6560-50-P
                        ENVIRONMENTAL PROTECTION AGENCY
                      40 CFR Parts 51, 52, 72, 78, and 97
                      [EPA-HQ-OAR-2009-0491; FRL-9174-9]
                                 RIN 2060-AP50
Federal Implementation Plans to Reduce Interstate Transport of Fine Particulate Matter and Ozone in 27 States; Correction of SIP Approvals for 22 states

AGENCY:  Environmental Protection Agency (EPA).
ACTION:  Final rule.
SUMMARY:  In this action, EPA is limiting the interstate transport of emissions of nitrogen oxides (NOX) and sulfur dioxide (SO2) that contribute to harmful levels of fine particle matter (PM2.5) and ozone in downwind states. EPA is identifying emissions within 27 states in the eastern United States that significantly affect the ability of downwind states to attain and maintain compliance with the 1997 and 2006 fine particulate matter national ambient air quality standards (NAAQS) and the 1997 ozone NAAQS. Also, EPA is limiting these emissions through Federal Implementation Plans (FIPs) that regulate electric generating units (EGUs) in the 27 states (Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, West Virginia, and Wisconsin).  This action will substantially reduce adverse air quality impacts in downwind states from emissions transported across state lines.  In conjunction with other federal and state actions, it will help assure that all but a handful of areas in the eastern part of the country achieve compliance with the current ozone and PM2.5 NAAQS by the deadlines established in the Clean Air Act.  The FIPs may not fully eliminate the prohibited emissions from certain states with respect to the 1997 ozone NAAQS for two remaining downwind areas and EPA is committed to identifying any additional required upwind emission reductions and taking any necessary action in a future rulemaking.  In this action, EPA is also modifying its prior approvals of certain SIP submissions to rescind any statements that the submissions in question satisfy the interstate transport requirements of the Clean Air Act with respect to the 1997 fine particulate and 1997 ozone standards for 22 states (Alabama, Arkansas, Connecticut, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maryland, Massachusetts, Minnesota, Mississippi, Missouri, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Virginia, and West Virginia).  EPA is also issuing a supplemental proposal to request comment on its conclusion that six additional states significantly affect downwind states' ability to attain and maintain compliance with the 1997 ozone NAAQS and that one additional state affects such states' ability to attain compliance with the 2006 PM2.5 NAAQS.
DATES:  This final rule is effective on [insert date 60 days after publication in the Federal Register].
ADDRESSES:  EPA has established a docket for this action under Docket ID No. EPA - HQ - OAR - 2009 - 0491.  All documents in the docket are listed on the www.regulations.gov web site. Although listed in the index, some information is not publicly available, e.g., CBI or other information whose disclosure is restricted by statute.  Certain other material, such as copyrighted material, is not placed on the Internet and will be publicly available only in hard copy form.  Publicly available docket materials are available either electronically through www.regulations.gov or in hard copy at the EPA Docket Center, EPA West, Room B102, 1301 Constitution Avenue, NW, Washington, DC.   The Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Public Reading Room is (202) 566 - 1744, and the telephone number for the Air Docket is (202) 566 - 1742.
FOR FURTHER INFORMATION CONTACT:  For general questions concerning this action, please contact Ms. Meg Victor, Clean Air Markets Division, Office of Atmospheric Programs, Mail Code 6204J, Environmental Protection Agency, 1200 Pennsylvania Avenue, NW., Washington, DC 20460; telephone number:<PHONE_NUMBER>; fax number:<PHONE_NUMBER>; e-mail address<EMAIL_ADDRESS>For legal questions, please contact Ms. Sonja Rodman, U.S. EPA, Office of General Counsel, Mail Code 2344A, 1200 Pennsylvania Avenue, NW, Washington, DC 20460, telephone (202) 564 - 4079; e-mail address<EMAIL_ADDRESS>SUPPLEMENTARY INFORMATION:
I. Preamble Glossary of Terms and Abbreviations
The following are abbreviations of terms used in the preamble.
ARP Acid Rain Program
BART Best Available Retrofit Technology
BACT Best Available Control Technology
CAA or Act Clean Air Act
CAIR Clean Air Interstate Rule
CBI Confidential Business Information
CFR Code of Federal Regulations
EGU Electric Generating Unit
FERC Federal Energy Regulatory Commission
FGD Flue Gas Desulfurization
FIP Federal Implementation Plan
FR Federal Register
EPA U.S. Environmental Protection Agency
GHG Greenhouse Gas
Hg Mercury
IPM Integrated Planning Model
lb/MMBtu Pounds Per Million British Thermal Unit
μg/m[3]  Micrograms Per Cubic Meter
NAAQS National Ambient Air Quality Standards
NOX Nitrogen Oxides
NSPS New Source Performance Standard
OTAG Ozone Transport Assessment Group
PUC Public Utility Commission
SNCR Selective Non-catalytic Reduction
SCR Selective Catalytic Reduction
SIP State Implementation Plan
PM2.5 Fine Particulate Matter, Less Than 2.5 Micrometers
PM10 Fine and Coarse Particulate Matter, Less Than 10 Micrometers
PM Particulate Matter
RIA Regulatory Impact Analysis
SO2 Sulfur Dioxide
SOX Sulfur Oxides, Including Sulfur Dioxide (SO2) and Sulfur Trioxide (SO3)
TIP Tribal Implementation Plan
TPY Tons Per Year
TSD Technical Support Document
II. General Information
A. Does This Action Apply to Me?
This rule affects EGUs, and regulates the following groups:
Industry group              	          				NAICS[a]
Utilities (electric, natural gas, other systems.)
2211, 2212, 2213
a North American Industry Classification System.
      This table is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely to be regulated by this action. This table lists the types of entities that EPA is aware of that could potentially be regulated. Other types of entities not listed in the table could also be regulated. To determine whether your facility would be regulated by the proposed rule, you should carefully examine the applicability criteria in proposed §§ 97.404, 97.504, and 97,604.
B. How Is The Preamble Organized?

   I. Preamble Glossary of Terms and Abbreviations
   II. General Information
         A. Does This Action Apply to Me?
         B. How Is The Preamble Organized?
   III. Executive Summary
   IV. Legal Authority, Environmental Basis, and Correction of CAIR SIP Approvals
         A. EPA's Authority for Transport Rule
         B. Rulemaking History
         C. Air Quality Problems and NAAQS Addressed
                 1. Air Quality Problems and NAAQS Addressed
                 2. FIP Authority for each State and NAAQS Covered
                 3. Additional Information Regarding CAA Section 110(a)(2)(D)(i)(I) SIPs for States in the Transport Rule Modeling Domain
         D. Correction of CAIR SIP Approvals
   V. Analysis of Downwind Air Quality and Upwind State Emissions
         A. Pollutants Regulated
                 1. Background
                 2. Which Pollutants did EPA Propose to Control for Purposes of PM2.5 and Ozone Transport?
                 3. Comments and Responses
         B. Baseline for Pollution Transport Analysis
         C. Air Quality Modeling to Identify Downwind Nonattainment and Maintenance Receptors
                 1. Emission Inventories
                 2. Air Quality Basis for Identifying Receptors
         D. Pollution Transport from Upwind States
             1. Choice of Air Quality Thresholds
             2. Approach for Identifying Contributing Upwind States
   VI. Quantification of State Emission Reductions Required
         A. Cost and Air Quality Structure for Defining Reductions
                 1. Summary
                 2. Background
         B. Cost of Available Emission Reductions
                 1. Development of Annual NOX and Ozone-Season NOX Cost Curves
                 2. Development of SO2 Cost Curves
                 3. Amount of Reductions That Could Be Achieved by 2012 and 2014
         C. Estimates of Air Quality Impacts
                 1. Development of the Air Quality Assessment Tool and Air Quality Modeling Strategy
                 2. Utilization of AQAT to Evaluate Control Scenarios
                 3. Air Quality Assessment Results
         D. Multi-Factor Analysis and Determination of State Emission Budgets
                 1. Multi-Factor Analysis
                 2. State Emission Budgets
         E. Approach to Power Sector Emission Variability
                 1. Introduction to Power Sector Variability
                 2. Transport Rule Variability Limits
         F. Variability Limits and State Emission Budgets: State Assurance Levels
         G. How the State Emission Reduction Requirements are Consistent with Judicial Opinions Interpreting the Clean Air Act
   VII. FIP Program Structure to Achieve Reductions
         A. Overview of Air Quality-Assured Trading Programs
         B. Applicability
         C. Compliance Deadlines
                 1. Alignment with NAAQS Attainment Deadlines
                 2. Compliance and Deployment of Pollution Control Technologies
         D. Allocation of Emission Allowances
                 1. Allocations to Existing Units
                 2. Allocations to New Units
         E. Assurance Provisions
         F. Penalties
         G. Allowance Management System
         H. Emissions Monitoring and Reporting
         I. Permitting
                 1. Title V Permitting
                 2. New Source Review
         J. How the Program Structure is Consistent with Judicial Opinions Interpreting the Clean Air Act
   VIII. Economic Impacts of the Transport Rule
         A. Emission Reductions
         B. The Impacts on PM2.5 and Ozone of the Final SO2 and NOX Strategy
         C. Benefits
                 1. Human Health Benefit Analysis
                 2. Quantified and Monetized Visibility Benefits
                 3. Benefits of Reducing GHG Emissions
                 4. Total Monetized Benefits
                 5. How Do the Benefits in 2012 Compare to 2014?
                 6. How do the Benefits Compare to the Costs of this Final Rule?
                 7. What are the Unquantified and Non-monetized Benefits of the Transport Rule Emission Reductions?
         D. Costs and Employment Impacts
                 1. Transport Rule Costs and Employment Impacts
                 2. End-Use Energy Efficiency
   IX. Related Programs and the Transport Rule
         A. Transition from the Clean Air Interstate Rule
                 1. Key Differences Between the Transport Rule and CAIR
                 2. Transition from the Clean Air Interstate Rule to the Transport Rule
         B. Interactions with NOX SIP Call
         C. Interactions with Title IV Acid Rain Program
         D. Other State Implementation Plan Requirements
   X. Transport Rule State Implementation Plans
   XI. Structure and Key Elements of Transport Rule Air Quality-Assured Trading Program Rules
   XII. Statutory and Executive Order Reviews
         A. Executive Order 12866: Regulatory Planning and Review and  Executive Order 13563: Improving Regulation and Regulatory Review
         B. Paperwork Reduction Act
         C. Regulatory Flexibility Act
         D. Unfunded Mandates Reform Act
         E. Executive Order 13132: Federalism
         F. Executive Order 13175: Consultation and Coordination with Indian Tribal Governments
         G. Executive Order 13045: Protection of Children from Environmental Health and Safety Risks
         H. Executive Order 13211: Actions That Significantly Affect Energy Supply, Distribution, or Use
         I. National Technology Transfer Advancement Act
         J. Executive Order 12898: Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations
                 1. Consideration of Environmental Justice in the Transport Rule Development Process and Response to Comments
                 2. Potential Environmental and Public Health Impacts among Populations Susceptible or Vulnerable to Air Pollution
                 3. Meaningful Public Participation
                 4. Summary
         K. Congressional Review Act
         L. Judicial Review

III. Executive Summary
      Clean Air Act (CAA) section 110(a)(2)(D)(i)(I) requires states to prohibit emissions that contribute significantly to nonattainment in, or interfere with maintenance by, any other state with respect to any primary or secondary NAAQS.  In this final rule, EPA finds that emissions of SO2 and NOX in 27 eastern, midwestern, and southern states contribute significantly to nonattainment or interfere with maintenance in one or more downwind states with respect to one or more of three air quality standards -- the annual PM2.5 NAAQS promulgated in 1997, the 24-hour PM2.5 NAAQS promulgated in 2006, and the ozone NAAQS promulgated in 1997 (EPA uses the term "states" to include the District of Columbia in this preamble).
      These emissions are transported downwind either as SO2 and NOX or, after transformation in the atmosphere, as fine particles or ozone.  This final rule identifies emission reduction responsibilities of upwind states, and also promulgates enforceable Federal Implementation Plans (FIPs) to achieve the required emission reductions in each state through cost-effective and flexible requirements for power plants.  Each state has the option of replacing these federal rules with state rules to achieve the required amount of emission reductions from sources selected by the state.
      Section 110(a)(2)(D)(i)(I) of the CAA requires the elimination of upwind state emissions that significantly contribute to nonattainment or interfere with maintenance of a NAAQS in another state.  Elimination of these upwind state emissions may not necessarily, in itself, fully resolve nonattainment or maintenance problems at downwind state receptors.  Downwind states also have control responsibilities because, among other things, the Act requires each state to adopt enforceable plans to attain and maintain air quality standards.  Indeed, states have put in place measures to reduce local emissions that contribute to nonattainment within their borders.  Section 110 (a)(2)(D)(i)(I) only requires the elimination of emissions that significantly contribute to nonattainment or interfere with maintenance of the NAAQS in other states; it does not shift to upwind states the responsibility for ensuring that all areas in other states attain the NAAQS.
      The reductions obtained through the Transport Rule will help all but a few downwind areas come into attainment with and maintain the 1997 annual PM2.5 NAAQS, the 2006 24-hour PM2.5 NAAQS, and the 1997 ozone NAAQS.  With respect to the annual PM2.5 NAAQS, this rule finds that 18 states have SO2 and annual NOX emission reduction responsibilities, and this rule quantifies each state's full emission reduction responsibility under section 110(a)(2)(D)(i)(I).  See Table III-1 for the list of these states.  With these reductions, EPA projects that no areas will have nonattainment or maintenance concerns with respect to the annual PM2.5 NAAQS.
      With respect to the 24-hour PM2.5 NAAQS, this rule finds that 21 states have SO2 and annual NOX emission reduction responsibilities, and this rule quantifies each state's full emission reduction responsibility under 110(a)(2)(D)(i)(I).  See Table III-1 for the list of these states.  In all, this rule requires emission reductions related to interstate transport of fine particles in 23 states.  With these reductions, as discussed in section VI.D of this preamble, only one area (Liberty-Clairton) is projected to remain in nonattainment, and three other areas (Chicago, Detroit, and Lancaster) are projected to have remaining maintenance concerns for the 24-hour PM2.5 NAAQS.  As discussed further below, EPA's analysis also demonstrates that one additional state significantly contributes to nonattainment of the 24-hour PM2.5 NAAQS in downwind states and is issuing a supplemental proposal to request comment on this conclusion.
      With respect to the 1997 ozone NAAQS, this rule finds that 20 states have ozone-season NOX emission reduction responsibilities.  For 10 of these states this rule quantifies the state's full emission reduction responsibility under section 110(a)(2)(D)(i)(I).  For 10 additional states, EPA quantifies in this rule the ozone-season NOX emission reductions that are necessary but may not be sufficient to eliminate all significant contribution to nonattainment and interference with maintenance in other states.  See Table III-1 for the complete list of 20 states required to reduce ozone-season NOX emissions in this rule.  With the Transport Rule reductions, only one area (Houston) is projected to remain in nonattainment, and one area (Baton Rouge) to have a remaining maintenance concern with respect to the 1997 ozone NAAQS.  The 10 states upwind of either of these two areas are the states for which additional reductions may be necessary to fully eliminate each state's significant contribution to nonattainment and interference with maintenance, as discussed in section VI of this preamble.
      As discussed further below, EPA's analysis also demonstrates that six additional states should be required to reduce ozone-season NOX emissions.  EPA is issuing a supplemental proposal to request comment on requiring ozone-season NOX reductions in these six states.  For five of these six states, EPA's analysis identifies the state's full emission reduction responsibility under section 110(a)(2)(D)(i)(I), and for the remaining one state EPA's analysis identifies reductions that are necessary but may not be sufficient to satisfy the requirements of 110(a)(2)(D)(i)(I).
      On January 19, 2010, EPA proposed revisions to the 8-hour ozone NAAQS that the Agency had issued March 12, 2008 (75 FR 2938); the Agency intends to finalize its reconsideration in the summer of 2011.  EPA intends to propose a rule to address transport with respect to the reconsidered 2008 ozone NAAQS as expeditiously as possible after reconsideration is completed.  EPA intends to include in that proposed rule requirements to address any remaining significant contribution to nonattainment and interference with maintenance with respect to the 1997 ozone NAAQS for the states identified in this final rule, or the associated supplemental notice of proposed rulemaking, for which EPA was unable to fully quantify the emissions that must be prohibited to satisfy the requirements of 110(a)(2)(D)(i)(I) with respect to the 1997 ozone NAAQS.
      The Act requires EPA to conduct periodic reviews of each the NAAQS.  When NAAQS are set or revised, the CAA requires revision of SIPs to ensure the standards are met expeditiously and within relevant timetables in the Act.  If more protective NAAQS are promulgated, in the case of pollutants for which interstate transport is important, additional emission reductions to address transported pollution may be required from the power sector, from other sectors, and from sources in additional states.  EPA will act promptly to promulgate any future rules addressing transport with respect to revised NAAQS.
      The Transport Rule requires substantial near-term emission reductions in every covered state to address each state's significant contribution to nonattainment and interference with maintenance downwind.  This rule achieves these reductions through FIPs that regulate the power sector using air quality-assured trading programs whose assurance provisions ensure that necessary reductions will occur within every covered state.  This remedy structure is substantially similar to the preferred trading remedy structure presented in the proposal.  The Transport Rule's air quality-assured trading approach will assure environmental results in each state while providing market-based flexibility to covered sources through interstate trading.  The final rule includes four air quality-assured trading programs: an annual NOX trading program, an ozone-season NOX trading program, and two separate SO2 trading programs ("SO2 Group 1" and "SO2 Group 2"), as discussed further in sections VI and VII, below.
      The first phase of Transport Rule compliance commences January 1, 2012 for SO2 and annual NOX reductions and May 1, 2012 for ozone-season NOX reductions.  The second phase of Transport Rule reductions, which commences January 1, 2014, increases the stringency of SO2 reductions in a number of states as discussed further below.
      EPA projects that with the Transport Rule, covered electric generating units (EGU) will substantially reduce SO2, annual NOX and ozone-season NOX emissions, as shown in Tables III-2 and III-3, below.  This rule generally covers electric generating units that are fossil fuel-fired boilers and turbines producing electricity for sale, as detailed in section VII.
      EPA is promulgating the Transport Rule in response to the remand of the Clean Air Interstate Rule (CAIR) by the U.S. Court of Appeals for the District of Columbia Circuit ("Court") in 2008.  CAIR, promulgated May 12, 2005 (70 FR 25162), required 29 states to adopt and submit revisions to their State Implementation Plans (SIPs) to eliminate SO2 and NOX emissions that contribute significantly to downwind nonattainment of the PM2.5 and ozone NAAQS promulgated in July 1997.  CAIR covered a similar but not identical set of states as the Transport Rule.  CAIR FIPs were promulgated April 26, 2006 (71 FR 25328) to regulate electric generating units in the covered states and achieve the emission reductions requirements established by CAIR until states could submit and obtain approval of SIPs to achieve the reductions.
      In July 2008, the Court found CAIR and the CAIR FIPs unlawful.  North Carolina v. EPA, 531 F.3d 896 (D.C. Cir. 2008), modified on rehearing, North Carolina v. EPA, 550 F.3d 1176, 1178 (D.C. Cir. 2008).  The Court's original decision vacated CAIR.  North Carolina, 531 F.3d at 929-30.  However, the Court subsequently remanded CAIR to EPA without vacatur because it found that "allowing CAIR to remain in effect until it is replaced by a rule consistent with our opinion would at least temporarily preserve the environmental values covered by CAIR."  North Carolina, 550 F.3d at 1178.  The CAIR requirements have remained in place while EPA has developed the Transport Rule to replace them.
      EPA's approach in the Transport Rule to measure and address each state's significant contribution to downwind nonattainment and interference with maintenance is guided by and consistent with the Court's opinion in North Carolina and addresses the flaws in CAIR identified by the Court therein.  This final rule also responds to extensive public comments and stakeholder input received during the public comment periods in response to the proposal and subsequent Notices of Data Availability (NODAs).
      In this action, EPA both identifies and addresses emissions within states that significantly contribute to nonattainment or interfere with maintenance in other downwind states.  In developing this rule, EPA used a state-specific methodology to identify emission reductions that must be made in covered states to address the CAA section 110(a)(2)(D)(i)(I) prohibition on emissions that significantly contribute to nonattainment or interfere with maintenance in a downwind state.  EPA believes this methodology addresses the Court's concern that the approach used in CAIR was insufficiently state-specific.  EPA used detailed air quality analysis to determine whether a state's contribution to downwind air quality problems is at or above specific thresholds.  A state is covered by the Transport Rule if its contribution meets or exceeds one of those air quality thresholds and the Agency identifies, using a multi-factor analysis that takes into account both air quality and cost considerations, emissions within the state that constitute the state's significant contribution to nonattainment and interference with maintenance with respect to the 1997 ozone or the 1997 annual or 2006 24-hour PM2.5 NAAQS.  Section 110(a)(2)(D)(i)(I) requires states to eliminate the emissions that constitute this "significant contribution" and "interference with maintenance."
      In this final rule, EPA determined the emission reductions required from all upwind states to eliminate significant contribution to nonattainment and interference with maintenance with respect to the 1997 ozone, 1997 annual PM2.5, and 2006 24-hour PM2.5 NAAQS, using, in part, an assessment of modeled air quality in 2012 and 2014.  EPA first identified the following two sets of downwind receptors: (1) receptors that EPA projects will have nonattainment problems; and, (2) receptors that EPA projects may have difficulty maintaining the NAAQS based on historic variation in air quality.  To identify areas that may have problems attaining or maintaining these air quality standards, EPA projected a suite of future air quality design values, based on measured data during the period 2003 through 2007.  EPA used the average of these future design values to assess whether an area will be in nonattainment.  EPA used the maximum projected future design value to assess whether an area may have difficulty maintaining the relevant NAAQS (i.e., whether an area has a reasonable possibility of being in nonattainment under adverse emission and weather conditions).  Section V.C of this preamble details the Transport Rule's approach to identify downwind nonattainment and maintenance areas.
      After identifying downwind nonattainment and/or maintenance areas, EPA next used air quality modeling to determine which upwind states are projected to contribute at or above threshold levels to the air quality problems in those areas.  Section V.D details the choice of air quality thresholds and the approach to determine upwind state contributions.  States whose contributions meet or exceed the threshold levels were analyzed further to determine emission reductions requirements as detailed in section VI.
      When EPA proposed this air-quality and cost-based multi-factor approach to identify emissions that constitute significant contribution to nonattainment and interference with maintenance from upwind states with respect to the 1997 ozone, annual PM2.5, and 2006 24-hour PM2.5 NAAQS, the Agency indicated that the approach was designed to be applicable to both current and potential future ozone and PM2.5 NAAQS (75 FR 45214).  EPA believes that the Transport Rule's approach of using air-quality thresholds to determine upwind-to-downwind-state linkages and using the air-quality and cost-based multi-factor approach to determine the quantity of emissions that each upwind state must eliminate, i.e., the state's significant contribution to nonattainment and interference with maintenance, could serve as a precedent for quantifying upwind state emission reduction responsibilities with respect to potential future NAAQS, as discussed further in section VI.A of this preamble.  The Agency further believes that the final Transport Rule demonstrates the strong value of this approach for addressing the role of interstate transport of air pollution in communities' ability to comply with current and future NAAQS.
      EPA thus identified specific emission reduction responsibilities for each upwind state found to significantly contribute to nonattainment or interfere with maintenance in other states.  Using that information, EPA developed individual state budgets for emissions from covered units under the Transport Rule.  The Transport Rule emission budgets are based on EPA's state-by-state analysis of each upwind state's significant contribution to nonattainment and interference with maintenance.  Because each state's budget is directly linked to this state-specific analysis of the state's obligations pursuant to section 110(a)(2)(D)(i)(I), this approach addresses the Court's concerns about the development of CAIR budgets.
      In this rule, EPA is finalizing SO2 and annual NOX budgets for each state covered for the 24-hour and/or annual PM2.5 NAAQS and an ozone-season NOX budget for each state covered for the ozone NAAQS.  A state's emission budget is the quantity of emissions that will remain from covered units under the Transport Rule after elimination of significant contribution to nonattainment and interference with maintenance in an average year (i.e., before accounting for the inherent variability in power system operations).
      Baseline power sector emissions from a state can be affected by changing weather patterns, demand growth, or disruptions in electricity supply from other units or from the transmission grid.  As a consequence, emissions could vary from year to year even in a state where covered sources have installed all controls and taken all measures necessary to eliminate the state's significant contribution to nonattainment and interference with maintenance.  As described in detail in sections VI and VII of this preamble, the Transport Rule accounts for the inherent variability in power system operations through "assurance provisions" based on state-specific variability limits which extend above the state budgets to form each state's "assurance level."  The state assurance levels take into account the inherent variability in baseline emissions from year to year.  The final Transport Rule FIPs will implement assurance provisions starting in 2012 as discussed in section VII, below.
      The emission reductions requirements (i.e., the "remedy") EPA is promulgating in this rule respond to the Court's concerns that in CAIR, EPA had not shown that the emission reduction requirements would get all necessary reductions within the state as required by section 110(a)(2)(D)(i)(I).  The Transport Rule FIPs include assurance provisions specifically designed to ensure that no state's emissions are allowed to exceed that specific state's budget plus the variability limit (i.e., the state's assurance level).
      Each state's Transport Rule SO2, annual NOX, or ozone-season NOX emission budget is composed of a number of emission allowances ("allowances") equivalent to the tonnage of that specific state budget.  Under the Transport Rule FIPs, EPA is distributing ("allocating") allowances under each state's budget to covered units in that state.  In this rule, EPA analyzed each individual state's significant contribution to nonattainment and interference with maintenance and calculated budgets that represent each state's emissions after the elimination of those prohibited emissions in an average year.  The methodology used to allocate allowances to individual units in a particular state has no impact on that state's budget or on the requirement that the state's emissions not exceed that budget plus the variability limit; the allocation methodology therefore has no impact on the rule's ability to satisfy the statutory mandate of CAA section 110(a)(2)(D)(i)(I).
      The Transport Rule's approach to allocate emission allowances to existing units is based on historic heat-input data, as detailed in section VII of this preamble.  The Transport Rule SO2, annual NOX, and ozone-season NOX emission allowances each authorize the emission of one ton of SO2, annual NOX, or ozone-season NOX emissions, respectively, during a Transport Rule control period, and are the currency in the Transport Rule's air quality-assured trading programs.  As discussed in section IX below, EPA is creating these Transport Rule allowances as distinct compliance instruments with no relation to allowances from the CAIR trading programs.  EPA recognizes the administrative value of continuity under successive regulatory trading programs; however, EPA is promulgating the Transport Rule as a Court-ordered replacement for (not a successor to) CAIR's trading programs.  EPA will strongly consider administrative continuity of this rule's trading programs under any future actions designed to address related problems of interstate transport of air pollution.
      A state may submit a SIP revision under which the state (rather than EPA) would determine allocations for one or more of the Transport Rule trading programs beginning with vintage year 2013 or later allowances.  Section X of this preamble discusses the final rule's provisions for SIP submissions in detail.
      Table III-1 lists states covered by the Transport Rule for PM2.5 and ozone.  It also, with respect to PM2.5, identifies whether EPA determined the state was significantly contributing to nonattainment or interfering with maintenance of the 1997 annual PM2.5 NAAQS, the 2006 24-hour PM2.5 NAAQS, or both.  As discussed below, the Transport Rule sorts the states required to reduce SO2 emissions due to their contribution to PM2.5 downwind into two groups of varying reduction stringency, with "Group 1" states subject to greater SO2 reduction stringency than "Group 2" states starting in 2014.  Table III-1 also lists which SO2 Group each of the states is in.

Table III-1 - States that Significantly Contribute to Nonattainment or Interfere with Maintenance of a NAAQS Downwind in the Final Transport Rule
                                     State
                                1997 Ozone NAAQS
                            1997 Annual PM2.5 NAAQS
                            2006 24-Hour PM2.5 NAAQS
                                   SO2 Group
 Alabama
 X
 X
 X
 2
 Arkansas
 X

 Florida
 X

 Georgia
 X
 X
 X
 2
 Illinois
 X
 X
 X
 1
 Indiana
 X
 X
 X
 1
 Iowa

 X
 X
 1
 Kansas

 X
 2
 Kentucky
 X
 X
 X
 1
 Louisiana
 X

 Maryland
 X
 X
 X
 1
 Michigan

 X
 X
 1
 Minnesota

 X
 2
 Mississippi
 X

 Missouri

 X
 X
 1
 Nebraska

 X
 2
 New Jersey
 X

 X
 1
 New York
 X
 X
 X
 1
 North Carolina
 X
 X
 X
 1
 Ohio
 X
 X
 X
 1
 Pennsylvania
 X
 X
 X
 1
 South Carolina
 X
 X

 2
 Tennessee
 X
 X
 X
 1
 Texas
 X
 X

 2
 Virginia
 X

 X
 1
 West Virginia
 X
 X
 X
 1
 Wisconsin

 X
 X
 1
 Number of States
 20
 18
 21

      As explained in this preamble, EPA has improved and updated both steps of its significant contribution analysis.  It updated and improved the modeling platforms and modeling inputs used to identify states with contributions to certain downwind receptors that meet or exceed specified thresholds.  It also updated and improved its analysis for identifying any emissions within such states that constitute the state's significant contribution to nonattainment or interference with maintenance.  Therefore, the results of the analysis conducted for the final rule differ somewhat from the results of the analysis conducted for the proposal.
      With respect to the 1997 ozone NAAQS, the analysis EPA conducted for the proposal did not identify Wisconsin, Iowa and Missouri as states that significantly contribute to nonattainment or interfere with maintenance of the ozone NAAQS in another state.  However, the analysis conducted for the final rule shows that emissions from these states do significantly contribute to nonattainment or interfere with maintenance of the ozone NAAQS in another state.  EPA is not issuing FIPs with respect to the 1997 ozone NAAQS or finalizing ozone season NOX budgets for these states in this rule.  EPA is publishing a supplemental notice of proposed rulemaking that will provide an opportunity for public comment on our conclusion that these states significantly contribute to nonattainment or interfere with maintenance of the 1997 ozone NAAQS.
      In the other direction, the analysis conducted for the proposal supported EPA's conclusion at the time that Connecticut, Delaware, and the District of Columbia significantly contributed to nonattainment or interfered with maintenance with respect to the 1997 ozone NAAQS, whereas the modeling for the final rule no longer supports that conclusion for those states.
      Additionally, the modeling conducted for the final rule identified two ozone maintenance receptors that were not identified in the modeling conducted for the proposal -- Allegan County (MI) and Harford County (MD).  Five states that EPA identified as significantly contributing to maintenance problems at the Allegan and/or Harford County receptors in the modeling for the final rule uniquely contribute to these receptors, i.e., absent these receptors the states would not be covered by the Transport Rule ozone-season program.  The five states that uniquely contribute to these receptors are Iowa, Kansas, Michigan, Oklahoma, and Wisconsin.  EPA is not issuing FIPs with respect to the 1997 ozone NAAQS or finalizing ozone-season NOX budgets for these states in this rule.  EPA is publishing a supplemental notice of proposed rulemaking that will provide an opportunity for public comment on our conclusion that these states significantly contribute to nonattainment or interfere with maintenance of the 1997 ozone NAAQS.
      EPA did not change its methodology between the proposed Transport Rule and the final Transport Rule for identifying upwind states that significantly contribute to nonattainment or interfere with maintenance in other states; nor did EPA change its methodology for identifying receptors of concern with respect to maintenance of the 1997 ozone NAAQS.  The final rule's air quality modeling identifies the new states and new receptors described above based on updated input information (including emission inventories), much of which was provided to EPA through public comment on the proposal and subsequent NODAs.  Section V of this preamble details the approach EPA used to identify contributing states and receptors of concern.
      With respect to the annual PM2.5 NAAQS, the analysis EPA conducted for the proposal supported EPA's conclusion that the states of Delaware, the District of Columbia, Florida, Louisiana, Minnesota, New Jersey, and Virginia were significantly contributing to nonattainment and interfering with maintenance of the annual PM2.5 NAAQS while the final rule's analysis does not.  Also, with respect to the 24-hour PM2.5 NAAQS, the analysis conducted for the proposal supported EPA's conclusion that the states of Connecticut, Delaware, the District of Columbia, and Massachusetts were significantly contributing to nonattainment or interfering with maintenance in other states while the analysis conducted for the final rule did not.
      In the proposal EPA also requested comment on whether Texas should be included in the Transport Rule for annual PM2.5.  EPA's analysis for the proposal showed that emissions in Texas would significantly contribute to nonattainment or interfere with maintenance of the annual PM2.5 NAAQS if Texas were not included in the rule for PM2.5.  The proposal did not include an illustrative budget for Texas or illustrative allowance allocations.  However, the budgets and allowance allocations provided for other states in the proposal were included solely to illustrate the result of applying EPA's proposed methodology for quantifying significant contribution to the data EPA proposed to use.  EPA provided an ample opportunity for comment on this methodology and on the data, including data regarding emissions from Texas sources, used in the significant contribution analysis.  EPA received numerous comments on and corrections to Texas-specific data.  The modeling conducted for the final rule demonstrates that Texas significantly contributes to nonattainment or interferes with maintenance of the annual PM2.5 NAAQS in another state.  EPA provided a full opportunity for comment on whether Texas should be included in the rule for annual PM2.5, as well as on the methodology and data used for the significant contribution analysis for the final rule.  EPA therefore believes its determination that Texas must be included in the rule for annual PM2.5 is a logical outgrowth of its proposal.
      With respect to the 24-hour PM2.5 NAAQS, the analysis EPA conducted for the proposal did not identify Texas as a state that significantly contributes to nonattainment or interferes with maintenance of 24-hour PM2.5 in another state.  However, the analysis conducted for the final rule shows that emissions from Texas do significantly contribute to nonattainment of the 24-hour PM2.5 NAAQS in another state.  EPA is not issuing a FIP for Texas with respect to the 24-hour PM2.5 NAAQS in this rule, and is requesting comment, in a supplemental notice of proposed rulemaking, on its conclusion that Texas significantly contributes to nonattainment of the 24-hour PM2.5 NAAQS in another state.  EPA is, however, issuing a FIP for Texas with respect to the annual PM2.5 NAAQS in this rule.
      The final rule, however, does not cover the states of Connecticut, Delaware, the District of Columbia, Florida, Louisiana, or Massachusetts for annual or 24-hour PM2.5 as the analysis for the final rule does not support their inclusion.
      The Transport Rule FIPs require the 23 states covered for purposes of the 24-hour and/or annual PM2.5 NAAQS to reduce SO2 and annual NOX emissions by specified amounts.  The FIPs require the 20 states covered for purposes of the ozone NAAQS to reduce ozone-season NOX emissions by specified amounts.  As discussed in detail in section VI, below, the 23 states covered for the 24-hour and/or annual PM2.5 NAAQS are grouped in two tiers reflecting the stringency of SO2 reductions required to eliminate that state's significant contribution to nonattainment and interference with maintenance downwind.  The more-stringent SO2 tier ("Group 1") is comprised of the 16 states indicated in Table III-1, above, and the less-stringent SO2 tier ("Group 2") is comprised of the 7 states identified in the table.  The two SO2 trading programs are exclusive, i.e., a covered source in a Group 1 state may use only a Group 1 allowance for compliance, and likewise a source in a Group 2 state may use only a Group 2 allowance for compliance.  In Group 1 states, the SO2 reduction requirements become more stringent in the second phase, which starts in 2014.
      In response to the Court's opinion in North Carolina, EPA has coordinated the Transport Rule's compliance deadlines with the NAAQS attainment deadlines that apply to the downwind nonattainment and maintenance areas.  The Transport Rule requires that all significant contribution to nonattainment and interference with maintenance identified in this action with respect to the 1997 annual PM2.5 NAAQS and the 2006 24-hour PM2.5 NAAQS be eliminated by no later than 2014, with an initial phase of reductions starting in 2012 to ensure that reductions are made as expeditiously as practicable and, consistent with the Court's remand, to "preserve the environmental values covered by CAIR."  Sources must comply by January 1, 2012 and January 1, 2014 for the first and second phases, respectively.
      With respect to the 1997 ozone NAAQS, the Transport Rule requires NOX reductions starting in 2012 to ensure that reductions are made as expeditiously as practicable to assist downwind state attainment and maintenance of the standard.  Sources must comply by May 1, 2012.  The Transport Rule's compliance schedule and alignment with downwind NAAQS attainment deadlines are discussed in detail in section VII below.
      Table III-2 shows projected Transport Rule emissions compared to projected base case emissions, and Table III-3 shows projected Transport Rule emissions compared to historical emissions (i.e., 2005 emissions), for the power sector in all Transport Rule states.  The ozone-season NOX results shown in Tables III-2 and III-3 are based on analysis of the group of 26 states that would be covered for the ozone-season program if EPA finalizes the supplemental proposal regarding ozone-season requirements for Iowa, Kansas, Michigan, Missouri, Oklahoma, and Wisconsin.
Table III-2  -  Projected SO2 and NOX Electric Generating Unit Emission Reductions in Covered States with the Transport Rule Compared to Base Case without Transport Rule or CAIR
                                (Million Tons)

                                     2012
                                   Base Case
                                   Emissions
                         2012 Transport Rule Emissions
                                     2012
                              Emission Reductions
                                     2014
                              Base Case Emissions
                         2014 Transport Rule Emissions
                                     2014
                              Emission Reductions
SO2
                                      7.0
                                      3.0
                                      4.0
                                      6.2
                                      2.4
                                      3.9
Annual NOX
                                      1.4
                                      1.3
                                      0.1
                                      1.4
                                      1.2
                                      0.2
Ozone-Season NOX
                                      0.7
                                      0.6
                                      0.1
                                      0.7
                                      0.6
                                      0.1
*Note that numbers may not sum exactly due to rounding.

Notes:
 The SO2 and annual NOX emissions in this table reflect EGUs in the 23 states covered by this rule for purposes of the 24-hour and/or annual PM2.5 NAAQS (Alabama, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Maryland, Michigan, Minnesota, Missouri, Nebraska, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, West Virginia, and Wisconsin).
 The ozone-season NOX emissions reflect EGUs in the 20 states covered by this rule for purposes of the ozone NAAQS (Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Kentucky, Louisiana, Maryland, Mississippi, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, and West Virginia) and the six states that would be covered for the ozone NAAQS if EPA finalizes its supplemental proposal (Iowa, Kansas, Michigan, Missouri, Oklahoma, and Wisconsin).

Table III-3  -  Projected SO2 and NOX Electric Generating Unit Emission Reductions in Covered States with the Transport Rule Compared to 2005 Actual Emissions
                                (Million Tons)

                             2005 Actual Emissions
                              2012 Transport Rule
                                   Emissions
                                     2012
                                   Emissions
                             Reductions from 2005
                              2014 Transport Rule
                                   Emissions
                                     2014
                                   Emissions
                             Reductions from 2005
                                      SO2
                                      8.8
                                      3.0
                                      5.8
                                      2.4
                                      6.4
                                  Annual NOX
                                      2.6
                                      1.3
                                      1.3
                                      1.2
                                      1.4
                               Ozone-Season NOX
                                      0.9
                                      0.6
                                      0.3
                                      0.6
                                      0.3

 Notes:
 The SO2 and annual NOX emissions in this table reflect EGUs in the 23 states covered by this rule for purposes of the 24-hour and/or annual PM2.5 NAAQS (Alabama, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Maryland, Michigan, Minnesota, Missouri, Nebraska, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, West Virginia, and Wisconsin).
 The ozone-season NOX emissions reflect EGUs in the 20 states covered by this rule for purposes of the ozone NAAQS (Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Kentucky, Louisiana, Maryland, Mississippi, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, and West Virginia) and the six states that would be covered for the ozone NAAQS if EPA finalizes its supplemental proposal (Iowa, Kansas, Michigan, Missouri, Oklahoma, and Wisconsin).

     In addition to the emission reductions shown above, EPA projects other substantial benefits of the Transport Rule, as described in section VIII in this preamble.  EPA used air quality modeling to quantify the improvements in PM2.5 and ozone concentrations that are expected to result from the Transport Rule emission reductions in 2014.  The Agency used the results of this modeling to calculate the average and peak reduction in annual PM2.5, 24-hour PM2.5, and 8-hour ozone concentrations for monitoring sites in the Transport Rule covered states (including the six states for which EPA issued a supplemental proposal for ozone-season NOX requirements) in 2014.
     For annual PM2.5, the average reduction across all monitoring sites in covered states in 2014 is 1.41 microgram per meter cubed (ug/m[3]) and the greatest reduction at a single site is 3.60 ug/m[3].  For 24-hour PM2.5, the average reduction across all monitoring sites in covered states in 2014 is 4.3 ug/m[3] and the greatest reduction at a single site is 11.6 ug/m[3].  And finally, for 8-hour ozone, the average reduction across all monitoring sites in covered states in 2014 is 0.3 parts per billion (ppb) and the greatest is 3.9 ppb.  See section VIII for further information on air quality improvements.  [PLACEHOLDER FOR CAVEAT REGARDING REMEDY ANALYSIS AND REVISED VARIABILITY LIMITS]
 EPA estimated the Transport Rule's costs and benefits, including effects on sensitive and vulnerable and environmental justice communities.  Table III-4, below, summarizes some of these results.  Further discussion of the results is provided in preamble section VIII, below, and in the Regulatory Impact Analysis (RIA).  Estimates here are subject to uncertainties discussed further in the RIA.

Table III-4.  Summary of Annual Benefits, Costs, and Net Benefits of the Final Transport Rule in 2014
                            (Billions of 2007$)[a]
                                  Description
                             Transport Rule Remedy
Social costs

   3 % discount rate
$0.81
   7 % discount rate
$0.81
Total monetized benefits[b]

   3 % discount rate
   7 % discount rate
$120 to $280
$110 to $250
Net benefits (benefits-costs)

   3 % discount rate
   7 % discount rate
$120 to $280
$100 to $250
[a] All estimates are for 2014, and are rounded to two significant figures.
[b] The total monetized benefits reflect the human health benefits associated with reducing exposure to PM2.5 and ozone and the welfare benefits associated with improved visibility in Class I areas. The reduction in premature mortalities account for over 90 percent of total monetized PM2.5 and ozone benefits.

 As a result of updated analyses and in response to public comments, the final Transport Rule differs from the proposal in a number of ways.  The differences between proposal and final rule are discussed throughout this preamble.  Some key changes between proposal and final rule are that EPA:
   * Updated emission inventories (resulting in generally lower base case emissions).  See section V.
   * Updated modeling and analysis tools (including improved alignment between air quality estimates and air quality modeling results).  See sections V and VI.
   * Updated conclusions regarding which states significantly contribute to nonattainment or interfere with maintenance of the NAAQS in other states.  See Table III-1 and sections V and VI.
   * Recalculated state budgets and variability limits, i.e., state assurance levels, based on updated modeling.  See section VI.
   * Simplified variability limits for one-year application only.  See section VI.
   * Revised allocation methodology for existing and new units and revised new unit set-asides for new units in Transport Rule states and new units potentially locating in Indian country.  See section VII.
   * Changed start of assurance provisions to 2012 and increased assurance provision penalties.  See section VII.
   * Removed opt-in provisions.  See section VII.
   * Added provisions for full and abbreviated Transport Rule SIP revisions.  See section X.

      EPA conducted substantial stakeholder outreach in developing the Transport Rule, starting with a series of "listening sessions" in the spring of 2009 with states, nongovernmental organizations, and industry.  EPA docketed stakeholder-related materials in the Transport Rule docket (Docket ID No. EPA-HQ-OAR-2009-0491).  The Agency conducted general teleconferences on the rule with tribal environmental professionals, conducted consultation with tribal governments, and hosted a webinar for communities and tribal governments.  EPA continued to provide updates to regulatory partners and stakeholders through several conference calls with states as well as at conferences where EPA officials often made presentations.  The Agency conducted additional stakeholder outreach during the public comment period.  EPA responded to extensive public comments received during the public comment periods on the proposed rule and associated NODAs.
      This Transport Rule is one of a series of regulatory actions to reduce the adverse health and environmental impacts of the power sector.  EPA is developing these rules to address judicial review of previous rulemakings and to issue rules required by environmental laws.  Finalizing these rules will effectuate health and environmental protection mandated by Congress while substantially reducing uncertainty over the future regulatory obligations of power plants, which will assist the power sector in planning for compliance more cost effectively.  The Agency is providing full opportunity for notice and comment for each rule.
      As discussed above, rules to address transport under revised NAAQS, including the reconsidered 2008 ozone NAAQS, may result in additional emission reduction requirements for the power sector.  In addition, existing Clean Air Act rules establishing best available retrofit technology (BART) requirements and other requirements for addressing visibility and regional haze may also result in future state requirements for certain power plant emission reductions where needed.
      On May 3, 2011 (76 FR 24976), EPA proposed national emission standards for hazardous air pollutants from coal- and oil-fired electric utility steam generating units under CAA section 112(d), also called Mercury and Air Toxics Standards (MATS), and proposed revised new source performance standards for fossil fuel-fired EGUs under section 111(b).  As discussed in the EPA-led public listening sessions during February and March 2011, EPA is preparing to propose innovative, cost-effective and flexible greenhouse gas (GHG) emissions performance standards under section 111 for steam electric generating units, the largest U.S. source of greenhouse gas emissions.  On April 20, 2011 (76 FR 22174), EPA proposed requirements under section 316(b) of the Clean Water Act for existing power generating facilities, manufacturing and industrial facilities that withdraw more than two million gallons per day of water from waters of the U.S. and use at least twenty-five percent of that water exclusively for cooling purposes.  On June 21, 2010 (75 FR 35128), the Agency proposed to regulate coal combustion residuals (CCRs) under the Resource Conservation and Recovery Act to address the risks from the disposal of CCRs generated from the combustion of coal at electric utilities and independent power producers.
      EPA will coordinate utility-related air pollution rules with each other and with other actions affecting the power sector including these rules from EPA's Office of Water and its Office of Resource Conservation and Recovery to the extent consistent with legal authority in order to provide timely information needed to support regulated sources in making informed decisions.  Use of a small number of air pollution control technologies, widely deployed, can assist with compliance for multiple rules.  EPA also notes that the flexibility inherent in the allowance-trading mechanism included in the Transport Rule affords utilities themselves a degree of latitude to determine how best to integrate compliance with the emissions reduction requirements of this rule and those of the other rules.  EPA will pursue energy efficiency improvements in the use of electricity throughout the economy, along with other federal agencies, states and other groups, which will contribute to additional environmental and public health improvements while lowering the costs of realizing those improvements.
IV. Legal Authority, Environmental Basis, and Correction of CAIR SIP Approvals
A. EPA's Authority for Transport Rule
      The statutory authority for this action is provided by the CAA, as amended, 42 U.S.C. § 7401 et. seq.  Section 110(a)(2)(D) of the CAA, often referred to as the "good neighbor" provision of the Act, requires states to prohibit certain emissions because of their impact on air quality in downwind states.  Specifically, it requires all states, within 3 years of promulgation of a new or revised NAAQS, to submit SIPs that prohibit certain emissions of air pollutants because of the impact they would have on air quality in other states.  42 U.S.C. § 7410(a)(2)(D).  This action addresses the requirement in section 110(a)(2)(D)(i)(I) regarding the prohibition of emissions within a state that will significantly contribute to nonattainment or interfere with maintenance of the NAAQS in any other state.  EPA has previously issued two rules interpreting and clarifying the requirements of section 110(a)(2)(D)(i)(I).  The NOX SIP Call, promulgated in 1998, was largely upheld by the U.S. Court of Appeals for the D.C. Circuit in Michigan, 213 F.3d 663.  CAIR, promulgated in 2005, was remanded by the D.C. Circuit in North Carolina, 531 F.3d 896, modified on reh'g, 550 F.3d. 1176.  These decisions provide additional guidance regarding the requirements of section 110(a)(2)(D)(i)(I) and are discussed later in this notice.
      Section 301(a)(1) of the CAA also gives the Administrator of EPA general authority to prescribe such regulations as are necessary to carry out her functions under the Act.  42 U.S.C. § 7601(a)(1).  Pursuant to this section, EPA has authority to clarify the applicability of CAA requirements.  In this action, among other things, EPA is clarifying the applicability of section 110(a)(2)(D)(i)(I) by identifying SO2 and NOX emissions that must be prohibited pursuant to this section with respect to the PM2.5 NAAQS promulgated in 1997 and 2006 and the 8-hour ozone NAAQS promulgated in 1997.
      Section 110(c)(1) requires the Administrator to promulgate a FIP at any time within 2 years after the Administrator finds that a state has failed to make a required SIP submission, finds a SIP submission to be incomplete or disapproves a SIP submission unless the state corrects the deficiency, and the Administrator approves the SIP revision, before the Administrator promulgates a FIP.  42 U.S.C. § 7410(c)(1).
      Tribes are not required to submit state implementation plans.  However, as explained in EPA's regulations outlining Tribal Clean Air Act authority, EPA is authorized to promulgate FIPs for Indian country as necessary or appropriate to protect air quality if a tribe does not submit and get EPA approval of an implementation plan.  See 40 CFR 49.11(a); see also 42 U.S.C.section 7601(d)(4).
      Section 110(k)(6) of the CAA gives the Administrator authority, without any further submission from a state, to revise certain prior actions, including actions to approve SIPs, upon determining that those actions were in error.
B. Rulemaking History
      The Transport Rule FIPs will limit the interstate transport of emissions of NOX and SO2 within 27 states in the eastern, midwestern, and southern United States that affect the ability of downwind states to attain and maintain compliance with the 1997 and 2006 PM2.5 NAAQS and the 1997 ozone NAAQS.  Prior to this Transport Rule, CAIR was EPA's most recent regulatory action in a longstanding series of regulatory initiatives to address interstate transport of air pollution.  The proposed Transport Rule preamble provides more information on EPA actions prior to CAIR (75 FR 45221-45225).
      CAIR, promulgated May 12, 2005 (70 FR 25162), required 29 states to adopt and submit revisions to their SIPs to eliminate SO2 and NOX emissions that contribute significantly to downwind nonattainment of the PM2.5 and ozone NAAQS promulgated in 1997.  The states covered by CAIR were similar but not identical to the states covered by the Transport Rule.  The CAIR FIPs, promulgated April 26, 2006 (71 FR 25328), regulated electric generating units in the covered states and achieved CAIR's emission reductions requirements unless or until states had approved SIPs to achieve the required reductions.
      In July 2008, the D.C. Circuit Court found CAIR and the CAIR FIPs unlawful and vacated CAIR.  North Carolina, 531 F.3d at 929-30.  However, the Court subsequently remanded CAIR to EPA without vacatur in order to "at least temporarily preserve the environmental values covered by CAIR."  North Carolina, 550 F.3d at 1178.  CAIR requirements have remained in place and CAIR's emissions trading programs have operated while EPA developed replacement rules in response to the remand.
      By promulgating the Transport Rule FIPs, EPA is responding to the Court's remand of CAIR and the CAIR FIPs and replacing those rules.  The approaches EPA used in the Transport Rule to measure and address each state's significant contribution to downwind nonattainment and interference with maintenance are guided by and consistent with the Court's opinion in North Carolina and address the flaws in CAIR identified by the Court therein.
      By notice of proposed rulemaking (Federal Implementation Plans To Reduce Interstate Transport of Fine Particulate Matter and Ozone, 75 FR 45210; August 2, 2010), EPA proposed the Transport Rule to identify and limit NOX and SO2 emissions within 32 states in the eastern, midwestern, and southern United States that affect the ability of downwind states to attain and maintain compliance with the 1997 and 2006 PM2.5 NAAQS and the 1997 ozone NAAQS. EPA proposed to achieve the emission reductions under FIPs, which states may choose to replace by submitting SIPs for EPA approval.  EPA proposed to limit emissions by regulating electric generating units in the 32 states with interstate emissions trading programs and assurance provisions to ensure the required reductions occur in each covered state. EPA also requested comment on two alternative FIP remedies.
      EPA supplemented the Transport Rule record with additional information relevant to the rulemaking in three NODAs for which EPA requested comments:
   * Notice of Data Availability Supporting Federal Implementation Plans to Reduce Interstate Transport of Fine Particulate Matter and Ozone (75 FR 53613; September 1, 2010).  This NODA provided an updated database of unit-level characteristics of EGUs included in EPA modeling, an updated version of the power sector modeling platform EPA used to support the final rule, and other input assumptions and data EPA provided for public review and comment.
   * Notice of Data Availability Supporting Federal Implementation Plans To Reduce Interstate Transport of Fine Particulate Matter and Ozone: Revisions to Emission Inventories (75 FR 66055; October 27, 2010).  This NODA provided additional information relevant to the rulemaking, including updated emission inventory data for 2005, 2012 and 2014 for several stationary and mobile source inventory components.
   * Notice of Data Availability for Federal Implementation Plans To Reduce Interstate Transport of Fine Particulate Matter and Ozone: Request for Comment on Alternative Allocations, Calculation of Assurance Provision Allowance Surrender Requirements, New-Unit Allocations in Indian Country, and Allocations by States (76 FR 1109; January 7, 2011).  This NODA provided additional information relevant to the rulemaking, including emissions allowance allocations for existing units calculated using two alternative methodologies, data supporting those calculations, information about an alternative approach to calculation of assurance provision allowance surrender requirements, allocations for new units locating in Indian country in Transport Rule states in the future, and provisions for states to submit SIPs providing for state allocation of allowances in the Transport Rule trading programs.
C. Air Quality Problems and NAAQS Addressed

1. Air Quality Problems and NAAQS Addressed
a. Fine Particles
      Fine particles are associated with a number of serious health effects including premature mortality, aggravation of respiratory and cardiovascular disease (as indicated by increased hospital admissions, emergency room visits, health-related absences from school or work, and restricted activity days), lung disease, decreased lung function, asthma attacks, and certain cardiovascular problems.  In addition to effects on public health, fine particles are linked to a number of public welfare effects, including (1) reduced visibility (haze) in scenic areas, (2) effects caused by particles settling on ground or water, such as: making lakes and streams acidic, changing the nutrient balance in coastal waters and large river basins, depleting the nutrients in soil, damaging sensitive forests and farm crops, and affecting the diversity of ecosystems, and (3) staining and damaging of stone and other materials, including culturally important objects such as statues and monuments.
      In 1997, EPA revised the NAAQS for PM to add new annual and 24 - hour standards for fine particles, using PM2.5 as the indicator (62 FR 38652).  These revisions established an annual standard of 15 ug/m[3] and a 24-hour standard of 65 ug/m[3].  During 2006, EPA revised the air quality standards for PM2.5.  The 2006 standards decreased the level of the 24-hour fine particle standard from 65 ug/m[3] to 35 ug/m[3], and retained the annual fine particle standard at 15 ug/m[3].
b. Ozone
      Short-term (1- to 3-hour) and prolonged (6- to 8-hour) exposures to ambient ozone have been linked to a number of adverse health effects.  At sufficient concentrations, short-term exposure to ozone can irritate the respiratory system, causing coughing, throat irritation, and chest pain.  Ozone can reduce lung function and make it more difficult to breathe deeply.  Breathing may become more rapid and shallow than normal, thereby limiting a person's normal activity.  Ozone also can aggravate asthma, leading to more asthma attacks that may require a doctor's attention and the use of additional medication.  Increased hospital admissions and emergency room visits for respiratory problems have been associated with ambient ozone exposures.  Longer-term ozone exposure can inflame and damage the lining of the lungs, which may lead to permanent changes in lung tissue and irreversible reductions in lung function.  A lower quality of life may result if the inflammation occurs repeatedly over a long time period (such as months, years, or a lifetime).  There is also epidemiological evidence indicating a correlation between short-term ozone exposure and premature mortality.
      In addition to causing adverse health effects, ozone affects vegetation and ecosystems, leading to reductions in agricultural crop and commercial forest yields; reduced growth and survivability of tree seedlings; and increased plant susceptibility to disease, pests, and other environmental stresses (e.g., harsh weather).  In long-lived species, these effects may become evident only after several years or even decades and have the potential for long-term adverse impacts on forest ecosystems.  Ozone damage to the foliage of trees and other plants can also decrease the aesthetic value of ornamental species used in residential landscaping, as well as the natural beauty of our national parks and recreation areas.  In 1997, at the same time we revised the PM2.5 standards, EPA issued its final action to revise the NAAQS for ozone (62 FR 38856) to establish new 8 - hour standards.  In this action published on July 18, 1997, we promulgated identical revised primary and secondary ozone standards that specified an 8-hour ozone standard of 0.08 parts per million (ppm).  Specifically, the standards require that the 3-year average of the fourth highest 24-hour maximum 8-hour average ozone concentration may not exceed 0.08 ppm.  In general, the 8-hour standards are more protective of public health and the environment and more stringent than the pre-existing 1-hour ozone standards.
On March 12, 2008, EPA published a revision to the 8-hour ozone standard, lowering the level from 0.08 ppm to 0.075 ppm.  On September 16, 2009, EPA announced it would reconsider these 2008 ozone standards.  The purpose of the reconsideration is to ensure that the ozone standards are clearly grounded in science, protect public health with an adequate margin of safety, and are sufficient to protect the environment.  EPA proposed revisions to the standards on January 19, 2010 (75 FR 2938) and anticipates issuing final standards soon.
c. Which NAAQS does this rule address?
      This action addresses the requirements of CAA section 110(a)(2)(D)(i)(I) as they relate to:
(1) the 1997 annual PM2.5 standard,
(2) the 2006 24-hour PM2.5 standard, and
(3) the 1997 ozone standard.
      The original CAIR and CAIR FIP rules, which pre-dated the 2006 PM2.5 standards, addressed the 1997 ozone and 1997 PM2.5 standards only.
      In this action, EPA fully addresses, for the states covered by this rule, the requirements of CAA section 110(a)(2)(D)(i)(I) for the annual PM2.5 standard of 15 ug/m[3] and the 24-hour standard of 35 ug/m[3].  For the 1997 8-hour ozone standard of 0.08 ppm, EPA fully addresses the CAA section 110(a)(2)(D)(i)(I) requirements for some states covered by this rule, but for the remaining states EPA is conducting further analysis to determine whether further requirements are needed, as discussed in section III of this preamble.
      This action does not address the CAA section 110(a)(2)(D)(i)(I) requirements for the revised ozone standards promulgated in 2008.  These standards are currently under reconsideration.  We are, however, actively conducting the technical analyses and other work needed to address interstate transport for the reconsidered ozone standard as soon as possible.  We intend to issue as soon as possible a proposal to address the transport requirements with respect to the reconsidered standard.
      This action addresses these CAA transport requirements through reductions in annual emissions of SO2 and NOX, and through reductions in ozone-season NOX.  The rationale for these reductions is discussed in detail later in the preamble.
d. Public comments.
      EPA received comments on two issues related to the NAAQS regulated under the proposed FIPs.
      A number of commenters believed that EPA's approach to ozone was inadequate, and that EPA should not have based the proposed requirements on the 1997 ozone NAAQS.  These commenters cited EPA's 2008 revision to the standard which lowered the standard to 75 ppb, and noted that EPA's January 2010 proposal for reconsidered ozone NAAQS would, if finalized, further lower the primary NAAQS from 75 ppb to a value between 60 and 70 ppb.  Accordingly, many of the commenters believed that EPA should have considered the 75 ppb level to be the maximum possible value moving forward, and that EPA should have used a value no greater than 75 ppb in its analysis.
      EPA agrees with commenters that EPA and states should address interstate transport with respect to the tighter ozone NAAQS as quickly as possible.  EPA, as commenters noted, intends to propose a second rule to address interstate transport of ozone that will be appropriately configured for the revised level of the ozone NAAQS after reconsideration of the 2008 standard is finalized.   EPA is mindful of the need for SIPs to provide for continuing ozone progress to meet the 75 ppb level of the 2008 NAAQS, or possibly lower levels based on the reconsideration.   EPA believes that the ozone-season NOX requirements of this rule will provide important initial assistance to states in this regard.
    Some commenters questioned whether EPA had given states the opportunity to provide SIPs addressing transport under the 2006 PM2.5 NAAQS, and thus questioned the appropriateness of the issuance of FIPs addressing those NAAQS.  Those comments, and EPA's response, are discussed in detail in section IV.C.2.
   1. FIP Authority for each State and NAAQS Covered
            The Clean Air Act requires and authorizes EPA to promulgate each of the Federal Implementation Plans in this final rule.  Section 110(c)(1) of the Clean Air Act requires the Administrator to promulgate a Federal Implementation Plan (FIP) at any time within 2 years after the Administrator takes one of three distinct actions: (1) she finds that a state has failed to make a required SIP submission; (2) she finds a SIP submission to be incomplete; or (3) she disapproves a SIP submission.  Once the Administrator has taken one of these actions with respect to a specific state's 110(a)(2)(D)(i)(I) obligation for a specific NAAQS, she has a legal obligation to promulgate a FIP to correct the SIP deficiency within two years.  EPA is relieved of the obligation to promulgate a FIP only if two events occur before the FIP is promulgated: (1) the state submits a SIP correcting the deficiency; and (2) the Administrator approves the SIP revision.  42 U.S.C. § 7410(c)(1).
      For each FIP in this rule, EPA either has found that the state has failed to make a required 110(a)(2)(D)(i)(I) SIP submission, or has disapproved a SIP submission.  In addition, EPA has determined, in each case, that there has been no approval by the Administrator of a SIP submission correcting the deficiency prior to promulgation of the FIP.  EPA's obligation to promulgate a FIP arose when the finding of failure to submit or disapproval was made, and in no case has it been relieved of that obligation.

      Some commenters argued that EPA was relieved of its obligation to promulgate FIPs when it approved the CAIR SIPs for certain states.  As an initial matter, EPA notes that this argument applies only to EPA's authority to promulgate FIPs with respect to the 1997 PM2.5 and/or 1997 ozone NAAQS for a subset of states covered by the CAIR.  It does not apply to EPA's authority to promulgate FIPs for the 2006 PM2.5 NAAQS which was not addressed in CAIR.  It also does not apply to EPA's authority to promulgate FIPs for the 1997 ozone and 1997 PM2.5 NAAQS for states that remain subject to the CAIR FIPs, including the states that received EPA approval of abbreviated CAIR SIPs which allowed the states to allocate allowances while remaining subject to the CAIR FIPs.
      Further, the CAIR SIP approvals do not eliminate EPA's obligation and authority to promulgate a FIP to address the requirements of 110(a)(2)(D)(i)(I) because the court in North Carolina v. EPA, 531 F.3d 896 (D.C. Cir. 2008) found that compliance with CAIR does not satisfy the requirement that each state prohibit all emissions within the state that significantly contribute to nonattainment or interfere with maintenance in another state.  The court's finding that CAIR was unlawful because it did not make measureable progress towards the statutory mandate of section 110(a)(2)(D)(i)(I) meant that the CAIR SIPs were not adequate to satisfy that mandate.  The CAIR SIPs thus do not correct the SIP deficiencies identified in the 2005 findings of failure to submit.  The SIPs remained in force for the limited purpose allowed by the Court  -  that is, to achieve interim reductions until EPA promulgated a rule to replace CAIR.  Given the flaws the court identified with CAIR, EPA's approval of a CAIR SIP does not relieve it of the obligation to promulgate FIPs created under section 110(c)(1) of the CAA.
      Further, to avoid any confusion, EPA has decided to correct, in this notice the full CAIR SIP approvals for states covered by this rule to rescind any statements suggesting that the SIP submissions satisfied or relieved states of the obligation to submit SIPs to satisfy the requirements of section 110(a)(2)(D)(i)(I).
      Some commenters further argued that states should be given additional time following promulgation of the Transport Rule, to submit a SIP to meet the requirements of section 110(a)(2)(D)(i)(I) and that CAIR should remain in place in the meantime.  Some commenters specifically suggested that EPA restart the "FIP clock" to give states this additional time.  	EPA does not interpret the Clean Air Act as giving it authority to extend the deadline for SIP submissions or restart the FIP clock.  And nothing in the Act requires EPA to give the states another opportunity, following promulgation of the Transport Rule, to promulgate a SIP before EPA promulgates a FIP.  The plain language of section 110(a)(1) of the Act requires the submission of SIPs that meet the requirements of 110(a)(2)(D)(i)(I) within three years after the promulgation of or revision of a primary NAAQS.  See 42 U.S.C. § 7410(a)(1).  Section 110(a)(2)(D)(i)(I) SIPs for the 1997 ozone and PM2.5 NAAQS were due in 2000 and 110(a)(2)(D)(i)(I) SIPs for the 2006 PM2.5 NAAQS were due in 2009.  While the statute gives EPA authority to prescribe a shorter period of time for states to make these SIP submissions, it does not give EPA authority to extend the 3-year deadline established by the Act.  See 42 U.S.C. § 7410(a)(1). The plain language of section 110(c)(1) of the Act, in turn, provides that EPA shall promulgate a FIP at any time within 2 years after the Administrator makes a finding of failure to make a required SIP submission of disapproves, in whole or in part, a SIP submission.  See 42 U.S.C. § 7410(c)(1).  EPA does not have authority to set aside the specific deadlines established in the statute, and neither provision allows for the deadlines to be extended or to run from promulgation by EPA of a rule to quantify the state's specific obligations pursuant to section 110(a)(2)(D)(i)(I).  The Act does not require EPA to promulgate a rule or issue guidance regarding the specific requirements of section 110(a)(2)(D)(i)(I) in advance of the SIP submittal deadline, much less require EPA to promulgate such a rule a specific amount of time before the SIP submittal deadline.  For these reasons, EPA has neither authority to alter the SIP submittal deadline nor authority to alter the statute provision regarding when EPA's obligation to promulgate a FIP is triggered.
      Finally, EPA does not believe it would be appropriate, in light of the Court's decision in North Carolina, to establish a lengthy transition period to the rule that will replace CAIR.  The Court decision remanding CAIR without vacatur stressed the court's conclusion that CAIR was deeply flawed and emphasized EPA's obligation to remedy those flaws expeditiously.  North Carolina, 550 F.3d 1176. Although the Court did not set a specific deadline for corrective action, the Court took care to note that the effect of its opinion would not be delayed "indefinitely" and that petitioners could bring a mandamus petition if EPA were to fail to modify CAIR in a manner consistent with its prior opinion.  Id.  Given the Court's emphasis on remedying CAIR's flaws expeditiously, EPA does not believe it would be appropriate to establish a lengthy transition period to the rule which is to replace CAIR.

3.  Additional Information Regarding CAA Section 110(a)(2)(D)(i)(I) SIPs for States in the Transport Rule Modeling Domain
      This final rule evaluates out-of-state contributions for the 38 states that are fully contained within the 12 km eastern U.S. modeling domain.  EPA is making no specific finding for states that are not fully contained within the eastern 12 km modeling domain. EPA did not conduct a contribution analysis or make any specific finding for New Mexico, Colorado, Wyoming, and Montana since they are only partially contained within the 12 km modeling domain.  With regard to the 1997 PM2.5 NAAQS and 2006 PM2.5 NAAQS, EPA believes that states that are included in this 38 state modeling domain will meet their section 110(a)(2)(D)(i)(I) obligations to address the "significant contribution" and "interference with maintenance" requirements by complying with the requirements in this rule.  With regard to the 1997 ozone NAAQS, EPA believes that states that are included in this 38 state modeling domain will meet their section 110(a)(2)(D)(i)(I) obligations to address the "significant contribution" and "interference with maintenance" requirements by complying with the requirements in this rule, except for the 10 states upwind of either Houston or Baton Rouge (i.e., Alabama, Arkansas, Georgia, Illinois, Indiana, Kentucky, Louisiana, Mississippi, Tennessee, and Texas).  States that are in the 38 state modeling domain, and are not found to be contributing significantly to nonattainment or interfering with maintenance for any NAAQS evaluated in the modeling for the final rule, could rely on this analysis as technical support that their current SIP (for those states that have already submitted SIPs to address 110(a)(2)(D)(i)(I) requirements) is adequate to address the transport requirements of 110(a)(2)(D)(i)(I).  Additionally, if a state has never submitted an interstate transport SIP and intends to submit a SIP, the state can rely on the technical analysis in this rule for its SIP submission.  For example, this rule finds that South Carolina significantly contributes to nonattainment and interferes with maintenance of the 1997 ozone NAAQS and the 1997 PM2.5 NAAQS in downwind states.  The technical support for the rule does not show that South Carolina significantly contributes to nonattainment or interferes with maintenance of the 2006 PM2.5 NAAQS in downwind states.  EPA believes that South Carolina can make a negative declaration concluding that the state does not significantly contribute to nonattainment or interfere with maintenance in other states with regard to the 2006 PM2.5 NAAQS.
D. Correction of CAIR SIP Approvals
      In this action, EPA is also correcting its prior approvals of CAIR related SIP submissions from Alabama, Arkansas, Connecticut, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maryland, Massachusetts, Minnesota, Mississippi, Missouri, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Virginia and West Virginia to rescind any statements that the SIP submissions either satisfy or relieve the state of the obligation to submit a SIP to satisfy the requirements of section 110(a)(2)(D)(i)(I) with respect to the 1997 ozone and/or 1997 PM2.5 NAAQS.  This action is based on EPA's determination that those SIP approvals were in error to the extent they provided explicitly or implicitly that compliance with CAIR satisfies the requirements of 110(a)(2)(D)(i)(I) with respect to the 1997 ozone and 1997 PM2.5 NAAQS.  The July 2008 decision of the D.C. Circuit held, among other things, that the CAIR rule did not "achieve[] something measureable toward the goal of prohibiting sources `within the State' from contributing to nonattainment or interfering with maintenance in `any other State.'"  North Carolina, 531 F.3d 908; see also, e.g., id. at 916 (EPA not exercising its authority to make measureable progress towards the goals of section 110(a)(2)(D)(i)(I) because the emission budgets were insufficiently related to the statutory mandate).  EPA's actions to approve CAIR SIP submittals as satisfying the requirements of section 110(a)(2)(D)(i)(I), based on the flawed determination in CAIR that compliance with CAIR satisfied those statutory requirements, were thus in error as were the separate actions taken to approve section 110(a)(2)(D)(i)(I) submissions that relied wholly or in part on CAIR.
      The approval for Alabama entitled "Approval and Promulgation of Implementation Plans; Alabama; Clean Air Interstate Rule" which is hereby corrected was originally published in the Federal Register on October 1, 2007 (72 FR 55659).
      The approval for Arkansas entitled "Approval and Promulgation of Implementation Plans; Arkansas; Clean Air Interstate Rule Nitrogen Oxides Ozone Season Trading Program" which is hereby corrected was originally published in the Federal Register on September 26, 2007 (72 FR 54556).
      The approval for Connecticut entitled "Approval and Promulgation of Air Quality Implementation Plans; Connecticut; State Implementation Plan Revision to Implement the Clean Air Interstate Rule" which is hereby corrected was originally published in the Federal Register on January 24, 2008 (73 FR 4105) and the approval for Connecticut entitled "Approval and Promulgation of Air Quality Implementation Plans; Connecticut; Interstate Transport of Pollution" which is hereby corrected was originally published in the Federal Register on May 7, 2008 (73 FR 25516).
      The approval for Florida entitled "Approval and Promulgation of Implementation Plans; Florida; Clean Air Interstate Rule" which is hereby corrected was originally published in the Federal Register on October 12, 2007 (72 FR 58016).
      The approval for Georgia entitled "Approval and Promulgation of Implementation Plans; Georgia; Clean Air Interstate Rule" which is hereby corrected was originally published in the Federal Register on October 9, 2007 (72 FR 57202).
      The approval for Illinois entitled "Approval of Implementation Plans of Illinois: Clean Air Interstate Rule" which is hereby corrected was originally published in the Federal Register on October 16, 2007 (72 FR 58528).
      The approval for Indiana entitled "Approval and Promulgation of Air Quality Implementation Plans; Indiana; Clean Air Interstate Rule" which is hereby corrected was originally published in the Federal Register on October 22, 2007 (72 FR 59480) and November 29, 2010 (75 FR 72956).
      The approval for Iowa entitled "Approval and Promulgation of Implementation Plans; Iowa; Clean Air Interstate Rule" which is hereby corrected was originally published in the Federal Register on August 6, 2007 (72 FR 43539) and the approval for Iowa entitled "Approval and Promulgation of Implementation Plans; Iowa; Interstate Transport of Pollution" which is hereby corrected was originally published in the Federal Register on March 8, 2007 (72 FR 10380).
      The approval for Kentucky entitled "Approval of Implementation Plans of Kentucky: Clean Air Interstate Rule" which is hereby corrected was originally published in the Federal Register on October 4, 2007 (72 FR 56623).
      The approval for Louisiana entitled "Approval and Promulgation of Implementation Plans; Louisiana; Clean Air Interstate Rule Sulfur Dioxide Trading Program" which is hereby corrected was originally published in the Federal Register on July 20, 2007 (72 FR 39741) and the approval for Louisiana entitled  "Approval and Promulgation of Implementation Plans; Louisiana; Clean Air Interstate Rule Nitrogen Oxides Trading Program" which is hereby corrected was originally published in the Federal Register on September 28, 2007 (72 FR 55064).
      The approval for Maryland entitled "Approval and Promulgation of Air Quality Implementation Plans; Maryland; Clean Air Interstate Rule" which is hereby corrected was originally published in the Federal Register on October 30, 2009 (74 FR 56117).
      The approval for Massachusetts entitled "Approval and Promulgation of Air Quality Implementation Plans; Massachusetts; State Implementation Plan Revision to Implement the Clean Air Interstate Rule" which is hereby corrected was originally published in the Federal Register on December 3, 2007 (72 FR 67854).
      The approval for Minnesota entitled "Approval and Promulgation of Air Quality Implementation Plans; Minnesota; Interstate Transport of Pollution" which is hereby corrected was originally published in the Federal Register on June 2, 2008 (73 FR 31366).  The approval for Mississippi entitled "Approval and Promulgation of Implementation Plans; Mississippi: Clean Air Interstate Rule" which is hereby corrected was originally published in the Federal Register on October 3, 2007 (72 FR 56268).
      The approval for Missouri entitled "Approval and Promulgation of Implementation Plans; Missouri; Clean Air Interstate Rule" which is hereby corrected was originally published in the Federal Register on December 14, 2007 (72 FR 71073) and the approval of Missouri entitled "Approval and Promulgation of Implementation Plans; Missouri; Interstate Transport of Pollution" which is hereby corrected was originally published in the Federal Register on May 8, 2007 (75 FR 25975).
      The approval for New York entitled "Approval and Promulgation of Implementation Plans; New York: Clean Air Interstate Rule" which is hereby corrected was originally published in the Federal Register on January 24, 2008 (73 FR 4109).
      The approval for North Carolina entitled "Approval of Implementation Plans; North Carolina: Clean Air Interstate Rule" which is hereby corrected was originally published in the Federal Register on October 5, 2007 (72 FR 56914) and the approval for North Carolina entitled "Approval and Promulgation of Air quality Implementation Plans; North Carolina; Clean Air Interstate Rule" which is hereby corrected was originally published in the Federal Register on November 30, 2009 (74 FR 62496).
      The approval for Ohio entitled "Approval and Promulgation of Air Quality Implementation Plans; Ohio; Clean Air Interstate Rule" which is hereby corrected was originally published in the Federal Register on February 1, 2008 (73 FR 6034) and the approval for Ohio entitled "Approval and Promulgation of Air Quality Implementation Plans; Ohio; Clean Air Interstate Rule" which is hereby corrected was originally published in the Federal Register on September 25, 2009 (74 FR 48857).
      The approval for Pennsylvania entitled "Approval and Promulgation of Air Quality Implementation Plans; Pennsylvania; Clean Air Interstate Rule; NOX SIP Call Rule; Amendments to NOX Control Rules" which is hereby corrected was originally published in the Federal Register on December 10, 2009 (74 FR 65446).
      The approval for South Carolina entitled "Approval of Implementation Plans of South Carolina: Clean Air Interstate Rule" which is hereby corrected was originally published in the Federal Register on October 9, 2007 (72 FR 57209) and the approval for South Carolina entitled "Approval and Promulgation of Air Quality Implementation Plans; South Carolina; Clean Air Interstate Rule" which is hereby corrected was originally published on October 16, 2009 (74 FR 53167).
      The approval for Virginia entitled "Approval and Promulgation of Air Quality Implementation Plans; Virginia; Clean Air Interstate Rule Budget Trading Programs" which is hereby corrected was originally published in the Federal Register on December 28, 2007 (72 FR 73602).
      The approval for West Virginia entitled "Approval and Promulgation of Air Quality Implementation Plans; West Virginia; Clean Air Interstate Rule" which is hereby corrected was originally published in the Federal Register on December 18, 2007 (72 FR 71576) and the approval for West Virginia entitled "Approval and Promulgation of Air Quality Implementation Plans; West Virginia; Clean Air Interstate Rule" which is hereby corrected was originally published in the Federal Register on August 4, 2009 (74 FR 38536).EPA is taking this final action without prior opportunity for notice and comment because EPA finds, for good cause, that notice and public procedure thereon are unnecessary and not in the public interest.  Section 553(b)(B) of the Administrative Procedure Act provides that the notice and comment requirements in section 553 do not apply when the agency for good cause finds that notice and public procedure there on are impracticable, unnecessary, or contrary to the public interest.  5 U.S.C. § 553(b)(B).  Section 307(d)(1) of the CAA in turn provides that the requirements of section 307(d) do not apply in the case of a rule or circumstance referred to in section 553(b)(A) or section 553(b)(B) of the Administrative Procedure Act in Title 5.  42 § U.S.C. 7607(1).
      EPA finds that notice and public procedure are unnecessary because EPA has no discretion given the specific circumstances presented in this case.  EPA is bound by the decisions of the courts and must act in accordance with those decisions. EPA must accept the court's conclusion that compliance with CAIR does not satisfy the requirements of CAA section 110(a)(2)(D)(i)(I) and lacks discretion to reach a different conclusion.  This correction is a ministerial matter consistent with the decisions of the courts.  For these reasons, it is unnecessary to provide an opportunity for notice and comment.
V. Analysis of Downwind Air Quality and Upwind State Emissions
A.  Pollutants Regulated
      To address interstate transport of air pollution, EPA must choose which pollutants to regulate relevant to significant contribution to nonattainment or interference with maintenance of the NAAQS of concern downwind.  This section of the proposal discusses the pollutants regulated under the final Transport Rule.
1.  Background.
      Based on the understanding of scientific and technical information, as well as EPA's air quality modeling, EPA concluded for CAIR that it was both appropriate and necessary to focus on control of SO2 and NOX emissions as the most effective approach to reducing the contribution of interstate transport to PM2.5.  For CAIR, EPA did not include emissions limitations that affect other components of PM2.5, noting that "current information relating to sources and controls for other components identified in transported PM2.5 (carbonaceous particles, ammonium, and crustal materials) does not, at this time, provide an adequate basis for regulating the regional transport of emissions responsible for these PM2.5 components" (69 FR 4582).
      With respect to ozone transport, EPA has previously concluded that it is proper to focus on ozone-season NOX emissions.  For the CAIR and the NOX SIP call programs, EPA noted its reliance on the assessment of ozone transport made by the Ozone Transport Assessment Group (OTAG) in the mid-1990s.  The OTAG Regional and Urban Scale Modeling and Air Quality Analysis Work Groups concluded that regional NOX emission reductions are effective in producing ozone benefits and that benefits grew with increased regional NOX abatement.
      The relative importance of NOX and VOC in ozone formation and control varies with local and time-specific factors, including the relative amounts of VOC and NOX present. In rural areas and many urban areas with high concentrations of VOC from biogenic sources, ozone formation and control is governed by NOX. In some urban core situations, NOX concentrations can be high enough relative to VOC to suppress ozone formation locally, but still contribute to increased ozone downwind from the city. In such situations, VOC reductions are most effective at reducing ozone within the urban environment and immediately downwind. The formation of ozone increases with temperature and sunlight, which is one reason ozone levels are higher during the summer.   Increased temperature also increases emissions of volatile man-made and biogenic organics and can indirectly increase NOX as well (e.g., increased electricity generation for air conditioning). Summertime conditions also bring increased episodes of large scale stagnation of air masses, which promote the build-up of direct emissions and pollutants formed through atmospheric reactions over large regions.   Authoritative assessments of ozone control approaches have concluded that, for reducing regional scale ozone transport, a NOX control strategy is most effective, whereas VOC reductions are generally most effective locally, in more dense urbanized areas.
      Studies conducted since the 1970s established that ozone occurs on a regional scale (i.e., thousands of kilometers) over much of the eastern U.S., with elevated concentrations occurring in rural as well as metropolitan areas. While substantial progress has been made in reducing ozone in many urban areas, regional scale ozone transport is still an important component of high ozone concentrations during the extended summer ozone season. A series of more recent progress reports discussing the effect of the NOX SIP Call reductions can be found on EPA's Web site at: http://www.epa.gov/airmarkets/ progress/progress-reports.html.
      More recent assessments of ozone (including those conducted for the Regulatory Impact Analysis for the ozone standards in 2008) continue to show the importance of NOX transport as a factor in ozone formation.  For addressing interstate ozone transport in CAIR, EPA addressed NOX emissions but did not include requirements for VOCs.  EPA believes that VOCs from some upwind states do indeed have an impact in some nearby downwind states, particularly over short transport distances.  EPA expects that states, typically in local nonattainment planning, would benefit from examining the extent to which VOC emissions affect ozone pollution levels within and near urban nonattainment areas, and states may identify areas where multi-state VOC strategies might assist in attainment planning for meeting the 8-hour standard.  However, EPA continues to believe that the most effective regional pollution control strategy for mitigation of interstate transport of ozone remains NOX emission reductions.
2.  Which Pollutants did EPA Propose to Control for Purposes of PM2.5 and Ozone Transport?
      For the proposed rule, EPA concluded that its findings in CAIR regarding the nature of pollutant contributions are still appropriate.  EPA proposed to continue to focus the PM2.5 transport requirements on SO2 and NOX emissions and to focus the ozone transport requirements on NOX emissions.  In the proposal, EPA discussed and requested comment on the inclusion of southern states in the annual NOX program for PM2.5 control.
3.   Comments and Responses
      EPA received no adverse comments on its proposal to regulate SO2 for addressing PM2.5 transport, the proposal not to regulate direct PM2.5 or organic PM2.5 precursors, and the proposal to focus ozone-season efforts on NOX and not to regulate VOCs.
      One commenter questioned EPA's regulation of NOX for purposes of addressing PM2.5 transport in all states (including northern states with cooler climates and higher nitrate deposition).  Several commenters, representing southern state air quality agencies and regulated sources in southern states, disagreed with EPA's proposed regulation of annual NOX emissions for all regulated states.  These commenters, while not disagreeing with the need for regulation of SO2, observed that in EPA's modeling analysis, contributions from certain southern states' NOX emissions to PM2.5 in downwind states were relatively small.
      Accordingly, these commenters argued that either (1) EPA should remove NOX as a precursor analyzed for PM2.5 contribution from those states, or (2) the required remedy for emission reductions in those states should not require reductions in annual NOX.
      For the final rule, EPA retains the approach for regulated pollutants in the proposal, which regulates annual NOX and SO2 for states affecting downwind state PM2.5 nonattainment and maintenance sites, and ozone-season NOX for states impacting downwind state ozone nonattainment and maintenance.  EPA considered commenters' requests to remove some states from the annual NOX program.  However, EPA believes that it is appropriate to establish a cap on these states' annual NOX emissions, in part to ensure the continued annual operation of existing control equipment that would prevent substantial increases in NOX emissions.   EPA believes that without these reductions, increased "nitrate replacement" could occur, a known atmospheric phenomenon whereby some of the sulfate reductions due to SO2 emission reductions are eroded by increases in nitrate concentrations due solely to those SO2 reductions.  This is an especially pertinent concern for southern states which have significant impacts on northern receptors in colder climates where nitrate concentrations are generally higher.  For example, Alabama and Tennessee are both linked to Washtenaw County, MI for 24-hour PM2.5; North Carolina is linked to Lancaster County, PA for 24-hour PM2.5; and Texas is linked to Madison County, IL for both annual and 24-hour PM2.5.  All of these downwind areas have appreciable nitrate deposition contributing to nonattainment and maintenance concerns for the PM2.5 NAAQS.  If the states linked to those receptors made SO2 reductions only, their beneficial impact on downwind air quality would be partially eroded by nitrate replacement.  EPA therefore believes that it is reasonable to seek both SO2 and NOX reductions from states included in the Transport Rule program for states affecting downwind state PM2.5 nonattainment and maintenance sites.
      In addition, EPA notes that there would be important disbenefits to effectively removing CAIR's existing annual NOX requirements in those states.  If EPA were to allow annual NOX emissions to increase for those states, there would be potentially harmful effects on visibility, nitrogen deposition, and other aspects of human and environmental health.
EPA notes that for the final rule this issue has become moot for two states -- Florida and Louisiana.   For those two states, the modeling analysis for the final rule showed their overall contributions to PM2.5 at downwind receptors of concern are below the threshold for inclusion.  Accordingly, Florida and Louisiana are no longer covered by the Transport Rule for PM2.5 and thus are no longer included in the annual NOX program.
B. Baseline for Pollution Transport Analysis
      Implementing the requirements of CAA section 110(a)(2)(D)(i)(I) requires EPA to determine which states significantly contribute to nonattainment and interfere with maintenance of the NAAQS in other states, as well as to quantify the emissions in each state that must be eliminated.  This process begins with an analysis of baseline emissions.  Baseline emissions are the emissions that would occur in each state if EPA did not promulgate the Transport Rule.  To conduct such analysis, EPA generally takes into account emission limitations that are currently, and will continue to be, in place.  From that baseline, EPA analyzes whether additional reductions beyond those already mandated by existing emission limitation requirements are necessary.  For example, the base case used in CAIR reflected the reductions already required by the NOX SIP Call, which remained in effect even after the CAIR emission reduction requirements took effect.
      The unique legal situation addressed by the Transport Rule necessarily affects the quantification of baseline emissions.  Specifically, because the Transport Rule will replace CAIR, EPA cannot consider reductions associated with CAIR in the "base case" (i.e., analytical baseline emissions scenario).  If EPA were to consider all reductions associated with CAIR in the "base case," the baseline emissions would not adequately reflect the true 2012 baseline in each state (i.e., the emissions that would occur in each state in 2012 if the Transport Rule did not require any reductions in that state).  Similarly, if EPA were to ignore that capital investments have already been made to meet the requirements of CAIR and that these investments comprise "sunk" capital costs and not new costs, EPA's analysis would not correctly reflect the cost of emission reductions required by the Transport Rule.  As explained below, EPA's analysis both properly considered all capital investments made in response to CAIR and properly recognized that, after CAIR is terminated, the emission limitations imposed by CAIR will cease to exist.
      In 2005 EPA promulgated CAIR, which required large electric generating units in 28 states and the District of Columbia to make phase I emission reductions in NOX emissions starting in 2009, phase I emission reductions in SO2 starting in 2010, and additional, phase II reductions in emissions of both pollutants starting in 2015.  On July 11, 2008, the D.C. Court of Appeals held that CAIR had "more than several fatal flaws," North Carolina, 531 F.3d at 901, and remanded and vacated the rule, id. at 930.  The Court subsequently granted EPA's petition for rehearing in part and remanded CAIR without vacatur "for EPA to conduct further proceedings consistent with" the Court's July 11, 2008 opinion.  North Carolina, 550 F.3d 1176.  The Court explained that it was "allowing CAIR to remain in effect until it is replaced by a rule consistent with [the July 11, 2008] opinion" because this "would at least temporarily preserve the environmental values covered by CAIR." Id. at 1178.  Moreover, the Court stated that it did not "intend to grant an indefinite stay of the effectiveness of" the July 11, 2008 order vacating CAIR.  Id.  In summary, the Court determined that CAIR was fatally flawed and could remain in effect only as a stopgap measure until EPA could act to replace it.
      Thus, unlike most other regulatory requirements (such as the Acid Rain Program under CAA Title IV, the NOX Budget Trading Program under the NOX SIP Call, New Source Performance Standards, and state laws and consent orders requiring emission reductions), the emission limitations contained in CAIR are only temporary.  Moreover, the duration of these limitations is directly tied to the Transport Rule.  The Transport Rule is to replace CAIR.  Thus, CAIR itself will be terminated for the SO2, annual NOX, and ozone-season NOX control periods starting in 2012 when the emission limitations established in the Transport Rule for those control periods take effect (January 1, 2012 for the annual control periods and May 1, 2012 for the ozone-season control period).  For this reason, emission reductions made to comply with CAIR cannot be treated as if they were emission reductions achieved to comply with statutory provisions, rules, consent decrees, and the like that establish permanent emission limitations.  EPA takes reductions made to comply with permanent limits into consideration when quantifying each state's baseline emissions for the purpose of analyzing whether its emissions significantly contribute to nonattainment or interfere with maintenance in another state.  However, the unique legal status of CAIR and the effect of the Transport Rule as a replacement for CAIR distinguish the emission reductions required by CAIR from those of other regulatory requirements.  Since the limits and emission reduction requirements in CAIR are temporary and will be terminated by the Transport Rule, they must be excluded from the base case analysis.
      Some comments on the Transport Rule proposal claim that EPA's treatment of CAIR is inconsistent with the treatment, in prior rulemakings, of the Acid Rain Program and the NOX SIP Call.  Such comments ignore the unique legal status of CAIR, and EPA therefore rejects these claims.
      A simple example illustrates this point.  Assume state Z's emissions before CAIR were 2,000 tons and that state Z was required by CAIR to reduce its emissions to 1,000 tons.  If EPA were to determine that state Z's baseline emissions were 1,000 tons and then conclude, based on that assumption, that no additional reductions in state Z are necessary because state Z does not significantly contribute to downwind nonattainment unless its emissions exceed 1,500 tons, then state Z would not be covered by the Transport Rule.  However, the Transport Rule will terminate all CAIR requirements in all CAIR states regardless of whether they are covered by the Transport Rule.  Thus, after promulgation of the Transport Rule, state Z would again be allowed, and would be projected in this example, to emit 2,000 tons.  In other words, state Z would be allowed to significantly contribute to nonattainment and/or interfere with maintenance in other states -- a result that would be inconsistent with the statutory mandate of CAA section 110(a)(2)(D)(i)(I).  On the other hand, if EPA assumes state Z's baseline emissions are 2,000 tons as projected without CAIR in place, EPA can properly determine whether, if state Z were allowed to emit that amount (i.e., the amount state Z would be projected to emit if excluded from the Transport Rule), the state would significantly contribute to nonattainment or interfere with maintenance in any other state.  In other words, EPA can determine the stringency of emission limitations needed (if any) to replace those that were established by CAIR in order to ensure that state Z prohibits all emissions that significantly contribute to nonattainment or interfere with maintenance in other states.
      In fact, commenters' suggestion that the Transport Rule base case should include CAIR would cause the anomalous result of excluding sources in a state from the Transport Rule because of their CAIR - required emission reductions while simultaneously eliminating those CAIR-required emission reductions.  If EPA's base case analysis were to assume erroneously that reductions from CAIR would continue indefinitely, a state currently covered by CAIR, but not covered by the Transport Rule, would have no CAIR requirements once the Transport Rule programs began and so could have increased emissions beyond the CAIR limitations.  Downwind areas that are in attainment (and are not experiencing interference with maintenance of such attainment) solely because of emission reductions required by CAIR could again face nonattainment or interference with maintenance problems because the current protection from upwind pollution from such an upwind state would not be replaced.  In short, the analysis of whether a state should be included in a rule eliminating and replacing CAIR cannot logically assume that CAIR remains in place.  For these reasons, EPA believes it is reasonable to use a base case that does not assume that the CAIR reduction requirements will continue to be achieved and so does not include CAIR-specific emission reductions.
      As a result, EPA's 2012 base case shows emissions higher than current levels in some states.  In the absence of the CAIR SO2 and NOX programs that EPA has been directed to eliminate and replace, utility emissions in CAIR states will be limited only by non-CAIR constraints including the Acid Rain Program, the NOX SIP Call, New Source Performance Standards, any state laws and consent order requiring emission reductions, and any other permanent and enforceable binding reduction commitments.  This will lead to increased emissions in some states in the 2012 base case relative to current emissions.  For example, efforts to comply with the Acid Rain Program at the least cost may occur, in some cases, without the operation of existing scrubbers through use of readily available, inexpensive Title IV allowances.
      It is important to note that, to the extent that emission reductions currently required by CAIR are also reflected in emission reduction requirements under the Acid Rain Program, the NOX SIP Call, New Source Performance Standards, any state laws and consent orders requiring emission reductions, and any other enforceable binding reduction commitments, such reductions are accounted for in EPA's 2012 base case.  Commenters' claims that, in excluding CAIR-specific emission reductions from the base case, EPA ignores non-CAIR legal requirements (e.g., in Title V permits) that may prevent sources from increasing emissions above CAIR levels, are incorrect.  As discussed elsewhere in this preamble, EPA accounted for any Title V permits, consent decrees, state rules, and the like that required specific sources to limit their emissions to the levels consistent with CAIR compliance.  Commenters also assert that utilities are unlikely to dismantle or discontinue running the installed controls to the point of returning to pre-CAIR emission levels.  EPA agrees that installed controls are not likely to be dismantled, and as discussed elsewhere in this preamble, EPA's analysis properly treats the capital investments made in emission controls as a result of CAIR as "sunk" capital costs (i.e., capital costs already incurred in the past) that are not included as costs of meeting Transport Rule requirements.
      Our cost analysis for significant contribution reflects on-the-ground realities.  Investments in pollution control equipment were made in response to the remanded CAIR requirements.  Those expenditures are "sunk" capital costs, meaning that those costs were incurred in the past, prior to the Transport Rule.  Adding the capital costs of that equipment into the costs of Transport Rule emission reduction options would be incorrect; those capital investments are represented in place in the base case.
      However, given ongoing costs associated with operating these controls, EPA believes sources would have an economic incentive to discontinue operating installed controls, or to operate those controls less effectively, except to the extent non-CAIR legal requirements mandate emission reductions or to the extent that sources would find it economic to operate the controls for non-CAIR market-based emission control programs.  EPA properly treats the costs of operating controls installed to meet CAIR requirements as costs of meeting Transport Rule requirements.  EPA's base case accounts for non-CAIR requirements and does not make the unreasonable assumption that installed controls would be operated to achieve emission reductions that are not necessary to meet non-CAIR requirements.  For all of these reasons, EPA rejects commenters' claims that the base case is "unrepresentative" or lacks "a rational relationship to the real world."
C. Air Quality Modeling to Identify Downwind Nonattainment and Maintenance Receptors
1. Emission Inventories
      To inform air quality modeling for the development of the final Transport Rule, EPA developed emission inventories for a 2005 base year and for 2012 and 2014.  The inventories for all years include emission estimates for EGUs, non-EGU point sources, stationary nonpoint sources, onroad mobile sources, nonroad mobile sources, and biogenic (non-human) sources.  EPA's air quality modeling relies on this comprehensive set of emission inventories because emissions from multiple source categories are needed for the model to compute values for the ambient air quality, and to facilitate comparison of model outputs with ambient measurements.  In addition, EPA considers all relevant emissions (regardless of source category) when determining whether a state is found to be significantly contributing to or interfering with maintenance of a particular NAAQS in another state.
      The emission inventories were processed through the Sparse Matrix Operator Kernel Emissions (SMOKE) Modeling System version 2.6 to produce the gridded, hourly, speciated, model-ready emissions for input to the CAMx air quality model.  Additional information on the development of the emission inventories and related data sets for emissions modeling is provided in the Emission Inventory Final Rule TSD for the Transport Rule Notice of Final Rulemaking (NFR).  Tables that provide summaries of SO2 and NOX emissions by state and sector for 2005, 2012, and 2014 are also available in the Emission Inventory Final Rule TSD.
      On October 27, 2010 a NODA on "Revisions to Emission Inventories" was issued. The primary purpose was to notify the public about changes to emission inventories made since the proposal modeling.  The affected emission sectors were stationary point sources that are not EGUs, nonpoint sources, and Category 3 commercial marine vessel sources. Plans to use a newly released model for onroad mobile source emissions were also announced in the NODA.
      The major comments received in response to the emission inventories and modeling included in the proposed Transport Rule and the October 27 NODA are summarized in the following subsections.  EPA agreed with the comments summarized below and adopted technical corrections or updates to the emissions inventories and modeling accordingly. For EPA to be able to take appropriate action, comments on the emission inventories needed to be specific enough to allow for credible alternative data sources to be located.  EPA adopted corrections from comments on in-place control programs or devices where the controls were enforceable and quantifiable.
a. Foundation Emission Inventory Data Sets
      EPA developed emission data representing the year 2005 to provide a base year from which future air quality could be forecasted.  EPA used the 2005 National Emission Inventory (NEI), version 2 from October 6, 2008, as the chief basis for the U.S. inventories supporting the 2005 air quality modeling.  This inventory includes 2005-specific data for point and mobile sources, while most nonpoint data were carried forward from version 3 of the 2002 NEI.  The future base case scenarios modeled for 2012 and 2014 represent predicted emission reductions primarily from already promulgated federal measures.
      EPA used a 2006 Canadian inventory and a 1999 Mexican inventory for the portions of Canada and Mexico within the air quality modeling domains for all modeled scenarios.  Emissions from Canada and Mexico for all source sectors (including EGUs) in these countries were held constant for all base and future-year cases.  EPA made this conservative assumption because it does not currently have data to support projections of future-year emissions from Canada and Mexico.
b. Development of Emission Inventories for EGUs
      The annual NOX and SO2 emissions for EGUs in the 2005 NEI v2 are based primarily on data from EPA's Clean Air Markets Division's Continuous Emissions Monitoring (CEM) program, with other EGU pollutants estimated using emission factors and the annual heat input data reported to EPA's Clean Air Markets Division.  Although only the pollutants NOX and SO2 are considered for control in this rule, emissions for all criteria air pollutants must be provided to the air quality model.  For EGUs without CEMs, data submitted to the NEI by the states were used. For more information on the details of how the 2005 EGU emissions were developed, see the Emissions Inventory Final Rule TSD. A comment impacting the final 2005 EGU inventory is the following:
      Comment: Commenters stated that some point sources that were classified as non-EGUs in the proposal modeling were actually EGUs, resulting in double counting of emissions in future-year modeling.
      Response: EPA reviewed the assignment of EGUs and non-EGUs and reclassified EGU sources found to be in the non-EGU inventory into the 2005 EGU inventory to prevent double counting of future-year emissions.
      The future base case scenarios for EGUs reflect projected changes to fuel usage and economics, as described in the Emission Inventory Final Rule TSD.  Future year base case EGU emissions that predict SO2, NOX, and PM2.5 were obtained from version 4.10_FTransport of the Integrated Planning Model (IPM) outputs (http://www.epa.gov/airmarkt/progsregs/epa-ipm/index.html). The IPM is a multi-regional, dynamic, deterministic linear programming model of the U.S. electric power sector; version 4.10_FTransport reflects state rules and consent decrees through December 1, 2010, and incorporates public comments on existing controls submitted to EPA through both the Transport Rule-related notice and comment process as well as the proposed Mercury and Air Toxics Standards Information Collection Request (ICR).  The operation of existing SO2 or NOX advanced controls (e.g., scrubber, SCR) on units that were not required to operate those controls for compliance with Title IV, New Source Review (NSR), state settlements, or state-specific rules was projected by IPM on the basis of providing least cost operation of the power generation system subject to existing regulatory requirements except CAIR (see baseline discussion section V.C.2.b).
      Additionally, IPM v.4.10_FTransport incorporates comments received during the rulemaking process.  Fuel-related updates include comment-driven unit-specific limitations on 2012 coal rank selection, limiting unrestricted switching from bituminous to subbituminous coal by imposing boiler modification costs for those units shifting from bituminous to subbituminous coal without historical precedent, and a correction of waste coal prices.  Pollution control-related updates include keying the performance assumptions for FGD and SCR more closely to historic performance data, and the inclusion of dry sorbent injection (DSI), a SO2 removal technology.  Other notable updates include revised assumptions on the heat rate and consequent dispatching of cogenerating units and incorporation of additional planned retirements.  Further details on these updates are available in the IPM Documentation, available in the docket and at: http://www.epa.gov/airmarkets/progsregs/epa-ipm/index.html.
 c. Development of Emission Inventories for Non-EGU Point Sources
      Details on the development of emission inventories are available in the Emission Inventory Final Rule TSD.  In both the proposal and final modeling, controls on industrial boilers installed under the NOX SIP call were assumed to have been implemented by 2005 and captured in the 2005 NEI v2.  The non-EGU point source emissions were updated from the 2005 NEI and the emissions used for the proposal modeling through the incorporation of comments on the proposal emissions values, previously unknown facility closures, and through other data improvements as identified by EPA analyses.
      EPA does not factor in economic growth to develop non-EGU point source emission projections because analysis of historical emission trends and economic data did not support using economic growth to project non-EGU emissions.  More details on the rationale for not applying economic growth to non-EGU industrial sources can be found in Appendix D of the Regulatory Impact Assessment for the PM NAAQS rule (http://www.epa.gov/ttn/ecas/regdata/RIAs/Appendix%20D--Inventory.pdf).  Although projections based on economic growth were not included, EPA did include reductions resulting from plant and unit closures, local and federal consent decrees, and several Maximum Achievable Control Technology (MACT) standards.
      For non-EGU point sources, local control programs that may be necessary for areas to attain the annual PM2.5 NAAQS and the ozone NAAQS are only included in the future base case projections when specific information about existing enforceable local controls was provided.
      Since aircraft at airports were treated as point emissions sources in the 2005 NEI v2, we applied projection factors based on activity growth projected by the Federal Aviation Administration Terminal Area Forecast (TAF) system, published in December 2008.
      A number of comments were received on the stationary non-EGU point source inventories.  Below is a summary of the major comments that impacted the stationary non-EGU point source inventories for the final modeling:
      Comment: Commenters stated that EPA did not properly represent some point source emissions in base-year and future-year inventories due to facility and unit closures, consent decrees, emission caps, control programs, and alternative emission estimates.
      Response: EPA reviewed the sources referenced in the individual comments regarding the base-year and future-year inventories.  In cases where credible alternative data were available, EPA revised the emission inventories to incorporate additional facility and unit closures, consent decrees, emission caps, control programs, enforceable local controls, and alternative emission estimates.
      Comment: Commenters stated that EPA should include controls from the National Emission Standards for Hazardous Air Pollutants for Reciprocating Internal Combustion Engines (RICE NESHAP) in our modeling.
      Response: EPA included reductions expected to be achieved by the RICE NESHAP across the United States in our final modeling of stationary non-EGU and nonpoint sources.
      Comment: Commenters stated that EPA was not properly representing existing or planned controls for cement plants.
      Response: EPA updated control and projection information for cement plants based on the latest available data and cement sector-specific modeling results.
      Comment: EPA specifically requested comments on whether to incorporate emission reduction estimates from the National Emissions Standards for Hazardous Air Pollutants (NESHAP) for Major Sources: Industrial, Commercial, and Institutional Boilers and Process Heaters (75 FR 32006). Commenters stated that emission reduction estimates should not be included until the rule became final.
      Response: EPA did not incorporate emission reduction estimates from the NESHAP for Major Sources: Industrial, Commercial, and Institutional Boilers and Process Heaters (75 FR 32006) into the proposal or final modeling because the rule was not final at the time the modeling was performed. Note that reductions from this rule would not have impacted the 2012 base case due to its implementation schedule, and only the 2014 emissions would have been affected.
 d. Development of Emission Inventories for Onroad Mobile Sources