[Federal Register: October 13, 2006 (Volume 71, Number 198)]
[Rules and Regulations]
[Page 60611-60634]
[DOCID:fr13oc06-10]

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Part II

Environmental Protection Agency

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40 CFR Part 51

 Regional Haze Regulations; Revisions to Provisions Governing
Alternative to Source-Specific Best Available Retrofit Technology
(BART) Determinations; Final Rule

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 51

[EPA-HQ-OAR-2002-0076; FRL-8230-4]
RIN 2060-AN22

Regional Haze Regulations; Revisions to Provisions Governing
Alternative to Source-Specific Best Available Retrofit Technology
(BART) Determinations

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: The EPA promulgated regulations to address a type of
visibility impairment known as regional haze in 1999. These regulations
have been judicially challenged twice. On May 24, 2002, the U.S. Court
of Appeals for the District of Columbia Circuit issued a ruling
vacating the Regional Haze Rule in part and sustaining it in part,
based on a finding that EPA's prescribed methods for determining best
available retrofit technology (BART) were inconsistent with the Clean
Air Act (CAA). American Corn Growers Ass'n v. EPA, 291 F.3d 1 (DC Cir.
2002). We finalized a rule on July 6, 2005 addressing the court's
ruling in this case. On February 18, 2005, the U.S. Court of Appeals
for the District of Columbia Circuit issued another ruling, in Center
for Energy and Economic Development v. EPA, 398 F.3d 653(DC Cir. 2005),
granting a petition challenging provisions of the Regional Haze Rule
governing an optional emissions trading program for certain western
States and Tribes (the Western Regional Air Partnership (WRAP) Annex
Rule). We published proposed regulations to revise the provisions of
the Regional Haze Rule governing alternative trading programs, and to
provide additional guidance on such programs in August 2005. We
received several comments on the August 2005 proposal. This final rule
finalizes the proposed revisions, including changes in response to the
public comments.

DATES: This rule is effective December 12, 2006.

ADDRESSES: The EPA has established a docket for this action under
Docket ID No. EPA-HQ-OAR-2002-0076. 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, i.e., 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 OAR 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>, and the
telephone number for the Air and Radiation Docket and Information
Center is<PHONE_NUMBER>. NOTE: The EPA Docket Center suffered damage
due to flooding during the last week of June 2006. The Docket Center is
continuing to operate. However, during the cleanup, there will be
temporary changes to Docket Center telephone numbers, addresses, and
hours of operation for people who wish to visit the Public Reading Room
to view documents. Consult EPA's Federal Register notice at 71 FR 38147
(July 5, 2006) or the EPA Web site at http://www.epa.gov/epahome/dockets.htm

for current information on docket status, locations and telephone
numbers.

FOR FURTHER INFORMATION CONTACT: Kathy Kaufman, EPA, Air Quality
Planning Division, Geographic Strategies Group, C504-02,<PHONE_NUMBER>
or by e-mail at<EMAIL_ADDRESS>or Todd Hawes, EPA, Air Quality
Planning Division, Geographic Strategies Group, C504-02,<PHONE_NUMBER>
or by e-mail at<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:
    Regulated Entities. This final rule will affect the following:
State and local permitting authorities and Indian Tribes containing
major stationary sources of pollution affecting visibility in
federally-protected scenic areas.
    This list is not intended to be exhaustive, but rather provides a
guide for readers regarding entities likely to be regulated by this
action. This list gives examples of the types of entities EPA is now
aware could potentially be regulated by this action. Other types of
entities not listed could also be affected. To determine whether your
facility, company, business, organization, etc., is regulated by this
action, you should examine the applicability criteria in section II of
this preamble. If you have any questions regarding the applicability of
this action to a particular entity, consult the people listed in the
preceding section.
    Outline. The contents of today's preamble are listed in the
following outline.

I. Overview and Background
II. Revisions to Regional Haze Rule Sec.  51.308(e)(2) Governing
Alternatives to Source-by-Source BART
    A. Establishing a BART Benchmark and Demonstrating Greater
Reasonable Progress Than BART
    B. Comments Relating to the Final Determination That CAIR Makes
Greater Reasonable Progress Than BART in the July 6, 2005 BART
Guidelines Rule
    C. Minimum Elements of Cap and Trade Programs
III. Revisions to Regional Haze Rule Sec.  51.309
IV. 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
IV. Statutory Provisions and Legal Authority

I. Overview and Background

    This rulemaking provides the following changes to the regional haze
regulations:
    (1) Revised regulatory text in section 51.308(e)(2)(i) in response
to the Center for Energy and Economic Development (CEED) v. EPA court's
remand, to remove the requirement that the determination of the BART
``benchmark'' be based on cumulative visibility analyses and to clarify
the process for making such determinations;
    (2) New regulatory text in Sec.  51.308(e)(2)(vi), to provide
minimum elements for cap and trade programs adopted in lieu of BART;
and
    (3) Revised regulatory text in Sec.  51.309, to reconcile the
optional framework for certain western States and Tribes to implement
the recommendations of the Grand Canyon Visibility Transport Commission
(GCVTC) with the CEED v. EPA decision.

How This Preamble Is Structured

    Section I provides background on the BART requirements of the CAA
as codified in the Regional Haze Rule, on the decision in American Corn
Growers in which the DC Circuit vacated and remanded parts of the rule
addressing the BART requirements, on the June 2005 BART rule, and on
the EPA's approval of the WRAP Annex and the

subsequent litigation. Section II discusses specific issues relating to
the revisions to Sec.  51.308(e)(2) of the Regional Haze Rule governing
alternatives to source-by-source BART. Section III discusses specific
issues relating to the revisions to Sec.  51.309 of the Regional Haze
Rule pertaining to the optional emissions trading program for certain
western States and Tribes. Section IV provides a discussion of how this
rulemaking complies with the requirements of Statutory and Executive
Order Reviews.

The Regional Haze Rule and BART Guidelines

    In 1999, we published the Regional Haze Rule to address visibility
impairment produced by a multitude of sources and activities which emit
fine particles and their precursors and which are located across a
broad geographic area (64 FR 35714). The Regional Haze Rule requires
States to submit State implementation plans (SIPs) to address regional
haze visibility impairment in 156 federally-protected parks and
wilderness areas, such as the Grand Canyon and Yosemite. These 156
scenic areas are called ``mandatory Class I Federal areas'' in the CAA
\1\ but are referred to simply as ``Class I areas'' in today's
rulemaking. The 1999 rule was issued to fulfill a long-standing EPA
commitment to address regional haze under the authority and
requirements of sections 169A and 169B of the CAA.
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    \1\ See, e.g. CAA section 169(a)(1).
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    As required by the CAA, we included in the final Regional Haze Rule
a requirement for BART for certain large stationary sources that were
put in place between 1962 and 1977. We discussed these requirements in
detail in the preamble to the final rule (64 FR 35737-35743). The
regulatory requirements for BART were codified at section 51.308(e) and
in definitions that appear in section 51.301.
    In the preamble to the Regional Haze Rule, we committed to issuing
further guidelines to clarify the requirements of the BART provision.
These guidelines were issued on July 6, 2005 in a final rule entitled
``Regional Haze Regulations and Guidelines for Best Available Retrofit
Technology (BART) Determinations' (``the BART Rule'') (70 FR 39104).
The purpose of the BART guidelines is to assist States as they identify
which of their BART-eligible sources should undergo a BART analysis
(i.e., which are ``sources subject to BART'') and select appropriate
controls (``the BART determination'').
    We explained in the preamble to the 1999 Regional Haze Rule that
the BART requirements in section 169A(b)(2)(A) of the CAA demonstrate
Congress' intent to focus attention directly on the problem of
pollution from a specific set of existing sources (64 FR 35737). The
CAA requires that any of these existing sources ``which, as determined
by the State, emits any air pollutant which may reasonably be
anticipated to cause or contribute to any impairment of visibility [in
any Class I area],'' shall install the best available retrofit
technology for controlling emissions.\2\ In determining BART, the CAA
requires the State to consider several factors that are set forth in
section 169A(g)(2) of the CAA, including the degree of improvement in
visibility which may reasonably result from the use of such technology.
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    \2\ CAA sections 169A(b)(2) and (g)(7).
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    Because the problem of regional haze is caused in large part by the
long-range transport of emissions from multiple sources, and for
certain technical and other reasons explained in that rulemaking, we
had adopted in the 1999 rule an approach that required States to look
at the contribution of all BART sources to the problem of regional haze
in determining both applicability and the appropriate level of control
for BART. Specifically, we had concluded that if a source potentially
subject to BART is located in an area from which pollutants may be
transported to a Class I area, that source ``may reasonably be
anticipated to cause or contribute'' to visibility impairment in the
Class I area. We had also concluded that in weighing the factors set
forth in the statute for determining BART, the States should consider
the collective impact of BART sources on visibility. In particular, in
considering the degree of visibility improvement that could reasonably
be anticipated to result from the use of such technology, we stated
that the State should consider the degree of improvement in visibility
that would result from the cumulative impact of applying controls to
all sources subject to BART. We concluded that the States should use
this analysis to determine the appropriate BART emission limitations
for specific sources.\3\
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    \3\ See 66 FR 35737-35743 for a discussion of the rationale for
the BART requirements in the 1999 Regional Haze Rule.
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    The 1999 Regional Haze Rule also included provisions in section
51.309 based on the strategies developed by the GCVTC. Certain western
States and Tribes were eligible to submit implementation plans under
section 51.309 as an alternative method of achieving reasonable
progress for those Class I areas covered by the GCVTC's analysis--i.e.,
the 16 Class I areas on the Colorado Plateau. In order for States and
Tribes to be able to utilize this section, however, the rule provided
that EPA must receive an ``Annex'' to the GCVTC's final
recommendations. The purpose of the Annex was to provide the specific
provisions needed to translate the GCVTC's general recommendations for
stationary source sulfur dioxide (SO2) reductions into an
enforceable regulatory program. The rule provided that such an Annex,
meeting certain requirements, be submitted to EPA no later than October
1, 2000. See section 51.309(d)(4) and (f) (2000).

American Corn Growers v. EPA

    In American Corn Growers, industry petitioners challenged EPA's
interpretation of the BART determination process and raised other
challenges to the rule. The court in American Corn Growers concluded
that the BART provisions in the 1999 Regional Haze Rule were
inconsistent with the provisions in the CAA ``giving the states broad
authority over BART determinations.'' 291 F.3d at 8. Specifically, with
respect to the test for determining whether a source is subject to
BART, the court held that the method EPA had prescribed for determining
which eligible sources are subject to BART illegally constrained the
authority Congress had conferred on the States. Id. The court did not
decide whether the general collective contribution approach to
determining BART applicability was necessarily inconsistent with the
CAA. Id. at 9. Rather, the court stated that

    ``[i]f the [Regional Haze Rule] contained some kind of a
mechanism by which a state could exempt a BART-eligible source on
the basis of an individualized contribution determination, then
perhaps the plain meaning of the Act would not be violated. But the
[Regional Haze Rule] contains no such mechanism.''

Id. at 12.

    The court in American Corn Growers also found that our
interpretation of the CAA requiring the States to consider the degree
of improvement in visibility that would result from the cumulative
impact of applying controls in determining BART was inconsistent with
the language of the CAA. 291 F.3d at 8. Based on its review of the
statute, the court concluded that the five statutory factors in section
169A(g)(2) ``were meant to be considered together by the states.'' Id.
at 6.
    The final rule promulgated on July 6, 2005 responded to the
American Corn Growers court's decision on the BART provisions by
amending the Regional Haze Rule at Sec.  51.308 and by finalizing

changes to the BART guidelines at part 51, appendix Y (70 FR 39104).
These changes eliminate the previous constraint on State discretion and
provide States with appropriate techniques and methods for determining
which BART-eligible sources ``may reasonably be anticipated to cause or
contribute to any impairment of visibility in any mandatory Class I
Federal area.'' In addition, the revised regulations list the
visibility improvement factor with the other statutory BART
determination factors in section 51.308(e)(1)(A), so that States will
be required to consider all five factors, including visibility impacts,
on an individual source basis when making each individual source BART
determination, rather than considering the cumulative impacts of all
BART sources on visibility (``group BART'').

The Annex Rule

    In a rule dated June 5, 2003, EPA approved the WRAP's Annex to the
GCVTC report (68 FR 33764). In this action, referred to as the ``Annex
rule,'' EPA approved the quantitative SO2 emission reduction
milestones and the detailed provisions of the backstop market trading
program developed by the WRAP as meeting the requirements of section
51.309(f), and therefore codified the Annex provisions in section
51.309(h). Subsequently, five States and one local agency submitted
SIPs developed to comply with all of section 51.309, including the
Annex provisions at section 51.309(h). In accordance with section
51.309(c) these SIPs were submitted prior to December 31, 2003.

Center for Energy and Economic Development v. EPA

    The EPA's approval of the Annex rule was challenged by CEED on,
among other grounds, that the CAA prohibits EPA from allowing States to
adopt alternative measures, such as a trading program, in lieu of BART.
The court, in CEED v. EPA, affirmed our interpretation of section
169A(b)(2) of the CAA as allowing for alternatives to BART where those
alternatives are demonstrated to make greater progress than BART. CEED
v. EPA, 398 F.3d at 659-660. The court, however, took issue with the
methodology that EPA had required the States to use in that
demonstration, pursuant to certain provisions of the Regional Haze
Rule. As noted above, Sec.  51.308(e)(2) of the 1999 Regional Haze Rule
required that visibility improvements under source-specific BART--the
benchmark for comparison to the alternative program--must be estimated
based on the application of BART controls to all sources subject to
BART. This section was incorporated into the WRAP Annex rule by
reference at Sec.  51.309(f). The court held that EPA could not require
this type of ``group BART'' approach, which was vacated in American
Corn Growers in a source-specific BART context, even in an alternative
trading program in which State participation was wholly optional.
    The BART guidelines as proposed in May 2004 contained a section
offering guidance to States choosing to address their BART-eligible
sources under the alternative strategy provided for in Sec.
51.308(e)(2). This guidance included a broad overview of the steps in
developing an emissions trading program and criteria for demonstrating
that such a trading program would achieve greater progress towards
eliminating visibility impairment than would BART. In light of the D.C.
Circuit's decision in CEED v. EPA in 2005, we did not include the
overview of emissions trading programs in the final BART guidelines. We
did note, however, that our authority to address BART through
alternative means was upheld in CEED v. EPA and that we remained
committed to providing States with that flexibility. Today's revisions
to the Regional Haze Rule, which responds to the holding in CEED v.
EPA, provide the flexibility that States need to implement alternatives
to BART.

Overview of Changes to Sec. Sec.  51.308(e)(2) and 51.309 of the
Regional Haze Rule

    The EPA continues to support State efforts to develop trading
programs and other alternative strategies to fulfill the goals of the
CAA. We believe such strategies have the potential to achieve greater
progress towards the national visibility goals than more traditional
approaches to regulation, and to do so in the most cost-effective
manner practicable. In August 2005, we proposed amendments to the
Regional Haze Rule to enable States to continue to develop and
implement such programs (70 FR 44154, August 1, 2005). Today's rule
finalizes these amendments, including changes in response to comments
on the proposal.
    First, we are amending the generally applicable provisions at Sec.
51.308(e)(2), which prescribe the type of analysis used to determine
emissions reductions achievable from source-by-source BART, for
purposes of comparing to the alternative program. These amendments
reconcile the methodology for determining whether an alternative
program is approvable with the court's decision in CEED v. EPA. Today's
rule also establishes the minimum elements of an acceptable cap and
trade program and provides for consistent application of the BART
guidelines for electric generating units (EGUs) between source-by-
source programs and alternative cap and trade programs.
    Second, we are amending section 51.309 to enable certain western
States and Tribes to continue to utilize the strategies contained in
the GCVTC report as an optional means to satisfy reasonable progress
requirements for certain Class I areas, for the first long-term
planning period. These changes provide States and Tribes with an
opportunity to revise and resubmit the backstop SO2
emissions trading program absent any requirement to assess visibility
on a cumulative basis when determining the emissions reductions
achievable by source-by-source BART.

II. Revisions to Regional Haze Rule Sec.  51.308(e)(2) Governing
Alternatives to Source-by-Source BART

    In this section of the preamble, we discuss changes or
clarifications to the provisions proposed in August, 2005. Where
relevant, we also respond to significant comments received during the
comment periods on our earlier BART proposals. For each provision that
we are changing or clarifying, where relevant, we provide discussion of
comments received on the proposal(s), changes or clarifications we are
finalizing, and the reasons for these changes or clarifications.

A. Establishing a BART Benchmark and Demonstrating Greater Reasonable
Progress Than BART

    The Regional Haze Rule provides States with the authority to
implement an emissions trading program or other alternative measures in
lieu of meeting the requirements for source-by-source BART. Under this
provision of the Regional Haze Rule, States have the flexibility to
design programs to reduce emissions from stationary sources in a more
cost-effective manner so long as they can demonstrate that the
alternative approach will achieve greater reasonable progress towards
improving visibility than would have been achieved by implementation of
the BART requirements.
    As described in the preamble to the August proposal, the 1999
Regional Haze Rule had specified a methodology for comparing an
alternative trading or other type program against source-by-source
BART. These regulations were challenged following a rulemaking by EPA
to revise the Regional Haze Rule to incorporate an optional emissions
trading program for certain Western States and Tribes (the Annex rule).
The

court in CEED v. EPA, granted petitioner's challenge to the Annex rule
because EPA's regional haze regulations had required the States
submitting the Annex to consider ``the impact of all emissions
reductions to estimate visibility progress'' in establishing a BART
benchmark against which to compare their BART alternative program. In
the August proposal, we proposed to revise the method for comparing an
alternative trading or other type program against source-by-source
BART. Specifically, we proposed to amend the regional haze regulations
to provide that States estimate the emission reductions that could be
achieved by BART in the same manner as in making source-by-source BART
determinations.
    Today's final rule revises section 51.308(e)(2) to make clear that
the emissions reductions that could be achieved through implementation
of the BART provisions at section 51.308(e)(1) serve as the benchmark
against which States can compare an alternative program. In short, to
demonstrate that a trading program or other alternative program makes
greater reasonable progress than BART, the State can develop an
estimate of BART emissions reductions using the same approach that it
would use to establish source-by-source BART emissions limitations
under the BART guidelines. As discussed in more detail below, today's
rule also makes clear that where a trading program or other similar
alternative program has been designed primarily to meet a Federal or
State requirement other than BART, the State can use a more simplified
approach to demonstrating that the alternative program will make
greater reasonable progress than BART. Such an approach may be
appropriate where the State believes the alternative program is clearly
superior to BART and a detailed BART analysis is not necessary to
assure that the alternative program will result in greater reasonable
progress than BART.
Framework for Demonstrating That an Alternative Program Provides for
Greater Reasonable Progress
    The development of a BART benchmark using the approach for source-
by-source BART determinations will require States to identify those
existing sources which are BART-eligible, to determine which of those
sources are subject to BART, and to then determine the level of control
that would be BART for these sources. Once the State has established a
BART benchmark, it can then compare the benchmark against the
alternative program it has developed. This approach could entail
separate visibility analyses in as many as three distinct stages: (1)
Determining which BART-eligible sources are subject to BART; (2)
determining what BART is for each source subject to BART; and (3)
determining the overall visibility improvement anticipated from the
application of BART to all sources subject to BART. The following
sections discuss the comments received on the visibility analyses in
the first two steps, as well as comments on additional issues for
determining which sources are subject to BART and the determination of
BART for such sources.
Sources Subject to BART
    Proposal. In the proposal, we noted that the BART guidelines
finalized on July 6, 2005 provide States with guidance on how to
determine which BART-eligible sources are reasonably anticipated to
cause or contribute to visibility. The Guidelines explain that States
may consider all BART-eligible sources to meet this threshold and
therefore subject all these sources to review, or, alternatively, that
States may determine which BART-eligible sources are subject to BART
using the methods for modeling source specific impacts on visibility
discussed in the guidance. We noted that by considering all BART-
eligible sources to be subject to BART in the context of setting the
BART benchmark, States could ease their administrative burden and
maximize the number of BART-eligible sources included in the benchmark
analysis. Where a State takes this approach, the opportunity for
assessing source-by-source visibility impact would still remain at the
next step of setting the benchmark--the BART determination analysis.
    Comments. Several commenters stated that allowing States to
consider all BART-eligible sources to be ``subject to BART'' (i.e.,
subject to a BART determination analysis) is contrary to the CAA as
interpreted by the D.C. Circuit in American Corn Growers. Two
commenters have indicated that they plan to challenge this provision of
the BART guidelines in a petition for review before the D.C. Circuit
and are opposed to it in the context of BART alternative programs as
well. One of these commenters also stated that it is unclear from the
preamble discussion where in the proposed revisions to the regulations
this option is authorized.
    Final Rule. We are reiterating here, as we pointed out in the
proposal, that the language in section 169A(b)(2) of the CAA
establishing the threshold for BART review provides a State with the
discretion to consider all BART-eligible sources to be subject to BART
and to make BART determinations for all its BART-eligible sources. In
other words, as noted in the BART guidelines, once a State has
identified its BART-eligible sources, it must decide whether (1) to
make BART determinations for all of them, or (2) to consider exempting
some of them from BART because they may not reasonably be anticipated
to cause or contribute to any visibility impairment in any Class I
area. As explained in the 1999 Regional Haze Rule, given the nature of
regional haze, it would be reasonable for a State to determine that
where the State as a whole contributes to visibility impairment at a
Class I area, any large stationary source in the State that emits
SO2 or other visibility-impairing pollutants would emit air
pollutants that would ``reasonably be anticipated to cause or
contribute to any impairment of visibility in [any Class I area].'' CAA
Section 169A(b)(2).
    This approach is authorized by the regulations through the cross
reference to Sec.  51.308(e)(1) in Sec.  51.308(e)(2). By providing
that the BART-benchmark should be established by conducting BART
determinations in accordance with Sec.  51.308(e)(1), we provide the
State with the same options as are available in those provisions for
determining source-by-source BART. In the context of subject-to-BART
determinations, this includes either considering all BART-eligible
sources to be subject to BART or, using the methods described in the
BART guidelines or other reasonable approaches, to exempt sources which
the State determines are not reasonably anticipated to cause or
contribute to any visibility impairment.\4\
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    \4\ We are also clarifying an unintended ambiguity in the
regulatory provisions pertaining to BART determinations under
51.308(e)(1). Specifically, as discussed in the preamble to the BART
Rule, consistent with our proposal in 2004, we revised the regional
haze regulations to allow States to ``exclude from the BART
determination process potential emissions from a source of less than
forty tons per year for SO2 or NOX, or 15 tons
per year for PM10.'' 70 FR at 39117 (emphasis added). The
regulatory text at 51.308(e)(1)(ii)(C), however, did not clearly
state that the de minimis level for PM10 should be based
on a source's potential to emit. In this rulemaking we are
clarifying that States are not required to determine BART for BART-
eligible sources with a potential to emit less than 15 tons per year
of PM10.
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The BART Determination
    Proposal. The CAA identifies five factors that States are to
consider in making BART determinations. One of these factors is ``the
degree of improvement in visibility which may reasonably be anticipated
to result from

the use of [BART].'' Today's rulemaking, in large part, is focused on
how States should handle consideration of this factor in establishing a
BART benchmark.
    In the proposal, we stated that one way to handle the visibility
improvement element of the BART determination for all BART sources
covered by the program would be to conduct individualized assessments
of the visibility improvement expected from each BART source under
various control scenarios, as described in the BART guidelines. We
noted that such an approach could impose significant resource burdens
on the States and solicited recommendations on more streamlined
approaches for estimating BART sources' individual impacts that might
be appropriate in the context of assessing alternative programs. One
area of consideration that we identified is the type of model used. We
requested comment on whether regional scale models might be used to
consolidate individual source impact analyses into one or a few model
runs, and whether this would significantly ease the burden on States.
    In the proposal, we also made clear our belief that in determining
whether an alternative program provides for greater reasonable progress
than would source-by-source BART, States have the discretion to employ
a cumulative visibility analysis for purposes of estimating the
potential visibility impacts of BART. Based on our analysis of American
Corn Growers and CEED, we stated that although EPA may not require
States to use a cumulative visibility approach to estimating the
improvement achievable from BART, States are not barred from using such
an approach if they so choose.
    Finally, in the proposal preamble, we discussed the situation where
emissions reductions at BART-eligible sources are required by CAA
requirements other than BART (or to fulfill requirements of a State law
or regulation not required by the CAA). We noted that in such cases, a
State may wish to evaluate whether the emissions reductions from the
program would result in greater reasonable progress towards the
national visibility goal than would the installation of BART. We noted
that EPA had made such a determination with respect to the Clean Air
Interstate Rule (CAIR) for EGUs in States which participate in the CAIR
cap and trade program.
    We noted that such a situation affects the type of analysis that is
permissible to show that the alternative program makes greater
reasonable progress than BART. Specifically, where a requirement other
than BART determines the level of emissions reductions required from
BART-eligible sources (along with other sources), a most-stringent case
BART may be used as the BART benchmark. (This most-stringent case BART
is essentially a form of ``group BART,'' because is assumes that every
BART-eligible source will apply controls). The reason for this is that
if it is shown that implementation of another requirement results in
greater progress than would the most stringent BART for all the BART-
eligible sources, then it can safely be said that this most-stringent-
BART benchmark is not the determinative factor in establishing the
emission reductions requirement. Therefore, there can be no concern
that the group-BART analysis would lead States to adopt an unduly
stringent alternative approach.
(1) Types of Models
    Comments. The comments submitted supported EPA's proposal that
States could use the approach in the Guidelines in making
individualized visibility assessments for BART determinations. In
response to our request for recommendations for more streamlined
approaches to assessing source specific visibility impacts, we received
several comments supporting regulations that would allow for this.
    One commenter pointed out that streamlined approaches, such as the
use of photochemical grid models, would significantly ease the burden
on States and Tribes. The commenter also pointed out that Sec.
51.308(e)(1), cross-referenced as the guiding provision for BART
determinations in proposed Sec.  51.308(e)(2)(i)(C), does not
explicitly recognize streamlined approaches for determining BART. Thus,
the commenter believes, EPA should ``take care to ensure that a
streamlined approach for the purpose of determining [the BART
benchmark] is clear, permissible, and not legally unsound in the final
rule.''
    Another commenter said that a streamlined approach ``is an
appropriate option that should be explicitly recognized and more fully
developed in the final rule.'' According to the commenter, either the
CMAQ or CAMx regional photochemical models would be suitable for
streamlined visibility assessments for BART determinations, but also
stated that none of the models is capable of consistently producing
unbiased results for all chemical constituents responsible for haze.
One State commenter said that States in EPA Region 5 are using the
CALPUFF model and it would prefer to continue doing so. The State would
not object to allowing other models to be used so long as they are
optional.
    Another commenter submitted comments detailing the reasons it
believes CALPUFF is superior to photochemical grid models for purposes
of source-by-source BART analysis. In brief, commenter explained that
with grid models, the concentration of pollutants from a point source
is automatically diluted evenly across the grid in which the source is
located. This dilution effect can be partially redressed by employing
smaller grid sizes or by using a hybrid model which employs Lagrangian
methods (as used in CALPUFF) close to the source and switches to a grid
method farther downstream. However, both of these methods are resource
intensive. The commenter therefore believed that CALPUFF, which can use
meteorological data bases developed for CMAQ and CAMx, should be the
preferred option.
    Final Rule. Section 308(e)(1)(ii)(B) requires that, for fossil
fuel-fired power plants with a total generating capacity of greater
than 750MW, BART determinations be made pursuant to the BART
guidelines. With respect to the type of air quality model used for the
BART determination, the guidelines instruct States to use CALPUFF or
another appropriate dispersion model to determine the visibility
improvement expected at a Class I area from the BART control technology
being evaluated (70 FR 39170).
    We maintain that CALPUFF is the best model currently available for
predicting visibility impacts from single sources. The use of regional
scale photochemical grid models may have merit, but to date, such
models have not been evaluated for single source applications (70 FR
39123). As the science and structure of regional photochemical grid
models are improved and demonstrated to successfully predict impacts
from single sources (e.g. plume in grid or source tagging techniques)
at least as well as CALPUFF, such models may become more useful in
streamlining the BART benchmark determination. All modeling
applications in making BART determinations call for the development of
a modeling protocol for all modeling, and States should consult with
EPA and the relevant regional planning organization (RPO) before
conducting any modeling.
(2) State Discretion to Consider Cumulative Visibility Impacts
    Comments. Several commenters said that the Agency's position
described in the preamble to the proposed rule--that

States have the discretion to require a cumulative visibility approach
in setting the BART benchmark--violates the American Corn Growers
decision. Most commenters opposed to EPA's proposed interpretation,
however, were also careful to point out that this did not indicate
opposition to the policy of allowing a ``group BART'' benchmark to be
used in the special case of evaluating emissions reductions required by
other CAA or State law requirements.
    Commenters that objected to EPA's statement that States have the
discretion to use ``group BART'' in setting the BART benchmark
referenced the courts' opinions in American Corn Growers and CEED v.
EPA to argue that such a statement was inconsistent with the CAA.
Several commenters cited the American Corn Growers court's statement
that ``the state must consider the degree of improvement in visibility
in national parks and wilderness areas that would result from the
source's installing and operating the retrofit technology [in making a
BART determination].'' See American Corn Growers, 291 F.3d at 7. One
commenter emphasized that the court had used the singular noun (``the
source's'') rather than the plural as a clear indication that the
visibility factor must be assessed on a source-by-source basis. Another
commenter pointed to the court's statement, in regard to the approach
in the 1999 Regional Haze Rule which separated the visibility factor
from the other BART factors, that ``[t]o treat one of the five
statutory factors in such a dramatically different fashion distorts the
judgment Congress directed the states to make for each BART-eligible
source.'' (291 F.3d at 6). No comments were received that explicitly
supported EPA's proposed interpretation of the DC Circuit's decisions
on this point. Several commenters also claimed that the flexibility to
use ``group BART,'' described in the preamble, was not actually
provided for in the proposed regulatory text, which cross-referenced to
the source-by-source BART determinations prescribed in Sec.
51.308(e)(1). One commenter that strongly opposed EPA's proposed
position on this issue noted that ``it is nevertheless true that states
can use simplifying assumptions or even apply some type of ``weight of
evidence'' test in determining the amount of emissions reductions that
BART-eligible sources may be required to undertake as part of a
regional trading program'' The commenter did not elaborate on examples
of appropriate simplifying assumptions or methods by which weight of
evidence could be taken into account.
    Where an independent requirement determines the emissions
reductions required of BART sources in a trading program or other type
of similar program, however, commenters appeared to agree that a BART
benchmark can be used that does not depend on source specific
visibility assessments. In other words, for BART alternatives that are
required by or that satisfy another CAA provision, the BART benchmark
to be used in a ``better-than-BART'' test may be established using a
group BART approach. In particular, several commenters representing
electric utilities and other industries submitted comments agreeing
with our interpretation of section 169A of the CAA as allowing other
programs to substitute for BART, and agreeing that where an independent
requirement determines the emissions reductions required of BART
sources, a most-stringent BART benchmark could be used without raising
the concerns at issue in the American Corn Growers and CEED v. EPA
cases. These commenters particularly agreed with and supported the
application of this rationale to the CAIR, as was finalized in the July
6 BART Guidelines rulemaking. One commenter urged EPA to adopt specific
regulatory language, as was done in the case of the CAIR, to implement
this option both with respect to the WRAP's program and to other
programs which may be developed elsewhere.
    Final Rule. We have carefully considered the comments on the
discussion in the NPRM addressing the discretion of the States in
establishing a BART benchmark and concluded that this rulemaking should
focus on the type of alternative program that we anticipate that some
States may submit in lieu of BART. In providing States with the
flexibility to adopt an alternative program, EPA has assumed that
States would adopt trading programs, or other substantially similar
programs--such as the WRAP's backstop market trading program--as
alternatives to source-by-source BART. While it is possible that a
State could design a trading program under the authority of section
169A(b)(2)(A) of the CAA (the BART provision), we believe that it is
far more likely that a State designing its regional haze plan would
adopt a trading program under the broader authority of section
169A(b)(2)(B) (the long-term strategy for making reasonable progress).
As such, the regulations promulgated today provide a basic framework
for States to demonstrate that any type of alternative program provides
greater reasonable progress than BART, but provide greater detail as to
how that demonstration might be done for a trading program (or other
substantially similar program) designed to fulfill requirements other
than BART.
    Generally, the comments received criticizing the statement that
States have discretion to consider visibility in a cumulative manner in
determining whether or not an alternative makes greater reasonable
progress than would BART appear to be premised on the argument that any
type of program that could be characterized as a BART program--even an
alternative program--is bounded by the requirements in section
169A(b)(2)(A). Thus, for example, several commenters cited the American
Corn Growers court's statement interpreting the definition of BART as
grounds for limiting a State's ability to take a different approach in
developing an alternative program. In other words, in determining the
amount of emissions reductions that sources in a trading program
alternative must achieve to demonstrate that the trading program is
``better'' than source-by-source BART, these commenters argued that the
States are limited to designing a program that begins with source
specific visibility analyses. Applying the same logic, however, States
would need to undertake source specific assessments of the other four
factors in the BART definition: the costs of control, the energy and
nonair quality environmental impacts, any existing pollution control
technology in use at the source, and the remaining useful life of the
source. Only once the State had ascertained what BART would be at each
source subject to BART--based on a thorough source specific analysis of
these five factors--could the State then show that its trading program
achieves greater reasonable progress. Although the States may certainly
adopt such an approach under this final rule, we think it unlikely that
States would conduct such an extensive assessment only to then go
through the additional, resource intensive steps of establishing a
trading program.
    The concern underlying these comments appears to be that EPA should
not explicitly authorize States to design a program more stringent than
required for BART in establishing a BART alternative program under
section 169A(b)(2)(A) of the CAA.\5\ Obviously,

under EPA's interpretation of the CAA, upheld by the CEED v. EPA court,
the alternative program must achieve greater reasonable progress than
would BART, presumably in most cases by achieving greater emissions
reductions over time. However, the commenters opposed to what they
label a ``group BART'' approach argue that States must consider source-
specific visibility impacts to avoid setting too high a bar for the
program. Although the commenters have not suggested that the other
simplifying approaches that we have suggested in the past for assessing
the costs of control were an inappropriate form of ``group-BART,'' if
the CAA requires visibility impacts to be considered on a case-by-case
basis, then it would also seem to require that the costs of control and
other factors be considered on a case-by-case basis. In other words,
these commenters argue that the BART benchmark for an alternative
program under section 169A(b)(2)(A) must be based on a case-by-case
analysis of what BART would be for each source subject to BART.
---------------------------------------------------------------------------

    \5\ The comments criticizing the statement by EPA that States
have the discretion to require a cumulative visibility analysis do
not appear to challenge the general principle that a State may adopt
measures in a SIP more stringent than required under the CAA, except
where explicitly prohibited. See Union Electric Co. v. EPA, 427 U.S.
246, 263-264 (1976); see also Summary of Comments on the Revisions
to Provisions Governing Alternative to Source-specific Best
Available Retrofit Technology (BART) Determinations, Docket ID No.
EPA-HQ-OAR-2002-0076, http://www.regulations.gov.

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

    The DC Circuit in CEED v. EPA was not absolutely clear as to
whether its decision was based solely on the fact that EPA had required
a ``group BART'' approach, or whether the fact the Annex contained such
an analysis was in itself a sufficient reason to invalidate the Annex
approval. As EPA explained in the proposed rule, we believe that the
CEED v. EPA decision is limited to circumstances where EPA requires or
induces States to adopt cumulative approaches that result in programs
more stringent than required by the CAA. However, we did not receive
comments from any States explicitly supporting our interpretation of
the court's holdings, and as we do not anticipate that States will
submit plans with trading programs designed only to meet the
requirements of section 169A(b)(2), we have concluded that the issue of
whether the CAA provides States with the discretion in designing such
programs to employ some type of cumulative approach or simplifying
assumptions in the process of estimating emissions reductions
achievable by source-by-source BART is not relevant to today's
rulemaking.
    The regulations finalized today provide that as a general matter,
States must undertake source specific BART analyses under Sec.
51.308(e)(1) for each source subject to BART in order to estimate the
emissions reductions achievable under the source-by-source BART
requirements. The use of such a BART benchmark enables a State to
design an alternative program that is ``better than BART'' based on a
precise estimation of the emissions reductions that could be achieved
under BART.
    For trading programs where the emissions reductions are required to
fulfill CAA requirements other than BART (or to fulfill requirements of
a State law or regulation not required by the CAA), we are amending the
regulations to make clear that States may establish a BART benchmark
based on a simplified BART analysis in such a situation. We agree with
commenters that a BART benchmark based on such an analysis raises none
of the concerns that were at issue in the American Corn Growers and
CEED v. EPA cases. Where a trading program is designed to fulfill other
requirements, including the requirement to make reasonable progress, an
independent requirement determines the level of reductions achieved and
the BART analysis serves only to ensure that the program meets the
requirement that a BART alternative make greater reasonable progress
than BART. In other words, there is no need to develop a precise
estimate of the emissions reductions that could be achieved by BART in
order simply to compare two programs. As EPA did in the CAIR, States
should have the ability to develop a BART benchmark based on
simplifying assumptions as to what the most-stringent BART is likely to
achieve. The regulations finalized today therefore provide that where
an emissions trading program has been designed to meet a requirement
other than BART, including the reasonable progress requirement, the
State may establish a BART benchmark based on an analysis that includes
simplifying assumptions about BART control levels for sources within a
source category.
    We do agree with commenters that EPA should issue regulatory
language expressly allowing for the use of a BART benchmark based on a
simplified BART analysis for demonstrating that emissions reductions
required by other provisions also make greater reasonable progress than
BART and may be used to substitute for BART. We have finalized such a
provision at Sec.  51.308(E)(2)(i)(C). This will help clarify that in
such cases, the BART benchmark is not the ``driver'' of emissions
reductions and is therefore not subject to the concerns on which the DC
Circuit decided American Corn Growers and CEED.

Role of BART Guidelines for EGUs in Determinations Proposal

    The BART guidelines establish control levels or emission rates as
presumptive standards for EGUs greater than 200 MW capacity at plants
with a total generating capacity in excess of 750 MW. We proposed that
the States apply these presumptive standards contained in the final
BART guidelines in developing a BART benchmark for a trading program or
other alternative that includes such EGUs. In other words, when States
are estimating emission reductions achievable from source-by-source
BART, they must assume that the EGUs which would otherwise be subject
to BART will control at the presumptive level, unless the State
demonstrates that such presumptions are not appropriate at particular
units. The preamble to the proposed rule explained that this would be
accomplished by the cross reference to Sec.  51.308(e)(1) within
proposed Sec.  51.308(e)(2)(i)(C), the provision prescribing the method
of setting the BART benchmark. Section 51.308(e)(1), in turn, provides
that BART determinations for EGUs of greater than 200 MW capacity at
plants with a total generating capacity greater than 750 MW must be
done in accordance with the BART guidelines in appendix Y to part 51.
    Comments. One commenter said that the presumptive standards for
EGUs are too lenient and should be lowered before EPA allows States to
use them for purposes of a ``better than BART'' demonstration. Another
commenter supported the use of the presumptive standards in this
context, but contested the preamble statement that the presumptive
standards ``apply to certain EGUs on a mandatory basis'' because,
according to the commenter, the presumptions are not mandatory in that
they are rebuttable. Another commenter argued that the use of
presumptive standards would make the installation of controls more
likely, without regard to the visibility benefit expected. The
commenter believes EPA use of presumptions is incompatible with CAA
section 169A as interpreted in American Corn Growers and incompatible
with EPA's authority to issue BART guidance for EGUs of 750 MW or
greater.
    Final Rule. The final rule promulgated on July 6, 2005, addresses
the authority of EPA to establish the presumptions in the BART
guidelines for certain EGUs, as well as the level of control reflected
by those presumptions. In the NPRM, EPA did not request comment on the
presumptions established in the Guidelines, but rather whether these
presumptions should be

used in establishing a BART benchmark for comparing an alternative
program to BART.
    In today's final rule, the regulations make clear that, with one
exception, States must follow the approach for making BART
determinations under section 51.308(e)(1) in establishing a BART
benchmark. This includes the requirement for States to use the BART
guidelines in making BART determinations for EGUs at power plants of a
certain size. As discussed above, the one exception to this general
approach is where the alternative program has been designed to meet
requirements other than BART; in this case, States are not required to
make BART determinations under Sec.  51.308(e)(1) and may use
simplifying assumptions in establishing a BART benchmark based on an
analysis of what BART is likely to be for similar types of sources
within a source category. Under either approach to establishing a BART
benchmark, we believe that the presumptions for EGUs in the BART
guidelines should be used for comparison to a trading program or other
alternative measure, unless the State determines that such presumptions
are not appropriate for particular EGUs. We note that this limitation
on the use of the presumptions is most likely to apply only in a
source-by-source determination under Sec.  51.308(e)(1). States
establishing a BART benchmark based on simplifying assumptions as to
the most-stringent BART for EGUs may rely on the presumptions, as EPA
did in the CAIR rule. For States considering the appropriateness of the
presumptions in specific cases, the same criteria discussed in the BART
guidelines should guide them in reaching a conclusion. Thus, the
presumptive standards are ``mandatory'' for the identified EGUs, in
that the presumption must be applied to the specified class of EGUs;
but the presumptive standards are rebuttable, as explained in the BART
guidelines.
    We do not agree that EPA should revise the presumptive standards
before allowing States to use them for purposes of establishing a BART
benchmark. We believe it is appropriate for the States to use the same
presumptions in developing the BART benchmark that they would use in
making BART determinations.
    We determined in the BART final rule that the limits represented by
the presumptions are cost effective for large EGUs at the largest power
plants. We believe that the presumptions represent a reasonable
estimate of a stringent case BART, particularly because in developing a
BART benchmark they would be applied across the board to a wide variety
of units with varying impacts on visibility, at power plants of varying
size and distance from Class I areas.
    We do not agree that the use of presumptive standards ignores the
visibility benefits to be expected from the control of the EGUs covered
by the presumption. In the final BART guidelines establishing the
presumptions, EPA took into account the degree of improvement in
visibility that would result from the installation of the presumptive
level of controls in finding that such controls should generally be
found to be BART. As explained in the preamble to the BART guidelines,
controlling the type of sources covered by the presumptions at the
level of the presumptive standards is likely to result in a substantial
degree of visibility improvement based on EPA's modeling analyses.
Minimum Universe of Sources Covered
    Proposal. In the 1999 Regional Haze Rule, the provisions for
alternative programs to BART at section 51.308(e)(2) contained a
requirement that such a program must include, at a minimum, each BART-
eligible source within the State. In the August 1, 2005 proposal, we
noted that having had the occasion to consider BART alternative
programs in more detail, we believed that some categories of BART
eligible sources might not be appropriate for inclusion in a cap and
trade program. We provided the example of the difficulty in quantifying
emissions with sufficient accuracy to participate in a trading program
for some source categories. We therefore proposed to allow States to
use a trading program or alternative measure to substitute for BART for
some source categories, while requiring source-by-source BART for BART-
eligible sources in any source categories not covered by the
alternative program. We further proposed that for any categories which
were included in the alternative program, we would retain the
requirement that all BART-eligible sources in the State within that
source category must be subject to the program. See proposed section
51.308(e)(2)(ii). One reason for this proposed provision was to prevent
any shifting of emissions from covered to non-covered BART eligible
sources, which could potentially undermine the effectiveness of the
emissions cap. In a related provision we proposed, as one of the
minimum elements of a cap and trade program, that the applicability
provisions must be designed to prevent any significant potential
shifting of production and emissions within the State or multi-State
region. See proposed section 51.308(e)(2)(vi)(A).
    Comments. Several commenters opposed the requirement to include in
the alternative program all BART-eligible sources within a source
category. Several of these commenters argued that such a requirement is
a form of ``group BART'' invalidated by the DC Circuit because it would
impose requirements on BART eligible sources without a demonstration
that those sources are reasonably anticipated to cause or contribute to
visibility impairment. One commenter argued that the requirement was
unjustified as a practical matter, at least in the case of the forest
products industry, because in order to be economically viable mills
must be operated at near capacity. This would leave no leeway for
production and emissions shifting. The commenter also argued that the
provision is conceptually unjustified, considering that under a
conventional source-by-source program, emissions shifting theoretically
could occur to BART-eligible sources which were determined to be exempt
from BART because they do not cause or contribute to visibility
impairment. The commenter argued that it would be illegal to impose
``compensating costs'' on such sources outside the trading program
context. The implication of this comment is that it would also be
illegal to impose such costs on these BART-eligible sources by
requiring them to participate in the alternative program.
    In contrast, one State commented that allowing some source
categories to add controls while others may avoid controls by buying
reductions elsewhere would be contrary to its management principles.
This commenter thought that the use of a trading program to address
haze for some but not all sources subject to BART might be counter-
productive. Similarly, another commenter noted that ``carving out
source categories would only shrink the universe of potential
participants, the opposite of what is needed for a successful trading
program.''
    Final Rule. Having carefully considered the comments and the
relationship between the requirement for category-wide participation of
BART-eligible sources and the requirements for the State to address
emissions shifting, we are adopting final provisions that maximize the
flexibility of the States while insuring that the BART-eligible sources
are addressed in some fashion by the States. As we noted in 1999 in
establishing the criteria governing BART alternative trading programs,
the legislative history of the

CAA demonstrates Congress' recognition of the need to control emissions
from a specific set of sources. We are therefore finalizing in this
rule that States must require that each BART-eligible source in the
State either participate in a BART alternative program or,
alternatively, be subject to the case-by-case BART requirements under
section 51.308(e)(1). In other words, States are not required to
include each BART-eligible source in a source category in an
alternative program; however, any BART-eligible sources not included in
an alternative program would remain subject to the general requirements
governing BART sources.
    For most trading programs, we do not anticipate that this
requirement will have a significant impact on the scope of the program.
Because trading programs generally include all sources within a source
category in a trading region, trading programs designed to meet either
reasonable progress goals or other requirements of the CAA are likely
to have broad applicability provisions that encompass all BART-eligible
sources in the trading region (or at least all BART-eligible sources
within certain categories of sources for some trading programs). States
have the inherent authority to determine the applicability of their
regulations for programs such as those designed to meet reasonable
progress requirements, or to attain the National Ambient Air Quality
Standard (NAAQS), and are most likely to design programs with
applicability provisions that are not dependent on factors such as the
age of sources covered by the program. For example, States in the WRAP
designed their program to apply to all stationary sources with actual
emissions of 100 tons per year or more, regardless of the type of
source or the age of the facility.
    We disagree that the requirement that States either require BART-
eligible sources to participate in a trading program or go through a
BART analysis is a form of ``group BART'' that would illegally impose
requirements on such sources without a demonstration that those sources
emit a pollutant that may reasonably be anticipated to cause or
contribute to visibility impairment. As noted above, for programs
designed to meet other requirements of the CAA, we would expect that
the States would design programs that apply broadly, and nothing in the
BART provisions of the CAA limits a States' ability to regulate BART-
eligible sources under other provisions in the CAA. Thus, for example,
a State need not demonstrate that an EGU built between 1962 and 1977
has a certain measurable impact on visibility before regulating it
under the CAIR. Rather, the BART sources would be treated in the same
manner as other sources in the State.\6\
---------------------------------------------------------------------------

    \6\ In theory, a State could design a program to meet the
reasonable progress or other requirements of the CAA that does not
have sufficiently broad applicability provisions to encompass all
BART sources. For example, a State could adopt a program that covers
all sources with SO2 emissions greater than 1000 tons per
year. In such a case, the BART sources not subject to the trading
program would be subject to the requirements of section 308(e)(1).
---------------------------------------------------------------------------

    In the case of programs designed solely to satisfy BART
requirements, which may arguably be limited to BART sources only, the
approach set forth in the final rule provides the opportunity for an
individual source not to be regulated by a trading program. In
particular, rather than participate in a trading program, a source may
demonstrate that it does not meet the ``subject to BART'' test or that
BART should be ``no control'' in its particular case, seek an exemption
from the Administrator under section 51.308(e)(4), or install BART
controls. This approach therefore avoids any potential problems
involving BART-eligible sources which are not reasonably anticipated to
cause or contribute to visibility impairment being illegally subject to
program requirements. Rather, section 51.308(e)(2) provides BART-
eligible sources which are reasonably anticipated to cause or
contribute to visibility the opportunity to participate in a trading
program instead of meeting source specific control limits.
    Our concerns with emissions shifting will be addressed under the
more general requirements applicable to trading programs. These
provisions require States to demonstrate that the applicability
provisions are designed to prevent any significant, potential shifting
within the State of production and emissions from sources in the
program to sources outside the program. This provision addresses
emissions shifting from sources in the program to those outside the
program, irrespective of the BART-eligibility status of the sources.
Moreover, this demonstration will enable States to take into account
the type of practical and economic factors raised by commenters which
may obviate theoretical concerns with emission shifting. We also note
that the periodic SIP updates required under Sec.  51.308(g) of the
regional haze rule will provide an opportunity to assess whether
emissions shifting is in fact a problem.
Comparison of BART and Alternative Scenarios
    Proposal. In the NPRM, we proposed several changes to Sec.
51.308(e)(2)(i). As explained in the preamble, the critical revision to
that section to bring it into compliance with the decision of the DC
Circuit in CEED v. EPA was to remove the requirement of a bifurcated
approach to establishing the BART benchmark. We also proposed
additional changes in the section which were intended to establish a
clear ``framework'' or step-by-step procedure for comparing an
alternative program to source-by-source BART. This consisted of a five-
step procedure in proposed paragraphs (A)-(E) within Sec.
51.308(e)(2)(i). In brief, those steps were: (A) List all BART-eligible
sources, (B) list all BART source categories covered by the program,
(C) analyze the degree of visibility improvement at each affected Class
I area expected as a result of the application of BART pursuant to
paragraph (e)(1) at each source subject to BART in each source category
covered by the program, (D) analyze the emissions reductions and
associated visibility improvement expected under the trading program or
other alternative measure, and (E) compare the results of the steps in
paragraphs (C) and (D) using the method prescribed under Sec.
51.308(e)(3).
    Section 51.308(e)(3), which was finalized in the BART guidelines
rulemaking, establishes criteria for determining whether an alternative
program makes greater reasonable progress than source-by-source BART.
First, if the distribution of emissions is similar between the two
scenarios, the comparison may be made on the basis of emissions alone.
In that case, the alternative program may be deemed to make greater
reasonable progress than BART if it results in greater emissions
reductions than source-by-source BART. If, however, the geographic
distribution of emissions reductions is significantly different under
the two alternatives, the State must conduct visibility modeling and
evaluate the alternative program under a two-pronged test. The first
prong is that the alternative program must not cause a decline in
visibility at any Class I area. The second prong is that there is an
overall improvement in visibility under the alternative program,
``determined by comparing the average differences between BART and the
alternative over all affected Class I areas.'' See section
51.308(e)(3).
    In proposing the above-described structure of section 51.308(e)(2),
we noted that we were proposing to add the term ``affected'' to modify
the term ``Class I areas'' in paragraph (C). The purpose of this was to
clarify that a State need not evaluate visibility improvement at every
Class I area nationwide. We also noted that, as

described in the preamble to the final BART guidelines, States have
discretion in defining an ``affected'' Class I area.
    Finally, while noting that section 51.308(e)(3) had been finalized,
we sought comment on whether EPA should allow other means of
demonstrating that an alternative program makes greater reasonable
progress than would BART. Specifically, we solicited comments on
whether a weight of evidence approach would be appropriate. We gave the
following scenario as an example of a situation where such an approach
might be appropriate: ``(1) The alternative program achieves emissions
reductions that are within the range believed achievable from source-
by-source BART at affected sources, (2) the program imposes a firm cap
on emissions that represents meaningful reductions from current levels
and, in contrast to BART, would prevent emissions growth from new
sources, and (3) the State is unable to perform a sufficiently robust
assessment of the programs using the two pronged visibility test due to
technical or data limitations.''
    Comments. One commenter noted that there was a contradiction
between the terms of Sec.  51.308(e)(3) as finalized and Sec.
51.308(e)(2) as proposed. Specifically, whereas under Sec.
51.308(e)(3), dispersion modeling is required only if the distribution
of emissions distribution is significantly different, under the
alternative measure, in proposed section 51.308(e)(2), dispersion
modeling is required as a matter of course in developing the two
scenarios to be compared.
    Several commenters also supported the ``weight of evidence''
approach to demonstrate that an alterantive makes greater reasonable
progress than BART. One commenter specified that the ``regulation
should require a weight of evidence demonstration to include emission
inventory, monitoring data, meteorology, and various data analysis
studies,'' and that modeling should not necessarily be weighted more
heavily than the other factors listed.
    With respect to the definition of an ``affected'' Class I area, one
commenter pointed to possible inconsistent application among States and
uncertainty as to which States should make the determination (i.e.,
only the State which contains the Class I area, or other States as
well). The commenter therefore requested that EPA clarify when a Class
I area is affected by emissions and the radius from a source within
which an analysis should be done.
    Another commenter claimed that our discussion of section
51.308(e)(3) re-opened that provision for comment in this rulemaking
and created a renewed opportunity for judicial review. The commenter
then raised several arguments regarding the legality of section
51.308(e)(3) under the CAA. The commenter argued that the proposed rule
was overly broad in failing to specify that only sources participating
in a trading program or other alternative measure may satisfy BART for
those sources and the specific visibility-impairing pollutant at issue.
The commenter also argued that the test is impermissibly vague in
providing for dispersion modeling if the distribution of emission is
``substantially different.'' The commenter also claimed that by
allowing States to compare ``average differences'' between BART and the
alternative over all affected Class I areas was inconsistent with the
CAA. Finally, the commenter responded to our request for comment on a
weight of evidence test, stating that allowing unspecified
``qualitative factors'' to trump other, more quantitative assessments
would dramatically weaken the rule.
    Final Rule. We agree with commenters who pointed to the
inconsistency between the proposed provisions of section 51.308(e)(2)
and the existing terms of section 51.308(e)(3). This conflict was the
result of inadvertent error, and we are correcting it in the final
rule. Specifically, we have eliminated the clauses within section
51.308(e)(2)(C) and section 51.308(e)(2)(D) which required that
visibility improvement be projected at those steps in the process.
Instead, these paragraphs call only for an assessment of emissions
reductions under BART and alternative scenarios, respectively. We have
also clarified in section 51.308(e)(2)(E) that visibility projections
are required only if necessary, pursuant to section 51.308(e)(3).
    Because we have eliminated the requirement for visibility
projections within the analysis prescribed in section 51.308(e)(2),
there is no longer a need to define an affected Class I area in the
context of this section. Instead, that term is defined in the context
of section 51.308(e)(3), at the States' discretion as discussed in the
preamble to the final BART rule. See 70 FR 39138. The EPA continues to
believe that it is not necessary to bound the terms of that discretion
upfront through Federal regulation. Any potential problems due to
inconsistent application among States can be addressed through the RPO
and inter-RPO processes already in place and ultimately through the SIP
process. This will allow consideration of the potential effects of
local conditions and of particular trading programs as they are
developed. It should, therefore, produce more reasoned results than
would the establishment of a nationwide, one-size-fits-all radius of
influence criterion.
    We disagree with comments that EPA reopened section 51.308(e)(3) by
discussing the provisions of this section of the rule in the proposal,
or that today's rule has impacted the meaning of section 51.308(e)(3).
    Notwithstanding the fact that this provision was not reopened, we
note that EPA disagrees with the substance of the comments claiming
that section 51.308(e)(3) is overly broad and vague. The commenter's
concerns regarding the failure of section 51.308(e)(3) to specify that
only those sources participating in a trading program may satisfy BART
for those sources is addressed in the regulations under section
51.308(e)(2)(i)(B), which provides that each BART-eligible source in a
State must be included in an alternative program, have a BART emission
limit, or otherwise be addressed under the BART provisions. The
commenter's concerns regarding the ``impermissibly vague'' language
used in section 51.308(e)(3) that would allow a State to approve
alternative measures that are less protective than BART ignore the SIP
process. The State's discretion in this area is subject to the
condition that it must be reasonably exercised and that its decisions
be supported by adequate documentation of its analyses.
    We also disagree with the comments criticizing the test finalized
in section 51.308(e)(3) for allowing States to consider the average
differences between BART and the alternative in determining whether the
alternative makes greater reasonable progress. In short, as explained
in the response to comments to the BART Guideline rulemaking, EPA
believes the test in section 51.308(e)(3) is an appropriate one:

    In addition, within a regional haze context, not every measure
taken is required to achieve a visibility improvement at every class
I area. BART is one component of long term strategies to make
reasonable progress, but it is not the only component. The
requirement that the alternative achieves greater progress based on
the average improvement at all Class I areas assures that, by
definition, the alternative will achieve greater progress overall.
Though there may be cases where BART could produce greater
improvement at one or more class I areas, the no-degradation prong
assures that the alternative will not result in worsened conditions
anywhere than would otherwise exist, and the possibility of BART for
reasonably attributable visibility protects against any potential
``hot spots.'' Taken

together, the EPA believes these factors make a compelling case that
the proposed test properly defines ``greater reasonable progress.''
The EPA anticipates that regional haze implementation plans will
also contain measures addressing other sources as necessary to make
progress at every mandatory federal Class I area.\7\
---------------------------------------------------------------------------

    \7\ Summary of Comments and Responses on the 2004 and 2001
Proposed Guidelines for Best Available Retrofit Technology
(``BART'') Determinations under the Regional Haze Rule, Docket
Number EPA-HQ-OAR-2002-0076, at 253.

    With respect to the use of a ``weight of evidence'' approach as an
alternative to the methodology of section 51.308(e)(3), we support the
use of such a test as an alternative to the methodology set forth in
section 51.308(e)(3). ``Weight of evidence'' demonstrations attempt to
make use of all available information and data which can inform a
decision while recognizing the relative strengths and weaknesses of
that information in arriving at the soundest decision possible. Factors
which can be used in a weight of evidence determination in this context
may include, but not be limited to, future projected emissions levels
under the program as compared to under BART, future projected
visibility conditions under the two scenarios, the geographic
distribution of sources likely to reduce or increase emissions under
the program as compared to BART sources, monitoring data and emissions
inventories, and sensitivity analyses of any models used. This array of
information and other relevant data may be of sufficient quality to
inform the comparison of visibility impacts between BART and the
alternative program. In showing that an alternative program is better
than BART and when there is confidence that the difference in
visibility impacts between BART and the alternative scenarios are
expected to be large enough, a weight of evidence comparison may be
warranted in making the comparison. The EPA will carefully consider the
evidence before us in evaluating any SIPs submitted by States employing
such an approach.

B. Comments Relating to the Final Determination That CAIR Makes Greater
Reasonable Progress Than BART in the July 6, 2005 BART Guideline Rule

    In the final BART guidelines rulemaking on July 6, 2005, EPA
determined that the CAIR makes greater reasonable progress than BART
for certain EGUs and pollutants (70 FR 39138-39143). We did not seek
comment on this determination, but we nonetheless received comments
related to this final rule.
    Comments. Several organizations submitted comments regarding BART
relief for non-EGUs in the CAIR region. They assert that the CAIR will
achieve more reasonable progress than would BART for all BART-eligible
sources in the CAIR region, including non-EGUs. Therefore, they urge
EPA to amend its final determination to include BART relief for non-
EGUs and to provide supporting analysis for this demonstration.
    In contrast, another commenter disagreed with our previous
determination that the CAIR will make greater reasonable progress than
BART. The commenter acknowledged that that determination was not at
issue in this rulemaking. However, this commenter was concerned that
there would not be enough BART-eligible sources in non-CAIR States to
support an effective BART trading program outside the CAIR region. The
commenter was also concerned about the administrative costs that a
trading program would impose on non-CAIR States. The commenter
therefore urged EPA to establish an alternative mechanism, such as ``an
exchange ratio for Acid Rain allowances held, or `BART' allowances
generated by sources located in CAIR states'' in order to allow
participation in an effective trading program by sources in non-CAIR
States.
    One commenter urged EPA to clarify that where another program
requires controls of one pollutant at BART-eligible sources, BART
applicability for other pollutants is not affected.
    One commenter said that it does not believe EPA has the authority
to ``circumvent'' CAA requirements for controlling specific BART
sources that affect visibility in a Class I area. They believe that EPA
should require States to show that all BART sources will be controlled
first as part of any showing that an alternative program is ``better
than BART.'' This commenter also requested clarification as to which
CAA requirements could be included in SIPs to make a ``better than
BART'' showing. Final Rule. The DC Circuit in CEED v. EPA upheld EPA's
interpretation of section 169A of the CAA as allowing for an
alternative program, such as an emissions trading program, to be
adopted in lieu of source-by-source BART controls. It is EPA's view
that emissions reductions required by CAA (or State) provisions other
than BART may be used to satisfy BART, so long as the program achieves
greater reasonable progress than would BART at the BART-eligible
sources affected. The preponderance of comments also supported this
position, and the comments in opposition did not raise any arguments
that were not addressed either in the course of the CAIR rulemaking or
in the final determination that the CAIR may substitute for BART for
EGUs in affected States made in the July 6, 2005 rule. As previously
explained, ``EPA does not believe that anything in the CAA or relevant
case law prohibits a State from considering emissions reductions
required to meet other CAA requirements when determining whether
source-by-source BART controls are necessary to make reasonable
progress.'' (70 FR 39143; see also 70 FR 25300-302).
    With respect to those comments specifically directed at whether the
CAIR makes greater reasonable progress than BART and, if so, what the
scope of BART relief should be (i.e., whether it should extend to non-
EGUs), it is important to emphasize that the determination that the
CAIR makes greater reasonable progress than BART for SO2 and
nitrogen oxides (NOX) at EGUs in the CAIR region, and thus
may substitute for BART for those pollutants and those sources, was
finalized in the July 2005 BART rule. Our supporting technical analysis
for the determination that the CAIR is ``better than BART'' addressed
only the comparative visibility impacts of the CAIR trading programs
with respect to EGUs versus BART for EGUs. A determination at this time
that the CAIR trading programs for EGUs could substitute for BART at
non-EGUs as well as for EGUs is beyond the scope of this rulemaking.
    With respect to the request that we clarify that where another
program requires controls of one pollutant at BART-eligible sources,
BART-eligibility for other pollutants is not affected, we note that EPA
agrees with this interpretation of the BART requirements.\8\ As a
general matter, if a program exists for the control of one pollutant at
BART-eligible sources, emissions of other visibility-impairing
pollutants merit analysis to determine if visibility impairment is such
that additional controls would or would not be warranted. However, it
is possible that a State could demonstrate that a trading program that
addresses one or two visibility-impairing pollutants under an
alternative program would provide greater reasonable progress than
would case-by-case BART applied to all visibility-impairing pollutants.
With respect to EPA's determination that the CAIR provides for greater
reasonable progress than BART for EGUs, EPA found that CAIR States
which participate in the EPA-administered

CAIR cap-and-trade programs for SO2 and NOX would
be allowed to treat the participation of EGUs in this program as a
substitute for the application of BART controls for these pollutants at
affected EGUs. EPA further explained in the preamble to the July 2005
BART rule that a CAIR State that participates in the EPA-administered
CAIR seasonal NOX trading program only, would still need to
address BART for SO2 emissions from EGUs. 70 FR at 39143. In
short, EPA's determination that the EPA-administered CAIR trading
programs provide for greater reasonable progress than BART was limited
to the pollutants covered by the EPA-administered CAIR trading programs
in which the State chooses to participate.
---------------------------------------------------------------------------

    \8\ The final BART Guidelines address this general question of
applicability. 70 FR at 39161.
---------------------------------------------------------------------------

    Finally, we agree with the comment that EPA should clarify those
CAA requirements that a State should include in its implementation plan
if it intends to rely on its participation in the CAIR trading programs
rather than to require BART for its EGUs. In our July 2005 BART rule,
EPA promulgated regulations effectuating our determination that States
which adopt the CAIR model trading rules for SO2 and
NOX would be allowed to treat the participation of EGUs in
these programs as a substitute for application of BART controls for
these pollutants at affected EGUs. The regulations at 40 CFR
51.308(e)(4) (as established in the July 6, 2005 BART rule) provide the
following:

    A State that opts to participate in the Clean Air Interstate
Rule cap-and-trade and trade [sic] program under part 96 AAA-EEE
need not require affected BART-eligible EGU's [sic] to install,
operate, and maintain BART. A State that chooses this option may
also include provisions for a geographic enhancement to the program
to address the requirement under Sec.  51.302(c) related to BART for
reasonably attributable impairment from the pollutants covered by
the CAIR cap-and-trade program.

70 FR at 39156. Subparts AAA-EEE of part 96 set forth a portion of the
model trading rules (which comprise subparts AAA-III of part 96) that
States must incorporate, with some allowed modifications, into their
SIPs to participate in the EPA-administered CAIR SO2 cap-
and-trade program. Although the regulations do not specifically address
participation in the NOX cap-and-trade program, EPA fully
anticipated that any State choosing to adopt the annual SO2
model trading rules would also choose to adopt the annual
NOX model trading rules. In addition to numerous practical
considerations that would lead States to adopt the model rules for and
thus choose to participate in both annual trading programs (as opposed
to the SO2 program only), as noted above, the CAIR
substitutes for BART only for those pollutants covered by the EPA-
administered CAIR trading programs in which the State chooses to
participate. EPA agrees, however, with the comment that the BART
requirements for SIPs should be clarified and is revising the
regulatory text of the regional haze rule to more closely align with
the determination regarding the relationship between CAIR and BART made
by EPA in 2005. We are revising the regulations accordingly to make
clear that participation in either the annual or seasonal CAIR
NOX cap-and-trade program is a necessary condition for
relying on EPA's determination that States can substitute CAIR for BART
for NOX. We are also revising the regulations to clarify
that a State that participates only in the ozone season NOX
cap-and-trade program may rely on EPA's determination that CAIR makes
greater reasonable progress than BART for NOX, but, as
discussed above, such a State would still need to address BART for
SO2. As noted above, EPA anticipates that all States opting
to participate in the annual NOX cap-and-trade program will
also participate in the SO2 cap-and-trade program.
    In addition to clarifying the applicable SIP requirements, we are
also revising the regulatory text to account for the rule signed by the
Administrator on March 15, 2006 promulgating Federal implementation
plans (FIPs) for all jurisdictions covered by the CAIR. These FIPs
adopt the model cap-and-trade programs that EPA proposed in the CAIR as
a control option for States, with minor adjustments to account for
Federal rather than state implementation. Each jurisdiction in the CAIR
region will be subject to the requirements set forth in these FIPs when
they became effective on June 27, 2006. The EPA intends to withdraw the
FIP in a State in coordination with EPA's approval of a SIP for that
State that meets the CAIR requirements. However, EPA anticipates that
some States may choose to remain subject to the CAIR FIP and either not
submit any SIP revisions or submit abbreviated SIP revisions that
modify certain limited provisions of the CAIR FIP trading programs. The
EPA's determination in the 2005 BART rule that States which adopt the
CAIR model trading rules could treat this as a substitute for BART for
EGUs was based on our finding that, if the CAIR reductions are achieved
through implementation of the EPA-administered trading programs in the
model trading rules, CAIR makes greater reasonable progress than BART
for these sources. This finding holds true whether a State chooses to
submit a SIP under part 96, remain subject to a FIP under part 97, or
adopt some combination of the two.

C. Minimum Elements of Cap and Trade Programs

    The August proposal discussed a set of minimum elements that any
cap and trade program should contain, in order that it be workable and
enforceable. We received very little comment on most of the proposed
minimum elements. The discussion below focuses only on those provisions
on which we received comment. Other elements on which we did not
receive comments are finalized as they were proposed, and are not
discussed further below.
Penalty Provisions
    Proposal. We proposed that the minimum program element for excess
emission penalties would be a mandatory deduction, from a source's
allowance account, of at least three times the excess emissions. We
explained that this allowance deduction must occur automatically upon
the State's or Tribe's determination of excess emissions, though it may
be reversed if the source successfully appeals that determination. The
appeal could be based on the determination of the number of allowances
held by the source as of the allowance transfer deadline and available
for compliance, the amount of the source's emissions, or the comparison
of the amount of the source's emissions and the total tonnage value of
the source's allowances held and available for compliance.
    Comments. A commenter said that in order to effectively and clearly
deter noncompliance and preserve consistency with other cap and trade
programs and EPA's economic incentive policies, EPA must require as a
minimum element of all cap and trade programs the imposition of
monetary penalties for noncompliance, in addition to the automatic
allowance deductions prescribed. No other comments were received on
this specific issue.
    Final Rule. The EPA agrees that cap and trade programs need to have
swift and unambiguous penalties to deter noncompliance and to ensure
the integrity of the market for allowances. The EPA believes that an
automatic allowance deduction penalty of at least three times the
amount of excess emissions, which is required under section
51.308(e)(2)(vi)(J), is an effective deterrent for noncompliance. And
given that allowances have monetary value, such a deduction would
result in an

automatic monetary loss to the entity in question.
    The commenter asserted that EPA must require in section
51.308(e)(2)(vi)(J) that a cap and trade program provide for both an
automatic offset of any excess emissions (i.e., the automatic deduction
of one allowance for each ton of emissions for which an allowance was
not held by the source) and an automatic monetary penalty (i.e., the
automatic requirement to pay a specified amount of money for each ton
of excess emissions). In the proposed regulation, EPA instead took the
approach of requiring an automatic allowance deduction of at least
three allowances for each ton of excess emissions. This deduction
includes both an automatic one-to-one offset and an automatic allowance
penalty of at least two-to-one. The commenter failed to explain why
giving up allowances in addition to a one-for-one offset provides any
less deterrence for noncompliance than paying money in addition to a
one-for-one offset. Each allowance has a monetary value on the
allowance market, and the source is penalized for noncompliance by
having to give up assets whether the assets are in the form of
allowances or in the form of money. In short, there is nothing inherent
in the nature of an automatic allowance deduction that would make such
a deduction any less effective a deterrent than an automatic monetary
penalty.
    Further, EPA believes that the cost, to a source, of a penalty for
excess emissions should be significantly greater than the cost, to a
source, of purchasing allowances to be in compliance. The most
straight-forward way of ensuring a consistent relationship between the
cost of noncompliance (i.e., the excess emissions penalty) and the cost
of compliance is to impose an excess emissions penalty in the form of
an automatic allowance deductions that are a fixed multiple of the
amount of excess emissions. Here, the automatic penalty consists of at
least a three-to-one allowance deduction, which includes the one-for-
one offset plus an additional two-for-one allowance surrender. The EPA
notes that the commenter did not object to this level of penalty, but
simply claimed that the penalty should have a portion in the form of
money. The EPA believes that the level of the penalty, as well as the
form of the penalty, specified in section 51.308(e)(2)(vi)(J) are
reasonable.
    Finally, the commenter errs in its assertion that EPA's approach in
section 51.308(e)(2)(vi)(J) deviates from ``long-standing'' policies in
requiring automatic allowance deductions rather than automatic monetary
penalties for cap and trade programs. In fact, EPA took the same
approach in the NOX Budget Trading Program regulations
promulgated in 1998 (63 FR 57356, 57528) (section 96.54(d)(1))) and in
the CAIR trading program regulations recently promulgated in 2005 (70
FR 25162, 25353, 25373-74, and 25396)(section 96.154(d)(1), section
96.254(d)(1), and section 96.354(d)(1)) and Clean Air Mercury Rule
(CAMR) trading program regulations promulgated in 2005 (70 FR 28606,
28669) (section 60.4154(d)(1)). The EPA notes that, for any trading
program established under the CAA, a source with excess emissions is
subject to discretionary monetary penalties under section 113 of the
CAA, in addition to the automatic penalties established by the
respective trading program. See, e.g., 63 FR 57528 (section 96.64(d)(3)
(stating that the automatic penalty under NOX Budget Trading
Program does not affect liability for any other penalty under the CAA).
Emissions Monitoring
    Proposal. In the NPRM, we proposed a requirement that the
monitoring, recordkeeping, and reporting provisions for boilers,
combustion turbines, and cement kilns participating in a trading
program comply with part 75, and that other sources in the program
include monitoring, recordkeeping, and reporting provisions that result
in information of the same precision, reliability, accessibility and
timeliness as provided for under part 75. This proposed requirement was
based on the need for consistent and accurate measurement of emissions
to ensure that each allowance actually represents its specified tonnage
value of emissions and that reported emissions are fungible across
different sources. We also proposed that any sources that are subject
to the cap and trade program but prohibited from selling emissions
allowances would not be subject to the requirement that the monitoring,
recordkeeping, and reporting provisions be consistent with, or
equivalent to, part 75.
    Comments. Several commenters expressed concerned that the emissions
monitoring requirement would be unduly burdensome for small sources
which are not currently subject to monitoring requirements. One
commenter stated that because the cost of operating continuous
emissions monitors (CEMs) tends not to decline proportionally with
emissions or output, the costs of CEMs for small industrial sources is
much higher than for large EGUs on a per-ton basis. The commenter also
argued that the superior accuracy of CEMs compared to other methods
such as emission factors, on a percentage basis, was not worth the cost
when applied to the total emissions from small sources. The commenter
therefore suggested that EPA should allow States to assume, when
establishing the BART benchmark, that individual emissions units with
annual emission levels less than the de minimis levels would not be
controlled, and to the extent that such sources are required to
participate in a BART trading program, that they not be required to use
CEMs. Another commenter, citing similar concerns, suggested that EPA
could establish a threshold source size for each affected source
category, and provide alternatives to Part 75 monitoring for sources
below the threshold. The commmenter also suggested allowing
alternatives such as parametric monitoring or periodic sources test,
possibly with the use of a conservative adjustment factor to compensate
for the greater uncertainty of those methods.
    Final Rule. The EPA is aware of the need to balance considerations
of the accuracy and reliability of emissions monitoring and reporting
with costs considerations, particularly as applicable to small sources.
We believe the approach contained in the proposal strikes the proper
balance and provides States with adequate flexibility to address
sources' concerns with the cost of CEMs monitoring. First, the
requirement to comply with part 75 only applies to boilers, combustion
turbines and cement kilns. For all other sources, the requirement is
that the sources ``provide information with the same precision,
reliability, accessibility, and timeliness'' as provided by part 75.
Any sources which are prohibited from selling allowances (including
boilers, combustion turbines, or cement kilns) are not required either
to comply with, or be consistent with, part 75.
    Second, even within part 75, there are alternatives to CEMs in
appropriate circumstances. As explained in a footnote in the proposal,
part 75 establishes requirements for CEMS, as well as other types of
monitoring (e.g., low mass emissions monitoring under section 75.19)
that may be used in lieu of CEMS under certain circumstances. Part 75
also establishes a process for proposal by owners and operators, and
approval by the Administrator, of alternative monitoring systems (under
subpart E of part 75) that meet requirements concerning precision,
reliability, accessibility, and timeliness. We continue to believe that
it is essential to the integrity of any

emissions trading program that those sources that are allowed to sell
allowances must either comply with or be consistent with the
requirements of part 75 (depending on the source category). Therefore,
we are finalizing those requirements as proposed.
    Finally, we believe there is some merit to the commenter's point
that States should be allowed to assume, when establishing the BART
benchmark, that individual emissions units with annual emission levels
less than the de minimis levels would not be controlled. In the BART
Guidelines we indicated that States may choose to set de minimis levels
for individual pollutants at BART-eligible sources, so long as those de
minimis levels are set at or below PSD applicability levels for those
pollutants. We said that sources with emissions of an individual
pollutant below de minimis levels could be excluded from BART-
eligibility. Similarly, we believe that for the purposes of an
alternative program, de minimis levels set at or below PSD
applicability levels for those pollutants would be appropriate. In
other words, States could assume, when establishing the BART benchmark,
that they need not include emissions that total less than de minimis
amounts of an individual pollutant at a BART-eligible source.

III. Revisions to Regional Haze Rule Sec.  51.309

Support for the WRAP Program

    Comments. We received very few comments addressing our proposed
revisions to section 51.309. One commenter stated that it agreed with
EPA's proposed changes to this section of the Regional Haze Rule, but
asked for clarification on several points. At the public hearing on the
proposed rule, representatives of the WRAP and the State of Utah
Division of Air Quality expressed general support for the proposal and
appreciation of EPA's efforts to provide an opportunity for affected
States and tribes to continue to utilize the extensive work of the
GCVTC and the WRAP. The representative of Utah added:

    Any suggestion that EPA has forced Utah into protecting
visibility in Utah's protected areas or that EPA is forcing Utah to
participate in alternatives to BART is simply untrue * * *
Statements that claim this rule usurps state authority are
absolutely not true * * * In fact, Section 309 has always been, and
continues to be, a state-driven regulation.\9\
---------------------------------------------------------------------------

    \9\ See Docket EPA-HQ-OAR-2002-0076.

Another commenter requested clarification of the potential geographic
scope of the program in Sec.  51.309.
    Final Rule. The EPA remains committed to allowing States and Tribes
the flexibility to use innovative approaches such as market-based
emissions trading programs to meet CAA requirements where appropriate,
and agrees that EPA has never attempted to coerce States and Tribes
into adopting such alternative programs in lieu of BART. The provisions
in the Regional Haze Rule allowing for alternatives to BART generally,
and the WRAP backstop trading program in particular, were originally
included at the request of the States.\10\
---------------------------------------------------------------------------

    \10\ See legacy EPA Docket A-95-38, Item number VII-G-76.
---------------------------------------------------------------------------

    As was the case in 1999 when EPA added section 51.309 to the
Regional Haze Rule to recognize to work of the GCVTC, the option set
out in section 51.309 is applicable to the States and Tribes of the
GCVTC transport region: Arizona, California, Colorado, Oregon, Idaho,
Nevada, New Mexico, Utah, and Wyoming, and all federally-recognized
Tribes within the exterior boundaries of those States. Section 51.309
establishes the requirements for the first regional haze plans for the
16 Class I areas covered by the GCVTC Report, listed in section
51.309(b)(1). The geographic scope of the program, in terms of the
Class I areas for which reasonable progress goals are satisfied, may be
expanded upon adequate demonstrations pursuant to section 51.309(g).

The WRAP Program as a Reasonable Progress Measure

    Proposal. The requirement in the CAA that States make reasonable
progress towards the national visibility goal, while related to the
BART requirement, is a separate requirement analogous to the NAAQS-
based requirements in the CAIR. For the reasons presented above in this
preamble in the discussion of ``independent requirements'' in general,
we proposed that for a program designed to meet reasonable progress
requirements, the BART benchmark may be based on simplifying
assumptions without running afoul of the DC Circuit's decision in CEED
v. EPA. We characterized such a program as one that includes BART
sources and has the purpose of satisfying reasonable progress
requirements for a larger universe of sources.
    Comments. Although the preamble discussion of this issue was not
limited to or expressly directed towards the WRAP's program, most of
the comments received were in regard to the application of this concept
to the WRAP. The WRAP itself submitted comments in agreement with our
interpretation and supporting the inclusion of this option in the final
rule. In addition, another commenter explicitly supported the use of
this approach. In its comments, the UARG stated that the ``[u]se of the
group-BART approach for justifying the WRAP Annex would be appropriate
because the WRAP Annex would be the SO2 portion of the
section 169A reasonable progress program for the 16 Colorado Plateau
Class I areas, and thus would be a BART alternative program that is
required under another CAA provision.'' As noted previously in this
preamble, this commenter urged EPA to include language within the rule
itself, in addition to the preamble discussion, to allow States to use
a ``group BART'' approach to derive the BART benchmark when the BART
alternative program is required by another provision of law. This
commenter also requested that EPA make it clear in regulatory language
that this provision applies to the WRAP.
    Another commenter said that through the proposed rule, EPA was
essentially proposing to repromulgate the WRAP Annex. The commenter,
while not disputing the proposition that a program designed to meet
reasonable progress could be evaluated against a group-BART benchmark,
argued that the previous Annex milestones could not be ``recycled''
under this rationale because they were not developed as reasonable
progress measures. Instead, the commenter argued, the milestones were
derived directly from BART by the WRAP. The commenter also argued that
the milestones cannot be justified as a reasonable progress measure
because the modeling submitted with the Annex showed that the
stationary source program for SO2 would achieve no humanly
perceptible visibility improvement. Finally, the commenter argued that
the milestones cannot be ``restored'' because there is no ``coherent
reasonable progress rationale'' underlying them.
    After the comment period closed, a commenter submitted supplemental
comments which directly responded to the CEED's comments on the WRAP
program. The commenter stated that in its view, ``the fact that the
WRAP Annex (or, more precisely, its SO2 milestones) were
established based on a group-BART approach does not taint the Annex, so
long as the Annex is required by or satisfies (in whole or in part) the
CAA's reasonable progress requirements

(or some other CAA or State requirement.'' (Emphasis in original).
    The commenter also opined on the manner in which the WRAP program
could be shown to satisfy reasonable progress requirements. First, the
commenter cited the EPA's discussion of the purpose of section 309 in
the preamble to the 1999 Regional Haze Rule, as meeting the reasonable
progress requirements for the 16 Class I areas addressed by the GCVTC
(See 64 FR 35749-51). Second, the commenter notes that it is the
States'', not EPA's, obligation to demonstrate that the program satisfy
reasonable progress requirements. In support of this, the commenter
points to the provision in the proposed provision at section
51.309(d)(2), requiring a visibility improvement projection in order to
demonstrate that section 51.309 as a whole comprises reasonable
progress for the 16 Class I areas on the Colorado Plateau. Therefore,
the commenter asserts, if a ``State demonstrates to EPA, as part of its
section 51.309 SIP submittal, that the WRAP annex satisfies part or all
of the reasonable progress requirement, the source-specific BART
benchmark to be used in the `better than BART' test can be established
using a group BART approach.''
    Final Rule. Today's rule does not ``re-promulgate'' or ``pre-
approve'' the stationary source SO2 trading program
addressed by the WRAP Annex. Rather, we are amending the Regional Haze
Rule to remove the requirement that States use a ``group BART''
benchmark for evaluating alternative programs and providing western
States and tribes the opportunity to reconsider the milestones absent
that invalid analytical requirement. The Regional Haze Rule makes clear
that the WRAP States have the option of using source-by-source BART
determinations to develop a BART benchmark against which to compare
their backstop market trading program. Alternatively, if a WRAP State
were to demonstrate as part of its SIP submittal that the backstop
market trading program satisfies part or all of its reasonable progress
requirement for the Class I areas at issue, then the regulations
provide that the WRAP States could use a BART benchmark based on
category-wide assumptions about control levels which could be expected
to result from BART to demonstrate that the trading program makes
greater reasonable progress than BART. In either case, a new
demonstration is required, based on regulatory requirements and control
technology factors as they currently exist, not as they were in 2000.
Therefore the ``Annex'' milestones are not being ``recycled.''
    We do agree that regulatory certainty and clarity are best served
by specifying within the regulatory provisions the circumstances in
which a State, including a State submitting a SIP under section 51.309,
may use simplifying assumptions to estimate BART emissions reductions
in establishing a BART benchmark. As discussed in section II of the
preamble, we have amended section 51.308(e)(2)(i)(C) to clarify the
methodologies for determining the BART benchmark. The new language
codifies the approach, discussed in the proposal preamble, which may be
used in the case of an emissions trading or other alternative program
designed to meet a Federal or State requirement other than BART. The
paragraph specifies that the CAA section 169A requirement to make
reasonable progress may be considered such a requirement.
    Although a commenter argues that we are ``recycling'' the WRAP
Annex, we are not determining at this time that a SIP with a backstop
market trading program identical to that approved by EPA in 2003 would
meet the requirements of the amended Regional Haze Rule. In other
words, it is unnecessary at this time to address the CEED's central
argument that the backstop market trading program in the WRAP Annex
cannot qualify as a BART alternative program designed to meet another
CAA provision. If any SIPs are submitted under section 51.309, EPA will
review the plans at that time based on the State's submittal and any
additional information adduced during the public comment period.
    We do note that EPA disagrees with the commenter that a WRAP State
could not show that a stationary source market trading program similar
to that in the WRAP Annex was designed to satisfy the reasonable
progress requirements. Although, as the commenter pointed out, EPA did
not provide an analysis in the proposal of how the milestones from 2003
could contribute to reasonable progress should any States submit SIPs
containing a trading program based on these milestones, the history of
the program authorized under Sec.  51.309 of the Regional Haze Rule
suggests strongly that the stationary source program for SO2 was
designed by the States and others in the GCVTC as a measure for
obtaining reasonable progress. In the preamble to the 1999 Regional
Haze Rule, we stated:

    ``The EPA finds that the GCVTC actions to date address, or
provide a mechanism to address, the statutory factors for assessing
reasonable progress required by the CAA. The EPA is satisfied that
the GCVTC's strategies as set forth in section 51.309, when
supplemented by the annex process discussed below, will provide for
`reasonable progress' toward the national visibility goal for the 16
parks and wilderness areas addressed by the GCVTC.'' [64 FR 35749
emphasis added].

    In elaborating on the Annex process, we noted that the haze rule
contained a provision calling for the submission of an Annex to the
GCVTC report ``for the purpose of completing the program requirements
to meet reasonable progress under the CAA, including submission of a
complete long-term strategy and addressing the BART requirement for the
16 Class I areas on the Colorado Plateau.'' [64 FR 35756 emphasis
added]. Thus, from the beginning of the process, it is clear that EPA
believed that satisfying the BART requirement was a subsidiary
component of the reasonable progress requirement, but that the purpose
of the Annex and of section 309 generally was to satisfy the overall
reasonable progress requirements of western States and Tribes with
respect to the 16 Class 1 areas on the Colorado Plateau.\11\ Based on
this, in EPA's opinion, a WRAP State could demonstrate in a SIP
submittal that a stationary source program similar to the WRAP Annex
was designed to make reasonable progress. However, as one commenter
noted, such an obligation belongs to the State, ``and the time for the
State to provide that justification is when the State submits a section
51.309 SIP that contains the WRAP Annex's provisions.'' In short,
whether any SIPs submitted several years from now under section 51.309
by the WRAP States meet the minimum requirements set forth in EPA's
regulations will depend on the submission made by the States at that
time.
---------------------------------------------------------------------------

    \11\ Section 51.309(a) of the Regional Haze Rule, in requiring
submission of an implementation plan for the 16 Class I areas
covered by the GCTVC report, states that ``[i]f a transport region
State submits an implementation plan which is approved by EPA as
meeting the requirements of this section, it will be deemed to
comply with the requirements for reasonable progress for the period
from approval of the plan to 2018.'' (64 FR 35769).
---------------------------------------------------------------------------

    We also disagree with the comments that EPA's approval of the WRAP
Annex in 2003 was not rational as the trading program had not been
shown to produce a ``humanly perceptible'' degree of visibility
improvement. We determined in the 1999 rule that the analysis conducted
by the GCVTC was the functional equivalent of the reasonable progress
analysis required under section 51.308. Under section 308, States must
establish reasonable progress goals by considering the uniform rate of
progress

(in deciviews) to natural conditions in 2064 (i.e. the ``glide path''),
and the statutory reasonable progress factors contained in CAA
169A(g)(1). If the state adopts a slower rate of progress than the
glide path, it must demonstrate that this slower rate is justified
based on the statutory factors. In approving the GCVTC analysis as
comparable to such an analysis, we found that the GCVTC had
demonstrated that a faster rate of progress was not feasible,
considering the costs and other factors. This determination does not
necessarily reflect what would be expected in other parts of the
country, as it is unique to the situation of the Colorado Plateau, in
terms of air quality, pollutant concentrations, source location, and
meteorology.
    In addition, the commenter's argument ignores the fact that there
are two elements of national visibility goals established by Congress
in CAA 169A(a)(1): Preventing future impairment as well as remedying
existing impairment. It cannot be disputed that a program that prevents
degradation for the first long-term planning period constitutes
reasonable progress towards the goal of preventing any future
impairment. In other words, holding the line against visibility
degradation for the first 10-year strategy period is reasonable
progress towards holding the line indefinitely.

Geographic Enhancements

    Proposal. The proposed rule made no mention of ``geographic
enhancements'' because no changes were intended for the relevant
provisions. The term geographic enhancement refers to a ``method,
procedure, or process to allow a broad regional strategy, such as a
milestone or backstop market trading program designed to achieve
greater reasonable progress than BART for regional haze, to accommodate
BART for reasonably attributable impairment.'' See 40 CFR 51.301 and
51.309(b)(7). As explained in the preamble to the 1999 Regional Haze
Rules, the purpose of this provision is to allow a market-based system
to accommodate actions taken under the ``reasonably attributable'' BART
provisions at section 51.302 to address ``hot spot'' issues. Section
51.308(e)(2)(v) provides that States may, at their option, include
geographic enhancements in an emissions trading program or other
alternative measure. We proposed changes to Sec.  51.308(e)(2)(i),
(ii), and (vi), but not to paragraph (e)(2)(v). In addition, Sec.
51.309(f)(4) had contained a provision for optional geographic
enhancements, similar to that in Sec.  51.308(e)(2)(v). However, as
explained in the preamble of the August 1 proposal, the ``Annex''
mechanism embodied in Sec.  309(f) is no longer necessary or
appropriate. We therefore proposed to repeal section 309(f), while
incorporating certain still-relevant provisions into Sec.  309(d)(4).
    Comments. One commenter requested a clarification that the option
of geographic enhancements is preserved for the WRAP program through
the cross-reference to Sec.  51.308(e)(2) that appeared in proposed
Sec.  51.309(d)(4)(i).
    Final Rule. We agree with the commenter that geographic
enhancements are retained as an option under the WRAP program. The
geographic enhancement provision is contained within Sec.
51.308(e)(2), the general requirements for trading programs or other
alternative measures in lieu of BART. The geographic enhancement
provision within Sec.  51.308(e)(2) provides a mechanism which could
affect the milestones. The proposed rule relied upon the fact that
Sec.  51.309(d)(4) would require that the WRAP stationary source
milestones comply with the provisions of Sec.  51.308(e)(2), which
include the geographic enhancement provision. However, for additional
clarity, we have added a geographic enhancement provision specific to
the WRAP program in Sec.  51.309(d)(4)(v).

Tribal Issues

    Proposal. Throughout the preamble to the proposed rule, we referred
to Tribes along with States in recognition that tribes may be delegated
authority to implement CAA programs, as provided in section 301(d) of
the CAA and the Tribal Authority Rule (Sec. Sec.  49.1 through 49.11).
We proposed to retain, in the text of the rule at proposed Sec.
51.309(c), the provision that Indian Tribes may submit implementation
plans after the proposed deadline of December 17, 2007.
    Comments. One commenter included two issues related to Tribes.
First, the commenter stated that participation in a program under this
rule would not be ``a trivial exercise for any Tribal program to
accomplish given most tribal programs lack the staff and expertise of
state air programs,'' and requested that EPA recognize this reality.
The second comment was specifically focused on the Tribal allowance
set-aside provision of the former ``Annex'' program. The commenter
noted that the rule as proposed did not contain a specific requirement
for a Tribal set-aside, presumably due to the fact that the Annex rule
had been vacated and that EPA was therefore aware of the need to avoid
the inclusions of ``provisions of the Annex rule that were directly or
indirectly dependent or related to the specific quantitative milestones
contained in the Annex.'' The commenter noted that in the 2003 approval
of the WRAP Annex, EPA had specified that the Tribal set-aside
provision was the one element of the allocation methodology that was
appropriate for treatment in the Federal regulation (rather than in
SIPs and Tribal implementation plans (TIPs)). The commenter therefore
requested that EPA clarify ``what expectations it has regarding the
consistency of tribal set aside provisions between the section 309 SIPs
submitted by various states, and what role, if any, EPA would play in
assuring implementation of such provisions.''
    Final Rule. The EPA agrees that regulatory activities such as BART
determinations and the development of trading programs is not by any
means trivial and would be difficult to perform or participate in with
the small staffs and limited resources typical of many nascent Tribal
air programs. Fortunately, there are few BART-eligible sources within
Indian country across the nation. Also, EPA has provided funding as
well as technical and other forms of support to the five RPOs
established to serve both State and Tribal needs in regional haze
planning. EPA has an ongoing commitment to insure that tribal interests
are addressed within the RPO process. Also, EPA is committed to
fulfilling its responsibility to implement CAA provisions in Indian
country as necessary and appropriate, in consultation with any affected
Tribes.
    The EPA agrees with the commenter's assessment that the reason a
tribal allowance set-aside was not included in the proposal was that
the set-aside provision in the Annex was integrally related to the
milestones previously submitted. The Tribal set-aside was developed
voluntarily by the WRAP and not in response to any CAA requirement.
Having been so developed, EPA determined at the time of the Annex rule
approval that it was appropriate for inclusion within section 309, in
order to provide an efficient mechanism to implement the set-aside.
Given that the CEED v. EPA decision necessitates that States and Tribes
be given the opportunity to revisit the milestones, that there is no
CAA provision that requires a Tribal set-aside, and that the details of
the WRAP's emissions trading program will be developed directly in SIPs
and TIPs without the intermediary step of codifying detailed
requirements in an Annex-like Federal rule, the EPA believes it would
be inappropriate to attempt to mandate a Tribal allowance

set-aside at this time. However, the EPA does continue to encourage
States and Tribes in the WRAP as well as elsewhere to develop
mechanisms to address Tribal interests and concerns, such as allowance
set-asides. We will review SIPs and TIPs submitted under section 309 to
insure that the allocation methodologies, including any Tribal
provisions, are consistent among jurisdictions and will provide the
certainty and regularity necessary for a functioning market. What other
role, if any, the EPA will play in assuring the implementation of any
Tribal set-aside provisions is dependent in large part upon the nature
of the program developed by participating states and Tribes--for
example, whether the program would be administered by the EPA, States
and Tribes, or a third-party contractor.

Other Comments and Responses

    One commenter requested that EPA make explicit in the final rule
that backstop trading programs are permissible under both Sec. Sec.
51.309 and 51.308 for SO2 and NOX. The commenter
noted that the proposal preamble stated only that ``nothing precludes
states outside the 9-state region from incorporating elements of the
GCVTC strategies into their SIPs.'' While this would indicate that the
section 309 program (including the backstop trading program) could be
expanded geographically, it does not address the question of whether
the backstop approach could be utilized, either inside or outside the
GCVTC region, for NOX as well as SO2.
    We wish to clarify here that a backstop trading program (i.e., a
system of voluntary milestones backed by an automatically required cap
and trade program in the event the milestones are exceeded) could
qualify as an ``other alternative measure'' under Sec.  51.308(e)(2) as
a BART substitute. This could be accomplished for any visibility
impairing pollutant, on a pollutant-by-pollutant basis. The key
distinction between programs under Sec. Sec.  51.308 and 51.309 is that
under Sec.  51.309, the reasonable progress requirements for
SO2, with respect to the 16 Class I areas on the Colorado
plateau, have already been defined by the GCVTC. With respect to
SO2 reductions to meet reasonable progress requirements at
other Class I areas, and with respect to other pollutants such as
NOX, the emission reductions requirements remain to be
determined. This could be accomplished either according to the
reasonable progress requirements of Sec.  51.308(d)(1), in the case of
a program designed to meet reasonable progress goals; or through
source-by-source BART determinations as described in this rule, for
programs designed only to satisfy BART. Provided these requirements are
met, it is acceptable for a State to use a backstop trading program
under Sec.  51.308.
    Finally, we note that there was an obvious omission in the proposed
provisions regarding the comparison of actual emissions to the
emissions milestones. Specifically, proposed Sec.  51.309(d)(4)(i)
provided for the use of a 3-year rolling average of actual emissions
for this purpose. This does not account for the fact that it is not
possible to generate a 3-year average during the first two years of
emission tracking. Therefore, the final rule provides that for the
first 2 years, compliance with the milestones may be measured by a
methodology of the States' choosing, so long as all States in the
program use the same methodology. After the first 2 years of the
program, compliance with the annual milestones may be measured by
comparing a 3-year rolling average of actual emissions with a rolling
average of the emissions milestones for the same 3 years.

IV. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review

    Under Executive Order (EO) 12866 (58 FR 51735, October 4, 1993),
this action is a ``significant regulatory action'' because it raises
novel legal or policy issues arising out of legal mandates, the
President's priorities, or the principles set forth in the EO.
Accordingly, EPA submitted this action to the Office of Management and