport Rule as well as the Significant Contribution and State Emissions Budgets Final Rule Technical Support Document.
Organization: Minnesota Power
Comment:
Minnesota emission reduction controls already in place. EPA projects that Minnesota has already provided for emission reductions sufficient to meet EPA's proposed 2012 Group 2 State SO2 and NOx emission budgets and concludes the 2012 compliance date for the Transport Rule is achievable.  Related EPA characterization that such emission reductions were implemented in anticipation of CAIR compliance ignores the record for the Minnesota Clean Air Visibility Rule, State Implementation Plan submitted to EPA for approval.  [EPA-HQ-OAR-2009-0491-2750.1, p.7]
Response:
EPA's modeling for the final Transport Rule captures any non-CAIR state and federal legal and enforceable emission limitations.  Therefore, the final rule air quality modeling that determined Minnesota's inclusion in the final Transport Rule for fine particles already accounted for any emission reductions achieved by "on-the-books" emission limitation requirements (except for CAIR, as explained in preamble section V.B).  EPA does not include proposed SIP emission control requirements that have not yet been formally approved and legally applied.  The IPM documentation has a list of state rules (and covered pollutants) that are captured in the final Transport Rule modeling.  Minnesota is included in this list and appears in the documentation.
Organization: New York State Department of Environmental Conservation
Comment:
New York State Department of Environmental Conservation
Basis of Emission Budgets I Variability
State emissions budgets should reflect the emission reductions necessary to prevent SC/IM using the maximum design value rather than an average value based on a three-year period. This is the only way to assure that during any given year, a NAAQS violation will not occur due to transport. Also, emission budgets should reflect levels needed to eliminate SC/IM and not 'cost effective' controls in a given state, and must be designed to prohibit emissions that cause SC/IM. Any variability limit should be applied in a manner such that emissions causing SC/IM are prohibited, or at least mitigated. That is, the sum of a state's budget and the variability limit should be equal to or less than the emission reductions necessary to avoid SC/IM or EPA's trading program mitigation measures need to be applied once the budget is exceeded. Still, any variability limit that EPA might establish should start at the beginning of the program (for this case, 2012). [EPA-HQ-OAR-2009-0491-2730.1, p.7; This comment can also be found at section IV.F.1 of this comment summary]
Allowing an additional variable emission quantity over and above the state budget that is needed to achieve SC/IM may result in non-compliance with a NAAQS. For example, it is likely that plants in one state may have a higher than average cost of controls than the costs of another state due to higher costs of living or smaller power plants which generally have higher control costs than another state. It would be reasonable to expect that plants in the latter state would control more to offset their costs and sell allowances in the former. Without some mechanism to keep emissions in a particular state to a level at or below the budgets established to eliminate SC/IM, there can be no assurance that the transported emissions that significantly contribute to nonattainment or interfere with maintenance are eliminated. Another shortcoming is that the year to year variability treatment does not take into account that air pollution is generally episodic in nature. Higher emissions are more likely when the potential for ozone and PM2.5 formation is greatest. [EPA-HQ-OAR-2009-0491-2730.1, p.7; This comment can also be found at section IV.F.1 of this comment summary]
Response:
State emission budgets reflect emissions in an average year after the elimination of "SC/IM" or, in the case of some states for ozone, it reflects progress towards this elimination.  EPA believes that state emissions after the elimination of "SC/IM" will have variability, and this is reflected in the variability limits.  See section VI.E of the preamble for further discussion.  Also, as suggested by commenter, EPA is finalizing variability limits to start at the beginning of the Transport Rule program.
Organization: Northeast States for Coordinated Air Use Management (NESCAUM)
Comment:
Northeast States for Coordinated Air Use Management (NESCAUM)
Furthermore, we strongly recommend that EPA use a bottom-up approach to setting budgets. The approach would entail evaluating a specific strategy and starting out with those specific technologies, and applying the appropriate controls to each unit in the database. EPA could then calculate the emissions rates and then model the strategy using an air quality database. This analysis would be conducted on a state-specific, unit-specific basis, by fuel type. Once the emissions rates were determined, EPA could calculate the emissions and assess whether those emissions triggered the 1% significant contribution linkage criterion through CMAQ. The IPM model could then be used for assessing costs (not establishing the budgets), and an air quality model, such as CMAQ or CALGRID, could be used to assess air quality benefits. We understand that EPA has employed a similar, but not as comprehensive, approach in conducting assessments of other cap-and-trade programs (i.e., EPA did not analyze on the state-specific level nor employ air quality modeling). While this approach would entail multiple runs and take more time than EPA's current approach, it would produce results that we feel are more aligned with the intent of the program, and the July 11, 2008 decision of the U. S. Court of Appeals for the District of Columbia Circuit. [EPA-HQ-OAR-2009-0491-2694.1, pp.6-7]
[These comments were submitted as testimony at the Philadelphia, Pennsylvania public hearing on August 26, 2010.  See Docket Number EPA-HQ-OAR-2009-0491-1938, p.12.]
Finally, we anticipate some issues with the proposed state budgets, and have identified some questionable assumptions used in the analysis. Our states will document these in our written comments.
Response:
In the final Transport Rule, EPA does not use historic emissions data to set the Transport Rule state budgets, but instead relies on projected emissions data under the marginal cost thresholds selected to define significant contribution and interference with maintenance.  EPA uses the same budget-setting methodology in the final rule on all pollutants analyzed (including ozone-season NOx, annual NOx, and SO2).  This multi-factor approach described in section VI.D of the preamble takes into account air quality and cost considerations when determining state budgets.
Organization: Ohio Utility Group (OUG)
Comment:
Ohio Utility Group (OUG)
C. The Proposed Transport Rule handcuffs the states, leaving no real choice for implementing emissions limitations
The validity of EPA's budget system under the Transport Rule hinges on whether the states have any real choice in implementing Section 110 requirements. Under the proposed Transport Rule, the states are handcuffed with no choice other than implementing EPA's unit-specific emissions limitations. The proposed rule's timing requirements and EPA's use of 'default' limitations scattered throughout the proposed rule and the NODA deny the states their Section 110 authority to make unit-specific limitations. [EPA-HQ-OAR-2009-0491-3761.1_NODA, p.7]
The Supreme Court has defined 'emissions limitations' as 'regulations of the composition of substances emitted into the ambient air. .. They are the specific rules to which operators of pollution sources are subject.,,16 Ultimately the Court concluded that Section 110 of the CAA grants to each state primary authority 'to adopt whatever mix of emissions limitations it deems best suited to its particular situation.'  In light of Train, the validity of EPA's budget program under the proposed Transport Rule depends on 'whether the program in effect constitutes an EPA-imposed control measure or emission limitation.' The Michigan court explained that an EPA-imposed control measure is one where 'the program constitutes an impermissible means rather than a permissible end goal.' In other words, EPA exceeds its (secondary) Section 110 authority when a rulemaking, promulgated pursuant to Section 110, denies covered states choice with respect to implementing emissions limitations. [EPA-HQ-OAR-2009-0491-3761.1_NODA, p.7]
The proposed Transport Rule includes provisions effectively denying the states any real choice. In Michigan, EPA's budget program was upheld because: 1) EPA made clear that the states do not have to adopt the control scheme that EPA assumed for budget-setting. The proposed Transport Rule does not give states this option; 2) states remain free to implement other cost-effective measures in place of the ones identified by EPA, such as giving states the option to focus on mobile sources rather than stationary sources. EGUs, and only EGUs, bear the burden of the emissions limitations under the proposed Transport Rule; and 3) EPA gave the states full discretion in selecting controls, including participation in an interstate trading program. The proposed Transport Rule does not grant such latitude. [EPA-HQ-OAR-2009-0491-3761.1_NODA, p.7]
Furthermore, all of EPA's 'default' emissions limitations constitute the exact 'impermissible source-specific means' prohibited by the D.C. Circuit. Assigning a 'default' number for any emissions limitation is ill-advised. The effectiveness of control technology depends on numerous unit-specific operating variables. EPA's default to a 98% removal rate of S02 for new scrubber installations is one example of a faulty assumption. Achieving a 98% removal rate for a new scrubber may be obtained on an intermittent basis. However, achieving 98% removal on an annual basis could only be achieved in a vacuum where no operational variability could occur. Based on years of historical operating data and unit-specific knowledge, the Utilities recommend that, if EPA maintains its 'default' limitations, S02 removal rates for new scrubber systems be reduced to 95%. In addition, AEP requests that scrubber efficiency at Gavin Units 1 and 2 be revised to 94.5%. [EPA-HQ-OAR-2009-0491-3761.1_NODA, pp.7-8]
Establishing 'default' limitations is likely a direct result of EPA's lack of unit-specific knowledge and realization that EPA simply does not have the capability to acquire the detailed unit-specific knowledge required to make such decisions. Therefore, the Utilities caution EPA in setting 'default' limitations, especially at the upper-end of the spectrum. [EPA-HQ-OAR-2009-0491-3761.1_NODA, p.8]
Response:
See section X of the preamble for discussion on State Implementation Plans.  In regards to commenters suggestions about adjusting SO2 removal efficiency, EPA updated its IPM modeling to reflect removal rates for existing FGDs that are based on historic removal efficiencies for the particular unit.  It also lowered its removal efficiency assumptions for new FGD retrofits.  The budgets set in the final Transport Rule were based on modeling that reflected these updated assumptions.
Organization: Ozone Transport Commission (OTC)
Comment:
Ozone Transport Commission (OTC)
[These comments were submitted as testimony at the Philadelphia, Pennsylvania public hearing on August 26, 2010.  See Docket Number EPA-HQ-OAR-0491-1938, p.115-116.]
A key reason that significant contribution is not eliminated by the proposed Transport Rule is that the NOX caps are not stringent enough. The proposed 2012 NOX caps are actually more generous than those that were required in CAIR phase 2, beginning in 2015.
We urge EPA to tighten the NOX caps in this rulemaking to a level that fully eliminates significant contribution.
Response:
EPA has finalized different state emissions budgets for annual and ozone season NOx than those proposed.
In the final Transport Rule, EPA does not use historic emissions data to set the Transport Rule state budgets, but instead relies on projected emissions data under the marginal cost thresholds selected to define significant contribution and interference with maintenance.  EPA uses the same budget-setting methodology in the final rule on all pollutants analyzed (including ozone-season NOx, annual NOx, and SO2).  EPA believes this budget-setting methodology is more clear and easier to understand in connection with the Agency's modeling projections.  EPA believes the state budgets set under the final Transport Rule are an accurate reflection of its modeling of the removal of emissions identified as significant contribution and interference with maintenance from the states controlled.  For a discussion of this method and its results, please refer to section VI of the preamble for the final Transport Rule as well as the Significant Contribution and State Emissions Budgets Final Rule Technical Support Document.
Organization: Prairie State Generating Company, LLC
Comment:
Prairie State Generating Company, LLC
PSGC suggests in the case of new sources, all units at the source should be considered 'existing' units if construction is well underway and at least one unit has commenced commercial operation by January I, 2012. This expansion of the definition would likely affect very few sources; indeed, the U.S. EPA projects growth of coal-fired units at a level of only 3% in the entire region. PSGC's suggestion preserves the U.S. EPA's apparent intent to limit the number of units that would be 'existing' units. The PSD program requires that construction be continuous. Therefore, it is very likely that all units at any new sources under construction with at least one unit that has commenced commercial operation by January 1, 2012, or will have commenced commercial operation by January 1, 2014, the date demarcating Phase 2 of the proposed Transport Rule Program. [EPA-HQ-OAR-2009-0491-2842.1, p.2]
In the alternative, 'existing units' should be those that have been issued construction permits by January 1,2012, and have commenced commercial operation by January 1,2014. Unless the permit for new units are currently in the queue, it is highly unlikely that there would be a run on permitting authorities to issue new PSD permits and such permits would become final and effective before January 1,2012. Therefore, the universe of units which will commence commercial operation by January 1,2014, is small, should be known, 2 and will not adversely impact the U.S. EPA's analysis. [EPA-HQ-OAR-2009-0491-2842.1, p.2]
Moreover, for these few new sources, PSGC believes the applicable statewide budgets should be expanded to reflect these additional units. As discussed elsewhere in these comments, in the case of PSGC, it appears that the U.S. EPA's modeling included emissions attributable to PSGC as 'planned-committed' units. Therefore, expansion of the statewide budget to accommodate PSGC's allocation would not alter U.S. EPA's air quality analyses. [EPA-HQ-OAR-2009-0491-2842.1, p.2]

2 We recognize, however, that EPA is apparently not aware of all new units, since PSGC's units were not included on the list of allocations to 'existing' units, although a review of the data suggests that EPA may have included these units in the 'planned-committed' category. [EPA-HQ-OAR-2009-0491-2842.1, p.2]
Response:
As explained in section VII.D of the preamble, units that commence commercial operation after January 1, 2010 are considered new units because EPA would not have one full year's worth of data on which to base these units' allocation if considered an existing unit.  However, EPA appreciates the commenters concern and has made modifications in the final Transport Rule in regards to the size of new source set-asides to address the issue raised by commenter.  Commenter correctly observed that some "planned-committed" units were reflected in EPA's modeling.  Because any "planned-committed" units that came online after 2009 are considered new units for Transport Rule purposes, the emission levels pertaining to those units under a Transport Rule scenario are reflected under the new source set-aside instead of the existing unit budget.  This has the impact of make the new source set-aside accounts larger in states where units are scheduled to come online, and consequently makes more allowances available to these units.
Organization: Rhode Island Department of Environmental Management
Comment:
Rhode Island Department of Environmental Managment
[[2818.1 p.1-2]]
Rhode Island suggests that EPA give consideration to revising its proposed rule to include a system to allocate allowances to new units in those states that EPA evaluated for contribution to downwind nonattainment and maintenance and detennined their contributions were not significant.
The purpose of such a provision would be to mitigate 'leakage' i.e. increased emissions from sources outside ofthe budget/cap that offsets some ofthe anticipated reductions from the sources covered by the budget.
The current proposal does not a include mechanism for limiting this 'out-of-budget' growth in emissions. Two possible consequences of this shortfall in the rule are, if a new source locates in a non-contributing state and displaces an older source in a budget state, there is no commensurate reduction in the budget of that state under the current proposal, whereas if the new source was located in the budget state there would be the reduction. Additionally, if a non-contributing state was just marginally below the threshold for significant contribution, the current proposal has no mechanism to control growth in that state and therefore, unrestricted growth could allow that state to then significantly contribute to a downwind state's nonattainment.
One suggested approach would be to hold back a quantity of allowances from the total of all of the state budgets for a new unit set aside allowance pool for those states. Any unused allowances from the new unit .set aside allowance pool for a given compliance period could be allocated back to the individual state budgets.
Response:
EPA analyzed the possibility of emissions increases in non-Transport Rule states.  However, EPA does not impose limits or require reductions from these states because its analysis suggested that no non-Transport Rule state's emissions would increase to the point where it tipped that state into a contributing on "linked" status as described in section V of the preamble.  See section V.C and VI and XII.J for further discussion.
Organization: RRI Energy, Inc.
Comment:
RRI Energy, Inc.
Please note, though, that RRI's support for these aspects of the proposed CATR is tempered by our lack of a complete and comprehensive understanding of the inputs, programming logic and outputs from the Integrated Planning Model (IPM) and Comprehensive Air Quality Model with Extensions (CAMx), which are the primary tools used to establish the state emissions budgets. Concerns with the difficulty in accounting for IPM model results that appear to be contrary to the information available to various stakeholders and EPA's reluctance to fully disclose the IPM programming logic (presumably because of the proprietary nature of IPM) have been previously expressed to EPA by industry and other stakeholders. These developments have in fact resulted in recent actions undertaken by the Eastern Regional Technical Advisory Committee (ERTAC2) to develop an alternative to IPM for use by state and regional air quality planning entities to grow base hourly electric generating unit (EGU) inventories into future projection years for air quality impact assessments on both an annual and episodic peak basis. ERTAC's recent efforts have been shared with EPA, and ERTAC is awaiting EPA's response. RRI requests EPA to conduct IPM and CAMx training and outreach sessions during the upcoming months to allow stakeholders the opportunity to develop a greater understanding of IPM and CAMx with the ultimate goal of establishing a more transparent process used to determine the state emissions budgets. [EPA-HQ-OAR-2009-0491-2717.1 p.2]
RRI has reviewed the unit characteristics information for our units included in the budget allocation data file. All information is correct with the exception of the generating capacity data (defined as the net summer ratings). A comparison of the capacities presented in the CATR with the capacities determined by RRI (and in accordance with the test procedures specified by the local electrical grid operator) is presented in Attachment 1. If CATR applicability is defined as units with capacities greater than 25 MWe, then this comparison shows that the following RRI units have been incorrectly identified as being CATR-affected units:
Ohio: Niles CTA (ORIS 2861)
Pennsylvania: Hamilton 1 (ORIS 3109)
Mountain 31 and Mountain 32 (ORIS 3111)
Tolna 31 and Tolna 32 (ORIS 3116)
RRI requests that the unit characteristics information be updated to reflect the most current net summer capacity and CATR-applicability data. Supporting documentation for the net summer capacities can be provided upon request. [EPA-HQ-OAR-2009-0491-2717.1 p.6]
Response:
In the final Transport Rule, EPA does not use historic emissions data to set the Transport Rule state budgets, but instead relies on projected emissions data under the marginal cost thresholds selected to define significant contribution and interference with maintenance.  EPA uses the same budget-setting methodology in the final rule on all pollutants analyzed (including ozone-season NOx, annual NOx, and SO2).  EPA believes this budget-setting methodology is more clear and easier to understand in connection with the Agency's modeling projections.  EPA believes the state budgets set under the final Transport Rule are an accurate reflection of its modeling of the removal of emissions identified as significant contribution and interference with maintenance from the states controlled.  For a discussion of this method and its results, please refer to section VI of the preamble for the final Transport Rule as well as the Significant Contribution and State Emissions Budgets Final Rule Technical Support Document.
Organization: Santee Cooper
Comment:
Santee Cooper
While EPA's proposed approach for developing state emissions budgets is consistent with the statute and court decisions, EPA has failed to recognize the broad discretion conveyed with regard to the allocation of allowances to affected units under the Transport Rule. [EPA-HQ-OAR-2009-0491-2820.1, p.2]
EPA's PROPOSED APPROACH FOR DEVELOPING STATE EMISSIONS BUDGETS IS CONSISTENT WITH THE STATUTE AND THE NORTH CAROLINA DECISION. [EPA-HQ-OAR-2009-0491-2820.1, p.7]
Santee Cooper strongly supports the approach EPA has proposed for developing state budgets for NOx and S02 emissions. Basing budgets on state-specific contributions to downwind air quality problems addresses the concerns we raised in connection with state SO2 budgets under CAIR, and is most consistent with the language of the statute and the D.C. Circuit's opinion in North Carolina. As EPA is aware, the principal objection to the CAIR budgeting approach for SO2 was that it reflected considerations that were not grounded in the statute and unfairly balanced the burden of reducing interstate emissions among states. Basing state SO2 emission budgets on congressionally-mandated allocations of Title IV allowances, as CAIR did, had no logical connection to the purpose of Section II0(a)(2)(D), which is to eliminate 'significant contributions' to downwind nonattainrnent or 'interference with maintenance' of downwind attainment. [EPA-HQ-OAR-2009-0491-2820.1, pp.7-8]
The D.C. Circuit agreed in North Carolina that this was a fatal flaw in the CAIR SO2 budgets, finding that the Title IV allocations were based on data from the mid-1980's and designed to address acid rain - making them an inappropriate basis for allocations under Section 110. Further, North Carolina held that the fuel-factor-based NOx emission budgets established under CAIR were similarly arbitrary and contrary to the statute, because they did nothing to ensure that each state complied with the directive in Section 110 to prohibit significant contributions and interference with maintenance. Indeed, North Carolina concluded that the NOx budgeting methodology unfairly burdened states that had done the most to address interstate emissions (by installing pollution control equipment or relying on cleaner fuels) by depriving them of emission allowances. The clear message of North Carolina was that Section 110(a)(2)(D) requires state emission budgets to ensure that sources 'within each state' eliminate their significant contributions and interference with maintenance - no more and no less. [EPA-HQ-OAR-2009-0491-2820.1, p.8]
The revised state emissions budgeting approach for both S02 and NOx addresses these concerns and fulfills the statutory requirements of Section 110(a)(2)(D) as interpreted by North Carolina. EPA's new methodology correctly bases state emission budgets on the quantity of S02 and NOx emissions that would remain once sources within each state undertake emission control measures below a uniform marginal abatement cost. This approach ensures that each state addresses its significant contribution and interference with maintenance - no more and no less - and ensures that the costs of doing so are reasonably balanced between downwind and upwind states. We believe this is a rational methodology that implements the statutory mandate as faithfully as practicable, and urge EPA to preserve this approach in its final Transport Rule. [EPA-HQ-OAR-2009-0491-2820.1, pp.8-9]
Response:
EPA finalizing an approach for determining state budgets that is consistent with what it proposed in regards to defining state emission budgets that reflect emissions subsequent to the elimination of significant contribution.
Organization: South Carolina Department of Health and Environmental Control
Comment:
South Carolina Department of Health and Environmental Control
[These comments were submitted as testimony at the Atlanta, Georgia public hearing on September 1, 2010.  See Docket Number EPA-HQ-OAR-0491-1939, pp.85-86.]
Our second comment centers on the increases in allowable sulfer dioxide and oxides of nitrogen, or SO2 and NOx respectively, budgets that some states are to receive under the proposed Transport Rule.
These possible increases in NOx and SO2 emissions are troubling given the recent lowering of the NOx and SO2 primary NAAQS, the current reconsideration of the 2000 ozone standard, and the end review of the fine particulate matter or PM 2.5 NAAQS. While we understand the technical reason for why this happened, it is hard to contemplate why the EPA is not taking this opportunity to address a more stringent NAAQS and bring about the public health and environmental benefits that the NAAQS are intended to address.
The budgeting process of the Transport Rule considered downwind non-attainment and interference with maintenance and the proposed budgets are the modeled amounts of NOx and SO2 that sources can emit without further contributing to non-attainment while interfering with maintenance downwind. However, the EPA did not account for the way a larger budget could potentially impact local air quality.
Response:
See section VI.D of the preamble for a discussion on why EPA did not use CAIR state budget levels in its determination of Transport Rule State budget levels.  Furthermore, EPA notes that it did assess how projected emission patterns under the final Transport Rule budgets would impact air quality in each State (including South Carolina)
Organization: Southern Company
Comment:
Southern Company
The graph below [See EPA-HQ-OAR-2009-0491-2864.1, p. 41 for the Figure] also shows that even if local controls are not considered, Georgia resolves all of its linkages at $300 - $400 per ton in 2014. This result should have left Georgia with a projected 2014 S02 budget of 133,563 tons per year. Furthermore, if local emission controls are appropriately considered early in the methodology, Georgia would have a projected budget in 2014 of no less than 173,257 tons per year. However, Georgia's budget in the proposed Transport Rule is 85,717 tons per year - less than half of what is necessary to resolve all of Georgia's downwind linkages to nonattainment and maintenance issues. [EPA-HQ-OAR-2009-0491-2864.1, p. 40]
XIII. EPA's State Budget and Unit Allocation Methodologies Are Fundamentally Flawed
To establish state budgets and unit allocations, EPA used a combination of reported data and projected data, both adjusted for controls. As mentioned earlier, EPA's methodology was not clearly defined and Southern Company spent  countless hours replicating EPA's approach. However, Southern Company has identified a number of fundamental flaws in EPA's methodologies for developing and adjusting this data for purposes of setting the state budgets and unit allocations. These flaws are described below. [EPA-HQ-OAR-2009-0491-2864.1, p. 48]
A. 2009 Was Not an 'Average Year'
To develop the reported emissions data for purposes of setting state budgets and unit allocations EPA took the most recent 'non-null' quarterly data (through the third quarter of 2009) for each quarter (quarter one through four). In most cases, this meant using data from the fourth quarter of 2008 through the third quarter of 2009 as a representative year (or 2009 ozone season data as a representative ozone season). This process is significantly flawed. EPA repeatedly claims that state budgets are based on emissions from an 'average year.' Yet its methods accomplish nothing of the sort. Put simply, EPA's selected representative year is anything but average. [EPA-HQ-OAR-2009-0491-2864.1, p. 48]
From 2008 through 2009, the nation was in the middle of the most significant economic downturn since the great depression. Electricity demand and heat input were unusually low. EPA appears to recognize this anomaly by adjusting reported NOx data based on 2008 heat input.4 But even that adjustment does not fully account for the unusually low demand for electricity beginning in the second half of 2008. In addition, in 2009 natural gas prices were at extraordinarily low resulting in highly unusual dispatch of the fossil fuel fired electric generating fleet. In some cases, large coal-fired units were idled while natural gas fired units - normally reserved for peaking power - ran at much higher capacity factors. Due to the combined forces of (i) decreased demand and (ii) low natural gas prices, 2009 is perhaps the least representative year in decades for determining average annual emissions. EPA should fully account for the economic downturn by selecting reporting years that were not impacted by the economic downturn. [EPA-HQ-OAR-2009-0491-2864.1, pp. 48-49]
Instead of attempting to select a single representative year, consistent with past practice, EPA should use a longer average period of time to develop reported emissions data. By selecting a longer period of time (e.g., three years as used in the Acid Rain Program, the NOx SIP Call and CAIR), EPA would capture data that is more representative. Selecting the three year period from 2005 to 2007 would fully account for the economic downturn, capture two full operational cycles for a typical unit, and would provide much more reliable data. [EPA-HQ-OAR-2009-0491-2864.1, p. 49]
[The above comments can also be found at section V.D.2.b.ii. of the comment summary.]
Response:
In the final Transport Rule, EPA does not use historic emissions data to set the Transport Rule state budgets, but instead relies on projected emissions data under the marginal cost thresholds selected to define significant contribution and interference with maintenance.  EPA uses the same budget-setting methodology in the final rule on all pollutants analyzed (including ozone-season NOx, annual NOx, and SO2).  EPA believes this budget-setting methodology is more clear and easier to understand in connection with the Agency's modeling projections.  EPA believes the state budgets set under the final Transport Rule are an accurate reflection of its modeling of the removal of emissions identified as significant contribution and interference with maintenance from the states controlled.  For a discussion of this method and its results, please refer to section VI of the preamble for the final Transport Rule as well as the Significant Contribution and State Emissions Budgets Final Rule Technical Support Document.
Organization: State of Delaware Department of Natural Resources & Environmental Control
Comment:
State of Delaware Department of Natural Resources & Environmental Control
Despite that EPA inventories for DE are inflated (see above and Attachment 1 [See comment EPA-HQ-OAR-2009-0491-2980.2, for Attachment 1] to this letter), EPA's inventories themselves indicate that it is not necessary to include Delaware in the transport rule, i.e.: [EPA-HQ-OAR-2009-0491-2980.1, p. 3]
Without variability limits, EPA proposes at 40 CFR 97.410 a 2012 Delaware NOx budget of 6,206 TPY, and at 40 CFR 97.710 a 2012 Delaware 802 budget of 7,784 TPY. EPA has indicted that a state's emissions budget ' ... is the quantity ofword~, it provides a quantity of emissions that would remain in that state from covered sources after elimination of that portion of each state's significant contribution and interference with maintenance that EPA has identified in today's proposal, before accounting for the inherent variability in power system operations ... The state emissions budget is a mechanism for converting the quantity of emissions that a state must reduce (i.e., the state's significant contribution and interference with maintenance) into enforceable control requirements. In other emissions to use in developing a remedy ... ' [EPA-HQ-OAR-2009-0491-2980.1, p. 3]
However, EPA's 2012 base case emissions for Delaware EGU's are 4,639 TPY for NOx and 7,841 TPY for S02, Since the EPA is establishing Delaware's EGU budgets at a level that is not less than its 2012 base case emissions 3, Delaware has already met its obligation to remedy downwind contributions for NOx and S02. [EPA-HQ-OAR-2009-0491-2980.1, p. 3]
 Given the above, Delaware should not be included in the final Transport Rule, since our current control strategies have already mitigated our significant contributions to downwind areas. [EPA-HQ-OAR-2009-0491-2980.1, p. 3]

Footnote:
3 The difference between the EPA 2012 base case S02 inventory and the proposed budget for Delaware is 57 TPY. Once the EPA corrects the problems with the inventory 1) overall modeled contributions will be much less given that EPA's 2012 S02 projections are inflated on the order of 57%, and 2) Delaware's 2012 EGU projection will be less than the proposed budget. [EPA-HQ-OAR-2009-0491-2980.1, p. 3]

Response:
Under the final Transport Rule air quality modeling, Delaware was not identified as a contributing upwind state and therefore not subject to the final Transport Rule.  However, EPA notes that under its revised budget determination methodology described in section VI of the preamble, states have budgets that are less than or equal to their base case emissions in 2012 for ozone season NOx to help meet with the June 2013 maximum attainment deadline.  For annual NOx and SO2, state have 2014 budgets that are less than their base case emissions to help meet the April 2015 deadline for the 1997 PM2.5 NAAQS.  The alignment with compliance deadlines is discussed in section VII.C, and section VI.D of the preamble discusses why some ozone states have budgets equal to, instead of less than, their state budgets
Organization: State of Wisconsin, Department of Natural Resources
Comment:
State of Wisconsin, Department of Natural Resources
Wisconsin supports EPA's premise that 2012 emission budgets should reflect all existing and planned controls implemented by utilities in meeting initial 2010-2012 CAIR requirements. [EPA-HQ-OAR-2009-0491-2829.2, p.1]
Setting EGU emission budgets for allocations in multiple phases: 2012, 2014, 2016 - Given that the current proposal addressing an EGU emission control program is a partial, not full, remedy to current significant contribution reduction obligations, these EGU budgets (and reduction target levels) need to address, in order of importance - [EPA-HQ-OAR-2009-0491-2829.2, p.10]
existing installed controls
CAIR Budgets in 2010 and 2015 that have focused EGU controls planning and installation schedules to date
residual air quality improvement needs associated with significant contribution
standing SIP attainment deadlines
some metric of relative level of state average emission rates per unit power produced from fossil fuels
some metric for relative cost of incremental controls installation. [EPA-HQ-OAR-2009-0491-2829.2, p.10]
Following these criteria, budgets should be set for:
2012 - accurately reflect existing and committed (under construction) controls combined with normal operation levels. Since EPA's intent is to not backslide they should use CAIR 2010 NOx budgets for states where it is lower than the predicted IPM emission budget. The current aggregate state-level heat inputs projected in support of the 2012 budgets may need to be adjusted slightly upward to reflect an equivalency with the highest inputs by state during the period 2005-2009 in order to continue to account for variability. Appendix B [See EPA-HQ-OAR-2009-0491-2829.3, p.6 for comments pertaining to Appendix B] identifies critical issues and necessary unit fixes for input to the final lPM configuration being used in support of this rule. Noted base operating levels need to account for operational flexibility if being used to set budgets from a bottom-up approach. (A response by October 15 to the September 1, 2010 NODA will identify critical fixes to the Wisconsin facility IPM inputs along with necessary unit-specific corrections). [EPA-HQ-OAR-2009-0491-2829.2, p.10]
2014 - account for some continued variability within the system and target feasible control optimization and all new installations that can occur through typical installation timing. All reasonable control should be set within this budget to assure meeting of significant contribution obligation. The IPM model should be used in this case to determine time frames necessary for installing equipment while accounting for variability. The IPM assumptions for construction schedules should also consider regulatory approvals for equipment by state agencies such as Wisconsin's Public Service Commission. The current aggregate state-level heat inputs projected in support of the 2014 budgets may need to be adjusted slightly upward to reflect an equivalency with the highest inputs during the period 2005-2009 (on the order of 5% on average but different state-to-state) in order to continue to account for variability. [EPA-HQ-OAR-2009-0491-2829.2, p.10]
2016 - An SNPR needs to be proposed to address the new 2010 ozone standard. Once promulgated new proposed 2016 budgets should reflect the increased contribution reduction need associated with that new standard. A placeholder in the regulatory structure should also exist to address additional reduction targets associated with any PM2.5 standard revision. These budget levels could be established now as control program goals by state much as is the case with Regional Visibility program targets. While use of the IPM model for determining achievable state level emission budgets and average cost is acceptable to address one set of criterion, it is not appropriate for determining allocations (see comments below in the allocation discussion [See EPA-HQ-OAR-2009-0491-2829.2, p.11 for comments pertaining to allocation discussion; EPA-HQ-OAR-2009-0491-2829.2, p.11] ).
Response:
In the final Transport Rule, EPA does not use historic emissions data to set the Transport Rule state budgets, but instead relies on projected emissions data under the marginal cost thresholds selected to define significant contribution and interference with maintenance.  EPA uses the same budget-setting methodology in the final rule on all pollutants analyzed (including ozone-season NOx, annual NOx, and SO2).  EPA believes this budget-setting methodology is more clear and easier to understand in connection with the Agency's modeling projections.  EPA believes the state budgets set under the final Transport Rule are an accurate reflection of its modeling of the removal of emissions identified as significant contribution and interference with maintenance from the states controlled.  For a discussion of this method and its results, please refer to section VI of the preamble for the final Transport Rule as well as the Significant Contribution and State Emissions Budgets Final Rule Technical Support Document.
Organization: Sunbury Generation LP
Comment:
Sunbury Generation LP
Consequently, the states' emissions budgets are highly conservative and provide an ample safety net for eliminating significant contribution. [EPA-HQ-OAR-2009-0491-3615,p.7]
Response:
In the final Transport Rule, EPA does not use historic emissions data to set the Transport Rule state budgets, but instead relies on projected emissions data under the marginal cost thresholds selected to define significant contribution and interference with maintenance.  EPA uses the same budget-setting methodology in the final rule on all pollutants analyzed (including ozone-season NOx, annual NOx, and SO2).  EPA believes this budget-setting methodology is more clear and easier to understand in connection with the Agency's modeling projections.  EPA believes the state budgets set under the final Transport Rule are an accurate reflection of its modeling of the removal of emissions identified as significant contribution and interference with maintenance from the states controlled.  For a discussion of this method and its results, please refer to section VI of the preamble for the final Transport Rule as well as the Significant Contribution and State Emissions Budgets Final Rule Technical Support Document.
Organization: TransCanada
Comment:
TransCanada
Comment 1: EPA's Calculation of New York State's Emission Budget Fails to Provide Credit for Prior Emission Reductions Achieved
Unlike previous EPA rulemakings, the Transport Rule does not give full credit to New York State for the NOx and SO2 emission reductions that have already occurred through reductions from the Electric Generating Units in the state. TransCanada urges the Agency to continue its practice of giving credit to a state like New York that implemented its own program to reduce emissions of NOx and SO2 and to use this as a factor in the allowance allocation process. [EPA-HQ-OAR-2009-0491-2827.1, p.1]
As a result of the New York State Acid Reduction Program ("ADRP") and the Clean Air Interstate Rule ("CAIR"), New York State electric generating units ("EGU") reduction of NOx and SO2 emissions have be significant. New York State implemented 6 NYCRR Part 237 and Part 238, to reduce acid deposition in New York State by limiting emissions of NOx and SO2 starting on October 1, 2004 for NOx and January 1, 2005 for SO2. Three years before ADRP and CAIR were implemented, the average annual NOx emissions in New York State were 85,895 tons and the NOx emission rate was .207 pounds per million British thermal units ("mmbtu"). The average SO2 annual emissions during this period was 231,984 tons and the SO2 emission rate was .560 pounds/mmbtu. [EPA-HQ-OAR-2009-0491-2827.1, pp.1-2]
During the three years after implementation of ADRP, the average annual NOx emissions in New York State were reduced to 51,641 tons, and the NOx emission rate was reduced to .143 pounds/mmbtu. During the same period, the average annual SO2 emissions were reduced to 108,686 tons and the SO2 emission rate to .299 pounds/mmbtu. After the implementation of CAIR in 2009, the average NOx emissions in New York State were reduced to 39,239 tons and the NOx emission rate to .132 pounds/mmbtu. The average annual SO2 emissions in New York State were reduced to 53,110 tons and the SO2 emission rate was reduced to .178 pounds/mmbtu. [EPA-HQ-OAR-2009-0491-2827.1, p.2]
As can be seen from the amount of NOx and SO2 emissions that have been reduced, New York State's reductions in NOx and SO2 emissions from EGUs are momentous and should be considered by the Agency when calculating the NOx and SO2 emission budgets for New York State under the proposed Transport Rule. [EPA-HQ-OAR-2009-0491-2827.1, p.2]
Response:
In the final Transport Rule, EPA uses an allowance allocation methodology that recognizes the early reductions made by units.  That is, if there are two identical units in the state, but one had installed advanced pollution control in recent years, and the other had not, they would still receive the same amount of allocations.  This allocation approach was made in response to commenters expressing concerns about the proposed allocation methodology penalizing early actors.
EPA notes that the recognition for previous emission reductions is reflected in the allocation methodology.  However, the commenter seems to suggest that similar recognition be made for state budgets.  While the commenter's intended mechanism for achieving this is unclear, EPA notes the important distinction between state budgets and allocations.  State budgets reflect the elimination of significant contribution, embody the environmental integrity of the program, and its responsiveness to CAA section 110(a)(2)(D)(i)(I).  The determination is described in section VI of the Transport Rule preamble.  Budgets are based on the amount of additional emission reductions that are necessary for the elimination of significant contribution and interference with maintenance.  Their determination is made independent of past reductions.  However, the burden imposed by a budget inherently reflects past reductions.  For example, if the state has already made significant reductions, then it will be starting from a lower base level of emissions and it will likely find it easier to meet its Transport Rule budget.  If the same state had not made the same previous reductions, than it would likely have more reductions to make in order to reach the point where its significant contribution had been eliminated.
To somehow index budgets to historic higher emission levels instead of the levels needed to achieve the elimination of significant contribution would fail to fulfill the mandate of CAA section 110(a)(2)(D)(i)(I), and potentially run counter to its goals by allowing for emission increases, rather than requiring reductions, within a state.
Organization: West Virginia Department of Environmental Protection
Comment:
West Virginia Department of Environmental Protection
State Implementation Plans - WVDAQ is concerned that significant increases in some state budgets over CAIR may adversely affect the integrity of many attainment and Regional Haze SIPs. West Virginia relied on CAIR reductions for the Regional Haze SIP, as well as the 1997 PM25 SIPs, and the 8-hr Ozone Maintenance Plans. Therefore, the Transport Rule NOx budgets need to be at least as stringent as the SIP-approved CAIR NOx budgets. As previously noted, future emissions from ICI boilers have been accounted for in West Virginia's submitted attainment demonstrations. WVDAQ believes it is important that the final rule not contravene the anti-backsliding provisions of the Clean Air Act. [EPA-HQ-OAR-2009-0491-2790.1, p. 2-3]
In the final Transport Rule, WVDAQ requests a tabular summary by state and pollutant that demonstrates the reductions necessary for each state to eliminate significant contribution and interference with maintenance (without considering costs). [EPA-HQ-OAR-2009-0491-2790.1, p. 3]
Response:
See Section VI.D of the Preamble for response to comments regarding backsliding concerns.
Organization: Wolverine Power Supply Cooperative
Comment:
Wolverine Power Supply Cooperative
Although we do not take exception to EPA determining statewide reduction budgets, we understand from our agency and industry groups that EPA's methodology and allocations supporting the state budgets in this rulemaking are severely flawed, and in some cases inadequate information is available to evaluate the allocations. Michigan's state agency believes that the impacts attributable to Michigan are over-stated because emissions control assumptions are flawed, and thus the reduction requirements are excessive. We understand that additional modeling with more up-to-date data is being performed by both EPA and industry groups, and these results should be the basis of final budgets. It is particularly important that 2008 or later committed controls, rather than 2005 as EPA has used, be the basis of emission inventory assumptions. We understand that recent modeling has shown a future of attainment for both standards using current and committed EGU emission controls which are being installed under the CAIR that is still in effect. To state it differently, this proposed rule is not even necessary as the problem it purports to remedy has already been resolved. As the CAIR is still in place and driving reductions that lead to attainment, there is no reason why EPA cannot take the additional time necessary to develop a robust and current evaluation of states' contributions and necessary reduction targets.  [EPA-HQ-OAR-2009-0491-2825.1 p.3]
Response:
EPA chose these dates to coordinate with the NAAQS attainment deadlines and to assure that reductions are made as expeditiously as practicable.  The Preamble discusses how the compliance deadlines address the Court's concern about timing.  See more in Section VII.C for more discussion on compliance deadline, and Section V.A and V.B for a description of the "no-CAIR" baseline that EPA used, and which further indicates that the Transport Rule is "necessary".

IV.E.1. SO2 and Annual NOx State Emissions Budgets for EGUs - Data and Methodology

Organization: Alcoa Power Generating Inc. - Warrick Power Plant
Comment:
Alcoa Power Generating Inc. - Warrick Power Plant
Tables IV.E-1 and IV.E-2 (75FR45239) do not agree with tile total state budget allocations, as described in the Technical Support Document CTSD) Allocation Table. For Indiana, the allocation table indicates the following:
SO2 emissions for 2012: 388.361 tons/yr.
SO2 emissions for 2014; 195,367 tons/yr.
NOx emissions starting in 2012: 112,223 tons/yr.
Ozone Season NOx: 48,493 tons/yr. [EPA-HQ-OAR-2009-0491-3648, p.2]
Table IV.E-l indicates the following:
SO2 emissions for 2012: 400,378·tons/yr.
SO2 emissions for 2014: 201,412 tons/yr.
NOx emissions starting in 2012: 115,687 tons/yr.
Ozone Season NOx: 49,987 tons/yr. [EPA-HQ-OAR-2009-0491-3648, p.2]
It appears that the allocation table in the TSD reflects removal of 3% for the new unit setasides. To minimize confusion, APGI suggests that Tables IV.E-1 and IV.E-2 reflect the correction for 3% for the new unit set-asides. [EPA-HQ-OAR-2009-0491-3648, p.2]
Based on a comparison of Table IV.C-l for EGU's, which represent 2005 emissions, (75FR45239) and Table IV.E-1 (75 FR45239), EPA envisions a 61.8% reduction in SO2 emissions by 2012, and a 70.8% reduction by 2014 for Indiana to meet the proposed transport rule. For Warrick 4, the TSD allocation table indicates that allowances for SO2 will be allocated at 1,308 tons/yr. in 2012 and 2013, and 1,231 tons/yr. in 2012. Warrick 4 SO2 emissions in 2005 were 32,790 tons. This represents required 802 reduction efficiencies. of 96.01 % and 96.24%, respectively. Both efficiencies far exceed the reductions in the 2005 baseline envisioned by EPA to meet the Indiana reduction requirements for S02. i.e. 61.8% and 70.8% respectively. [EPA-HQ-OAR-2009-0491-3648, p.2]
Based on a comparison of Table IV.C-2 for EGU's, which represent 2005 emissions, (FR45239) and Table IV .E-1 (FR45239), EPA envisions a 51.9% reduction in NOx emissions by 2012 for Indiana to meet the proposed transport rule. For Warrick 4, the. TSD allocation table indicates that allowances for NOx will be allocated at 676 tons/yr. in 2012 and later years. Warrick 4 NOx emissions in 2005 were 4,093 tons. This represents a required NOx reduction efficiency of 83.48%. This efficiency requirement· far exceeds the reduction in the 2005 baseline envisioned to meet the Indiana reduction requirements for NOx, i.e. 51.9%. [EPA-HQ-OAR-2009-0491-3648,pp.2-3]
Response:
See section VI.D for discussion on EPA final budget methodology and section VII.D for discussion on the allocation methodology used in the final Transport Rule.  The final allocation tables reflect unit-level allocations to existing units under the FIP methodology while reserving the allowances held in the new unit set-asides.  However, in the event that new unit set-aside allowances remain unallocated, then they will be allocated out to existing sources under the same existing unit allocation methodology as represented in the existing unit allocation tables.
The commenter mistakenly represents unit-level allowance allocations as conveying "reduction requirements" under the Transport Rule programs.  EPA also notes that there are no unit specific reduction requirements for the Transport Rule.  Reduction requirements are imposed at the state level.  Individual unit owners and operators may choose to obtain as many allowances as needed to cover their emissions under the Transport Rule programs, in line with whatever emission reduction strategy that the unit owner or operator deems to be most cost-effective for that given unit.
Organization: Algonquin Power Windsor Locks, LLC
Comment:
Algonquin Power Windsor Locks, LLC
Connecticut is a small state with NOx emissions significantly lower than other states affected by the regulations. Over the years Connecticut has been pro-active in reducing the NOx emissions from Connecticut facilities by implementing some of the strictest emission limits in the country. It is well documented that the ambient NOx levels in Connecticut are significantely impacted by the NOx emissions from upwind states, many of which have less restrictive NOx emission limits. As a whole, the NOx emissions from Connecticut electric generating units are significantly lower than the NOx emissions from comparable units in other states. To achieve this, the Connecticut units have undertaken significant capital and operational expenditures and operate at the lowest emission levels that the current technologies of the units allow. Unfortunately, in the current open power market, the Connecticut units must compete with units with higher emissions rates in other states, which also adversely affect Connecticut air quality. Because of this, I fail to see the justification of requiring Connecticut generators to further reduce NOx emissions when significantly higher overall reduction at lower cost can be achieved by requiring the upwind states to meet the Connecticut emission limits. The Connecticut NOx budget should not be lowered from the Clean Air Interstate Rule levels. [EPA-HQ-OAR-2009-0491-2779.1, p.1]
Response:
Connecticut is not subject to the final Transport Rule in light of EPA's final air quality modeling to identify contributing upwind states.
Organization: Clean Air Council
Comment:
Clean Air Council
There is a local aspect to the inadequacy of the NOx reduction which is of particular concern. Upon examination of the state NOx emissions budget under the Transport Rule (Table IV.E.1), it appears that Pennsylvania has been allocated 113,903 tons of NOx on an annual basis. This number reflects a considerable increase from the Pennsylvania budget under CAIR, which allocated roughly 99,000 tons. NOx is a pre-cursor to PM2.5, and Pennsylvania faces serious challenges to attaining the NAAQS, especially in Lancaster and Allegheny County. Presenting Pennsylvania power plants with a bonus of nearly 14,000 tons of NOx will be detrimental to public health, contrary to public policy, and present an unjustified obstacle to attainment in portions of the Commonwealth struggling to meet air quality standards. As Phase I of CAIR remains effective upon power plants in Pennsylvania until the Transport Rule supercedes it, the specter of backsliding on air quality is very real. The Council does not believe that such a result would be consistent with the Clean Air Act. Therefore, we urge EPA to reassess the Pennsylvania budget to preclude this harmful anomaly before finalizing the Transport Rule. [EPA-HQ-OAR-2009-0491-2804.1, p.2]
Response:
See Section VI.D of the Preamble for additional discussion on concerns over backsliding.
Some commenters expressed concern that, under the proposed Transport Rule, states had some state budgets that were higher than those under CAIR.  Commenters suggested that this would be inconsistent with requirements or spirit of certain CAA provisions aimed at preventing backsliding, i.e., sections 110(l), 172(e), and 193.   However, the D.C. Court of Appeals rejected the state budgets in CAIR as arbitrary and capricious and not consistent with CAA section 110(a)(2)D)(i)(I)  ( North Carolina, (531 F.3d  918 and 921) and remanded CAIR to EPA to promulgate a new rule replacing CAIR and consistent with the Court's decision ( North Carolina, 550 F.3d 1178 ).  As discussed elsewhere in this section, on remand EPA developed new, final state budgets that address the Court's concerns and meet section 110(a)(2)(D)(i)(I) requirements.   Although, for some states, some state budgets under the final rule are higher than those under CAIR, this does not violate either the letter nor the spirit of CAA provisions aimed at backsliding.   In particular, CAA section 110(l) provides that the Administrator may not approve  a plan revision  that would "interfere with any...applicable requirement" of the CAA.  42 U.S.C. 7410(l).   Because the Court reversed and remanded CAIR with instructions to "remedy" the rule's  "fundamental flaws"  (including specifically the state budgets found to be unlawful (North Carolina, (550 F.3d 1178 )), it is difficult to see how new state budgets replacing unlawful budgets and meeting section 110(a)(2)(D)(i)(I) requirements could be viewed as interfering with requirements of the CAA.   Indeed, the commenters' approach would severely limit  EPA's ability to meet the Court's mandate to develop a new rule consistent with section 110(a)(2)(D)(i)(I).  See North Carolina, 531 F.3d 921 (explaining that EPA may not require  "some states to exceed the mark" of eliminating their significant contribution).  Further, the other CAA sections cited by the commenters (section 172(e), addressing circumstances where the Administrator relaxes a NAAQS,  and section 193, addressing the treatment of requirements promulgated before the November 15, 1990, enactment date for the 1990 Amendments to the Clean Air Act) are not applicable here.
Organization: Clean Air Task Force
Comment:
Clean Air Task Force
We therefore urge EPA to reduce the 2014 aggregate state budgets in the annual control region (including Texas) for SO2 to 1.75 million tons (approximately equivalent to a 2 million ton nationwide cap); reduce the 2014 aggregate state budgets in the annual control region (including Texas) for NOx to 900,000 tons (approximately equivalent to a 1.25 million ton nationwide cap); and include Texas, Arkansas, New Hampshire, North Dakota and Oklahoma in the control region for SO2 and annual NOx purposes, and include Massachusetts and Missouri in the control region for ozone season NOx purposes. [EPA-HQ-OAR-2009-0491-2738.1, p.4; this comment can also be found at section IV.D. of this comment summary.]
EPA's Proposed Power Plant SO2 and NOx Emissions Budgets are Inadequate to Protect Public Health and Allow NAAQS Attainment and Must be Strengthened.
The severe harm to human health and the environment described above [See EPA-HQ-OAR-2009-0491-2738.1, p.8-12 for description of severe harm to health and the environment] demand the most substantial reductions in regional power plant emissions of SO2 and NOx that are feasible and cost-effective. EPA's proposal does not fully accomplish this -- tighter budgets for both pollutants are quite feasible and cost-effective, and EPA should require them. Specifically, as previously indicated, we urge EPA to limit regional (including Texas) SO2 emissions to 1.75 million tons annually and regional NOx emissions to 900,000 tons annually. 73 [EPA-HQ-OAR-2009-0491-2738.1, p.13]
We urge the Agency to issue a rule that includes that following adjustments to its August 2 proposal: reduces the 2014 annual control region SO2 cap to about 1.75 million tons (including Texas) [EPA-HQ-OAR-2009-0491-2738.1, p.30]
CATF Analysis of Alternate Control Scenario
In order to demonstrate that deeper reductions of NOx and SO2 emissions are feasible, cost-effective, and will provide substantial additional human health benefits, CATF, with the assistance of ICF Consulting and MSB Energy Associates, has evaluated the benefits and costs of tighter emission caps and schedules than proposed by EPA in the TR. This alternate scenario is a regional (EPA's proposed PM transport region plus Texas) annual EGU SO2 cap of 1.75 million tons, with a regional annual EGU NOx cap of 900,000 tons, each effective in 2014 ("Alternate Control Scenario"). [EPA-HQ-OAR-2009-0491-2738.1, p.26; For additional comments pertaining to CATF Analysis of Alternate Control Scenario, including: Alternate Control Scenario Analysis Methodology,Alternate Control Scenario Analysis Results, and tables V.1- V.7, see pages 26-28 & 32-33 of this comment]

73 As previously stated: supra at note 16, our recommended regional emission caps are the rough equivalent of national caps of 2 MT for SO2 and 1.25 MT for NOx, assuming equivalent out of region emission reductions; and supra at note 36, although we believe that our recommended lower threshold for determining significant contribution will require additional states to be included in the TR control regions, we have included only Texas emissions in our recommended emissions caps and the Alternate Control Scenario described in Section V infra.
Response:
The sum of final Transport Rule state budgets is tighter for both SO2 and NOx than those specified at proposal (for states covered in both proposal and final rule).  See section VI.D for description of the multi-factor analysis EPA used to determine appropriate stopping points for SO2 and NOx budgets.
Organization: Dayton Power and Light Company (DP&L)
Comment:
Dayton Power and Light Company (DP&L)
The MOG modeling demonstrates that Ohio NOx and S02 caps similar to those developed for the CAIR rule are adequate to eliminate inappropriate transport from electric generating units ('EGUs') in Ohio. MOG modeling projections show that attainment for all existing standards can be achieved by 2018 without additional controls, with Ohio emissions estimated at 274,000 tons of SO2. This is significantly higher than the proposed CATR S02 emissions cap for Ohio of 178,307 in 2014. [EPA-HQ-OAR-2009-0491-2637.1, p. 3]
DP&L believes that lower CATR caps for Ohio are unnecessary to achieve overall attainment across the CAIR states. There may remain one or two monitoring sites facing nonattainment; however, these can be addressed though state SIPs and it is inappropriate to establish lower state caps through CATR to address these localized air quality problems. [EPA-HQ-OAR-2009-0491-2637.1, p. 3]
Response:
See Section IV of the preamble for a discussion of the legal authority of the final Transport Rule, and Section VII.C for a discussion of the compliance deadlines.
Organization: Duke Energy
Comment:
Duke Energy
EPA Should Modify Its Method of Adjusting a Unit's Reported NOx Annual Emission Rates to its Ozone Season Emission Rate.
Table 1 of the PTR State Budgets TSD indicates that for units with a pre-2009 SCR or SNCR, EPA is adjusting the reported annual NOx emissions rate to the unit's reported ozone-season emission rate. EPA has not explained why it believes it necessary to adjust the reported non-ozone season data in cases when a unit's reported data clearly reflects operation of the control. Such an adjustment might be appropriate if a unit's most recent non-null quarter 1; quarter 2, quarter 3, and quarter 4 of reported NOx emissions data with a pre-2009 SCR or SNCR only reflected operation of the control during the ozone season. When, however, a unit with a pre-2009 SCR or SNCR has the most recent non-null quarter 1, quarter 2, quarter 3, and quarter 4 of reported NOx emissions data that reflects the operation of the SCR or SNCR throughout the period, EPA should use the data as reported in determining a unit's NOx emission rates. For such a case, EPA should use two separate emission rates, an ozone season rate and a non-ozone season rate to calculate a unit's reported emissions. In other words, EPA should consider all reported data with a control in operation to be representative of the operation of the control during that period, and EPA should not adjust a unit's reported non-ozone season NOx rate to its reported ozone season NOx rate. Similarly, if a unit does not have the most recent non-null quarter 1, quarter 2, quarter 3, and quarter 4 of reported data that reflects the operation of the SCR or SNCR, EPA should adjust only the reported data for the period that does not reflect operation of the controls. For example, if a unit has reported NOx emissions data for the non-ozone season months of January through April of 2009 that reflect operation of controls and only the 4th quarter 2008 reported NOx emissions data does not reflect operation of controls, EPA should adjust only the 4th quarter 2008 data and not adjust the January through April data. In this case the reported 4th quarter data should be adjusted to the unit's January through April emissions rate, not its ozone season emission rate. [EPA-HQ-OAR-2009-0491-2689.1, pp.24-25]
By adjusting all reported NOx data to the ozone season emission rate, EPA is generally underestimating NOx emissions because ozone season NOx emission rates are typically lower than non-ozone season rates. This is due to many factors, including the following: 1) most units have the fewest number of outages during the ozone season which results in the most continuous period of SCR/SNCR operation, whereas outside of the ozone season, most units experience the bulk of planned and maintenance outage activity. This results in higher occurrences of unit start-up and shut-down when emission rates are higher than during continuous operation. 2) Lower ambient temperatures in the winter season generally result in a higher propensity for ammonium bisulfate formation in the air heaters and downstream ductwork on SCR/SNCR units, resulting in air heater and ductwork pluggage, and the need to reduce NOx removal to maintain unit output capacity. 3) Most units tend to have catalyst replacement outages in the spring outage season, resulting in peak SCR removal capability during the ozone season immediately following the outage. As the catalyst degrades, SCR removal capability decreases in the months following the ozone season. [EPA-HQ-OAR-2009-0491-2689.1, p.25]
If EPA does not modify its method by utilizing the average of 2006-2008 reported data, however, Duke Energy recommends that for SO2 EPA abandon its use of the most recent non-null quarter 1, quarter 2, quarter 3, and quarter 4 of reported emissions data and instead use reported 2008 emissions data as the basis for developing each state's adjusted reported SO2 emissions for 2012.  [EPA-HQ-OAR-2009-0491-2689.1, pp.28-29]
EPA Should Apply an Annual and Ozone Season Floor NOx Emission Rate of 0.060 lb/mmBtu to both New and Existing SCRs
EPA has made downward adjustments to reported NOx emission rates for units with an existing SCR that are unwarranted, unreasonable, and inaccurately described in the State Budgets TSD. The State Budgets TSD indicates that "NOx controls were assumed not to control beyond a floor of 0.060 lb/mmBtu." The way EPA has applied this rate to units with existing SCRs, however, the 0.060 lb/mmBtu rate would be more accurately described as a ceiling rather than a floor because of the downward adjustments EPA has made to NOx emission rates. If a unit had reported historical data that supported a NOx emission rate lower than 0.060 lb/mmBtu, EPA used that lower emission rate. Yet if a unit had reported historical data that demonstrated a NOx emission rate higher than 0.060 lb/mmBtu, EPA -- apparently arbitrarily -- made a downward adjustment of that rate to 0.060 lb/mmBtu. Such downward adjustments are unfair and unwarranted. Incentives exist in most cases to emit at the lowest reasonably achievable NOx emission rate whenever the SCR is in operation, and if a given unit reports NOx emissions at rates above 0.06 lbs/mmBtu, it is because that unit cannot physically and consistently operate at a lower rate. At a minimum, an across-the-board downward adjustment to 0.060 lb/mmBtu, without consideration of case-by-case factors, cannot be justified. Just because EPA thinks a unit should be able to emit at a 0.060 lb/mmBtu rate doesn't mean that it can actually achieve that rate. Under EPA's proposed approach, where an existing unit cannot in fact meet the 0.060 lb/mmBtu rate, that unit may well be forced to upgrade its pollution control device. Such an option was not anticipated in the PTR and the cost associated with such an option does not appear to have been accounted for in the PTR analysis. Certainly the $/ton removal cost for upgrades required to allow a unit to perform consistently at a 0.060 lb/mmBtu emission rate will exceed EPA's $500/ton cost breakpoint for NOx controls, and also could not be completed between the time EPA finalizes the PTR and January 1, 2012. EPA should therefore use the 0.060 lb/mmBtu rate as a floor rate for units with either a new or existing SCR. [EPA-HQ-OAR-2009-0491-2689.1,pp.42-43]
EPA's application of a 0.060 lb/mmBtu NOx emission rate without regard for the actual capability of existing SCRs to achieve that emissions rate resulted in EPA overestimating the amount of NOx emissions reduction available at $500/ton. The consequence is to make the annual and ozone season state budgets much more constraining that they should be based on actual SCR capabilities. Take for example a unit that is currently operating at an ozone season emission rate of 0.100 lb/mmBtu. When EPA models this unit's NOx emission rate at 0.060 or adjusts the unit's reported NOx emission rate to reflect a 0.060 lb/mmBtu emission rate for purposes of establishing a state's budget and allocating allowances, EPA has effectively reduced the emissions attributable to this unit by 40%. When this downward adjustment occurs at many units within a state and across the region, the result is a substantially reduced sector ozone season NOx cap beginning in 2012.  [EPA-HQ-OAR-2009-0491-2689.1,pp.43-44]
EPA has stated correctly that additional controls cannot be brought on line by 2012 unless they are already under construction. So if EPA finalizes the PTR with the unreasonable 2012 compliance timeframe that reflects a ceiling 0.060 lb/mmBtu NOx emission rate for all units, and in 2012 when units for which EPA adjusted their NOx emission rates down to 0.060 are still operating at their reported 2009 emission rate because that's what the SCRs are capable of achieving, the result will be an exceedingly tight cap. Add to this the fact that while EPA is proposing not to apply variability limits in 2012 and 2013 (a proposal which Duke Energy supports), the ability of the trading program under the transport rule to serve as a cost-effective and reliable compliance alternative is uncertain at best. What is certain is if state budgets are based on a ceiling NOx emission rate of 0.060 lb/mmBtu, allowance prices in 2012 will likely be very high, much higher than they would be if EPA applies the 0.060 lb/mmBtu emission rate as a floor instead of a ceiling and used a unit's actual reported emission rate when it is above 0.060 lb/mmBtu.  [EPA-HQ-OAR-2009-0491-2689.1, p.44]
The $500/ton cost breakpoint EPA is using for NOx emissions is intended to ensure that all existing NOx controls are operated in 2012. This should mean operate at their current capability, not at some artificial level that EPA selects and that requires controls to be upgraded. As stated previously and reiterated here, the budgets that result from EPA modeling existing SCRs with a ceiling emission rate of 0.060 lb/mmBtu will certainly require emission reductions that cost more than $500/ton to achieve, and for which there is not enough time between when EPA plans to finalize the PTR (mid-2011) and January 1, 2012 to implement. [EPA-HQ-OAR-2009-0491-2689.1,p.44]
For Units with an Existing SCR, EPA Should Update Reported Unit NOx Emission Rates to Reflect 2009 Data and Use Separate Ozone Season and Non-Ozone Season Emission Rates in the PTR Analysis to Represent a Unit's NOx Emissions Over the Course of a Year.
As a general statement, EPA's use of a 0.060 lb/mmBtu NOx emissions rates ceiling for SCR controlled units is inconsistent with how SCR controlled units actually work. The key element of SCR performance is the condition and amount of catalyst used. SCR reactors are fixed in size at their time of construction and nits do not have the capability to add additional catalyst layers beyond what was included in their original design. In addition while in operation, catalyst ages as it is poisoned by materials in the flue gas and steadily degrades in its performance. Once its performance reaches an unacceptable level, it must be replaced. Catalyst replacement is expensive and can only be performed during a unit shutdown of sufficient length. Because of these factors, units will have significant differences in the levels of NOx removal performance when catalyst is new, and then just before it is replaced. An uninformed response to the issue of catalyst degradation would be to call for more frequent catalyst replacement. Clearly this is not an option because it would require frequent unit shutdowns, and scrapping expensive catalyst prematurely which would also increase the amount of waste materials. The marginal costs for the incremental reductions that would result would wildly exceed the $500 per ton cost breakpoint.  [EPA-HQ-OAR-2009-0491-2689.1, p.45]
For units with an existing SCR where the SCR has operated all of 2009 to comply with CAIR, consent decrees, state requirements, etc., Duke Energy recommends that EPA use two separate NOx emission rates, the ozone season rate and the non-ozone season rate, to calculate the annual NOx emissions from these units. Each of these emission rates should be set at the greater of the 0.060 lb/mmBtu floor that Duke Energy recommends for units with an existing SCR, and a unit's actual 2009 ozone season and non-ozone season NOx emission rates. [EPA-HQ-OAR-2009-0491-2689.1, p.45]
Duke Energy recommends that EPA use separate ozone season and non-ozone season NOx emission rates for units with an existing SCR instead of using a unit's ozone season emission rate to represent its emissions over the entire year because a unit's ozone season NOx emission rate is typically not completely representative of its non-ozone season emission rate, and therefore is not representative of a unit's capability over an entire year (a review of 2009 ozone season and non-ozone season NOx emission rates for units with SCRs operating year around shows that the ozone season NOx emission rates are typically lower than the non-ozone season rates). Therefore, applying a unit's ozone season NOx emission rate to the non-ozone season under predicts a unit's annual NOx emissions, the state budgets, and the unit allowance allocations. The fact that the ozone season NOx emission rate is not representative of the non-ozone season emission rate is due to many factors, including the following: 1) most units have the fewest number of outages during the ozone season which results in the most continuous period of SCR operation, whereas outside of the ozone season, most units experience the bulk of planned and maintenance outage activity. This results in higher occurrences of unit start-up and shut-down when emission rates are higher than during continuous operation. 2) Lower ambient temperatures in the winter season generally result in a higher propensity for ammonium bisulfate formation in the air heaters and downstream ductwork on SCR units, resulting in air heater and ductwork pluggage, and the need to reduce NOx removal to maintain unit output capacity. Generating units do this by reducing the level of ammonia feed and/or regulating the temperature of the gas entering the SCR. 3) Many units tend to have catalyst replacement outages in the spring outage season, resulting in peak SCR removal capability during the ozone season immediately following the outage. This "brand new" catalyst will show the best overall performance for the next several months immediately following the outage, and thus lower average ozone season emissions may be influenced by SCR catalyst outage schedules. [EPA-HQ-OAR-2009-0491-2689.1,pp.46-47]
The following presents unit level ozone season and non-ozone season NOx emission rates that Duke Energy recommends EPA use for each of the listed Duke Energy units. [EPA-HQ-OAR-2009-0491-2689.1,p.47]
East Bend (ORISPL 6018) Unit 2.
This unit is being modeled at a 0.0520 lb/mmBtu annual and ozone season NOx emission rate. This unit cannot perform at or below a rate of 0.060 lb/mmBtu, as demonstrated by the actual 2009 performance which reflects year-round operation of the SCR for CAIR Annual and Ozone NOx compliance. The SCR was operated to the maximum extent possible, given the operating conditions of the unit. The 2009 ozone season and non-ozone season NOx emission rates for this unit were 0.0886 lb/mmBtu and 0.1249 lb/mmBtu respectively. These are the emission rates that Duke Energy recommends EPA use for this unit. It would require extensive upgrades to the SCR to get it to perform at or below 0.060 lb/mmBtu at a $/ton cost far in excess of $500/ton. In addition, it is not be possible to complete an upgrade by January 1, 2012. [EPA-HQ-OAR-2009-0491-2689.1, p.47]
Miami Fort (ORISPL 2832) Unit 7.
This unit is being modeled at a 0.0530 lb/mmBtu annual and ozone season NOx emission rate. This unit cannot perform at or below a rate of 0.060 lb/mmBtu, as demonstrated in the actual 2009 performance which reflects year-round operation of the SCR for CAIR Annual and Ozone NOx compliance. The SCR was operated to the maximum extent possible, given the operating conditions of the unit. The 2009 ozone season and non-ozone season NOx emission rates for this unit were 0.0650 lb/mmBtu and 0.0843 lb/mmBtu respectively. These are the emission rates that Duke Energy recommends EPA use for this unit. It would require extensive upgrades to the SCR to get it to perform at or below the floor level at a $/ton cost far in excess of $500/ton. In addition, it is not be possible to complete an upgrade by January 1, 2012. [EPA-HQ-OAR-2009-0491-2689.1,pp.47-48]
Miami Fort (ORISPL 2832) Unit 8.
This unit is being modeled at a 0.0560 lb/mmBtu annual and ozone season NOx emission rate). This unit cannot perform on an annual basis at the floor rate of 0.060 lb/mmBtu or lower, as demonstrated in the actual 2009 performance which reflects year-round operation of the SCR for CAIR Annual and Ozone NOx compliance. The SCR was operated to the maximum extent possible, given the operating conditions of the unit. The 2009 ozone season and non-ozone season NOx emission rates for this unit were 0.0556 lb/mmBtu and 0.0993 lb/mmBtu respectively. Duke Energy recommends using 0.060 lb/mmBtu (Duke Energy's recommended floor emission rate) for the ozone season and 0.0993 lb/mmBtu for the non-ozone season for this unit. It would require extensive upgrades to the SCR to get it to perform at or below the floor level at a $/ton cost far in excess of $500/ton on an annual basis. In addition, it is not be possible to complete an upgrade by January 1, 2012. [EPA-HQ-OAR-2009-0491-2689.1, p.48]
W H Zimmer (ORISPL 6019) Unit 1.
This unit is being modeled at a 0.0530 lb/mmBtu annual and ozone season NOx emission rate. This unit cannot perform at or below a rate of 0.060 lb/mmBtu, as demonstrated in the actual 2009 performance which reflects year-round operation of the SCR for CAIR Annual and Ozone NOx compliance. The SCR was operated to the maximum extent possible, given the operating conditions of the unit. The 2009 ozone season and non-ozone season NOx emission rates for this unit were 0.0852 lb/mmBtu and 0.1330 lb/mmBtu respectively. These are the emission rates that Duke Energy recommends EPA use for this unit. It would require extensive upgrades to the SCR to get it to perform at or below the floor level at a $/ton cost far in excess of $500/ton. In addition, it is not be possible to complete an upgrade by January 1, 2012. [EPA-HQ-OAR-2009-0491-2689.1, pp.49-50]
Gibson (ORISPL 6113) Unit 3.
This unit is being modeled at a 0.060 lb/mmBtu annual and ozone season NOx emission rate. This unit cannot perform at or below a rate of 0.060 lb/mmBtu, as demonstrated in the actual 2009 performance which reflects year-round operation of the SCR for CAIR Annual and Ozone NOx compliance. The SCR was operated to the maximum extent possible, given the operating conditions of the unit. The 2009 ozone season and non-ozone season NOx emission rates for this unit were 0.1182 lb/mmBtu and 0.1400 lb/mmBtu respectively. These are the emission rates that Duke Energy recommends EPA use for this unit. It would require extensive upgrades to the SCR to get it to perform at or below the floor level at a $/ton cost far in excess of $500/ton. In addition, it is not be possible to complete an upgrade by January 1, 2012.  [EPA-HQ-OAR-2009-0491-2689.1, p.50]
Gibson (ORISPL 6113) Unit 4.
This unit is being modeled at a 0.060 lb/mmBtu annual and ozone season NOx emission rate. This unit cannot perform at or below a rate of 0.060 lb/mmBtu, as demonstrated in the actual 2009 performance which reflects year-round operation of the SCR for CAIR Annual and Ozone NOx compliance. The SCR was operated to the maximum extent possible, given the operating conditions of the unit. The 2009 ozone season and non-ozone season NOx emission rates for this unit were 0.0803 lb/mmBtu and 0.0915 lb/mmBtu respectively. These are the emission rates that Duke Energy recommends EPA use for this unit. It would require extensive upgrades to the SCR to get it to perform at or below the floor level at a $/ton cost far in excess of $500/ton. In addition, it is not be possible to complete an upgrade by January 1, 2012. [EPA-HQ-OAR-2009-0491-2689.1, p.50]
Gibson (ORISPL 6113) Unit 5.
This unit is being modeled at a 0.060 lb/mmBtu annual and ozone season NOx emission rate. This unit cannot perform at or below a rate of 0.060 lb/mmBtu, as demonstrated in the actual 2009 performance which reflects year-round operation of the SCR for CAIR Annual and Ozone NOx compliance. The SCR was operated to the maximum extent possible, given the operating conditions of the unit. The 2009 ozone season and non-ozone season NOx emission rates for this unit were 0.1088 lb/mmBtu and 0.1105 lb/mmBtu respectively. These are the emission rates that Duke Energy recommends EPA use for this unit. It would require extensive upgrades to the SCR to get it to perform at or below the floor level at a $/ton cost far in excess of $500/ton. In addition, it would not be possible to complete an upgrade by January 1, 2012.  [EPA-HQ-OAR-2009-0491-2689.1, p.51]
Response:
In the final Transport Rule, EPA does not use historic emissions data to set the Transport Rule state budgets, but instead relies on projected emissions data under the marginal cost thresholds selected to define significant contribution and interference with maintenance.  EPA uses the same budget-setting methodology in the final rule on all pollutants analyzed (including ozone-season NOx, annual NOx, and SO2).  This change obviates many of the concerns above regarding the selection and use of historic data in budget determination.  Additionally, EPA's final Transport Rule uses NOx rates that were updated from the proposal to reflect 2009 data.  See EPA IPMv.4.10 documentation for a description of how unit level NOx rates are modeled.  Finally, EPA notes that there are not unit level control requirements under the final Transport Rule, and individual sources are not required to operate in the same manner as reflected in any EPA modeling.
Organization: Edison Electric Institute (EEI)
Comment:
Edison Electric Institute (EEI)
As for the particulate matter standard and the Proposed Rule's SO2 budgets, testifying on behalf of the National Association of Clean Air Agencies, Tad Aburn (Maryland Department of the Environment), at EPA's August 26 public hearing on the Proposed Rule in Philadelphia, stated that "Furthermore, at this time the proposed SO2 caps -- especially the tightened 2014 cap -- appears to be sufficiently stringent to meet most states' needs." [EPA-HQ-OAR-2009-0491-2697.1, p.13]
Response:
See Section VI.D of final Transport Rule Preamble for discussion on final state emissions budgets and resulting air quality impact.
Organization: GE Energy Financial Services (GE EFS)
Comment:
GE Energy Financial Services (GE EFS)
According to the preamble to the Proposed Transport Rule, 'instead of defining the budgets based on IPM projections of what will happen when [emissions controls] are turned on' (75 Fed. Reg. at 45291), EPA disregarded IPM's projections because 'EPA believes that the actual performance units achieved in 2009 is more representative of expected emissions than what EPA modeled using IPM. This is because real data takes into account actual unit by unit information that is represented at a more aggregate level in [PM.' 75 Fed. Reg. at 45290 (emphasis added). [EPA-HQ-OAR-2009-0491-2701.1, p.3]
Response:
See Section VI of Preamble for discussion on why EPA relied on projected emissions for state budget in the final Transport Rule
Organization: Illinois Environmental Protection Agency
Comment:
Illinois Environmental Protection Agency
Consistent with the recommendations ofthe state collaborative efforts, as contained in the September 2, 2009 letter to U.S. EPA Administrator Jackson mentioned above, Illinois EPA supports U.S. EPA's proposed approach for establishing initial budgets based on the optimization of existing controls. We believe that this approach provides the best means of providing timely emission reductions needed to address fast-approaching attaimnent deadlines for some nonattainment areas affected by interstate transport. It is important however that these initial budgets be replaced expeditiously with budgets based on a more equitable approach. Significantly, U.S. EPA's proposed NOx budgets for the second phase of emissions budgets continue to be based on optimization of existing controls which unfairly penalizes sources who have implemented controls prior to 2012. Illinois EPA recognizes and appreciates U.S. EPA's commitment to finalize a second Transport Rule quickly that may establish tighter NOx emission caps derived using a more equitable methodology. We believe that U.S. EPA should include revised Phase 2 NOx emission budgets in the present rulemaking to encourage further controls on high-emitting, under-controlled EGUs to level the playing field for EGUs that have already implemented controls.
Illinois EPA also believes that the initial 2012 budgets are based on unrealistic expectations for optimization of controls for some emission units. Review of the emissions data for Illinois sources shows that many of the units were assigned emissions allowances applying SCR emissions rates below 0.06 Ibs/mmBTU for NOx, and S02 removal rates greater than 95%. It may not be reasonably possible for some existing control systems to achieve these levels of emissions reductions. It is instructive to note that recent determinations of best achievable control technology (BACT) for new coal-fired utility boilers, as listed in the BACTILAER Clearinghouse, indicate that BACT for NOx controls using SCR varies from 0.07 to 0.1 Ibs/mmBTU. For S02 controls using FGD, BACT has been determined to be from 92 to 96% removal. Illinois EPA therefore recommends that U.S. EPA set a floor for the effectiveness of optimized controls at 0.07 Ibs/mmBTU for SCRs and 95% removal rate for FGD for NOx and S02 emissions, respectively.  [EPA-HQ-OAR-2009-0491-2781.1 p.2]
Response:
See section VI of the preamble for a description of the final Transport Rule state budget determination. Also, the "Documentation Supplement for EPA Base Case v.4.10_FTransport - Updated for Final Transport Rule" describes changes made to removal efficiency of FGD.  Notably, EPA has adjusted its removal rate assumptions for both existing and new FGD based on comments of this nature.  Furthermore, EPA's modeling of EGU NOx emissions at each unit reflects emission rates that were reported by that specific unit.  EPA does not assign NOx emission rates below 0.06 lbs/mmbtu to any unit unless that unit had reported such a rate previously.
Organization: Kentucky Division for Air Quality
Comment:
Proposed Transport Rule State SO2 Budgets for Kentucky
Pursuant to the proposed Transport rule Preamble Section IV.E., State Emissions Budgets (75 FR 45290-45292), the Division is concerned that the Transport Rule SO2 emission budgets being proposed by EPA for Kentucky, especially in 2014, represent a drastic SO2 emission reduction which may not be achievable by Kentucky sources. Based on the Division's review of 2009 actual SO2 emissions for Kentucky Electric Generating Units (EGUs) (an estimated 252,000 tpy per 2009 EPA CAMD data), the proposed Transport Rule SO2 budget in 2012 (219,549 tpy) will be difficult to meet and the proposed rule's SO2 budget for 2014 (113,844 tpy) will be much more difficult and problematic to achieve given that most large Kentucky EGUs already have flue gas desulfurization (FGD) scrubbers operational before 2012 (See below Figure 1 and see the attached Table 1 for Kentucky SO2 FGD controls and 2009 CAMD emissions [See EPA-HQ-2009-0491-2805.1, p.2 for Figure 1]). Kentucky has only one remaining large unit (800 MWe) that is not scrubbed. Per a consent decree, this unit will install a FGD scrubber by December 31, 2015. However, this alone cannot achieve the needed SO2 budget reduction proposed by EPA for 2014. [EPA-HQ-2009-0491-2805.1, pp.1-2]
As indicated by Figure 1 [See EPA-HQ-2009-0491-2805.1, p.2 for Figure 1], the Transport Rule as proposed would require Kentucky EGUs to reduce their 2009 SO2 emissions by an estimated 13% by 2012 and reduce their 2009 emissions by an additional 42% by 2014 resulting in a total EGU SO2 emission reduction of 55% from the Kentucky 2009 EGU SO2 emission level. In addition, the proposed 2014 Transport Rule SO2 budget reflects a 48% decrease from the proposed 2012 Transport Rule SO2 budget for Kentucky EGUs. Even if these drastic emissions reductions being proposed by the Transport Rule are technologically feasible, which is in question, they are unrealistic and not practicable given that achieving such reductions may: (1) lead to disruptions in a reliable power supply in the region; (2) cause certain economic hardships for industry sectors; and (3) drive up the cost of consumer electricity rates. The Division requests that EPA reconsider the SO2 emission reductions in light of these probable outcomes. [EPA-HQ-2009-0491-2805.1, p.2]
Proposed Transport Rule State NOx Budgets for Kentucky
Pursuant to the rule preamble Section IV.E., State Emissions Budgets (75 FR 45290-45292), based on the Division's review of 2009 actual NOx emissions for Kentucky EGUs (an estimated 79,000 tpy per 2009 EPA CAMD data), the proposed Transport Rule NOx budget in 2012 and 2014 (74,117 tpy) will also be difficult for certain Kentucky EGUs to meet since most Kentucky EGUs already have some type of NOx controls in place (See below Figure 2 [See EPA-HQ-OAR-2009-0491-2805.1, p.3 for Figure 2] and see the attached Table 1 [See EPA-HQ-OAR-2009-0491-2805.1, p.2 for Figure 1] for Kentucky NOx controls and 2009 CAMD emissions). [EPA-HQ-OAR-2009-0491-2805.1, p.3]
As indicated by Figure 2 [See EPA-HQ-OAR-2009-0491-2805.1, p.3 for Figure 2], the Transport Rule as proposed would require Kentucky EGUs to reduce their 2009 annual NOx emissions by an estimated 6% by 2012. Notwithstanding the difficulty in obtaining this reduction, the Division is perplexed that EPA has proposed such a drastic budget reduction for SO2 from 2012 to 2014 for Kentucky (See Figure 1), but has kept the 2012 and 2014 proposed Transport Rule NOx budgets the same (See Figure 2 [See EPA-HQ-OAR-2009-0491-2805.1, p.3 for Figure 2]). The Division requests that EPA provide its rationale for this decision. [EPA-HQ-OAR-2009-0491-2805.1, pp.3-4]
Response:
The Transport Rule 2012 budget does not assume the installation of any new controls in 2012, and Kentucky's 2012 budget is based on the operation of existing controls and other reductions available at $500/ton as described in the TR preamble.  EPA also notes that there are several consent decree requirements that impacted Kentucky sources between 2009 (the year for which SO2 emissions are quoted in comment) and 2012 (the first year of compliance).  Additionally, sources in the state had controls come online and become fully operational during this time period.  EPA believes that the 2012 SO2 budget for Kentucky is reasonable and can be met with no service disruptions. Additionally, as noted in the comment, there is one large unit that is not yet controlled in the state for SO2.  The 2012 SO2 emissions budget is premised on this unit not operating a control in 2012.

In regards to how EPA determined NOX and SO2 budgets, see the discussion in section VI of the Transport Rule preamble.  In regards to 2014 budget compliance, see section VII of the Transport Rule preamble.
Organization: Maryland Department of Environment (MDE)
Sierra Club, Pennsylvania Chapter
Comment:
Maryland Department of Environment (MDE)
Despite our analysis of NOx reductions needed to decrease transport and our specific recommendations of appropriate NOx levels, EPA's proposed Transport Rule includes a NOx budget that is not tight enough to achieve healthy air. Maryland encourages EPA to adopt an annual NOx cap of 900,000 tons in 2014, consistent with National Association of Clean Air Agencies (NACAA) and Ozone Transport Commission (OTC) analyses suggesting this to be technologically feasible and cost effective. In addition, EPA's analysis confirms the cost effectiveness of additional NOx reductions.1 [EPA-HQ-OAR-2009-0491-2639.1, p.2]

Footnote:
1 Senator Thomas Carper (D-DE) asked EPA to analyze the impacts of a 900,000 ton NOx cap in the East beginning in 2015 as a possible alternative to the 1.3 million ton cap in 2015 in his bill, the Clean Air Act Amendments of 2010 (S. 2995). The more stringent NOx caps provided between $3-10 billion in additional benefits each year at a cost of $1.5 billion. See "EPA Analysis of Alternative NOx and SO2 Caps for Senator Carper," July 16, 2010, http://www.epa.gov/airmarkets/progsregs/epa-ipm/ Carper2010/Carper_Analysis.pdf, accessed September 27, 2010. [EPA-HQ-OAR-2009-0491-2639.1, p.2]
Sierra Club, Pennsylvania Chapter
- reduce the 2014 aggregate state budgets in the annual control region (including Texas) for SO2 to 1.75 million tons (approximately equivalent to a 2 million ton nationwide cap); 3
- reduce the 2014 aggregate state budgets in the annual control region (including Texas) for NOx to 900,000 tons (approximately equivalent to a 1.25 million ton nationwide cap); [EPA-HQ-OAR-2009-0491-3482.1, p.7]

3. Based on the relative percentage of national 2009 power plant NOx and SO2 emissions that were within the TR plus Texas, the recommended regional caps are approximately a 2.0 million ton national SO2 cap, and a 1.25 million ton national NOx cap. [EPA-HQ-OAR-2009-0491-3482.1, p.7]
Response:
See section VI.D of the preamble for description of multi-factor analysis used to determine elimination of significant contribution and subsequent determination of state budgets.  EPA notes that the sum of annual state budgets for SO2 and NOx is tighter in this final rule than as originally proposed (for states included in both proposed and final geography).
Organization: National Association of Clean of Air Agencies (NACAA)
Massachusetts Department of Environmental Protection
State of Louisiana, Department of Environmental Quality
Adirondack Council
Comment:
Adirondack Council
[These comments were submitted as testimony at the Philadelphia, Pennsylvania public hearing on August 26, 2010.  See Docket Number EPA-HQ-OAR-0491-1938, pp.62-63.]
We urge the EPA to use a stronger baseline for NOX emissions than the 1997 NAAQS standard. At a minimum, EPA should use the more stringent 2008 standard, and update the Transport Rule when a new standard is put in place, hopefully later this year, although that is now uncertain.
Massachusetts Department of Environmental Protection
EPA acknowledges that the proposal does not adequately address the 'significant contribution' of a number of states for the ozone and fine particle (PM 2.5) air quality standards that EPA adopted in 1997 ('the 1997 NAAQS'). We urge EPA to adopt NOx budgets in the final rule that fully meet the Transport Rule's stated goal of addressing states' downwind contributions. We believe that EPA should require reductions that eliminate the significant contribution of any state based solely on downwind air quality impacts, irrespective of the cost per ton of reductions needed to eliminate the transported emissions. EPA has taken an approach that considers downwind air quality impacts combined with an assessment of the reductions achievable at $500 per ton or less. Massachusetts has aggressively addressed our own sources of ozone precursor emissions for years, and will continue to do so. Like other states in the Ozone Transport Region, in order to meet the 1997 ozone NAAQS on which the Transport Rule is based, as well as the prior I-hour ozone NAAQS, we have adopted ozone control measures at costs that are at least 2- 3 times higher than the $500 per ton threshold for NOx reductions on which EPA is basing the proposed Transport Rule. We strongly encourage EPA to base the final Transport Rule on a cost threshold that exceeds $500 per ton in order to realize additional reductions and to more equitably address the needed balance between upwind and local control measures in meeting air quality goals.   [EPA-HQ-OAR-2009-0491-2787.2 p.2]
National Association of Clean of Air Agencies (NACAA)
With respect to ozone, our preference is that EPA tighten the NOx caps in 2014 to resolve the remaining nonattainment problems. In addition, since EPA plans to quickly promulgate Transport Rule II to address the new tightened ozone standard, EPA also has an opportunity in that rulemaking to resolve any remaining ozone downwind issues, in collaboration with the 10 states identified as still contributing to transport of ozone precursor emissions. [EPA-HQ-OAR-2009-0491-2771.1, p.4]
State of Louisiana, Department of Environmental Quality
LDEQ suggests that the NOx emission caps identified in the proposed Transport Rule are sufficient to begin the control of this pollutant. With the forthcoming Ozone NAAQS Reconsideration decision, states will perform air quality modeling runs based on a smaller grid and will be able to better understand the air quality of each particular area. As an example, the last modeling performed in the Baton Rouge Nonattainment Area showed that the area was NOx limited; by allowing the cap to remain static, the area will be better suited to developing a control strategy that will continue the downward trend of emissions. [EPA-HQ-OAR-2009-0491-2655.1, pp.5-6]
Response:
As discussed in section III of the preamble, EPA plans to finalize its reconsideration of the 2008 revised ozone NAAQS soon, and the reductions achieved through this final Transport Rule will also help areas make progress toward achieving those revised NAAQS.  EPA intends to finalize reconsideration of the March 2008 ozone NAAQS in the summer of 2011 and subsequently to propose a transport-related action to address any necessary upwind state control responsibilities with respect to that reconsidered NAAQS expeditiously.  Section VI or the preamble explains how EPA determined the final rule's selection of cost thresholds on each pollutant to define significant contribution and interference with maintenance in each state.
Organization: New York State Department of Environmental Conservation
Tennessee Valley Authority (TVA)
Clean Energy Group
JEA
Comment:
Clean Energy Group
III. The Clean Energy Group Supports EPA's Preferred Methodology for Developing State Budgets
EPA appropriately uses a multi-step process that includes both air quality and cost modeling to calculate state contributions to downwind nonattainment and interference with maintenance. As EPA discusses in the preamble to the proposed rule, it is important to require that emission reductions are achieved as expeditiously as possible. Under the preferred methodology for determining the 2012 state budgets, EPA uses a mix of IPM modeling, adjusted reported emissions, and adjustments to both modeled and reported emissions based on pollution control technologies installed or projected to be installed before 2012. By using this methodology, EPA intends to avoid backsliding in the control of emissions from Transport Rule units' progress made in response to CAIR. Under the unique circumstances resulting from the vacatur and subsequent remand of CAIR, the Clean Energy Group supports this methodology for establishing initial state budgets for annual NOx, ozone season NOx, and 2012 S02 in both Group 1 and 2 states. This methodology would not be appropriate for future rulemakings because it would not drive the most cost-effective emissions reductions. However, the Clean Energy Group understands that the D.C. Circuit's decision creates a unique situation for EPA, and we agree that the proposed approach is appropriate for the initial state budgets. [EPA-HQ-OAR-2009-0491-2702.1, p. 4]
The Clean Energy Group also supports EPA's use of Integrated Planning Model (IPM) runs to set state budgets for 2014 Group 1 S02 emissions using pollution control cost thresholds. The Clean Energy Group understands and supports that this methodology would be the basis for establishing any revised state budgets in any of the four programs (e.g., ozone season NOx, annual NOx, Groups 1 and 2 S02) as necessary to comply with future NAAQS. [EPA-HQ-OAR-2009-0491-2702.1, p. 4]
JEA
EPA's Choice of 2008 and 2009 for the Baseline is Inappropriate
EPA has chosen 2008 and 2009 as baseline years for NOx and SO2 emissions, respectively. These two years do not represent normal operating conditions for JEA and many other EGUs regulated under this rulemaking. Therefore, EPA should allow for the selection of a more representative time period. The units regulated by this rulemaking are also regulated under the Clean Air Interstate Rule (CAIR). JEA did indeed have extended outages in 2008 and 2009 to install NOx control equipment at SJRPP. Additionally, in 2008 and further into 2009, the U.S. economy plunged into an economic 'crisis,' and electricity demand dropped significantly. Therefore, 2008 and 2009 are not representative years for JEA and many other EGUs regulated by this rulemaking. JEA suggests that EPA utilize an approach similar to CAIR, and use an average capacity of the past five years, or some other period that would more accurately represent past performance. [EPA-HQ-OAR-2009-0491-2713.1, p.3]
New York State Department of Environmental Conservation
The Department suggests two primary methods to rectify these residual transport issues. The first is a higher cost-per-ton threshold. This proposal defines cost-effective controls for ozone [EPA-HQ-OAR-2009-0491-2730.1, p.5] season NOx at $500 per ton. EPA reasons that SCR units would have already been installed under CAIR, and $500 per ton is the amount that would be required to keep these units operating. By not considering the cost of installing controls, EPA's cost threshold is held artificially low, which effectively eliminates installation of any controls from consideration. EPA should consider both the cost of installation and operation of controls and set the cost threshold accordingly. This would allow cost effective controls not yet in place to be considered in the analysis. [EPA-HQ-OAR-2009-0491-2730.1, p.6]
Tennessee Valley Authority (TVA)
B. Issue: EPA's technical support documents (TSD) indicate 2012 SO2 and NOx budgets are set at the lower of recent historical actual emissions or projected emissions at the state level. For NOx, EPA notes in the TSD ("State Budgets, Unit Allocations and Unit Emission Rates") that the reported annual and ozone season NOx data was adjusted for unusually low utilization rates in 2009. For SO2, however, EPA used the historical 12 month emission period comprising the last quarter of 2008 and the first three quarters of 2009, disregarding any low utilization during this period. EPA did not use historical emission rates with projected future heat input levels to determine SO2 and NOx budgets. [EPA-HQ-OAR-2009-0491-2782.1, p. 8]
TVA Comment: TVA coal fired generation and emissions were significantly depressed during the 2008- 2009 historical period due to economic recession, unusually low natural gas prices, and other factors. For example, two of TVA's fossil plants in Tennessee, Kingston and Bull Run, had units shutdown for significant periods in 2009, the former in the aftermath of the Kingston coal ash slide and the latter for high cost fuel supply and reduced demand. EPA should not use the 2008-09 time period to establish the emission budgets as this period is not representative of normal coal-fired generation levels for TVA. Instead, if EPA uses historical emissions to set budgets, EPA should use the average three year period spanning 2006-2008 as this period is representative of historical generation levels from the coal-fired plants in TVA's fleet. A better historical performance-based methodology would be to base future emission budgets on representative historical emission rates in conjunction with projected future heat input levels. [EPA-HQ-OAR-2009-0491-2782.1, p. 8]
Response:
In the final Transport Rule, EPA does not use historic emissions data to set the Transport Rule state budgets, but instead relies on projected emissions data under the marginal cost thresholds selected to define significant contribution and interference with maintenance.  EPA uses the same budget-setting methodology in the final rule on all pollutants analyzed (including ozone-season NOx, annual NOx, and SO2).  Please see section VI.D of the preamble for a thorough explanation of this approach.
Organization: Pennsylvania Department of Environmental Protection
South Carolina Department of Health and Environmental Control
Comment:
Pennsylvania Department of Environmental Protection
Stringent Emission Budgets Needed to Prevent Backsliding
Pennsylvania is extremely concerned that the proposed Transport Rule may result in a relaxation of the CAIR emission budgets approved by EPA and incorporated in the Commonwealth's SIP on December 10,2009 (74 Fed. Reg. 65,446). [EPA-HQ-OAR-2009-0491-2660.1,p.5]