[Federal Register: April 28, 2006 (Volume 71, Number 82)]
[Rules and Regulations]
[Page 25287-25302]
[DOCID:fr28ap06-13]

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Part II

Environmental Protection Agency

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40 CFR Parts 51 and 96

Inclusion of Delaware and New Jersey in the Clean Air Interstate Rule;
Final Rule

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 51 and 96

[EPA-HQ-OAR-2003-0053; FRL-8048-1]
RIN 2060-AM95

Inclusion of Delaware and New Jersey in the Clean Air Interstate
Rule

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: In today's action, we are finalizing regulations to include
Delaware and New Jersey in the Clean Air Interstate Rule (CAIR) for
fine particles (PM2.5), based on our assessment that they
contribute significantly to a downwind State's nonattainment. In the
CAIR, we determined that upwind States that contribute 0.2 [mu]g/
m3 or more to a downwind PM2.5 nonattainment area
are potentially deemed to be contributing significantly to
nonattainment in the downwind State. The EPA proposed to augment the
analytical approach used in the CAIR by supplementing the air quality
step of the contribution analysis. Based on the results of this
augmented analytical approach, we proposed that Delaware and New Jersey
should be covered by the CAIR for annual sulfur dioxide
(SO2) and nitrogen oxides (NOX) requirements and
are finalizing the regulation to include these States in the CAIR for
PM2.5.

DATES: This final rule is effective on June 27, 2006.

ADDRESSES: The EPA has established a docket for this action under
Docket ID No. EPA-HQ-OAR-2003-0053. All documents in the docket are
listed on the http://www.regulations.gov Web site. Although listed in

the index, some information is not publicly available, e.g.,
Confidential Business Information (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 http://www.regulations.gov
 or in hard copy at the Air Docket, EPA/DC, EPA

West, Room B102, 1301 Constitution Ave., 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<PHONE_NUMBER>. The Air Docket telephone number is
(202) 566-1742.

FOR FURTHER INFORMATION CONTACT: General questions concerning today's
action should be addressed to Jan King, U.S. EPA, Office of Air Quality
Planning and Standards, Air Quality Strategies and Standards Division,
Mail Code C539-02, Research Triangle Park, NC 27711, telephone (919)
541-5665, e-mail<EMAIL_ADDRESS>For legal questions, please contact
Steven Silverman, U.S. EPA, Office of General Counsel, Mail Code 2344A,
1200 Pennsylvania Avenue, NW., Washington, DC 20460, telephone (202)
564-5523, e-mail at<EMAIL_ADDRESS>For questions regarding
air quality analyses, please contact Norm Possiel, U.S. EPA, Office of
Air Quality Assessment Division, Mail Code C439-01, Research Triangle
Park, NC 27711, telephone<PHONE_NUMBER>, e-mail at
<EMAIL_ADDRESS>For questions regarding the electric generating

units (EGUs) cost analyses, emissions inventories, and budgets, and
also for questions regarding the model cap and trade programs, please
contact Sam Waltzer, U.S. EPA, Office of Atmospheric Programs, Clean
Air Markets Division, Mail Code 6204J, 1200 Pennsylvania Avenue, NW.,
Washington, DC 20460, telephone<PHONE_NUMBER>, e-mail at
<EMAIL_ADDRESS>For questions regarding statewide emissions

inventories, please contact Marc Houyoux, U.S. EPA, Office of Air
Quality Assessment Division, Mail Code C339-02, Research Triangle Park,
NC 27711, telephone<PHONE_NUMBER>, e-mail at<EMAIL_ADDRESS>For
questions regarding emissions reporting requirements, please contact
Bill Kuykendal, U.S. EPA, Office of Air Quality Planning and Standards,
Emissions, Monitoring, and Analysis Division, Mail Code D205-01,
Research Triangle Park, NC 27711, telephone<PHONE_NUMBER>, e-mail at
<EMAIL_ADDRESS>For questions regarding analyses required by

statutes and executive orders, please contact Linda Chappell, U.S. EPA,
Office of Air Quality Planning and Standards, Air Quality Strategies
and Standards Division, Mail Code C339-01, Research Triangle Park, NC
27711, telephone<PHONE_NUMBER>, e-mail at<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

Web Site for Rulemaking Information

    The EPA has established a Web site for this rulemaking at http://www.epa.gov/cleanairinterstaterule/ or http://www.epa.gov/cair/ which
A> which
includes the rulemaking actions and certain other related information
that the public may find useful.

Judicial Review

    Section 307(b)(1) of the CAA indicates which Federal Courts of
Appeal have venue for petitions of review of final actions by EPA. This
section provides, in part, that petitions for review must be filed in
the Court of Appeals for the District of Columbia Circuit if (i) the
agency action consists of ``nationally applicable regulations
promulgated, or final action taken, by the Administrator,'' or (ii)
such action is locally or regionally applicable, if ``such action is
based on a determination of nationwide scope or effect and if in taking
such action the Administrator finds and publishes that such action is
based on such a determination.''
    Any final action related to the CAIR is ``nationally applicable''
within the meaning of section 307(b)(1). As an initial matter, through
this rule, EPA interprets section 110(a)(2)(D)(i) of the Clean Air Act
(CAA), a provision which has nationwide applicability. In addition, the
CAIR applies to 28 States and the District of Columbia. The CAIR is
also based on a common core of factual findings and analyses concerning
the transport of pollutants between the different States subject to it.
Finally, EPA has established uniform approvability criteria that would
be applied to all States subject to the CAIR. For these reasons, the
Administrator also is determining that any final action regarding the
CAIR is of nationwide scope and effect for purposes of section
307(d)(1). Thus, any petitions for review of final actions regarding
the CAIR must be filed in the Court of Appeals for the District of
Columbia Circuit within 60 days from the date final action is published
in the Federal Register.

Outline

I. Overview
    A. What Are the Central Requirements of This Rule?
    B. Why Are We Taking This Action?
II. Air Quality Analysis of Ozone and PM2.5 Contributions
in the CAIR
    A. Analysis of Highly Cost-Effective Controls and Timeframe for
Emissions Reductions
    1. Overall Criteria
    2. Evaluation of Cost Effectiveness and Feasibility
    3. CAIR Regionwide SO2 and NOX Emissions
Reductions Requirements
III. Inclusion of Delaware and New Jersey in the CAIR for
PM2.5
    A. Why EPA Is Revising the Status of Delaware and New Jersey in
the CAIR
    B. Results of Updated Air Quality Modeling for Delaware and New
Jersey
IV. Findings and Action

    A. Findings of Significant Contribution for Delaware and New
Jersey
    B. SIP Approval Criteria
    C. SIP Submittal Deadline
    D. Emissions Reporting Requirements
V. Expected Effects of This Action
    A. Emissions
    B. Air Quality
VI. Statutory and Executive Order Reviews
    A. Executive Order 12866: Regulatory Planning and 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
    K. Congressional Review Act

I. Overview

    By notice of proposed rulemaking dated May 12, 2005, EPA proposed
to include Delaware and New Jersey in the CAIR, which was published on
the same date (70 FR 25162). We are finalizing that proposal here. The
final rule requires Delaware and New Jersey to adopt and submit State
implementation plans (SIPs), under the requirements of CAA section
110(a)(2)(D), that would eliminate emissions of specified amounts of
SO2 and NOX which contribute significantly to
nonattainment of the PM2.5 National Ambient Air Quality
Standard (NAAQS) in a downwind State. Although Delaware and New Jersey
are now combined to determine significant contribution, these States
may independently determine which sources to subject to controls, and
which control measures to adopt. The EPA's analysis indicates that
emissions reductions from EGUs are highly cost effective, and EPA
encourages Delaware and New Jersey to adopt controls for EGUs. To do
so, they must place an enforceable limit, or cap, on EGU emissions (see
section VII of the CAIR for a more detailed discussion). The EPA has
calculated the amount of each State's EGU emissions cap, or budget,
based on reductions that EPA has determined are highly cost effective
(see section IV of this rule). Delaware and New Jersey may also allow
their EGUs to participate in an EPA-administered cap and trade program
as a way to reduce the cost of compliance. The cap and trade programs
are described in more detail in section VIII of the preamble to the
final CAIR.

A. What Are the Central Requirements of This Rule?

    In today's action, we establish SIP requirements for the affected
upwind States of Delaware and New Jersey under CAA section
110(a)(2)(D)(i). Section 110(a)(2)(D)(i) of the CAA requires SIPs to
contain adequate provisions prohibiting air pollutant emissions from
sources or activities in those States which emissions contribute
significantly to nonattainment in, or interfere with maintenance by,
any other State with respect to a NAAQS. Based on air quality modeling
analyses and cost analyses, EPA has concluded that SO2 and
NOX emissions in Delaware and New Jersey, through the
phenomenon of air pollution transport,\1\ contribute significantly to
downwind nonattainment of the PM2.5 NAAQS.\2\ In addition to
making the findings of significant contribution to nonattainment, EPA
is requiring Delaware and New Jersey to make specified amounts of
SO2 and NOX emissions reductions to eliminate
their significant contribution to downwind States. Delaware and New
Jersey are required to adopt and submit SIP revisions with the
necessary control measures by September 11, 2006.
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    \1\ In today's final rule, when we use the term ``transport'' we
mean to include the transport of both fine particles
(PM2.5) and their precursor emissions.
    \2\ In the CAIR, the 23 States along with the District of
Columbia that must reduce SO2 and NOX
emissions for the purposes of the PM2.5 NAAQS are:
Alabama, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky,
Louisiana, Maryland, Michigan, Minnesota, Mississippi, Missouri, New
York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee,
Texas, Virginia, West Virginia, and Wisconsin.
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B. Why Are We Taking This Action?

    On May 12, 2005, we proposed to include Delaware and New Jersey in
the CAIR for PM2.5. Our assessment was that the combination
of the two States does contribute significantly to PM2.5
nonattainment in New York County, NY, and to one or more counties in
eastern Pennsylvania. In that action, we proposed the following:
     Combining Delaware and New Jersey for purposes of
assessing whether that combination contributes significantly to
nonattainment of the PM2.5 NAAQS by downwind receptors under
section 110(a)(2)(D);
     Requiring Delaware and New Jersey, under CAA section
110(a)(2)(D), to adopt SIP requirements for addressing annual emissions
of the PM2.5 precursors NOX and SO2;
     Adding requirements for control of annual emissions of
SO2 and NOX;
     Requiring that SIPs to achieve the required
PM2.5 emissions reductions be submitted as soon as
practicable, but no later than 18 months after the date of signature of
the CAIR, i.e., September 11, 2006, the same deadline as in the CAIR;
and
     Providing model cap and trade programs for EGUs in the
CAIR and administering these programs.
    Delaware and New Jersey are already subject to the CAIR for
purposes of ozone, and must reduce ozone season emissions of
NOX starting in 2009. We proposed to add requirements for
control of annual emissions of NOX by 2009 and
SO2 by 2010 for purposes of PM2.5. We also
proposed larger reductions by 2015 for NOX and
SO2 in order to avoid contributing significantly to
PM2.5 nonattainment, or interfere with maintenance, in other
States.
    We performed air quality modeling to determine the contribution
from projected 2010 SO2 and NOX emissions in
Delaware and New Jersey combined to PM2.5 nonattainment in
downwind States. The results of this modeling were provided in a Notice
of Data Availability (NODA) (70 FR 37068, June 28, 2005). The results
show that the largest contribution from Delaware and New Jersey was
0.23 [mu]g/m3 to PM2.5 nonattainment in New York
County, New York. This amount exceeds EPA's PM2.5
significance criterion of 0.2 [mu]g/m3.
    Based on a comment we received from the State of Delaware on the
proposed rule, we have updated our 2010 emissions projections for
Delaware and re-ran the model for Delaware and New Jersey. Materials
relevant to this have been placed in the docket. See section III.B of
this rule for further discussion of this comment and our response. The
revised modeling confirms that the combination of Delaware and New
Jersey make a significant contribution to PM2.5
nonattainment in at least one downwind State thus necessitating SIP
revisions under section 110(a)(2)(D) to eliminate the significant
contribution. Therefore, we are finalizing the requirement for Delaware
and New Jersey that they adopt SIP requirements for addressing annual
emissions of the PM2.5 precursors NOX and
SO2.

II. Air Quality Analysis of Ozone and PM2.5 Contributions in
the CAIR \3\
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    \3\ This discussion is for readers' convenience. The EPA did not
reconsider or otherwise reopen any aspect of the CAIR in this
rulemaking, except for the matter specifically proposed.
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    For the CAIR, we performed State-by-State zero-out modeling to
quantify the

contribution from emissions in each State to future ozone and
PM2.5 nonattainment in other States and to determine whether
that contribution meets requirements of the ``contribute
significantly'' test. This zero-out modeling technique provides an
estimate of downwind impacts by comparing the model predictions from
the 2010 base case to the predictions from a run in which all
anthropogenic NOX emissions (in the case of ozone) or all
anthropogenic SO2 and NOX emissions (in the case
of PM2.5) are removed from specific States, one State at a
time. After considering an updated analysis and public comments, we
applied a threshold of 0.2 [mu]g/m3 for PM2.5 for
this determination.
    For more detailed discussions of EPA's analytical approach,
findings, and final actions in the CAIR, see 70 FR 25162, May 12, 2005.

A. Analysis of Highly Cost-Effective Controls and Timeframe for
Emissions Reductions

1. Overall Criteria
    In the CAIR rulemaking, we considered a variety of factors in
evaluating the source categories from which highly cost-effective
reductions may be available and the level of reduction assumed from
that sector. These include:
     The availability of information,
     The identification of source categories emitting
relatively large amounts of the relevant emissions,
     The performance and applicability of control measures,
     The cost effectiveness of control measures, and
     Engineering and financial factors that affect the
availability of control measures.
    We further stated that overall, ``We are striving * * * to set up a
reasonable balance of regional and local controls to provide a cost-
effective and equitable governmental approach to attainment with the
NAAQS for fine particles and ozone.'' These criteria are unaffected by
this rule.
2. Evaluation of Cost Effectiveness and Feasibility
    The CAIR preamble (70 FR 25195-25229) describes EPA's determination
of regionwide SO2 and NOX control levels. As
described in section IV in the CAIR preamble, EPA determined that
highly cost-effective emissions reductions may be obtained by
controlling EGUs. The EPA determined the amounts of emissions
reductions that must be eliminated in upwind States to help downwind
States achieve attainment of the PM2.5 and ozone
NOX NAAQS, by assuming the application of highly cost-
effective control measures to EGUs and determining the emissions
reductions that would result.
    For the CAIR, EPA determined highly cost-effective regionwide
amounts of emissions reductions based on comparison to reference lists
of the cost effectiveness of other regulatory controls. We developed
reference lists for both average and marginal cost effectiveness of
those other controls. By comparison to the reference lists, EPA
determined that the CAIR final (2015) SO2 and NOX
regionwide control levels are highly cost effective. The EPA also
developed marginal cost-effectiveness curves for SO2 and
NOX abatement at varying levels of stringency, to
corroborate its cost-effectiveness determinations.
    The EPA determined the interim control levels (commencing in 2009
for NOX and in 2010 for SO2) based on evaluating
the feasibility of installing the necessary emission control retrofits.
Although the interim regionwide control levels were determined based on
feasibility considerations, EPA also evaluated the cost effectiveness
of the interim control levels to ensure that they were also highly cost
effective.
    Section IV.A describes our evaluation of highly cost-effective
controls and section IV.C in the CAIR notice of final rulemaking (NFR)
preamble describes EPA's feasibility analysis. Section V in the CAIR
NFR preamble describes the method EPA used to apportion regionwide
control levels to the affected States. A technical support document in
the CAIR docket entitled ``Modeling of Control Costs, Emissions, and
Control Retrofits for Cost Effectiveness and Feasibility Analyses''
describes EPA's use of the Integrated Planning Model (IPM) for its
cost-effectiveness and feasibility analyses. In addition, a technical
support document entitled ``Boilermaker Labor Analysis for the Final
Clean Air Interstate Rule'' provides further explanation of EPA's
feasibility analyses. Documentation for IPM, as well as IPM output
files, are available in the CAIR docket listed in the ADDRESSES section
of this rule.
3. CAIR Regionwide SO2 and NOX Emissions
Reductions Requirements
    The CAIR NFR requires annual SO2 and NOX
reductions in the District of Columbia and the 23 States listed in
section I.A above. If all affected States choose to implement the CAIR
annual SO2 emission reduction requirements by controlling
EGUs, the regionwide annual SO2 emissions caps that will
apply in these 23 States and the District of Columbia are 3.6 million
tons in 2010 and 2.5 million tons in 2015. If all affected States
choose to implement the CAIR annual NOX emission reduction
requirements by controlling EGUs, the regionwide annual NOX
emissions caps that will apply for EGUs in these 23 States and the
District of Columbia are 1.5 million tons in 2009 and 1.3 million tons
in 2015.
    The CAIR does not require annual SO2 or NOX
emissions reductions in Delaware or New Jersey for purposes of the
PM2.5 NAAQS.\4\ However, today, EPA is requiring annual
SO2 and NOX reductions in these two States for
that purpose. Annual SO2 and NOX budgets for
Delaware and New Jersey are presented in section IV.B of this preamble.
Since EPA is finalizing annual SO2 and NOX
budgets for Delaware and New Jersey, the States may choose to implement
their annual emission reduction requirements by controlling EGUs. If
the States choose to control EGUs, the CAIR regionwide EGU caps will
include reduction requirements for these two States. The updated annual
SO2 caps, including Delaware and New Jersey, would be 3.7
million tons in 2010 and 2.6 million tons in 2015. The updated annual
NOX caps, including Delaware and New Jersey, would be 1.5
million tons in 2009 and 1.3 million tons in 2015.
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    \4\ The CAIR does require ozone season NOX emissions
reductions in Delaware and New Jersey for ozone.
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III. Inclusion of Delaware and New Jersey in the CAIR for
PM2.5

A. Why EPA Is Revising the Status of Delaware and New Jersey in the
CAIR

    Section 110(a)(2)(D)(i) of the CAA requires States to include in
their SIPs adequate provisions prohibiting emissions that will
contribute significantly to nonattainment in, or interfere with
maintenance by, any other State. The term ``contribute significantly''
is not further defined, so in implementing this section we have had to
develop an analytical approach to give the term specific meaning. The
underlying logic of the analytical approach used in both the
NOX SIP Call and the CAIR is that the emission reduction
efforts needed to reach attainment should be reasonably balanced
between the State containing a nonattainment area and upwind States
significantly contributing to the nonattainment. In this way, control
efforts on one side of a border are not undermined (and even rendered
futile) by out-of-State emissions, and highly

cost-effective emissions reductions by out-of-State sources which
contribute significantly to downwind receptors' nonattainment are
achieved. We believe this approach is both efficient and equitable, so
that overall costs are less and costs are more fairly distributed than
if the burden of reaching attainment were entirely on the State with
the nonattainment area. Congress had the same purpose when it enacted
section 110(a)(2)(D). See 64 FR 29260-61, May 25, 1999 (summarizing
Legislative History of section 110(a)(2)(D) predecessor provision).
    We are retaining this underlying analytical approach, but treating
Delaware and New Jersey as special cases and as a single geographic
area for PM2.5. Specifically, we are combining Delaware and
New Jersey for purposes of assessing significant contribution to
nonattainment of the PM2.5 NAAQS by downwind receptors under
section 110(a)(2)(D), and applying the finding from that combined
assessment to each State.
    The analytical approach used for the CAIR has two parts, the first
of which is a test of whether the air quality contribution from one
entire State to nonattainment in any part of another State is
substantial enough to be considered significant, pending consideration
of control costs. For ozone, we used a test for this first part which
is based on several metrics of air quality contribution, involving
absolute magnitude, relative magnitude, and frequency. For
PM2.5, we used a test with the single criterion of whether
the PM2.5 air quality contribution from an upwind State to
nonattainment in a downwind State, due to total anthropogenic
SO2 and NOX emissions in the upwind State, was
0.2 [mu]g/m\3\ or more. We believe that this specific form of the
analytical approach used in the final CAIR rule has very appropriately
identified a set of 23 States and the District of Columbia that should
make certain reductions in annual emissions by 2009 for NOX
and by 2010 for SO2, and larger reductions by 2015 for
NOX and SO2, in order to avoid contributing
significantly to PM2.5 nonattainment in other States.
    In the course of applying that analytical approach, we realized
that a geographically small upwind State may have a maximum
contribution on other States that is below the air quality contribution
threshold used in the CAIR simply because of its size. Nevertheless, it
may clearly contribute to PM2.5 nonattainment in a downwind
State(s). Delaware and New Jersey are examples of this geographic
phenomenon. In this instance they are embedded in the much larger NE
Corridor nonattainment area that covers the area from Virginia to
Massachussetts. Upon further examination, EPA found that Delaware and
New Jersey each has substantial emissions for its size with emission
densities that are greater than some of the neighboring States included
in the CAIR. Therefore, excluding Delaware or New Jersey from emission
reduction requirements related to PM2.5 would not achieve
the desired balancing of local and upwind controls. Excluding either
State could forgo opportunities for highly cost-effective control that
would improve air quality in nearby States' PM2.5
nonattainment areas. Ignoring the contributions of Delaware and New
Jersey could result in both air quality detriments and cost
inefficiencies and inequities.
    The EPA considered alternative approaches to addressing this issue.
We do not believe it would be appropriate to consider amending or
revising the contribution significance criteria set forth in the final
CAIR notice. Nevertheless, we believe that these two States, which
combined represent a significant source of PM2.5 precursor
emissions, should not be considered to be below the air quality
contribution threshold, in the unique circumstances presented here,
solely because of their comparatively small geographic size. We have
faced a similar issue with respect to small geographic entities in the
NOX SIP Call, where we combined emissions of Delaware,
Maryland, and the District of Columbia, and more recently in the CAIR,
where we combined emissions of the District of Columbia and Maryland.
    The final CAIR's exclusion of Delaware and New Jersey for purposes
of PM2.5 drew our attention because of features unique to
Delaware and New Jersey. Table III-1 and Table III-2 in the proposal to
include Delaware and New Jersey in the CAIR PM2.5 region (70
FR 25414 and 25415, respectively) present relevant facts regarding
Delaware and New Jersey. We believe the following specific conditions
with respect to Delaware and New Jersey justify the departure from the
CAIR significance criteria because both States:
     Are contiguous;
     Have relatively small land area;
     Have high emissions densities;
     Are near major cities where PM2.5 nonattainment
affects large populations; and
     Are located between upwind States and at least one
downwind area linked to an upwind State.

On balance, we believe the most appropriate way to address the factual
situation presented here is to consider Delaware's and New Jersey's
contributions together, as one unit of analysis. We also note that both
States assented to this approach. Since Delaware and New Jersey are
already subject to the CAIR for purposes of ozone, the remainder of
this discussion focuses on PM2.5 considerations.
    Delaware and New Jersey are both relatively small in land area;
both are smaller than any of the 23 States already subject to the CAIR
for purposes of PM2.5. Portions of both States are urbanized
and industrialized, and overall both have a high emissions density,
comparable to that of their neighbors.\5\ Delaware has an emissions
density of 76.1 tons/year per square mile, almost twice that of
neighboring Pennsylvania and also higher than that of Maryland, States
already linked to downwind PM2.5 nonattainment areas. New
Jersey has an emissions density of 46.6 tons/year per square mile,
above that of Pennsylvania although somewhat lower than that of
Maryland.
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    \5\ By emissions density we mean the total SO2 and
NOX emissions from each State in tons per year, divided
by the geographic area of the State in square miles. For comparing
emissions densities for the purposes of contributions to
PM2.5 nonattainment, we have compared the emissions
density expressed in terms of SO2 plus NOX
emissions per square mile. Such a comparison is a reasonable measure
of comparison that is independent of the disparity in the land area
size of the two States.
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    Delaware and New Jersey are near major cities where current
PM2.5 nonattainment affects large populations. Also, both
are relatively near a county or counties in other States that are
projected to still be in nonattainment for PM2.5 in 2010 in
the base modeling case. Delaware and New Jersey are also near large
markets for electric power in other States subject to the CAIR for
PM2.5, and both are part of the PJM Interconnect electric
generation. As a result, there is a potential for emissions shifting
from States subject to the PM2.5 requirements of the CAIR to
States not subject to those requirements, e.g., Delaware and New
Jersey.
    Both Delaware and New Jersey lie between upwind States that are now
subject to the CAIR for both ozone and PM2.5 and downwind
receptor PM2.5 nonattainment areas that are linked to one or
both of those upwind States. Maryland has already been determined to
contribute significantly to nonattainment in both Philadelphia and New
York City. Pennsylvania has already been determined to contribute
significantly to nonattainment in New York City, and New York has been
determined to contribute to nonattainment in Lancaster County,

Pennsylvania. New Jersey lies between Pennsylvania and New York City,
and Delaware lies between part of Maryland and both Philadelphia and
New York City. This means that emissions from Delaware and New Jersey
are mixed with the emissions of these other upwind States and arrive
together at the downwind nonattainment areas in other States. Moreover,
Delaware and New Jersey are closer to these receptors.
    Given these highly distinctive facts, considered in conjunction
with the data concerning the downwind emissions contributions from
Delaware and New Jersey, it is reasonable that Delaware and New Jersey
be viewed as an entity for assessing significance of PM2.5
nonattainment in downwind States. We did this by treating the
combination of these two small States as a unit, and then evaluating
the combined emissions with the 0.2 [mu]g/m\3\ threshold for
PM2.5 air quality contribution used in the CAIR. As noted,
this is consistent with our approach in the NOX SIP Call and
other aspects of the CAIR in which we also aggregated certain States in
assessing significant contribution. We note also that Delaware and New
Jersey lie side-by-side and together form a compact geographic area. We
believe this further supports combining them for purposes of this
analysis. By combining these two small States, we believe the
underlying cost-balancing and control program efficiency goals of our
original analytical approach can be better met.
    Virtually every commenter (including New Jersey and Delaware)
agreed with this approach. The only negative comment termed the
proposed approach ``arbitrary'' (without further analysis), and
requested that EPA adhere to existing approaches for assessing
significant contribution. The EPA disagrees that aggregating Delaware
and New Jersey emissions is arbitrary, for the reasons just set
forward. Indeed, given the facts here (especially the emission density
and geographic location of the two States), it could be argued that it
is arbitrary not to combine the emissions for those two States in
assessing significance of contribution. Moreover, past EPA practice in
both the CAIR and the NOX SIP Call has aggregated emissions
across State boundaries in similar circumstances, as explained above.

B. Results of Updated Air Quality Modeling for Delaware and New Jersey

    The proposed rule for including Delaware and New Jersey in the CAIR
included an analysis of the contribution of anthropogenic
SO2 and NOX emissions in these two States to
PM2.5 nonattainment in other States. This analysis was based
upon the sum of the contributions from Delaware and from New Jersey to
each downwind nonattainment receptor. The contribution from each of
these two States was determined based on air quality modeling of each
State individually. Details on EPA's PM2.5 contribution
modeling approach can be found in the Air Quality Modeling Technical
Support Document for the final CAIR.\6\ In brief, the modeling approach
involves ``zero-out'' model simulations in which the SO2 and
NOX emissions from sources in a given State or multi-State
area are removed from a 2010 base case scenario.\7\ The predictions
from this 2010 ``zero-out'' run are compared to predictions from the
corresponding 2010 Base Case simulation to quantify the contributions
to downwind ``modeled plus monitored'' PM2.5 nonattainment
receptors. In the proposal, we stated that we would reassess the
contribution from Delaware and New Jersey combined by performing
``zero-out'' modeling in which SO2 and NOX
emissions are removed from both States in a single model run. We
conducted the combined Delaware/New Jersey zero-out modeling and the
results were provided in the NODA (70 FR 37068; June 28, 2005).
---------------------------------------------------------------------------

    \6\ Docket No. EPA-HQ-OAR-2003-0053-2151.
    \7\ 2010 base case does not include emissions reductions
expected to result from implementation of the CAIR.
---------------------------------------------------------------------------

    The EPA did not receive any significant comment challenging the
proposal to combine Delaware and New Jersey emissions to assess
significance of contribution to downwind States' PM2.5 NAAQS
nonattainment. However, one commenter stated that EPA's modeling of
Delaware and New Jersey failed to account for the effect on
SO2 emissions in Delaware of an enforcement action against
the Motiva refinery. The commenter said that not accounting for the
27,000 tons per year reduction in SO2 at this facility, as
required by a Consent Decree, inflates Delaware's 2010 base case
emissions.
    In response to this comment, EPA adjusted downward the projected
2010 emissions at the Motiva refinery to reflect the required
reductions and remodeled the combined contributions from Delaware and
New Jersey. As a result, 2010 emissions from Delaware in the revised
modeling were lower than in the NODA modeling by over 29,000 tons per
year for SO2 and over 500 tons per year for NOX.
In remodeling Delaware and New Jersey, EPA used the same
PM2.5 modeling platform as was used for the CAIR
PM2.5 contribution modeling. The contributions from Delaware
and New Jersey to PM2.5 nonattainment in other States based
on the revised modeling are provided in Table III-1. These results show
that the maximum downwind contribution from Delaware and New Jersey
combined is 0.21 [mu]g/m\3\ which exceeds EPA's PM2.5
contribution significance criterion of 0.20 g/m\3\. Thus, the revised
modeling for Delaware and New Jersey combined confirms that these
States make a significant contribution to PM2.5
nonattainment in a downwind State (namely New York County, New York,
which includes New York City).

  Table III-1.--PM2.5 Contributions ([mu]g/m\3\) From Delaware and New
                 Jersey Combined to PM2.5 Nonattainment
------------------------------------------------------------------------
                                                              PM2.5
             State                       County            contribution
------------------------------------------------------------------------
Alabama........................  Jefferson Co..........           <  0.05
Alabama........................  Russell Co............           <  0.05
Delaware.......................  New Castle Co.........             0.15
District of Columbia...........  District of Columbia..             0.08
Georgia........................  Bibb Co...............           <  0.05
Georgia........................  Clarke Co.............           <  0.05
Georgia........................  Clayton Co............           <  0.05
Georgia........................  Cobb Co...............           <  0.05
Georgia........................  DeKalb Co.............           <  0.05
Georgia........................  Floyd Co..............           <  0.05
Georgia........................  Fulton Co.............           <  0.05

Georgia........................  Walker Co.............           <  0.05
Illinois.......................  Cook Co...............           <  0.05
Illinois.......................  Madison Co............           <  0.05
Illinois.......................  St. Clair Co..........           <  0.05
Indiana........................  Clark Co..............           <  0.05
Indiana........................  Dubois Co.............           <  0.05
Indiana........................  Lake Co...............           <  0.05
Indiana........................  Marion Co.............           <  0.05
Indiana........................  Vanderburgh Co........           <  0.05
Kentucky.......................  Fayette Co............           <  0.05
Kentucky.......................  Jefferson Co..........           <  0.05
Maryland.......................  Anne Arundel Co.......             0.11
Maryland.......................  Baltimore City........             0.10
Michigan.......................  Wayne Co..............           <  0.05
New York.......................  New York Co...........             0.21
North Carolina.................  Catawba Co............           <  0.05
North Carolina.................  Davidson Co...........           <  0.05
Ohio...........................  Butler Co.............           <  0.05
Ohio...........................  Cuyahoga Co...........           <  0.05
Ohio...........................  Franklin Co...........           <  0.05
Ohio...........................  Hamilton Co...........           <  0.05
Ohio...........................  Jefferson Co..........           <  0.05
Ohio...........................  Lawrence Co...........           <  0.05
Ohio...........................  Mahoning Co...........           <  0.05
Ohio...........................  Montgomery Co.........           <  0.05
Ohio...........................  Scioto Co.............           <  0.05
Ohio...........................  Stark Co..............           <  0.05
Ohio...........................  Summit Co.............           <  0.05
Pennsylvania...................  Allegheny Co..........           <  0.05
Pennsylvania...................  Beaver Co.............           <  0.05
Pennsylvania...................  Berks Co..............             0.13
Pennsylvania...................  Cambria Co............           <  0.05
Pennsylvania...................  Dauphin Co............             0.09
Pennsylvania...................  Delaware Co...........             0.15
Pennsylvania...................  Lancaster Co..........             0.15
Pennsylvania...................  Philadelphia Co.......             0.15
Pennsylvania...................  Washington Co.........           <  0.05
Pennsylvania...................  Westmoreland Co.......           <  0.05
Pennsylvania...................  York Co...............             0.12
Tennessee......................  Hamilton Co...........           <  0.05
Tennessee......................  Knox Co...............           <  0.05
West Virginia..................  Berkeley Co...........           <  0.05
West Virginia..................  Brooke Co.............           <  0.05
West Virginia..................  Cabell Co.............           <  0.05
West Virginia..................  Hancock Co............           <  0.05
West Virginia..................  Kanawha Co............           <  0.05
West Virginia..................  Marion Co.............           <  0.05
West Virginia..................  Marshall Co...........           <  0.05
West Virginia..................  Ohio Co...............           <  0.05
West Virginia..................  Wood Co...............           <  0.05
------------------------------------------------------------------------

IV. Findings and Action

A. Findings of Significant Contribution for Delaware and New Jersey

    We find that emissions of the PM2.5 precursors
SO2 and NOX emitted by Delaware and New Jersey
contribute significantly to nonattainment of the PM2.5 NAAQS
in New York. Accordingly, we are finalizing SIP requirements for
Delaware and New Jersey under section 110(a)(1) to meet the
requirements of section 110(a)(2)(D)(i), namely, to contain adequate
provisions to prohibit SO2 and NOX emissions from
sources or activities within the States from ``contribut[ing]
significantly to nonattainment'' of the PM2.5 NAAQS in
downwind States.

B. SIP Approval Criteria

    The CAIR added two new sections to title 40 of the Code of Federal
Regulations, Sec. Sec.  51.123 and 51.124 containing requirements
related to NOX and SO2 respectively, which
establish the requirement for submission of SIP revisions to comply
with the CAIR and the criteria which EPA will use to review these
revisions for approval or disapproval. The content of these sections is
presented in section VII of the preamble to the CAIR. Delaware and New
Jersey are already subject to the ozone-related provisions of these
sections but not to the provisions that relate to PM2.5. We
are amending these two sections to extend the PM2.5-related
provisions to both States. The practical effect of the amendments will
be to subject the States to budgets (if they choose to control large
EGUs) for annual emission reduction requirements of NOX and
SO2.

Delaware and New Jersey Statewide Annual Emissions Budgets
    The NOX and SO2 annual and ozone season
budgets for New Jersey and Delaware are shown below in Tables IV-1 and
IV-2.

                     Table IV-1.--Annual NOX Budgets
                                 [Tons]
------------------------------------------------------------------------
                     Year                         Delaware    New Jersey
------------------------------------------------------------------------
2009..........................................        4,166       12,670
2015..........................................        3,472       10,558
------------------------------------------------------------------------

                     Table IV-2.--Annual SO2 Budgets
                                 [Tons]
------------------------------------------------------------------------
                     Year                         Delaware    New Jersey
------------------------------------------------------------------------
2010..........................................       22,411       32,392
2015..........................................       15,687       22,674
------------------------------------------------------------------------

    State annual SO2 budgets for the years 2010-2014 (Phase
I) are based on a 50 percent reduction from title IV allocations for
all units in the affected State. The State annual budgets for 2015 and
beyond (Phase II) are based on a 65 percent reduction from title IV
allowances allocated to units in the affected State for SO2
control.
    The EPA calculated State NOX budgets through a fuel-
adjusted heat-input basis, as in the CAIR. State budgets were
determined by multiplying historic heat input data (summed by fuel) by
different adjustment factors for the different fuels. These factors
reflect the relative differences in the average NOX
emissions rates for each fuel type. The average NOX
emissions rates were derived by totaling 1999 through 2001 heat input
and emissions for each fuel type (i.e., coal, natural gas, and oil), in
each State. The resulting adjustment factors from this calculation are
1.0 for coal, 0.4 for gas and 0.6 for oil. The factors reflect the
inherently higher emissions rate of coal-fired plants, and consequently
the greater burden on coal plants to control emissions. The regional
budget was then apportioned to States on a pro-rata basis, based on
each State's share of total adjusted average heat input. For a more
detailed discussion of how the budgets were calculated, see the
proposal (70 FR 25416).
Compliance Supplement Pool (CSP) Allowances and the Statewide Budgets
    The final CAIR annual NOX cap and trade rule provides
additional incentives for early annual NOX reductions by
creating a CSP for CAIR States from which they can distribute
allowances for early, annual NOX emissions reductions in the
years 2007 and 2008. The CSP functions much like the NOX SIP
Call's CSP. The CSP is comprised of CAIR annual NOX
allowances of vintage year 2009.
    In the final CAIR, EPA apportions a 200,000 ton CSP to all States
in the CAIR region. The CSP was apportioned based on a State's share of
the required emissions reductions (i.e., the difference between their
State baseline emissions and their projected emissions under the CAIR).
States may distribute these CAIR NOX allowances to sources
based upon either: (1) A demonstration to the State of NOX
emissions reductions in surplus of any existing NOX emission
control requirements; or (2) a demonstration to the State that the
facility has a ``need'' that would affect electricity grid reliability;
or, another method chosen by the State. Sources that wish to receive
CAIR CSP allowances can be awarded one CAIR annual NOX
allowance for every ton of NOX emissions reductions. (Should
a State receive more requests for allowances than their share of the
CAIR CSP, the State would pro-rate the allowance distribution).
Determination of surplus emissions must use emissions data measured
using part 75 monitoring.
    The CSP for CAIR States affected by the CAIR NFR has a total of
198,494 CAIR NOX allowances in addition to the annual CAIR
NOX budgets. With Delaware and New Jersey as part of the
final CAIR program, they will be allotted an additional 1,503
allowances. Table IV-3 shows the NOX CSP for New Jersey and
Delaware.

               Table IV-3.--NOX Compliance Supplement Pool
                                 [Tons]
------------------------------------------------------------------------
              Delaware                            New Jersey
------------------------------------------------------------------------
                     843                                  660
------------------------------------------------------------------------

C. SIP Submittal Deadline

    We are also finalizing the requirement that PM2.5
transport SIPs be submitted, under CAA section 110(a)(1), as soon as
practicable, but not later than 18 months from the date of signature of
the CAIR, i.e., September 11, 2006. While EPA did not receive public
comment regarding the proposed Delaware and New Jersey CAIR SIP
revision for PM2.5, EPA notes that this deadline will be
less than 18 months from today's final action and less than the 12-
month timeline EPA had expected at the time of the publication of the
Delaware and New Jersey CAIR proposal. However, we continue to believe
that Delaware and New Jersey have sufficient time to develop and submit
CAIR SIP revisions for the following reasons.
    First, Delaware and New Jersey were included in the initial CAIR
finding of significant contribution for PM2.5 precursors, so
Delaware and New Jersey have been aware that they might have to submit
transport SIPs for PM2.5 since the CAIR proposal was
published on January 30, 2004. Moreover, we are adopting all of the key
features of the initial CAIR proposal, including the same annual
SO2 and NOX reductions and budgets and the same
implementation mechanisms. In addition, Delaware and New Jersey have
been aware of the CAIR model trading rules, which they may choose to
adopt as a highly cost-effective control remedy, for the same length of
time as the other CAIR States. Again, since these States have been on
notice regarding these issues, we believe that it is reasonable to
require Delaware and New Jersey to submit their CAIR SIP revisions for
PM2.5 on the same timeline as other CAIR PM2.5
States.
    The EPA modeling projects that, when Delaware and New Jersey are
included in the CAIR SO2 and NOX annual trading
programs, these States would achieve the required emissions reductions
with limited installation of advanced emissions controls. Specifically,
EPA modeling projected the installation of one flue gas desulfurization
(FGD) control device in New Jersey.\8\ By requiring the Delaware and
New Jersey CAIR SIP revisions by September 11, 2006, sources will have
40 months to plan and install the one additional FGD device EPA
predicts will be installed. This exceeds the 27 months EPA estimates it
takes for the installation of a FGD device. Also, we believe sufficient
boiler maker labor and other resources exist to support one additional
FGD device installation by January 1, 2010.
---------------------------------------------------------------------------

    \8\ The EPA modeling shows that no additional selective
catalytic reduction (SCR) units would be required in the two States.
Analysis is based upon comparisons of projected emissions control
equipment retrofits in IPM runs with and without Delaware and New
Jersey. See IPM runs (``CAIR 2004 Final DE and NJ'') in the docket
for further details.
---------------------------------------------------------------------------

    For all these reasons, also put forth in the Delaware and New
Jersey NPR, we think it reasonable that Delaware and New Jersey submit
PM2.5 transport SIPs by September 11, 2006.

D. Emissions Reporting Requirements

    In order to provide emissions inventory information that will allow
EPA to better monitor the implementation and effects of the

CAIR's emissions reductions, EPA incorporated into the CAIR the pre-
existing emission inventory reporting requirements applicable to States
affected by the CAIR. Those CAIR requirements were specific to whether
a State was affected by the annual emissions reductions requirements
for SO2 and NOX or only the ozone-season
reduction requirements for NOX. Because we are applying the
annual emissions reductions requirements to Delaware and New Jersey, we
are also placing these two States under the corresponding provisions of
the emissions reporting requirements. The only practical effect of this
change relative to existing requirements is that if either State
chooses to obtain some of the required annual emissions reductions from
a source which emits less than 2,500 tons/year of both SO2
and NOX and that source is not also made subject to the EPA-
operated emissions trading programs, the State must report the annual
emissions of that source to EPA annually in contrast to the triennial
requirement that presently applies to such sources.

V. Expected Effects of This Action

A. Emissions

    The EPA has conducted power sector analysis of the CAIR using the
IPM. The IPM is a dynamic linear programming model that can be used to
examine air pollution control policies for SO2 and
NOX throughout the contiguous United States for the entire
power system. Documentation for IPM can be found at  http://www.epa.gov/airmarkets/epa-ipm
.

    Emissions of SO2 and NOX in the CAIR region
would be higher under the final CAIR where Delaware and New Jersey are
only included in a summer season ozone cap, similar to Connecticut and
Massachusetts. Since these two States are being included as part of the
annual SO2 and NOX caps for the CAIR, emissions
in the region will be reduced by another 48,000 tons of SO2
and 11,000 tons of NOX from the final CAIR scenario by 2015.
    The inclusion of Delaware and New Jersey in the annual CAIR
requirements will result in additional reductions of SO2 and
NOX that will help achieve attainment in downwind States.
These additional reductions are shown in Table V-1.
---------------------------------------------------------------------------

    \9\ The CAIR region for purposes of this table includes the
following States: Alabama, Arkansas, Connecticut, Delaware, District
of Columbia, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky,
Louisiana, Maryland, Massachusetts, Michigan, Minnesota,
Mississippi, Missouri, New Jersey, New York, North Caorlina, Ohio,
Pennsylvania, South Carolina, Tennessee, Texas, Virginia, West
Virginia, Wisconsin.

                   Table V-1.--Annual Emissions From Affected Sources for the CAIR Region \9\
                                                 [Thousand tons]
----------------------------------------------------------------------------------------------------------------
                                                                        2010                      2015
                                                             ---------------------------------------------------
                                                                  SO2          NOX          SO2          NOX
----------------------------------------------------------------------------------------------------------------
Base Case...................................................        8,868        2,826        8,056        2,853
Final CAIR (DE and NJ Included for Ozone Season NOX Only)...        5,336        1,592        4,216        1,342
CAIR Modified By This Rule (DE and NJ Included for Annual           5,305        1,582        4,168        1,331
 SO2 and NOX)...............................................
Difference between CAIR Scenarios...........................           32           10           48           11
----------------------------------------------------------------------------------------------------------------
Note: Numbers may not add due to rounding.

B. Air Quality

    Section VI of the preamble to the CAIR describes the air quality
modeling performed to determine the projected impacts of the CAIR on
PM2.5 and 8-hour ozone of the SO2 and
NOX emissions reductions in the control region modeled. The
modeling used to estimate the air quality impact of these reductions
assumed annual SO2 and NOX controls for Arkansas,
Delaware, and New Jersey (as had been proposed before completion of the
final contribution analysis) in addition to the 23 States plus the
District of Columbia. Since Arkansas, Delaware, and New Jersey are not
included in the final CAIR PM2.5 region, the modeled
estimated impacts are overstated for the final CAIR which excludes all
three States from the CAIR region for PM2.5. Because
Delaware and New Jersey now are subject to the PM2.5-related
emissions limits for SO2 and NOX, the air quality
modeling for the final CAIR better approximates the net effects of the
CAIR plus today's rule, but still overestimates the air quality changes
somewhat due to the continued discrepancy regarding Arkansas. The
Regulatory Impact Analysis for the CAIR discusses these differences in
scenarios in more detail.
    The EPA analyzed the impacts of the regional emissions reductions
in both 2010 and 2015. These impacts are quantified by comparing air
quality modeling results for the regional control scenario to the
modeling results for the corresponding 2010 and 2015 base case
scenarios. The 2010 and 2015 emissions reductions and air quality
improvements from the regional control strategy modeled are presented
in summary form in section VI of the preamble to the CAIR and in detail
in the Emission Inventory Technical Support Document and the Air
Quality Modeling Technical Support Document for the CAIR.
    The EPA estimates, based on the air quality analysis for the CAIR,
that the required SO2 and NOX emissions
reductions would, by themselves, bring into attainment 52 of the 80
counties that are otherwise expected to be in nonattainment for
PM2.5 in 2010, and 57 of the 75 counties that are otherwise
expected to be in nonattainment for PM2.5 in 2015. The EPA
further estimates that the required NOX emissions reductions
would, by themselves, bring into attainment 3 of the 40 counties that
are otherwise expected to be in nonattainment for 8-hour ozone in 2010,
and 6 of the 22 counties that are expected to be in nonattainment for
8-hour ozone in 2015. In addition, today's rule will improve
PM2.5 and 8-hour ozone air quality in the areas that will
remain nonattainment for those two NAAQS after implementation of
today's rule. Because of today's rule, the States with those remaining
nonattainment areas will find it less burdensome and less expensive to
reach attainment by adopting additional local controls. The CAIR will
also reduce PM2.5 and 8-hour ozone levels in attainment
areas.
    We have not conducted an incremental analysis of the air quality
effects from the proposed extension of the annual emissions reductions
requirements to New Jersey and Delaware. However, IPM modeling of EGU
emissions indicates that assuming that all States join the EPA trading

programs, highly cost-effective emissions reductions will be
distributed across the region in addition to Delaware and New Jersey
themselves, and contribute to the attainment of these two States'
downwind neighbors as well as other States with nonattainment areas.

VI. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review

    Under Executive Order 12866 (58 FR 51735, October 4, 1993), the
Agency must determine whether a regulatory action is ``significant''
and therefore subject to Office of Management and Budget (OMB) review
and the requirements of the Executive Order. The Order defines
``significant regulatory action'' as one that is likely to result in a
rule that may:
    1. Have an annual effect on the economy of $100 million or more or
adversely affect in a material way the economy, a sector of the
economy, productivity, competition, jobs, the environment, public
health or safety, or State, local, or Tribal governments or
communities;
    2. Create a serious inconsistency or otherwise interfere with an
action taken or planned by another agency;
    3. Materially alter the budgetary impact of entitlements, grants,
user fees, or loan programs or the rights and obligations of recipients
thereof; or
    4. Raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
the Executive Order.
    In view of its important policy implications and potential effect
on the economy of over $100 million, this rule and the CAIR program
inclusive of this rule has been judged to be an economically
``significant regulatory action'' within the meaning of the Executive
Order. As a result, today's rule was submitted to OMB for review, and
EPA prepared an economic analysis of the CAIR program including this
rule entitled ``Regulatory Impact Analysis of the Final Clean Air
Interstate Rule'' (March 2005).
1. What Economic Analyses Were Conducted for the Rulemaking?
    The analyses conducted for the CAIR program (CAIR final rule plus
this New Jersey and Delaware rule) provide several important analyses
of impacts on public welfare. These include an analysis of the social
benefits, social costs, and net benefits of the regulatory scenario.
The economic analyses also address issues involving small business
impacts, unfunded mandates (including impacts for Tribal governments),
environmental justice, children's health, energy impacts, and
requirements of the Paperwork Reduction Act.
2. What Are the Benefits and Costs of the CAIR Program?
    The benefit-cost analysis shows that substantial net economic
benefits to society are likely to be achieved due to reduction in
emissions resulting from the CAIR program that includes annual
SO2 and NOX controls for New Jersey and Delaware.
The results show that the CAIR program would be highly beneficial to
society, with annual net benefits (benefits less costs) of
approximately $71.4 or $60.4 billion in 2010 and $98.5 or $83.2 billion
in 2015. These alternative net benefits estimates occur due to
differing assumptions concerning the social discount rate used to
estimate the annual value of the benefits of the rule with the lower
estimates relating to a discount rate of 7 percent and the higher
estimates a discount rate of 3 percent. All amounts are reflected in
1999 dollars. For more information, see the NFR for the CAIR published
in the Federal Register (70 FR 25162; May 12, 2005) and the Regulatory
Impact Analysis for the Final Clean Air Interstate Rule (March 2005).
3. What Are the Incremental Costs to the Power Industry Associated With
This New Jersey and Delaware Rule?
    The costs presented here represent the total incremental cost to
the electric power industry of reducing NOX and
SO2 emissions to meet the reduction requirements set forth
in the rule, assuming all States participate in a regionwide cap and
trade program. These costs estimates are referred to as private costs,
and these estimates differ from the cost of the program to society or
social cost estimates presented for the CAIR program discussed
previously. As shown in Table VI-1, EPA estimates the annual private
costs of this rule to include Delaware and New Jersey in the CAIR are
approximately $30 million in 2010 and $40 million in 2015. All
estimates reflect 1999 dollars. Overall, the impacts of the CAIR
program are modest, particularly in light of the large benefits we
expect. Delaware and New Jersey are part of the PJM electricity region,
which is an extremely large regional transmission organization that
manages electricity movement through several Mid-Atlantic and Mid-
Western States. The PJM ensures that plants are operated efficiently
and power is supplied reliably and safely. Other States already in the
CAIR are also part of the PJM, and EPA does not anticipate that retail
electricity prices will be greatly affected by the CAIR, inclusive of
this rule to include Delaware and New Jersey. Retail electricity prices
are projected to increase roughly 2.0-2.6 percent with the CAIR program
(inclusive of this rule) in the 2010 and 2015 timeframe, and then drop
below 2.0 percent thereafter. For the MAAAC Power Region, which
includes Delaware and New Jersey, retail electricity prices are
projected to increase roughly 3.2 to 3.4 percent with the CAIR program
(inclusive of this rule) in the 2010 and 2015 timeframe, and then drop
below 1.0 percent, thereafter. The effects of the CAIR program on
natural gas prices and the electric power industry generation mix are
also small, with a 1.6 percent or less increase in natural gas prices
projected from 2010 to 2020.
    With the Delaware and New Jersey rule and the CAIR, we estimate
there will be continued reliance on coal-fired generation. Coal-fired
generation is projected to remain at roughly 50 percent of total
electricity generated. A relatively small amount of coal-fired
capacity, about 5.2 GW \10\ (1.7 percent of all coal-fired capacity and
0.5 percent of all generating capacity), is projected to be uneconomic
to maintain. For the most part, these units are small and infrequently
used generating units that are dispersed throughout the CAIR region.
Units projected to be uneconomic to maintain may be ``mothballed,''
retired, or kept in service to ensure transmission reliability in
certain parts of the grid.
---------------------------------------------------------------------------

    \10\ 0.5 GW of this capacity occurs as a result of the inclusion
of Delaware and New Jersey in the CAIR.
---------------------------------------------------------------------------

    As demand grows in the future, additional coal-fired generation is
projected to be built under the CAIR program. As a result, both coal-
fired generation and coal production for electricity generation are
projected to increase from 2003 levels by about 15 percent in 2010 and
25 percent by 2020, and we expect a small shift towards greater coal
production in Appalachia and the interior coal regions of the country
with the CAIR.
    For today's rule, EPA analyzed the costs and other economic inputs
using the IPM described earlier and the EPA Retail Pricing Model (RPM).
The additional annualized incremental costs of including Delaware and
New Jersey in the CAIR program primarily occur because of the
additional installation

and operation of a modest amount of pollution control equipment.

  Table VI-1.--Annualized Incremental Private Costs for the CAIR Region
                With and Without Delaware and New Jersey
                       [Billions of 1999 dollars]
------------------------------------------------------------------------
                 Program                   Costs in 2010   Costs in 2015
------------------------------------------------------------------------
Final CAIR (DE and NJ: Ozone Season NOX            $2.53           $3.85
 Only)..................................
Final CAIR Plus NJ and DE Proposal (DE              2.56            3.89
 and NJ: Annual SO2 and NOX.............
Difference Between CAIR Scenarios.......            0.03            0.04
------------------------------------------------------------------------
Source: EPA 2004-2005, Integrated Planning Model. Results differ from
  those reported in the CAIR RIA reflecting more recent modeling results
  for the CAIR.

4. What Potential Benefits May Be Associated With This Rule?
    Air quality modeling was not conducted for the New Jersey and
Delaware rule. For this reason, an analysis of the potential benefits
for the New Jersey and Delaware rule cannot be determined with any
degree of specificity. However, based on the air quality modeling
results for the CAIR, we can make ``ball park'' estimates of the
benefits and net benefits that might occur with this rule. Including
New Jersey and Delaware in the CAIR program would result in additional
reductions of SO2 and NOX emissions. This ``ball
park'' estimate approach assumes the benefits-per-ton for reductions of
SO2 and NOX emissions for Delaware and New Jersey
will equate to the average benefits-per-ton resulting from the CAIR
program. Using this approach, we estimate that approximately $630
million of the total annual CAIR program benefits previously discussed
are attributable to annual SO2 and NOX controls
for New Jersey and Delaware in 2010. This estimate increases to over
$1.1 billion in 2015. The full CAIR analysis including New Jersey and
Delaware showed a benefit-cost ratio of as high as 39:1 in 2015. Based
on the relatively low estimated private costs of including New Jersey
and Delaware of $30 million in 2010 and $40 million in 2015, it is
highly likely that benefits would exceed the costs of including
Delaware and New Jersey in the CAIR even if benefits of controlling
SO2 and NOX for New Jersey and Delaware are
substantially lower than the average benefit estimates for the CAIR in
general. It is highly unlikely that benefits are much lower than the
average given the urban nature of much of New Jersey, and the proximity
of New Jersey and Delaware to many heavily populated urban areas.

B. Paperwork Reduction Act

    The information collection requirements in this rule have been
submitted for approval to the OMB under the Paperwork Reduction Act, 44
U.S.C. 3501 et seq. The Information Collection Request (ICR) document
prepared by EPA has been assigned EPA ICR number 2184.02.
    The purpose of the ICR is to estimate the anticipated monitoring,
reporting, and recordkeeping burden estimates and associated costs for
States, local governments, and sources that are expected to result from
this final rule. This ICR describes the nature of the information
collection and the estimated burden for this rule. In cases where
information is already collected by a related program, the ICR takes
into account only the additional burden. This situation arises in
States that are also subject to requirements of the Consolidated
Emissions Reporting Rule (EPA ICR number 0916.10; OMB control number
2060-0088) or for sources that are subject to the Acid Rain Program
(EPA ICR 2152.01; EPA ICR number 1633.13; OMB control number 2060-0258)
or NOX SIP Call (EPA ICR number 1857.03; OMB control number
2060-0445) requirements.
    The total monitoring, recordkeeping, and reporting burden to
sources resulting from Delaware and New Jersey choosing to participate
in a regional cap and trade program are expected to be approximately
$263,000 at the time the monitors are initially used. This estimate
includes the annualized cost of installing and operating appropriate
SO2 and NOX emissions monitoring equipment to
measure and report the total emissions of these pollutants from
affected EGUs (serving generators greater than 25 megawatt capacity)
for this rule. The burden to State and local air agencies includes any
necessary SIP revisions, performing monitoring certification, and
fulfilling audit responsibilities.
    Burden means the total time, effort, or financial resources
expended by persons to generate, maintain, retain, or disclose or
provide information to or for a Federal agency. This includes the time
needed to review instructions; develop, acquire, install, and utilize
technology and systems for the purposes of collecting, validating, and
verifying information, processing and maintaining information, and
disclosing and providing information; adjust the existing ways to
comply with any previously applicable instructions and requirements;
train personnel to be able to respond to a collection of information;
search data sources; complete and review the collection of information;
and transmit or otherwise disclose the information.
    An agency may not conduct or sponsor, and a person is not required
to respond to a collection of information unless it displays a
currently valid OMB control number. The OMB control numbers for EPA's
regulations in 40 CFR are listed in 40 CFR part 9.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) generally requires an agency
to prepare a regulatory flexibility analysis of any rule subject to
notice and comment rulemaking requirements under the Administrative
Procedure Act or any other statute unless the agency certifies that the
rule will not have a significant economic impact on a substantial
number of small entities. Small entities include small businesses,
small organizations, and small governmental jurisdictions.
    For purposes of assessing the impacts of today's rule on small
entities, small entity is defined as: (1) A small business that is
identified by the North American Industry Classification System (NAICS)
Code, as defined by the Small Business Administration (SBA); (2) a
small governmental jurisdiction that is a government of a city, county,
town, school district or special district with a population of less
than 50,000; and (3) a small organization that is any not-for-profit
enterprise which is independently owned and operated and is not
dominant in its field. Table VI-2 lists entities potentially impacted
by this rule with applicable NAICS codes.

                              VI-2.--Potentially Regulated Categories and Entities
----------------------------------------------------------------------------------------------------------------
                   Category                     NAICS code \1\     Examples of potentially regulated entities
----------------------------------------------------------------------------------------------------------------
Industry......................................          221112  Fossil fuel-fired electric utility steam
                                                                 generating units.
Federal Government............................         2211122  Fossil fuel-fired electric utility steam
                                                                 generating units owned by the Federal
                                                                 government.
State/local/Tribal Government.................      \2\ 221112  Fossil fuel-fired electric utility steam
                                                                 generating units owned by municipalities.
                                                        921150  Fossil fuel-fired electric utility steam
                                                                 generating units in Indian Country.
----------------------------------------------------------------------------------------------------------------
1 North American Industry Classification System.
2 Federal, State, or local government-owned and operated establishments are classified according to the activity
  in which they are engaged.

    According to the SBA size standards for NAICS code 221112
Utilities-Fossil Fuel Electric Power Generation, a firm is small if,
including its affiliates, it is primarily engaged in the generation,
transmission, and or distribution of electric energy for sale and its
total electric output for the preceding fiscal year did not exceed 4
million megawatt hours.
    After considering the economic impacts of today's final rule on
small entities, I certify that this action will not have a significant
economic impact on a substantial number of small entities. This final
rule will not impose any requirements on small entities. Courts have
interpreted the RFA to require a regulatory flexibility analysis only
when small entities will be subject to the requirements of the rule.
See Michigan v. EPA, 213 F.3d 663, 668-69 (D.C. Cir., 2000), cert. den.
121 S.Ct. 225, 149 L.Ed.2d 135 (2001).
    This rule would not establish requirements applicable to small
entities. Instead, this rule requires New Jersey and Delaware to
develop, adopt, and submit SIP revisions that would achieve the
necessary SO2 and NOX emissions reductions, and
would leave to the States the task of determining how to obtain those
reductions, including which entities to regulate. Moreover, because
these States would have discretion to choose the sources to regulate
and how much emissions reductions each selected source would have to
achieve, EPA could not predict the effect of the rule on small
entities. Although not required by the RFA, the Agency has conducted a
small business analysis for the CAIR program inclusive of the New
Jersey and Delaware proposal.
    Overall, about 445 MW of total small entity capacity, or 1.0
percent of total small entity capacity in the CAIR region, is projected
to be uneconomic to maintain under the CAIR relative to the base case.
In practice, units projected to be uneconomic to maintain may be
``mothballed,'' retired, or kept in service to ensure transmission
reliability in certain parts of the grid. Our IPM modeling is unable to
distinguish between these potential outcomes.
    The EPA modeling identified 264 small power-generating entities
within the entire CAIR region based upon the definition of small entity
outlined above. The EPA excluded from this analysis 189 small entities
that were not projected to have at least one unit with a generating
capacity of 25 MW or great operating in the base case. Thus, we found
that 75 small entities may potentially be affected by the CAIR program.
Of these 75 small entities, 28 may experience compliance costs in
excess of 1 percent of revenues in 2010, and 46 may in 2015, based on
the Agency's assumptions of how the affected States implement control
measures to meet their emissions budgets as set forth in this
rulemaking. Potentially affected small entities experiencing compliance
costs in excess of 1 percent of revenues have some potential for
significant impact resulting from implementation of the CAIR. However,
it is the Agency's position that because none of the affected entities
currently operate in a competitive market environment, they should be
able to pass the costs of complying with the CAIR on to rate-payers.
Moreover, the decision to include only units greater than 25 MW in size
exempts 185 small entities that would otherwise be potentially affected
by the CAIR.
    Two other points should be considered when evaluating the impact of
the CAIR program (inclusive of the New Jersey and Delaware rule),
specifically, and cap and trade programs more generally, on small
entities. First, under the CAIR program, the cap and trade program is
designed such that States determine how NOX allowances are
to be allocated across units. A State that wishes to mitigate the
impact of the rule on small entities might choose to allocate
NOX allowances in a manner that is favorable to small
entities. Finally, the use of cap and trade in general will limit
impacts on small entities relative to a less flexible command-and-
control program.

D. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-
4) (UMRA), establishes requirements for Federal agencies to assess the
effects of their regulatory actions on State, local, and Tribal
governments and the private sector. Under section 202 of the UMRA, 2
U.S.C. 1532, EPA generally must prepare a written statement, including
a cost-benefit analysis, for any proposed or final rule that ``includes
any Federal mandate that may result in the expenditure by State, local,
and Tribal governments, in the aggregate, or by the private sector, of
$100,000,000 or more * * * in any one year.'' A ``Federal mandate'' is
defined under section 421(6), 2 U.S.C. 658(6), to include a ``Federal
intergovernmental mandate'' and a ``Federal private sector mandate.'' A
``Federal intergovernmental mandate,'' in turn, is defined to include a
regulation that ``would impose an enforceable duty upon State, Local,
or Tribal governments,'' section 421(5)(A)(i), 2 U.S.C. 658(5)(A)(i),
except for, among other things, a duty that is ``a condition of Federal
assistance,'' section 421(5)(A)(i)(I). A ``Federal private sector
mandate'' includes a regulation that ``would impose an enforceable duty
upon the private sector,'' with certain exceptions, section 421(7)(A),
2 U.S.C. 658(7)(A).
    Before promulgating an EPA rule for which a written statement is
needed under section 202 of the UMRA, section 205, 2 U.S.C. 1535, of
the UMRA generally requires EPA to identify and consider a reasonable
number of regulatory alternatives and adopt the least costly, most
cost-effective, or least burdensome alternative that achieves the
objectives of the rule.
    The EPA prepared a written statement for the CAIR final inclusive
of this rule consistent with the requirements of section 202 of the
UMRA. Furthermore, as EPA stated in the rule, EPA is not directly
establishing any regulatory requirements that may significantly or
uniquely affect small governments, including Tribal governments. Thus,
EPA is not obligated to develop under

section 203 of the UMRA a small government agency plan. Furthermore, in
a manner consistent with the intergovernmental consultation provisions
of section 204 of the UMRA, EPA carried out consultations with the
governmental entities affected by this rule.
    For several reasons, however, EPA is not reaching a final
conclusion as to the applicability of the requirements of UMRA to this
rulemaking action. First, it is questionable whether a requirement to
submit a SIP revision would constitute a Federal mandate in any case.
The obligation for a State to revise its SIP that arises out of section
110(a) of the CAA is not legally enforceable by a court of law, and at
most is a condition for continued receipt of highway funds. Therefore,
it is possible to view an action requiring such a submittal as not
creating any enforceable duty within the meaning of section
421(5)(9a)(I) of UMRA (2 U.S.C. 658 (a)(I)). Even if it did, the duty
could be viewed as falling within the exception for a condition of
Federal assistance under section 421(5)(a)(i)(I) of UMRA (2 U.S.C.
658(5)(a)(i)(I)).
    As noted earlier, however, notwithstanding these issues, EPA
prepared the statement that would be required by UMRA if its statutory
provisions applied for the CAIR final rule and this rule. The EPA also
consulted with governmental entities as would be required by UMRA.
Consequently, it is not necessary for EPA to reach a conclusion as to
the applicability of the UMRA requirements.
    The EPA conducted an analysis of the economic impacts anticipated
from the CAIR program inclusive of the New Jersey and Delaware proposal
for government-owned entities. The modeling conducted using the IPM
projects that about 340 MW of municipality-owned capacity (about 0.4
percent of all subdivision, State and municipality capacity in the CAIR
region) would be uneconomic to maintain under the CAIR program, beyond
what is projected in the base case. In practice, however, the units
projected to be uneconomic to maintain may be ``mothballed,'' retired,
or kept in service to ensure transmission reliability in certain parts
of the grid. For the most part, these units are small and infrequently
used generating units that are dispersed throughout the CAIR region.
    The EPA modeling identified 265 State or municipally-owned
entities, as well as subdivisions, within the entire CAIR region. The
EPA excluded from the analysis government-owned entities that were not
projected to have at least one unit with generating capacity of 25 MW
or greater in the base case. Thus, we excluded 184 entities from the
analysis. We found that 81 government entities will be potentially
affected by the CAIR. Of the 81 government entities, 20 may experience
compliance costs in excess of 1 percent of revenues in 2010, and 39 may
in 2015, based on our assumptions of how the affected States implement
control measures to meet their emissions budgets as set forth in this
rulemaking.
    Government entities projected to experience compliance costs in
excess of 1 percent of revenues have some potential for significant
impact resulting from implementation of the CAIR. However, as noted
above, it is EPA's position that because these government entities can
pass on their costs of compliance to rate-payers, they will not be
significantly impacted. Furthermore, the decision to include only units
greater than 25 MW in size exempts 179 government entities that would
otherwise be potentially affected by the CAIR program.
    The above points aside, potentially adverse impacts of the CAIR
program on State and municipality-owned entities could be limited by
the fact that the cap and trade program is designed such that States
determine how NOX allowances are to be allocated across
units. A State that wishes to mitigate the impact of the rule on State
or municipality-owned entities might choose to allocate NOX
allowances in a manner that is favorable to these entities. Finally,
the use of cap and trade in general will limit impacts on entities
owned by small governments relative to a less flexible command-and-
control program.

E. Executive Order 13132: Federalism

    Executive Order 13132, entitled ``Federalism'' (64 FR 43255, August
10, 1999), requires EPA to develop an accountable process to ensure
``meaningful and timely input by State and local officials in the
development of regulatory policies that have federalism implications.''
``Policies that have federalism implications'' is defined in the
Executive Order to include regulations that have ``substantial direct
effects on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government.''
    This rule does not have federalism implications. It will not have
substantial direct effects on the States, on the relationship between
the national government and the States, or on the distribution of power
and responsibilities among the various levels of government, as
specified in Executive Order 13132. The CAA establishes the
relationship between the Federal government and the States, and this
rule does not impact that relationship. Thus, Executive Order 13132
does not apply to this rule. In the spirit of Executive Order 13132,
and consistent with EPA policy to promote communications between EPA
and State and local governments, EPA specifically solicited comment on
the CAIR from State and local officials.

F. Executive Order 13175: Consultation and Coordination With Indian
Tribal Governments

    Executive Order 13175, entitled ``Consultation and Coordination
with Indian Tribal Governments'' (65 FR 67249, November 9, 2000),
requires EPA to develop an accountable process to ensure ``meaningful
and timely input by Tribal officials in the development of regulatory
policies that have Tribal implications.'' The CAIR program (CAIR final
and New Jersey and Delaware rule) does not have Tribal implications as
specified in Executive Order 13175.
    The CAIR program addresses transport of pollutants that are
precursors for ozone and PM2.5. The CAA provides for States
and Tribes to develop plans to regulate emissions of air pollutants
within their jurisdictions. The regulations clarify the statutory
obligations of States and Tribes that develop plans to implement this
rule. The Tribal Authority Rule (TAR) give Tribes the opportunity to
develop and implement CAA programs, but it leaves to the discretion of
the Tribe whether to develop these programs and which programs, or
appropriate elements of a program, the Tribe will adopt.
    The CAIR program does not have Tribal implications as defined by
Executive Order 13175. It does not have a substantial direct effect on
one or more Indian Tribes, because no Tribe has implemented a federally
enforceable air quality management program under the CAA at this time.
Furthermore, the CAIR program does not affect the relationship or
distribution of power and responsibilities between the Federal
government and Indian Tribes. The CAA and the TAR establish the
relationship of the Federal government and Tribes in developing plans
to attain the NAAQS, and this rule does nothing to modify that
relationship. Because the CAIR program does not have Tribal
implications, Executive Order 13175 does not apply.
    If one assumes a Tribe is implementing a Tribal Implementation
Plan, today's rule could have

implications for that Tribe, but it would not impose substantial direct
costs upon the Tribe, nor preempt Tribal law. As provided above, EPA
has estimated that the total annual private costs for the CAIR program
inclusive of the New Jersey and Delaware rule for the CAIR region as
implemented by State, local, and Tribal governments is approximately
$2.4 billion in 2010 and $3.6 billion in 2015 (1999 dollars). There are
currently very few emissions sources in Indian country that could be
affected by the CAIR program and the percentage of Tribal land that
will be impacted is very small. For Tribes that choose to regulate
sources in Indian country, the costs would be attributed to inspecting
regulated facilities and enforcing adopted regulations.
    Although Executive Order 13175 does not apply to this rule, EPA
consulted with Tribal officials in developing the CAIR program. The EPA
encouraged Tribal input at an early stage. Also, EPA held periodic
meetings with the States and the Tribes during the technical
development of the CAIR program. Three meetings were held with the Crow
Tribe, where the Tribe expressed concerns about potential impacts of
the CAIR on their coal mine operations. The addition of Delaware and
New Jersey to the CAIR program does not have any bearing upon the
concerns expressed by the Tribes. In addition, EPA held three calls
with Tribal environmental professionals to address concerns specific to
the Tribes. These discussions have given EPA valuable information about
Tribal concerns regarding the development of the CAIR program. The EPA
has provided briefings for Tribal representatives and the newly formed
National Tribal Air Association (NTAA), and other national Tribal
forums. Input from Tribal representatives was taken into consideration
in development of the CAIR program.

G. Executive Order 13045: Protection of Children From Environmental
Health and Safety Risks

    Executive Order 13045, ``Protection of Children from Environmental
Health and Safety Risks'' (62 FR 19885, April 23, 1997) applies to any
rule that (1) is determined to be ``economically significant'' as
defined under Executive Order 12866, and (2) concerns an environmental
health or safety risk that EPA has reason to believe may have a
disproportionate effect on children. If the regulatory action meets
both criteria, Section 5-501 of the Order directs the Agency to
evaluate the environmental health or safety effects of the planned rule
on children, and explain why the planned regulation is preferable to
other potentially effective and reasonably feasible alternatives
considered by the Agency.
    The CAIR program inclusive of the Delaware and New Jersey rule is
not subject to the Executive Order, because it does not involve
decisions on environmental health or safety risks that may
disproportionately affect children. The EPA believes that the emissions
reductions from the strategies in this rule will further improve air
quality and will further improve children's health.

H. Executive Order 13211: Actions That Significantly Affect Energy
Supply, Distribution, or Use

    Executive Order 13211 (66 FR 28355, May 22, 2001) provides that
agencies shall prepare and submit to the Administrator of the Office of
Regulatory Affairs, OMB, a Statement of Energy Effects for certain
actions identified as ``significant energy actions.'' Section 4(b) of
Executive Order 13211 defines ``significant energy actions'' as any
action by an agency (normally published in the Federal Register) that
promulgates or is expected to lead to the promulgation of a final rule
or regulation, including notices of inquiry, advance notices of final
rulemaking, and notices of final rulemaking: (1)(i) That is a
significant regulatory action under Executive Order 12866 or any
successor order, and (ii) is likely to have a significant adverse
effect on the supply, distribution, or use of energy; or (2) that is
designated by the Administrator of the Office of Information and
Regulatory Affairs as a ``significant energy action.'' The CAIR program
(the CAIR final and the New Jersey and Delaware rule) is a significant
regulatory action under Executive Order 12866, and the CAIR program may
have a significant adverse effect on the supply, distribution, or use
of energy.
    If States choose to obtain the emissions reductions required by the
CAIR final and this rule by regulating EGUs, EPA projects that
approximately 5.3 GW of coal-fired generation (0.5 GW due to the
inclusion of Delaware and New Jersey) may be removed from operation by
2010. In practice, however, the units projected to be uneconomic to
maintain may be ``mothballed,'' retired, or kept in service to ensure
transmission reliability in certain parts of the grid. For the most
part, these units are small and infrequently used generating units that
are dispersed throughout the CAIR region. Less conservative assumptions
regarding natural gas prices or electricity demand would create a
greater incentive to keep these units operational. The EPA projects
that the average annual electricity price will increase by less than
2.7 percent in the CAIR region (and less than 3.5 percent in the MAAC
Power Region, which includes Delaware and New Jersey) for the CAIR
program. The EPA does not believe that the CAIR final and this rule
will have any other impacts that exceed the significance criteria.
    The EPA believes that a number of features of today's rulemaking
serve to reduce its impact on energy supply. First, the optional
trading program provides considerable flexibility to the power sector
and enables industry to comply with the emission reduction requirements
in the most cost-effective manner, thus minimizing overall costs and
the ultimate impact on energy supply. The ability to use banked
allowances from the existing title IV SO2 Trading Program
and the NOX SIP Call Trading Program also provide additional
flexibility. Second, the CAIR program caps are set in two phases and
provide adequate time for EGUs to install pollution controls. For more
details concerning energy impacts, see the Regulatory Impact Analysis
for the Final Clean Air Interstate Rule (March 2005).

I. National Technology Transfer Advancement Act

    Section 12(d) of the National Technology Transfer Advancement Act
(NTTAA) of 1995 (Pub. L. 104-113; 15 U.S.C. 272 note) directs EPA to
use voluntary consensus standards in its regulatory and procurement
activities unless to do so would be inconsistent with applicable law or
otherwise impractical. Voluntary consensus standards are technical
standards (e.g., materials specifications, test methods, sampling
procedures, business practices) developed or adopted by one or more
voluntary consensus bodies. The NTTAA directs EPA to provide Congress,
through annual reports to OMB, with explanations when an agency does
not use available and applicable voluntary consensus standards.
    The CAIR final and this rule would require all sources that
participate in the trading program under part 96 to meet the applicable
monitoring requirements of part 75. Part 75 already incorporates a
number of voluntary consensus standards. Consistent with the Agency's
Performance Based Measurement System (PBMS), part 75 sets forth
performance criteria that allow the use of alternative methods to the
ones set forth in part 75. The PBMS approach is intended to be more
flexible and cost effective for the regulated community; it is also
intended to encourage innovation in analytical technology and improved
data quality. At this time, EPA is not

recommending any revisions to part 75; however, EPA periodically
revises the test procedures set forth in part 75. When EPA revises the
test procedures set forth in part 75 in the future, EPA will address
the use of any new voluntary consensus standards that are equivalent.
Currently, even if a test procedure is not set forth in part 75, EPA is
not precluding the use of any method, whether it constitutes a
voluntary consensus standard or not, as long as it meets the
performance criteria specified; however, any alternative methods must
be approved through the petition process under section 75.66 before
they are used under part 75.

J. Executive Order 12898: Federal Actions to Address Environmental
Justice in Minority Populations and Low-Income Populations

    Executive Order 12898, ``Federal Actions to Address Environmental
Justice in Minority Populations and Low-Income Populations,'' requires
Federal agencies to consider the impact of programs, policies, and
activities on minority populations and low-income populations.
According to EPA guidance,\11\ agencies are to assess whether minority
or low-income populations face risks or a rate of exposure to hazards
that are significant and that ``appreciably exceed or is likely to
appreciably exceed the risk or rate to the general population or to the
appropriate comparison group.'' (EPA, 1998)
---------------------------------------------------------------------------

    \11\ U.S. Environmental Protection Agency, 1998. Guidance for
Incorporating Environmental Justice Concerns in EPA's NEPA
Compliance Analyses. Office of Federal Activities, Washington, DC,
April, 1998.
---------------------------------------------------------------------------

    In accordance with Executive Order 12898, the Agency has considered
whether the CAIR program inclusive of the New Jersey and Delaware rule
may have disproportionate negative impacts on minority or low income
populations. The Agency expects the CAIR program to lead to reductions
in air pollution and exposures generally. For this reason, negative
impacts to these sub-populations that appreciably exceed similar
impacts to the general population are not expected.

K. Congressional Review Act

    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the
Small Business Regulatory Enforcement Fairness Act of 1996, generally
provides that before a rule may take effect, the agency promulgating
the rule must submit a rule report, which includes a copy of the rule,
to each House of the Congress and to the Comptroller General of the
United States. The EPA will submit a report containing this rule and
other required information to the U.S. Senate, the U.S. House of
Representatives, and the Comptroller General of the United States prior
to publication of the rule in the Federal Register. A major rule cannot
take effect until 60 days after it is published in the Federal
Register. This action is a ``major rule'' as defined by 5 U.S.C.
804(2). This rule will be effective June 27, 2006.

L. Judicial Review

    Section 307(b)(1) of the CAA indicates which Federal Courts of
Appeal have venue for petitions of review of final actions by EPA. This
section provides, in part, that petitions for review must be filed in
the Court of Appeals for the District of Columbia Circuit if (i) the
agency action consists of ``nationally applicable regulations
promulgated, or final action taken, by the Administrator,'' or (ii)
such action is locally or regionally applicable, if ``such action is
based on a determination of nationwide scope or effect and if in taking
such action the Administrator finds and publishes that such action is
based on such a determination.''
    Any final action related to the CAIR is ``nationally applicable''
within the meaning of section 307(b)(1). As an initial matter, through
this rule, EPA interprets section 110(a)(2)(D)(i) of the CAA, a
provision which has nationwide applicability. In addition, the CAIR
applies to 28 States and the District of Columbia. The CAIR is also
based on a common core of factual findings and analyses concerning the
transport of pollutants between the different States subject to it.
Finally, EPA has established uniform approvability criteria that would
be applied to all States subject to the CAIR. For these reasons, the
Administrator also is determining that any final action regarding the
CAIR is of nationwide scope and effect for purposes of section
307(d)(1). Thus, any petitions for review of final actions regarding
the CAIR must be filed in the Court of Appeals for the District of
Columbia Circuit within 60 days from the date final action is published
in the Federal Register.

List of Subjects

40 CFR Part 51

    Administrative practice and procedure, Air pollution control,
Intergovernmental relations, Nitrogen dioxide, Ozone, Particulate
matter, Reporting and recordkeeping requirements, Sulfur oxides,
Volatile organic compounds.

40 CFR Part 96

    Administrative practice and procedure, Air pollution control,
Nitrogen oxides, Reporting and recordkeeping requirements.

    Dated: March 15, 2006.
Stephen L. Johnson,
Administrator.

0
Title 40, Chapter I, of the Code of Federal Regulations is amended as
follows:

PART 51--[AMENDED]

0
1. The authority citation for part 51 continues to read as follows:

    Authority: 23 U.S.C. 101; 42 U.S.C. 7401-7671q.

Subpart G--[Amended]

0
2. Section 51.123 is amended as follows:
0
a. By revising paragraphs (c)(1) and (c)(3).
0
b. In the table to paragraph (e)(2) by adding entries for ``Delaware''
and ``New Jersey'' in alphabetical order.
0
c. In the table to paragraph (e)(4)(ii) by adding entries for
``Delaware'' and ``New Jersey'' in alphabetical order.

Sec.  51.123  Findings and requirements for submission of State
implementation plan revisions relating to emissions of oxides of
nitrogen pursuant to the Clean Air Interstate Rule.

* * * * *
    (c) * * *
    (1) Alabama, Delaware, Florida, Illinois, Indiana, Iowa, Kentucky,
Louisiana, Maryland, Michigan, Mississippi, Missouri, New Jersey, New
York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee,
Virginia, West Virginia, Wisconsin, and the District of Columbia shall
be subject to the requirements contained in paragraphs (e) through (cc)
of this section;
* * * * *
    (3) Arkansas, Connecticut, and Massachusetts shall be subject to
the requirements contained in paragraphs (q) through (cc) of this
section.
* * * * *
    (e) * * *
    (2) * * *

------------------------------------------------------------------------
                                                          Annual EGU NOX
                                          Annual EGU NOX    budget for
                  State                     budget for       2015 and
                                             2009-2014      thereafter
                                              (tons)          (tons)
------------------------------------------------------------------------

                                * * * * *
Delaware................................           4,166           3,472

                                * * * * *
New Jersey..............................          12,670          10,558

                                * * * * *
------------------------------------------------------------------------

* * * * *
    (4)(i) * * *
    (ii) * * *

------------------------------------------------------------------------
                                                            Compliance
                          State                             supplement
                                                               pool
------------------------------------------------------------------------

                                * * * * *
Delaware................................................             843

                                * * * * *
New Jersey..............................................             660

                                * * * * *
------------------------------------------------------------------------

* * * * *

Sec.  51.124  [Amended]

0
3. Section 51.124 is amended by revising paragraph (c) and by adding
entries for ``Delaware'' and ``New Jersey'' in the table in paragraph
(e)(2) to read as follows:

Sec.  51.124  Findings and requirements for submission of State
implementation plan revisions relating to emissions of sulfur dioxide
pursuant to the Clean Air Interstate Rule.

    (a) * * *
* * * * *
    (c) The following States are subject to the requirements of this
section: Alabama, Delaware, Florida, Georgia, Illinois, Indiana, Iowa,
Kentucky, Louisiana, Maryland, Michigan, Minnesota, Mississippi,
Missouri, New Jersey, New York, North Carolina, Ohio, Pennsylvania,
South Carolina, Tennessee, Texas, Virginia, West Virginia, Wisconsin,
and the District of Columbia.
* * * * *
    (e) * * *
    (2) * * *

------------------------------------------------------------------------
                                                          Annual EGU SO2
                                          Annual EGU SO2    budget for
                  State                     budget for       2015 and
                                             2010-2014      thereafter
                                              (tons)          (tons)
------------------------------------------------------------------------

                                * * * * *
Delaware................................          22,411          15,687

                                * * * * *
New Jersey..............................          32,392          22,674

                                * * * * *
------------------------------------------------------------------------

* * * * *

0
4. Section 51.125 is amended by revising paragraph (a)(1) to read as
follows:

Sec.  51.125  Emissions reporting requirements for SIP revisions
relating to budgets for SO2 and NOX emissions.

    (a) * * *
    (1) Alabama, Delaware, Florida, Georgia, Illinois, Indiana, Iowa,
Kentucky, Louisiana, Maryland, Michigan, Minnesota, Mississippi,
Missouri, New Jersey, New York, North Carolina, Ohio, Pennsylvania,
South Carolina, Tennessee, Texas, Virginia, West Virginia, Wisconsin,
and the District of Columbia.
* * * * *

PART 96--[AMENDED]

0
5. The authority citation for part 96 continues to read as follows:

    Authority: 42 U.S.C. 7401, 7403, 7410, 7601, and 7651, et seq.

Subpart EE--[Amended]

0
6. In Sec.  96.140 the table is amended by adding entries for
``Delaware'' and ``New Jersey'' in alphabetical order to read as
follows:

Sec.  96.140  State trading budgets.

* * * * *

------------------------------------------------------------------------
                                                           State trading
                                           State trading    budget for
                  State                     budget for       2015 and
                                             2009-2014      thereafter
                                              (tons)          (tons)
------------------------------------------------------------------------

                                * * * * *
Delaware................................           4,166           3,472

                                * * * * *
New Jersey..............................          12,670          10,558

                                * * * * *
------------------------------------------------------------------------

0
7. In Sec.  96.143 the table is amended, in paragraph (a), by adding
entries for ``Delaware'' and ``New Jersey'' in alphabetical order to
read as follows:

Sec.  96.143  Compliance supplement pool.

    (a) * * *

------------------------------------------------------------------------
                                                            Compliance
                          State                             supplement
                                                            pool (tons)
------------------------------------------------------------------------

                                * * * * *
Delaware................................................             843

                                * * * * *
New Jersey..............................................             660

                                * * * * *
------------------------------------------------------------------------

* * * * *
[FR Doc. 06-2750 Filed 4-27-06; 8:45 am]

BILLING CODE 6560-50-P