In 1996, Congress amended Section 18 of the Securities Act to exempt from state registration requirements securities listed, or authorized for listing, on the New York Stock Exchange LLC (“NYSE”), the American Stock Exchange LLC (“Amex”) (now known as NYSE Amex LLC), 1 or the National Market System of The NASDAQ Stock Market LLC (“Nasdaq/NGM”)  2 (collectively, the “Named Markets”), or any national securities exchange designated by the Commission to have substantially similar listing standards to those of the Named Markets. 3 More specifically, Section 18(a) of the Securities Act provides that “no law, rule, regulation, or order, or other administrative action of any State * * * requiring, or with respect to, registration or qualification of securities * * * shall directly or indirectly apply to a security that—(A) is a covered security.”  4 Covered securities are defined in Section 18(b)(1) of the Securities Act to include those securities listed, or authorized for listing, on the Named Markets, or securities listed, or authorized for listing, on a national securities exchange (or tier or segment thereof) that has listing standards that the Commission determines by rule are “substantially similar” to those of the Named Markets (“Covered Securities”). 5

Pursuant to Section 18(b)(1)(B) of the Securities Act, the Commission adopted Rule 146. 6 Rule 146(b) lists those national securities exchanges, or segments or tiers thereof, that the Commission has determined to have listing standards substantially similar to those of the Named Markets and thus securities listed on such exchanges are deemed Covered Securities. 7 BATS has filed a proposed rule change for the listing of securities on BATS  8 and has petitioned the Commission to amend Rule 146(b) to designate such securities as Covered Securities for the purpose of Section 18 of the Securities Act. 9 If the Commission were to approve the proposed listing standards and make this determination, then securities listed on BATS would be exempt from state law registration requirements. 10 Additionally, should the Commission approve BATS' proposed listing standards and the securities listed, or authorized for listing, on BATS were designated as Covered Securities under Rule 146(b)(1), then BATS' listing standards would be subject to Rule 146(b)(2) under the Securities Act. Rule 146(b)(2) conditions the designation of securities as Covered Securities under Rule 146(b)(1) on the identified exchange's listing standards continuing to be substantially similar to those of the Named Markets. Thus, under Rule 146(b)(2), the designation of certain securities as Covered Securities would be conditioned on BATS maintaining listing standards for its equity securities that are substantially similar to those of the Named Markets.

In 1998, the CBOE, PCX (now known as NYSE Arca, Inc.), Phlx, 11 and the Chicago Stock Exchange, Inc. (“CHX”) petitioned the Commission to adopt a rule determining that specified portions of the exchanges' listing standards were substantially similar to the listing standards of the Named Markets. 12 In response to the petitions, and after extensive review of the petitioners' listing standards, the Commission adopted Rule 146(b), determining that the listing standards of the CBOE, Tier 1 of the PCX, and Tier 1 of the Phlx were substantially similar to those of the Named Markets and that securities listed pursuant to those standards would be deemed Covered Securities. 13 In 2004, ISE petitioned the Commission to amend Rule 146(b) to determine that its listing standards for securities listed on ISE are substantially similar to those of the Named Markets and, accordingly, that securities listed pursuant to such listing standards are Covered Securities for purposes of Section 18(b) of the Securities Act. 14 The Commission subsequently amended Rule 146(b) to designate options listed on ISE as Covered Securities. 15 In 2007, Nasdaq petitioned the Commission to amend Rule 146(b) to determine that listing standards for securities listed on the NCM are substantially similar to those of the Named Markets and, accordingly, that securities listed pursuant to such listing standards are Covered Securities. 16 The Commission subsequently amended Rule 146(b) to designate securities listed on the NCM as Covered Securities. 17

BATS has petitioned the Commission to amend Rule 146(b) and determine that its proposed listing standards for securities listed on BATS are substantially similar to those of the Named Markets, and that such securities are Covered Securities under Section 18(b) of the Securities Act. 18

Under Section 18(b)(1)(B) of the Securities Act, 19 the Commission has the authority to determine that the listing standards of an exchange, or tier or segment thereof, are substantially similar with those of the NYSE, NYSE Amex, or Nasdaq/NGM. The Commission initially has compared BATS' proposed listing standards for all securities with one of the Named Markets. If the proposed listing standards in a particular category were not substantially similar to the standards of that market, the Commission compared BATS' proposed standards to one of the other two markets. 20 In addition, as it has done previously, the Commission has interpreted the “substantially similar” standard to require listing standards at least as comprehensive as those of the Named Markets. 21 If a petitioner's listing standards are higher than the Named Markets, then the Commission may still determine that the petitioner's listing standards are substantially similar to those of the Named Markets. 22 Finally, the Commission notes that differences in language or approach would not necessarily lead to a determination that the listing standards of the petitioner are not substantially similar to those of any Named Market. 23

The Commission has reviewed proposed listing standards for securities to be listed and traded on BATS and, for the reasons discussed below, preliminarily believes that the proposed standards overall are substantially similar to those of a Named Market. 24

BATS' proposed qualitative listing standards for both the Tier I and Tier II securities are substantively identical to the qualitative listing standards for Nasdaq/NGM securities. 25 Therefore, the Commission preliminarily believes that BATS' qualitative listing standards for Tier I and Tier II securities are substantially similar to a Named Market.

The Commission requests comment on whether BATS' proposed qualitative listing standards for Tier I and Tier II are “substantially similar” to Nasdaq/NGM's listing standards.

The Commission believes that BATS' proposed initial and continued listing standards for its Tier I Securities are substantively identical to the initial and continued listing standards for securities listed on Nasdaq/NGM. 26 Therefore, the Commission preliminarily believes that BATS' quantitative listing standards for Tier I Securities are substantially similar to a Named Market.

The Commission requests comment on whether BATS' proposed Tier I Securities quantitative listing rules are “substantially similar” to Nasdaq/NGM's listing rules.

The Commission compared BATS' proposed listing standards for primary equity securities listed on Tier II of the Exchange to the listing standards of NYSE Amex. 27 The Commission preliminarily believes that BATS' proposed initial listing standards for primary equity securities listed on Tier II of the Exchange are substantially similar to those of NYSE Amex's common stock listing standards. 28 Specifically, BATS' proposed requirements relating to bid price, 29 round lot holders, 30 shares held by the public, 31 and required number of registered and active market makers  32 are substantially similar to NYSE Amex requirements. Additionally, BATS' proposed equity, 33 market value, 34 and net income  35 standards are also substantially similar to NYSE Amex standards.

In addition to the above initial listing requirements, BATS would require that American Depositary Receipts (“ADRs”) comply with an additional criterion. Specifically, BATS would require there be at least 400,000 ADRs issued for such securities to be initially listed on BATS. 36 However, NYSE Amex does not have specific requirements for ADRs in addition to its initial listing standards for primary equity securities. 37 As noted above, the Commission may still determine that the petitioner's listing standards are similar to those of the Named Markets if BATS' proposed listing standards are higher than the Named Markets. 38 The Commission preliminarily believes that BATS' proposed listing requirements for ADRs are substantially similar to those of NYSE Amex.

The Commission also preliminarily believes that the proposed continued listing requirements for primary equity securities listed on Tier II of the Exchange, while not identical, are substantially similar to those of NYSE Amex. 39 NYSE Amex's delisting criteria are triggered by poor financial conditions or operating results of the issuer. 40 Specifically, NYSE Amex will consider delisting an equity issue if: (i) Stockholders' equity is less than $2 million and such issuer has sustained losses from continuing operations and/or net losses in two of its three most recent fiscal years; (ii) stockholders' equity is less than $4 million and such issuer has sustained losses from continuing operations and/or net losses in three of its four most recent fiscal years; (iii) stockholders' equity is less than $6 million if such issuer has sustained losses from continuing operations and/or net losses in its five most recent fiscal years; or (iv) the issuer has sustained losses which are so substantial in relation to its overall operations or its existing financial resources, or its financial condition has become so impaired that it appears questionable, in the opinion of the exchange, as to whether such company will be able to continue operations and/or meet its obligations as they mature. 41

Although BATS would not have the same continued listing provisions for Tier II, BATS also would look at the financial condition and operating results of the issuer in order to determine whether to delist an issuer. BATS' continued listing standards for Tier II securities would require compliance with either a (1) Shareholder equity, (2) market value of listed securities or (3) net income standard. Specifically, for continued listing, BATS would require shareholder's equity of at least $2.5 million, market value of listed securities of at least $35 million, or net income of $500,000 from continuing operations in the past fiscal year or two out of three past fiscal years. 42 Further, BATS would require an issuer to have (i) A minimum bid price for continued listing of $1 per share, 43 (ii) at least two registered and active market makers, (iii) 300 public holders, and (iv) a minimum number of publicly held shares of at least 500,000 shares with a market value of at least $1 million. 44 The Commission preliminarily believes that the differences in the maintenance criteria for common stock listed on NYSE Amex and as proposed on BATS for Tier II Securities are not significant and that, taken as a whole, the criteria are substantially similar. 45

The Commission requests comment on whether BATS' proposed listing standards for primary equity securities on Tier II are “substantially similar” to NYSE Amex standards.

The Commission has compared the proposed listing standards of preferred stock and secondary classes of common stock on Tier II of the Exchange to the Nasdaq/NGM standards and preliminarily believes that BATS' standards are substantially similar to those of Nasdaq/NGM. A secondary class of common stock is a class of common stock of an issuer that has another class of common stock listed on an exchange. 46 The Commission preliminarily believes that BATS' proposed initial and continued listing standards with respect to the number of round lot holders, 47 bid price, 48 number of publicly held shares, 49 market value of publicly held shares, 50 and number of market makers  51 are substantially similar to the Nasdaq/NGM standards. 52

The Commission requests comment on whether the BATS proposed secondary classes of common stock and preferred stock rules are “substantially similar” to Nasdaq/NGM's rules.

The Commission has compared BATS' proposed standards for warrants to Nasdaq/NGM's standards, and preliminarily believes that the BATS proposed standards are substantially similar to the Nasdaq/NGM standards. BATS' proposed initial listing standards would require that 400,000 warrants be outstanding for initial listing, and that there be at least three registered and active market makers and 400 round lot holders. 53 Nasdaq/NGM's standards are identical except that Nasdaq/NGM requires 450,000 warrants to be outstanding. 54 Though not identical with respect to the number of warrants outstanding standard, the Commission preliminarily believes these proposed initial listing standards are substantially similar to the Nasdaq/NGM standards. 55 Further, the proposed BATS standards would require the issuer's underlying security to be listed on the Exchange or be a Covered Security. 56 The Commission notes that Nasdaq/NGM has a similar standard that the underlying security be listed on Nasdaq/NGM or be a Covered Security and preliminarily believes that BATS' proposed standard is substantially similar to Nasdaq/NGM. 57

The Commission also preliminarily believes that BATS' proposed continuing listing requirements for warrants that there be two registered and active market makers (one of which may be a market maker entering a stabilizing bid) and that the underlying security remain listed on the Exchange or be a Covered Security are substantially similar to that of Nasdaq/NGM. 58

The Commission requests comment on whether BATS' proposed listing standards for warrants are “substantially similar” to Nasdaq/NGM's listing standards.

For index warrants traded on BATS, BATS has proposed the same standards (both initial and continuing) that apply to index warrants traded on Nasdaq/NGM. 59 Therefore, the Commission preliminarily believes that the proposed listing standards for index warrants traded on BATS are substantially similar to the standards applicable to index warrants traded on the Nasdaq/NGM market.

The Commission requests comment on whether BATS proposed listing standards for index warrants are “substantially similar” to Nasdaq/NGM's listing standards.

The Commission has compared BATS' proposed listing standards for convertible debt to NYSE Amex's listing standards for debt. The Commission preliminarily believes that BATS' proposed initial listing standards regarding the threshold principal amount outstanding, 60 the availability of current last sale information, 61 and number of market makers  62 are substantially similar to NYSE Amex standards. 63 In addition to the requirements noted above, BATS' proposed listing standards would require that one of four additional conditions be met for listing of convertible debt. Specifically, BATS proposes that it would not list a convertible debt security unless one of the following conditions were met: (i) The issuer of the debt security also has equity securities listed on the Exchange, NYSE Amex, the NYSE, or Nasdaq/NGM; (ii) an issuer of equity securities listed on the Exchange, NYSE Amex, the NYSE, or Nasdaq/NGM directly or indirectly owns a majority interest in, or is under common control with, the issuer of the debt security, or has guaranteed the debt security; (iii) a nationally recognized securities rating organization (an “NRSRO”) has assigned a current rating to the debt security that is no lower than an S&P Corporation “B” rating or equivalent rating by another NRSRO; or (iv) if no NRSRO has assigned a rating to the issue, an NRSRO has currently assigned an investment grade rating to an immediately senior issue or a rating that is no lower than an S&P Corporation “B” rating, or an equivalent rating by another NRSRO, to a pari passu or junior issue. 64 The Commission preliminarily believes that these other conditions proposed by BATS for listing of convertible debt are substantially similar to NYSE Amex standards. 65

The Commission requests comment on whether the BATS proposed convertible debt listing rules are “substantially similar” to NYSE Amex's listing standards for debt securities.

The listing requirements for units on Tier II of the Exchange, NYSE Amex, and Nasdaq/NGM are all the same, as each evaluates the initial and continued listing of a unit by looking to its components. 66 If all of the components of a unit individually meet the standards for listing, then the unit would meet the standards for listing. 67 Because the components for units proposed by BATS are substantially similar to those of a Named Market, as discussed above, the Commission preliminarily believes that BATS' proposed listing standards for units to be listed on Tier II of the Exchange are substantially similar to a Named Market. 68

The Commission requests comment on whether BATS' proposed listing standards for units on Tier II of the Exchange are “substantially similar” to NYSE Amex requirements.

In addition to the proposed listing standards for Tier I and Tier II securities and the analyses of such standards to the Named Markets discussed above, the Commission notes that BATS has proposed listing standards for other securities, including exchange traded funds, portfolio depository receipts, and index fund shares. The Commission also notes that BATS' proposed standards for these securities are identical to those of Nasdaq/NGM. 69

Sections (b)(1) and (b)(2) of Rule 146 use the term “Amex” to refer to the American Stock Exchange LLC. As noted above, on October 1, 2008, NYSE Euronext acquired Amex and renamed it NYSE Alternext. 70 Further, in 2009, NYSE Alternext was renamed NYSE Amex LLC. 71 Additionally, Section (b)(1) of Rule 146 uses the term “the Philadelphia Stock Exchange, Inc.” As noted above, on July 24, 2008, The NASDAQ OMX Group, Inc. acquired Phlx and renamed it “NASDAQ OMX PHLX LLC.”  72 The proposed rule change includes changes to Rule 146(b) to account for these name changes.

To date, the Commission has not received any comment letters on the Petition.

The Commission seeks comment generally on the desirability of amending Rule 146(b) to include securities listed, or authorized for listing, of BATS. As discussed above, based on its review of BATS' proposed listing standards, the Commission preliminarily believes that the proposed initial and continued listing standards for BATS are substantially similar to those of the NYSE Amex or Nasdaq/NGM. The Commission seeks comments on its preliminary analysis.

The Commission also invites commenters to provide views and data as to the costs, benefits, and effects associated with the proposed amendments. In addition to the questions posed above, commenters are welcome to offer their views on any other matter raised by the proposed amendment to Rule 146(b), including the application of rule 146(b)(2). Finally, the Commission requests comment on whether it could use a different methodology to determine whether BATS' proposed listing standards are “substantially similar” to those of the Named Markets.

The Paperwork Reduction Act of 1995 does not apply because the proposed amendment to Rule 146(b) does not impose recordkeeping or information collection requirements or other collection of information, which require the approval of the Office of Management and Budget under 44 U.S.C. 3501 et seq.

Section 2(b) of the Securities Act  73 requires us, when engaging in rulemaking where we are required to consider or determine whether an action is necessary or appropriate in the public interest, to consider, in addition to the protection of investors, whether the action will promote efficiency, competition and capital formation. We have considered, and discuss below, the effects of the proposed amendment to Securities Act Rule 146, with regard to BATS' proposed listing standards to designate certain securities that would be listed on BATS as Covered Securities, on efficiency, competition, and capital formation, as well as the benefits and costs associated with the proposed rulemaking.

Congress amended Section 18 of the Securities Act to exempt covered securities from state registration requirements. These securities are listed on the Named Markets or any other national securities exchange determined by the Commission to have “substantially similar” listing standards to those of the Named Markets (“Designated Markets”). 74 The Commission proposes to determine (if the Commission were to approve the proposed listing standards filed by BATS) that the listing standards for securities listed on BATS are substantially similar to those of a Named Market, specifically Nasdaq/NGM or NYSE Amex. Securities listed, or authorized for listing, on BATS therefore would be exempt from state law registration requirements.

There are three Named Markets (NYSE, NYSE Amex, and Nasdaq/NGM) and currently five Designated Markets (Tier I of NYSE Arca, Tier I of the Philadelphia Stock Exchange, CBOE, ISE, and Nasdaq/NCM). NYSE and Nasdaq/NGM are currently the largest exchanges in terms of number of securities listed. As of April 19, 2011, in terms of securities listed, NYSE lists 3,255, Nasdaq/NGM lists 2,854, NYSE Arca lists 1,213, and NYSE Amex lists 544. 75

The direct economic effect of the proposed rule would be to exempt issuers that list, or are authorized to list, on BATS from the requirements of state registration. Instead, these issuers would be required to comply with BATS' proposed listing standards and the federal securities laws, rules and regulations with respect to the registration and sale of securities. The requirements of state registration typically include: (i) Paperwork and labor hours necessary to comply with state registration requirements, (ii) meeting the disclosure standards, and (iii) in some states, meeting certain minimum merit requirements to make public offerings. 76

In the Federal Register of December 8, 2010 (75 FR 76526), FDA proposed to amend its regulations in § 101.83 (21 CFR 101.83) on plant sterol/stanol esters and risk of CHD (the phytosterols proposed rule). Among other revisions, the Agency proposed to: (1) Adopt the term “phytosterols” as inclusive of both plant sterols and stanols; (2) permit claims on products with phytosterols, derived from either vegetable oils or tall oils, containing at least 80 percent of beta-sitosterol, campesterol, stigmasterol, sitostanol, and/or campestanol (combined weight); (3) replace the analytical methods FDA uses to determine the amount and nature of the substance with the Sorenson and Sullivan method for evaluation of campesterol, stigmasterol, and beta-sitosterol in those foods for which the method has been validated; (4) revise the daily dietary intake of phytosterols necessary to justify the CHD risk reduction claim (2 grams (g) per day) and the minimum amount of phytosterols (non-esterified weight) required to be in a serving of the food (0.5 g per reference amount customarily consumed (RACC)); (5) for conventional food, limit the use of the claim to the food uses of phytosterols that have been submitted to FDA in a generally recognized as safe notification to which the Agency had no further questions and where the conditions of use are consistent with the eligibility requirements for the health claim; (6) remove the requirement that the health claim include a recommendation that phytosterols be consumed in two servings eaten at different times of the day, but require that the substance be taken with meals or snacks; (7) eliminate the enumeration of specific conventional foods eligible to bear the claim; (8) allow for the use of the health claim on phytosterol ester-containing dietary supplements (esterified with food-grade fatty acids) but not on nonesterified phytosterol-containing dietary supplements; (9) clarify that the limited exemption from the total fat disqualifying level of more than 13 g total fat per 50 g of food when the RACC is 30 g or less or 2 tablespoons or less applies to vegetable oil spreads resembling margarine; (10) permit liquid vegetable oils to be exempt from the total fat disqualifying level on a per RACC, per labeled serving size, and per 50 g basis; and (11) permit liquid vegetable oils to be exempt from the minimum nutrient requirement and vegetable oil spreads resembling margarine to meet the 10 percent minimum nutrient requirement by the addition of Vitamin A consistent with FDA's fortification policy.

Interested persons were originally given until February 22, 2011, to comment on the proposed rule.

After publication of the phytosterols proposed rule, the Agency received two petitions for an administrative stay of action and two letters requesting that FDA extend its enforcement discretion based on FDA's February 14, 2003, letter of enforcement discretion to Cargill Health and Food Technologies. Based on concerns that 75 days was not enough time for industry to come into compliance with § 101.83 or to make the claim consistent with the proposed requirements in the phytosterols proposed rule, the Agency issued, in the Federal Register of February 18, 2011, an extension of its enforcement discretion based on the February 14, 2003, letter (76 FR 9525).

On February 10, 2011, the Agency received a comment on the phytosterols proposed rule by Venable LLP requesting an extension of the comment period until April 23, 2011, because the period of time allowed for comment did not provide enough time for them to collect, assess, and comment on the relevant data regarding the cholesterol-lowering efficacy of nonesterified phytosterols in dietary supplements. FDA did not respond to Venable LLP's request within the comment period and cannot extend a closed comment period. However, the Agency is reopening the comment period for this rule in response to Venable LLP's request. The Agency recognizes that additional time to review and comment on the data related to the relationship between nonesterified phytosterols and reduced risk of CHD would be helpful and consistent with sound public policy, therefore FDA is reopening the comment period for all interested persons on the phytosterols proposed rule to allow for comments to be submitted to the docket.

Following receipt of comments on this document, FDA intends to publish a final rule, which will amend § 101.83. The reopening of the comment period may result in the submission of additional information that may cause the Agency to reconsider its proposed amendments to the phytosterols and risk of coronary heart disease health claim. The Agency notes that a final rule may vary from the proposal. To the extent that manufacturers have labeled their products consistent with the proposed requirements, and the final requirements differ from what the Agency proposed, manufacturers will be required to change their labels to conform to the final rule.

Interested persons may submit to the Division of Dockets Management (see ADDRESSES ) either electronic or written comments regarding this document. It is only necessary to send one set of comments. It is no longer necessary to send two copies of mailed comments. Identify comments with the docket number found in brackets in the heading of this document. Received comments may be seen in the Division of Dockets Management between 9 a.m. and 4 p.m., Monday through Friday.

On December 22, 2010, IDNR submitted a request to EPA to approve revisions to the State's SIP and Title V program to incorporate recent rule amendments adopted by the Iowa Environmental Protection Commission. These adopted rules became effective in the Iowa Administrative Code on that date. These amendments establish thresholds for GHG emissions in Iowa's PSD and Title V regulations at the same emissions thresholds and in the same time-frames as those specified by EPA in the “PSD and Title V Greenhouse Gas Tailoring Final Rule” (75 FR 31514), hereafter referred to as the “Tailoring Rule,” ensuring that smaller GHG sources emitting less than these thresholds will not be subject to permitting requirements for GHGs that they emit. The amendments to the SIP clarify the applicable thresholds in the Iowa SIP, address the flaw discussed in the “Limitation of Approval of Prevention of Significant Deterioration Provisions Concerning Greenhouse Gas Emitting-Sources in State Implementation Plans Final Rule,” 75 FR 82536 (December 30, 2010) (the “PSD SIP Narrowing Rule”), and incorporate state rule changes adopted at the state level into the Federally-approved SIP. In today's notice, pursuant to section 110 of the CAA, EPA is proposing to approve these revisions into the Iowa SIP. 1

This section briefly summarizes EPA's recent GHG-related actions that provide the background for today's proposed actions. More detailed discussion of the background is found in the preambles for those actions. In particular, the background is contained in what we called the PSD SIP Narrowing Rule, 2 and in the preambles to the actions cited therein.

EPA has recently undertaken a series of actions pertaining to the regulation of GHGs that, although for the most part distinct from one another, establish the overall framework for today's proposed action on the Iowa SIP. Four of these actions include, as they are commonly called, the “Endangerment Finding” and “Cause or Contribute Finding,” which EPA issued in a single final action, 3 the “Johnson Memo Reconsideration,”  4 the “Light-Duty Vehicle Rule,”  5 and the “Tailoring Rule.” Taken together and in conjunction with the CAA, these actions established regulatory requirements for GHGs emitted from new motor vehicles and new motor vehicle engines; determined that such regulations, when they took effect on January 2, 2011, subjected GHGs emitted from stationary sources to PSD requirements; and limited the applicability of PSD requirements to GHG sources on a phased-in basis. EPA took this last action in the Tailoring Rule, which, more specifically, established appropriate GHG emission thresholds for determining the applicability of PSD requirements to GHG-emitting sources.

PSD is implemented through the SIP system. In December 2010, EPA promulgated several rules to implement the new GHG PSD SIP program. Recognizing that some states had approved SIP PSD programs that did not apply PSD to GHGs, EPA issued a SIP Call and, for some of these states, a Federal Implementation Plan (FIP). 6 Recognizing that other states had approved SIP PSD programs that do apply PSD to GHGs, but that do so for sources that emit as little as 100 or 250 tpy of GHG, and that do not limit PSD applicability to GHGs to the higher thresholds in the Tailoring Rule, EPA issued the PSD SIP Narrowing Rule. Under that rule, EPA withdrew its approval of the affected SIPs to the extent those SIPs covered GHG-emitting sources below the Tailoring Rule thresholds. EPA based its action primarily on the “error correction” provisions of CAA section 110(k)(6).

On July 20, 2010, Iowa provided a letter to EPA, in accordance with a request to all states from EPA in the Tailoring Rule, with confirmation that the State of Iowa has the authority to regulate GHGs in its PSD program. The letter also confirmed Iowa's intent to amend its air quality rules for the PSD program for GHGs to match the thresholds set in the Tailoring Rule. See the docket for this proposed rulemaking for a copy of Iowa's letter.

In the PSD SIP Narrowing Rule, published on December 30, 2010, EPA withdrew its approval of Iowa's SIP (among other SIPs) to the extent that the SIP applies PSD permitting requirements to GHG emissions from sources emitting at levels below those set in the Tailoring Rule. 7 As a result, Iowa's current approved SIP provides the State with authority to regulate GHGs, but only at and above the Tailoring Rule thresholds; and requires new and modified sources to receive a Federal PSD permit based on GHG emissions only if they emit or have potential to emit at or above the Tailoring Rule thresholds.

The basis for this proposed SIP revision is that limiting PSD applicability to GHG sources to the higher thresholds in the Tailoring Rule is consistent with the SIP provisions that require assurances of adequate resources, and thereby addresses the flaw in the SIP that led to the PSD SIP Narrowing Rule. Specifically, CAA section 110(a)(2)(E) includes as a requirement for SIP approval that states provide “necessary assurances that the State * * * will have adequate personnel [and] funding * * * to carry out such [SIP].” In the Tailoring Rule, EPA established higher thresholds for PSD applicability to GHG-emitting sources on grounds that the states generally did not have adequate resources to apply PSD to GHG-emitting sources below the Tailoring Rule thresholds, 8 and no state, including Iowa, asserted that it did have adequate resources to do so. 9 In the PSD SIP Narrowing Rule, EPA found that the affected states, including Iowa, had a flaw in their SIP at the time they submitted their PSD programs, which was that the applicability of the PSD programs was potentially broader than the resources available to them under their SIP. 10 Accordingly, for each affected state, including Iowa, EPA concluded that EPA's action in approving the SIP was in error, under CAA section 110(k)(6), and EPA rescinded its approval to the extent the PSD program applies to GHG-emitting sources below the Tailoring Rule thresholds. 11 EPA recommended that states adopt a SIP revision to incorporate the Tailoring Rule thresholds, thereby (i) assuring that under state law, only sources at or above the Tailoring Rule thresholds would be subject to PSD; and (ii) avoiding confusion under the Federally approved SIP by clarifying that the SIP applies to only sources at or above the Tailoring Rule thresholds. 12

On December 22, 2010, IDNR submitted a revision of its regulations to EPA for processing and approval into the SIP. This SIP revision puts in place the GHG emission thresholds for PSD applicability set forth in EPA's Tailoring Rule. EPA's approval of Iowa's SIP revision will incorporate the revisions of the Iowa regulations into the Federally-approved SIP. Doing so will clarify the applicable thresholds in the Iowa SIP.

The State of Iowa's December 22, 2010, proposed SIP revision establishes thresholds for determining which stationary sources and modification projects become subject to permitting requirements for GHG emissions under Iowa's PSD program. Specifically, Iowa's December 22, 2010, proposed SIP revision includes changes—which are already effective—to Iowa's Administrative Code, revising the subrule 33.3(1) definition of “regulated New Source Review (NSR) pollutant” to specifically define the term “subject to regulation” for the PSD program, and to define “greenhouse gases (GHGs)” and “tpy CO 2 equivalent emissions (CO 2 e).” Additionally, the amendments to subrule 33.3(1) specify the methodology for calculating an emissions increase for GHGs, the applicable thresholds for GHG emissions subject to PSD, and the schedule for when the applicability thresholds take effect.

Iowa is currently a SIP-approved State for the PSD program, and has previously incorporated EPA's 2002 NSR reform revisions for PSD into its SIP. See 72 FR 27056 (May 14, 2007). The changes to Iowa's PSD program regulations are substantively the same as the Federal provisions amended in EPA's Tailoring Rule. As part of its review of Iowa's submittal, EPA performed a line-by-line review of Iowa's proposed revision and has preliminarily determined that it is consistent with the Tailoring Rule.

Pursuant to section 110 of the CAA, EPA is proposing to approve Iowa's December 22, 2010 revisions to the Iowa SIP, relating to PSD requirements for GHG-emitting sources. Specifically, Iowa's December 22, 2010, proposed SIP revision establishes appropriate emissions thresholds for determining PSD applicability to new and modified GHG-emitting sources in accordance with EPA's Tailoring Rule. EPA has made the preliminary determination that this SIP revision is approvable because it is in accordance with the CAA and EPA regulations regarding PSD permitting for GHGs.

If EPA does approve Iowa's changes to its air quality regulations to incorporate appropriate thresholds for GHG permitting applicability into Iowa's SIP, then section 52.822(b) of 40 CFR part 52, as included in EPA's PSD SIP Narrowing Rule—which codifies EPA's limiting its approval of Iowa's PSD SIP to not cover the applicability of PSD to GHG-emitting sources below the Tailoring Rule thresholds—is no longer necessary. In today's proposed action, EPA is also proposing to amend section 52.822(b) of 40 CFR part 52 to remove this unnecessary regulatory language.

Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable Federal regulations. 42 U.S.C. 7410(k), 7661a(d); 40 CFR 52.02(a); 40 CFR 70.1(c). Thus, in reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the CAA. Accordingly, this proposed action merely approves the State's law as meeting Federal requirements and does not impose additional requirements beyond those imposed by the State's law. For that reason, the proposed approvals of Iowa's revision to its SIP relating to GHGs:

• Are not “significant regulatory actions” under the terms of Executive Order 12866 (58 FR 51735, October 4, 1993) and are therefore not subject to review under Executive Orders 12866 and 13563 (76 FR 3821, January 21, 2011);

• Do not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq. );

• Are certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. );

• Do not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4);

• Do not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);

• Are not economically significant regulatory actions based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);

• Are not significant regulatory actions subject to Executive Order 13211 (66 FR 28355, May 22, 2001);

• Are not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the CAA; and

• Do not provide EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629, February 16, 1994).

In addition, this proposed rule does not have Tribal implications as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), because the SIP program is not approved to apply in Indian country located in the State, and EPA notes that it will not impose substantial direct costs on Tribal governments or preempt Tribal law.

Throughout this document, wherever “Agency,” “we,” “us,” or “our” is used, we mean the EPA.

EPA is proposing to approve the State of New Jersey's (New Jersey's) July 28, 2009 State Implementation Plan (SIP) revision addressing regional haze under the Clean Air Act (CAA or the Act) sections 301(a) and 110(k)(3). New Jersey's Regional Haze SIP revision implements all measures determined by the State to be reasonable and addresses New Jersey's Reasonable Progress Goals (RPG), as required by the Act. RPGs are interim visibility goals towards meeting the national visibility goal. New Jersey's Regional Haze SIP revision also implements Best Available Retrofit Control Technology (BART) on eligible facilities subject to the regional haze program.

Consistent with EPA guidance and regulations, (see 70 FR 39104, 39106 (July 6, 2005)), many states relied on EPA's Clean Air Interstate Rule (CAIR) to satisfy key elements of Regional Haze SIPs. The D.C. Circuit, however, found CAIR to be inconsistent with the requirements of the Act and remanded the rule to the Agency. North Carolina v. EPA, 531 F.3d 896, 929-30 (D.C. Cir. 2008); modified on rehearing, North Carolina v. EPA, 550 F.3d 1176, 1178 (D.C. Cir. 2008). In response to the remand of the CAIR rule, on July 6, 2011 EPA finalized the Cross-State Air Pollution Rule (CSAPR); a rule intended to reduce the interstate transport of fine particulate matter and ozone, located at http://www.epa.gov/crossstaterule.

Although New Jersey was subject to CAIR, its Regional Haze SIP did not rely on CAIR to meet the requirements for BART or for attaining the in-state emissions reductions necessary to ensure reasonable progress, instead, New Jersey evaluated controls for its potential BART sources. New Jersey made BART determinations for its BART-eligible sources, including Electric Generating Units (EGUs) that might have been controlled under CAIR. Similarly, its long-term strategy for attaining the RPG at the Brigantine Wilderness Area of the Edwin B. Forsythe National Wildlife Refuge (Brigantine) includes controls on EGUs in New Jersey. Therefore, the remand of CAIR has no negative effect on the amount of emission reductions New Jersey will achieve from its Regional Haze SIP revision. This action and the accompanying Technical Support Document (TSD) explain the basis for EPA's proposed approval of New Jersey's Regional Haze SIP revision proposal.

New Jersey has met all of its obligations with respect to the Regional Haze SIP requirements, including the recommendation 1 of the Mid-Atlantic/Northeast Visibility Union (MANE-VU) regional planning organization. New Jersey should not be required to substitute for any emissions shortfalls in other states' plans, especially if other states expected that EPA's CAIR program would be available as part of their RPGs or their BART controls. Therefore, EPA proposes to approve New Jersey's Regional Haze SIP revision, since it adopts all the measures determined to be reasonable by New Jersey, as evaluated by the states working together through MANE-VU.

Regional haze is visibility impairment that is produced by many sources and activities which are located across a broad geographic area and emit fine particles and their precursors ( e.g., sulfur dioxide, nitrogen oxides, and in some cases, ammonia and volatile organic compounds). Fine particle precursors react in the atmosphere to form fine particulate matter (PM 2.5 ) ( e.g., sulfates, nitrates, organic carbon, elemental carbon, and soil dust), which also impairs visibility by scattering and absorbing light. Visibility impairment reduces the clarity, color, and visible distance that one can see. Visibility impairment caused by air pollution occurs virtually all the time at most national parks and wilderness areas, many of which are also referred to as Federal Class I areas.

In the 1977 Amendments to the CAA, Congress initiated a program for protecting visibility in the nation's national parks and wilderness areas. Section 169A(a)(1) of the Act establishes as a national goal the “prevention of any future, and the remedying of any existing, impairment of visibility in mandatory Class I Federal areas which impairment results from manmade air pollution.” In 1990 Congress added section 169B to the Act to address regional haze issues. On July 1, 1999 EPA promulgated the Regional Haze Rule (RHR) (64 FR 35713). The requirement to submit a Regional Haze SIP applies to New Jersey and all 50 states, the District of Columbia and the Virgin Islands. 40 CFR 51.308(b) of the RHR required states to submit the first implementation plan addressing regional haze visibility impairment no later than December 17, 2007.

On January 15, 2009, EPA issued a finding that New Jersey failed to submit the Regional Haze SIP. New Jersey subsequently submitted its Regional Haze SIP on July 28, 2009. EPA's January 15, 2009 finding established a two-year deadline of January 15, 2011 for EPA to either approve New Jersey's Regional Haze SIP, or adopt a Federal implementation plan. This proposed action is intended to address the January 15, 2009 finding.

Because the pollutants that lead to regional haze can originate from sources located across broad geographic areas, EPA has encouraged the states and tribes across the United States to address visibility impairment from a regional perspective. Five regional planning organizations (RPOs) were developed to address regional haze and related issues. New Jersey participates in the MANE-VU RPO, which also includes the state and tribal governments of Connecticut, Delaware, District of Columbia, Maine, Maryland, Massachusetts, New Hampshire, New York, Pennsylvania, Rhode Island, Vermont, the Penobscot Nation, and the St. Regis Mohawk Tribe.

The following is a basic explanation of the RHR. See 40 CFR 51.308 for a complete listing of the regulations under which this SIP revision was evaluated.

Regional haze SIPs must assure reasonable progress towards the national goal of achieving natural visibility conditions in Class I areas. Section 169A of the Act and EPA's implementing regulations require states to establish long-term strategies for making reasonable progress toward meeting this goal. Implementation plans must also give specific attention to certain stationary sources that were in existence on August 7, 1977, but were not in operation before August 7, 1962, and require these sources, where appropriate, to install BART controls for the purpose of eliminating or reducing visibility impairment. The specific regional haze SIP requirements are discussed in further detail below.

The RHR establishes the deciview (dv) as the principal metric for measuring visibility. This visibility metric expresses uniform changes in haziness in terms of common increments across the entire range of visibility conditions, from pristine to extremely hazy conditions. Visibility is determined by measuring the visual range, which is the greatest distance, in kilometers or miles, at which a dark object can be viewed against the sky. The dv is calculated from visibility measurements. Each dv change is an equal incremental change in visibility perceived by the human eye. For this reason, EPA believes it is a useful measure for tracking progress in improving visibility. Most people can detect a change in visibility at one dv. 2

The dv is used in expressing RPGs (which are interim visibility goals towards meeting the national visibility goal), defining baseline, current, and natural conditions, and tracking changes in visibility. The regional haze SIPs must contain measures that ensure “reasonable progress” toward the national goal of preventing and remedying visibility impairment in Class I areas caused by manmade air pollution by reducing anthropogenic emissions that cause regional haze. The national goal is a return to natural conditions, i.e., manmade sources of air pollution would no longer impair visibility in Class I areas.

To track changes in visibility over time at each of the 156 Class I areas covered by the visibility program (40 CFR 81.401-437) and as part of the process for determining reasonable progress, the RHR requires states to calculate the degree of existing visibility impairment at each Class I area at the time of each regional haze SIP submittal and periodically review progress every five years midway through each 10-year planning period. To do this, the RHR requires states to determine the degree of impairment (in dv) for the average of the 20 percent least impaired (“best”) and 20 percent most impaired (“worst”) visibility days over a specified time period at each of their Class I areas. In addition, the RHR requires states to develop an estimate of natural visibility conditions for the purposes of comparing progress toward the national goal. Natural visibility is determined by estimating the natural concentrations of pollutants that cause visibility impairment and then calculating total light extinction based on those estimates. EPA has provided guidance to states regarding how to calculate baseline, natural and current visibility conditions. 3

For the initial regional haze SIPs that were due by December 17, 2007, baseline visibility conditions were used as the starting points for assessing current visibility impairment. Baseline visibility conditions represent the degree of impairment for the 20 percent least impaired days and 20 percent most impaired days at the time the regional haze program was established. Using monitoring data for 2000 through 2004, the RHR required states to calculate the average degree of visibility impairment for each Class I area, based on the average of annual values over the five year period. The comparison of initial baseline visibility conditions to natural visibility conditions indicates the amount of improvement necessary to attain natural visibility, while the future comparison of baseline conditions to the then current conditions will indicate the amount of progress made. In general, the 2000-2004 baseline period is considered the time from which improvement in visibility is measured.

The submission of a series of regional haze SIPs from the states that establish RPGs for Class I areas for each (approximately) 10-year planning period is the vehicle for ensuring continuing progress towards achieving the natural visibility goal. The RHR does not mandate specific milestones or rates of progress, but instead calls for states to establish goals that provide for “reasonable progress” toward achieving natural ( i.e., “background”) visibility conditions. In setting RPGs, states must provide for an improvement in visibility for the most impaired days over the (approximately) 10-year period of the SIP, and ensure no degradation in visibility for the least impaired days over the same period.

States have significant discretion in establishing RPGs, but are required to consider the following factors established in the Act and in EPA's RHR: (1) The costs of compliance; (2) the time necessary for compliance; (3) the energy and non-air quality environmental impacts of compliance; and (4) the remaining useful life of any potentially affected sources. States must demonstrate in their SIPs how these factors are considered when selecting the RPGs for the best and worst days for each applicable Class I area. (See 40 CFR 51.308(d)(1)(i)(A)). States have considerable flexibility in how they take these factors into consideration, as noted in our Reasonable Progress guidance. 4 In setting the RPGs, states must also consider the rate of progress needed to reach natural visibility conditions by 2064 (referred to as the “uniform rate of progress” or the “glidepath”) and the emission reduction measures needed to achieve that rate of progress over the 10-year period of the SIP. In setting RPGs, each state with one or more Class I areas (“Class I State”) must also consult with potentially “contributing states,” i.e., other nearby states with emission sources that may be affecting visibility impairment at the Class I State's areas. (40 CFR 51.308(d)(1)(iv)).

Section 169A of the Act directs states to evaluate the use of retrofit controls at certain larger, often uncontrolled, older stationary sources in order to address visibility impacts from these sources. Specifically, the Act requires states to revise their SIPs to contain such measures as may be necessary to make reasonable progress towards the natural visibility goal, including a requirement that certain categories of existing stationary sources  5 built between 1962 and 1977 procure, install, and operate the “Best Available Retrofit Control Technology (BART)” as determined by the state. (CAA 169A(b)(2)(A)). States are directed to conduct BART determinations for such sources that may be anticipated to cause or contribute to any visibility impairment in a Class I area. Rather than requiring source-specific BART controls, states also have the flexibility to adopt an emissions trading program or other alternative program as long as the alternative provides equal or greater reasonable progress towards improving visibility than BART.

On July 6, 2005, EPA published the Guidelines for BART Determinations Under the Regional Haze Rule at Appendix Y to 40 CFR part 51 (hereinafter referred to as the “BART Guidelines”) to assist states in determining which of their sources should be subject to the BART requirements and in determining appropriate emission limits for each applicable source. The BART Guidelines require states to use the approach set forth in the BART Guidelines in making a BART applicability determination for a fossil fuel-fired electric generating plant with a total generating capacity in excess of 750 megawatts. The BART Guidelines encourage, but do not require states to follow the BART Guidelines in making BART determinations for other types of sources.

The BART Guidelines recommend that states address all visibility impairing pollutants emitted by a source in the BART determination process. The most significant visibility impairing pollutants are sulfur dioxide (SO 2 ), nitrogen oxides (NO X ), and PM. The BART Guidelines direct states to use their best judgment in determining whether volatile organic compounds (VOCs), or ammonia (NH 3 ) and ammonia compounds impair visibility in Class I areas.

In their SIPs, states must identify potential BART sources, described as “BART-eligible sources” in the RHR, and document their BART control determination analyses. In making BART determinations, section 169A(g)(2) of the CAA requires that states consider the following factors: (1) The costs of compliance, (2) the energy and non-air quality environmental impacts of compliance, (3) any existing pollution control technology in use at the source, (4) the remaining useful life of the source, and (5) the degree of improvement in visibility which may reasonably be anticipated to result from the use of such technology. States are free to determine the weight and significance to be assigned to each factor. (70 FR 39170, (July 6, 2005)).

A regional haze SIP must include source-specific BART emission limits and compliance schedules for each source subject to BART. Once a state has made its BART determination, the BART controls must be installed and in operation as expeditiously as practicable, but no later than five years after the date of EPA approval of the regional haze SIP, as required in the Act (section 169A(g)(4)) and in the RHR (40 CFR 51.308(e)(1)(iv)). In addition to what is required by the RHR, general SIP requirements mandate that the SIP must also include all regulatory requirements related to monitoring, recordkeeping, and reporting for the BART controls on the source. States have the flexibility to choose the type of control measures they will use to meet the requirements of BART.

Consistent with the requirement in section 169A(b) of the Act that states include in their regional haze SIP a 10 to 15 year strategy for making reasonable progress, section 51.308(d)(3) of the RHR requires that states include a Long-Term Strategy (LTS) in their SIPs. The LTS is the compilation of all control measures a state will use to meet any applicable RPGs. The LTS must include “enforceable emissions limitations, compliance schedules, and other measures as necessary to achieve the reasonable progress goals” for all Class I areas within, or affected by emissions from, the state. (40 CFR 51.308(d)(3)).

When a state's emissions are reasonably anticipated to cause or contribute to visibility impairment in a Class I area located in another state, the RHR requires the impacted state to coordinate with the contributing states in order to develop coordinated emissions management strategies. (40 CFR 51.308(d)(3)(i)). In such cases, the contributing state must demonstrate that it has included in its SIP all measures necessary to obtain its share of the emission reductions needed to meet the RPGs for the Class I area. The RPOs have provided forums for significant interstate consultation, but additional consultations between states may be required to sufficiently address interstate visibility issues. This is especially true where two states belong to different RPOs.

States should consider all types of anthropogenic sources of visibility impairment in developing their LTS, including stationary, minor, mobile, and area sources. At a minimum, states must describe how each of the seven factors listed below is taken into account in developing their LTS: (1) Emission reductions due to ongoing air pollution control programs, including measures to address Reasonably Attributable Visibility Impairment (RAVI); (2) measures to mitigate the impacts of construction activities; (3) emissions limitations and schedules for compliance to achieve the RPG; (4) source retirement and replacement schedules; (5) smoke management techniques for agricultural and forestry management purposes including plans as currently exist within the state for these purposes; (6) enforceability of emissions limitations and control measures; (7) the anticipated net effect on visibility due to projected changes in point, area, and mobile source emissions over the period addressed by the LTS. (40 CFR 51.308(d)(3)(v)).

As part of the RHR, EPA revised 40 CFR 51.306(c) regarding the LTS for RAVI to require that the RAVI plan must provide for a periodic review and SIP revision not less frequently than every three years until the date of submission of the state's first plan addressing regional haze visibility impairment, which was due December 17, 2007, in accordance with 51.308(b) and (c). On or before this date, the state must revise its plan to provide for review and revision of a coordinated LTS for addressing reasonably attributable and regional haze visibility impairment, and the state must submit the first such coordinated LTS with its first regional haze SIP revision. Future coordinated LTS's, and periodic progress reports evaluating progress towards RPGs, must be submitted consistent with the schedule for SIP submission and periodic progress reports set forth in 40 CFR 51.308(f) and 51.308(g), respectively. The periodic reviews of a state's LTS must report on both regional haze and RAVI impairment and must be submitted to EPA as a SIP revision, in accordance with 51.308.

Section 51.308(d)(4) of the RHR includes the requirement for a monitoring strategy for measuring, characterizing, and reporting of regional haze visibility impairment that is representative of all mandatory Class I Federal areas within the state. The strategy must be coordinated with the monitoring strategy required in section 51.305 for RAVI. Compliance with this requirement may be met through participation in the Interagency Monitoring of Protected Visual Environment (IMPROVE) network. The monitoring strategy is due with the first regional haze SIP, and it must be reviewed every five years.

The RHR requires that states consult with FLMs before adopting and submitting their SIPs. (40 CFR 51.308(i)). States must provide FLMs an opportunity for consultation, in person and at least 60 days prior to holding any public hearing on the SIP. This consultation must include the opportunity for the FLMs to discuss their assessment of impairment of visibility in any Class I area and to offer recommendations on the development of the RPGs and on the development and implementation of strategies to address visibility impairment. Further, a state must include in its SIP a description of how it addressed any comments provided by the FLMs. Finally, a SIP must provide procedures for continuing consultation between the state and FLMs regarding the state's visibility protection program, including development and review of SIP revisions, five-year progress reports, and the implementation of other programs having the potential to contribute to impairment of visibility in Class I areas.

On July 28, 2009 the State of New Jersey submitted a revision to the New Jersey SIP to address regional haze in the State's Class I Brigantine Wilderness Area as required by EPA's RHR.

New Jersey contains a Class I area, the Brigantine National Wildlife Refuge, where visual impairment that the FLMs have identified as an important value that must be addressed in regional haze plans. Emissions from New Jersey also influence the amount of visibility impairment of Class I areas located in Maine, New Hampshire, and Vermont. New Jersey's Regional Haze SIP will help to improve visibility in these states. Thus, New Jersey is responsible for developing a Regional Haze SIP that addresses its own and other Class I areas, that describes its long-term emission strategy, its role in the consultation processes, and how its SIP meets the other requirements in EPA's regional haze regulations. Because New Jersey is home to a Class I area, New Jersey has the additional responsibility to address the following Regional Haze SIP elements: (a) Calculation of baseline and natural visibility conditions, (b) establishment of RPGs, (c) monitoring requirements, and (d) RAVI requirements as required by EPA's RHR.

As described above, the Long Term Strategy (LTS) is a compilation of state-specific control measures relied on by the state to obtain its share of emission reductions to support the RPGs for the Brigantine National Wildlife Refuge. New Jersey's LTS for the first implementation period, addresses the emissions reductions from Federal, state, and local controls that take effect in the State from the baseline period starting in 2002 until 2018. New Jersey participated in the MANE-VU RPO regional strategy development process. As a participant, New Jersey supported a regional approach towards deciding which control measures to pursue for regional haze, which was based on technical analyses documented in the following reports: (a) Contributions to Regional Haze in the Northeast and Mid-Atlantic United States  6 ; (b) Assessment of Reasonable Progress for Regional Haze in MANE-VU Class I Areas  7 ; (c) Five-Factor Analysis of BART-Eligible Sources: Survey of Options for Conducting BART Determinations  8 ; and (d) Assessment of Control Technology Options for BART-Eligible Sources: Steam Electric Boilers, Industrial Boilers, Cement Plants and Paper, and Pulp Facilities. 9

The LTS was developed by New Jersey, in coordination with MANE-VU, identifying the emissions units within New Jersey that likely have the largest impacts currently on visibility at the Brigantine National Wildlife Refuge Class I area, estimating emissions reductions for 2018, based on all controls required under Federal and state regulations for the 2002-2018 period (including BART), and comparing projected visibility improvement with the uniform rate of progress for the Brigantine National Wildlife Refuge Class I area.

New Jersey's LTS includes measures needed to achieve its share of emissions reductions and includes enforceable emissions limitations, compliance schedules, and other measures necessary to achieve the reasonable progress goals established for the Brigantine National Wildlife Refuge Class I area.

The emissions inventory used in the regional haze technical analyses was developed by the Mid-Atlantic Regional Air Management Association for MANE-VU with assistance from New Jersey. The 2018 emissions inventory was developed by projecting 2002 emissions, and assuming emissions growth due to projected increases in economic activity as well as applying reductions expected from Federal and state regulations affecting the emissions of VOC and the visibility-impairing pollutants NO X , PM 10 , PM 2.5 , and SO 2 . The BART guidelines direct states to exercise judgment in deciding whether VOC and NH 3 impair visibility in their Class I area(s). As discussed further below, MANE-VU demonstrated that anthropogenic emissions of sulfates are the major contributor to PM 2.5 mass and visibility impairment at Class I areas in the Northeast and Mid-Atlantic region. It was also determined that the total ammonia emissions in the MANE-VU region are extremely small. In addition, since VOC emissions are aggressively controlled through the New Jersey ozone SIP, the pollutants New Jersey considered under BART are NO X , PM 10 , PM 2.5 , and SO 2 .

In developing the 2018 reasonable progress goal, and the 2018 projection inventory, New Jersey relied primarily upon the information and analyses developed by MANE-VU to meet the requirements of EPA's regional haze rules. Based on information from the contribution assessment and additional emission inventory analyses, MANE-VU identified the following source categories for further examination for reasonable measures:

• Coal and oil-fired EGUs;

• Point and area source industrial, commercial and institutional (ICI) boilers;

• Cement and Lime Kilns;

• Heating oil; and

• Residential wood combustion.

MANE-VU, for its member states and tribes, analyzed these potential source categories based on the four factors listed in section 169A(g)(1) of the Act and in Section III.C of this action. New Jersey and the MANE-VU states agreed with the analysis that determined that reasonable controls existed for coal and oil-fired EGUs, industrial, commercial and institutional (ICI) boilers and that reducing the sulfur content of heating oil was a reasonable strategy. Additionally, MANE-VU determined that due to the lack of specific data for the wide range of residential wood boilers, it was not reasonable to set particular reductions amounts for emissions from residential wood boilers.

New Jersey adopted controls on EGUs and boilers. While New Jersey's plan does not include emission reduction regulations for residential wood boilers, New Jersey will consider state specific wood burning provisions, which was the strategy agreed to by the MANE-VU states. ICI boiler controls were implemented as an Ozone Transport Commission (OTC) regional measure for VOC and NO X controls that have benefits for reducing regional haze. New Jersey does not have any cement or lime kilns. More details on the adopted controls are described later in this section.

After identifying potential control measures and performing the four factor analysis, MANE-VU performed initial modeling that showed the visibility impacts from the implementation of the measures. The initial modeling results showed that the projected 2018 visibility on the 20% worst days at the Brigantine Wilderness area was at least as good at the uniform rate of progress. Details of MANE-VU's initial modeling were later documented in the MANE-VU Modeling for RPGs report. 10 Based on the modeling results and other analysis performed by MANE-VU, the MANE-VU states developed “Asks,” which are “emission management” strategies. These strategies served as the basis for the consultation with the other states.

As part of the modeling needed to assess the emission reductions needed to meet the RPG, MANE-VU developed emissions inventories for four inventory source classifications: (1) Stationary point sources, (2) area sources, (3) off-road mobile sources, and (4) on-road mobile sources. The New York State Department of Environmental Conservation also developed an inventory of biogenic emissions for the entire MANE-VU region. Stationary point emission sources are those sources that emit greater than a specified tonnage per year, depending on the pollutant, with data provided at the facility level. Area source emissions are from stationary sources whose individual emissions are relatively small, but due to the large number of these sources, the collective emissions from the source category could be significant. Off-road mobile source emissions are from equipment that can move but do not use the roadways. On-road mobile source emissions are from automobiles, trucks, and motorcycles that use the roadway system. The emissions from these sources are estimated by vehicle type and road type. Biogenic sources emissions are from natural sources like trees, crops, grasses, and natural decay of plants. Stationary point sources emission data is tracked at the facility level. For all other source types emissions are summed on the county level.

There are many Federal and state control programs being implemented that MANE-VU and New Jersey anticipate will reduce emissions between the baseline period and 2018. Emission reductions from these control programs were projected to achieve substantial visibility improvement by 2018 in the Brigantine National Wildlife Refuge. To assess emissions reductions from ongoing air pollution control programs, BART, and reasonable progress goals; MANE-VU developed 2018 emissions projections called Best and Final. The emissions inventory provided in the Best and Final 2018 projections is based on adopted and enforceable requirements, as well as Federal programs, such as Federal motor vehicle control programs and maximum achievable control technologies (MACT).

These measures are included in the MANE-VU modeling used to determine the amount of progress in the improvement of visibility in Class I areas. MANE-VU States agreed to implement several measures at the state level. These measures are: a timely implementation of BART requirements, 90 percent or more reduction in sulfur dioxide at 167 stacks identified by MANE-VU (or comparable alternative measures), and low sulfur fuel oil regulations (with limits specified for each state).

Controls from various Federal MACT regulations were also utilized in the development of the 2018 emission inventory projections. These MACTs include the industrial boiler/process heater MACT, the combustion turbine and reciprocating internal combustion engines MACTs, and the VOC 2-, 4-, 7-, and 10-year MACT standards.

EPA's industrial boiler/process heater MACT was vacated on June 8, 2007. 11 The MANE-VU States, including the State of New Jersey, included these controls in modeling for their regional haze SIPs. EPA accepts these emission reductions in the modeling for the following reasons. EPA expects to propose a new Industrial Boiler MACT rule to address the vacatur in October 2011 and issue a final rule in April 2012, giving New Jersey time to assure the required controls are in place prior to the end of the first planning period in 2018. In the absence of an established MACT for boilers and process heaters, the statutory language in section 112(j) of the Act specifies a schedule for the incorporation of enforceable MACT-equivalent limits into the Title V operating permits of affected sources. Should circumstances warrant the need to enact section 112(j) of the Act for industrial boilers, compliance with case-by-case MACT limits for industrial boilers would occur no later than January 2015, which is well before the 2018 RPGs for regional haze. The RHR also requires that any resulting differences between emissions projections and actual emissions reductions that may occur will be addressed during the five-year review prior to the next regional haze SIP. In addition, the expected reductions due to the original, vacated Industrial Boiler MACT rule were relatively small compared to the State's projected total SO 2 emissions in 2018 ( i.e. , one to two percent of the projected 2018 SO X , PM 2.5 and coarse particulate matter (PM 10 ) inventory), and are not likely to affect any of New Jersey's modeling conclusions. Thus, even if there is a need to address discrepancies between the projected emissions reductions from the now vacated Industrial Boiler MACT and actual reductions achieved by the replacement MACT, we do not expect that this would be significant enough to affect the adequacy of the New Jersey Regional Haze SIP.

The MANE-VU States' goal was to reduce SO 2 emissions from the largest emission units in the eastern United States by 90 percent or if it was infeasible to achieve that level of reduction, an alternative had to be identified that could include other point sources. In New Jersey, there are four of the 167 units identified by MANE-VU as having the highest SO 2 emissions in the eastern United States. New Jersey has reduced emissions from these four units at each facility by more than 90 percent, thus meeting and exceeding this portion of the reasonable progress goals.

New Jersey is fulfilling its goal of achieving the emission reductions needed to meet its contribution to the reasonable progress goals projected by the MANE-VU modeling with the following measures: BART controls on all BART-eligible facilities, 90 percent or more control at the four New Jersey units from the 167 EGU units identified by MANE-VU, reductions due to New Jersey's Mercury rule, adoption of performance standards at all coal-fired boilers in New Jersey, adoption of the lower limits on fuel oil and the measures listed in Table 1 developed for other programs that support regional haze emission reduction goals.

Federal measures and other control programs relied upon by New Jersey include EPA's NO X SIP Call; measures adopted for New Jersey's 1-hour and 8-hour ozone attainment demonstration SIPs, Federal 2007 heavy duty diesel engine standards for on-road trucks and busses; Federal Tier 2 tailpipe controls for on-road vehicles; Federal large spark ignition and recreational vehicle controls; and EPA's non-road diesel rules. New Jersey also relied on emission reductions from various Federal MACTs that were vacated, but, as described above, EPA expects these rules to be adopted by 2018, and should not negatively affect New Jersey's fulfillment of its commitment to meet the RPGs. In addition, the RHR requires that any resulting differences between emissions projections and actual emissions reductions that may occur will be addressed during the five-year review prior to the next 2018 Regional Haze SIP.

Tables 2 and 3 are summaries of the 2002 baseline and 2018 estimated emissions inventories for New Jersey. The 2018 estimated emissions include emission growth as well as emission reductions due to ongoing emission control strategies to meet RPGs and BART.

These emissions were used in the modeling that demonstrated that the Brigantine Wildlife Refuge Class I area would meet the Reasonable Progress Goal set for 2018. New Jersey adopted the emission reduction programs that are forecast to improve visibility to meet the goal for 2018, thus New Jersey is projected to achieve its goal for the first implementation period.

MANE-VU performed modeling for the regional haze LTS for the states, the District of Columbia and tribal nations located in Mid-Atlantic and Northeast portions of the United States. The modeling analysis is a complex technical evaluation that began with selection of the modeling system. MANE-VU used a modeling system described below and discussed in more detail in the TSD.

The EPA's Models-3/Community Multiscale Air Quality (CMAQ) version 4.5.1 is a photochemical grid model capable of addressing ozone, PM, visibility and acid deposition on a regional scale. CMAQ modeling of regional haze in the MANE-VU region for 2002 and 2018 was carried out on a grid of 12x12 kilometer (km) cells that covers the 11 MANE-VU States and the District of Columbia and states adjacent to them. This grid is nested within a larger national CMAQ modeling grid of 36x36 km grid cells that covers the continental United States, portions of Canada and Mexico, and portions of the Atlantic and Pacific Oceans along the east and west coasts. Selection of a representative period of meteorology is crucial for evaluating baseline air quality conditions and projecting future changes in air quality due to changes in emissions of visibility-impairing pollutants. MANE-VU conducted an in-depth analysis that resulted in the selection of the entire year of 2002 (January 1-December 31) as the best period of meteorology available for conducting the CMAQ modeling. The MANE-VU States' modeling was developed consistent with EPA guidance. 12

MANE-VU examined the model performance of the regional modeling for the areas of interest before determining whether the CMAQ model results were suitable for use in the regional haze assessment of the LTS and for use in the modeling assessment. The modeling assessment predicts future levels of emissions and visibility impairment used to support the LTS and to compare predicted, modeled visibility levels with those on the uniform rate of progress. In keeping with the objective of the CMAQ modeling platform, the air quality model performance was evaluated using graphical and statistical assessments based on measured ozone, fine particles, and acid deposition from various monitoring networks and databases for the 2002 base year. MANE-VU used a diverse set of statistical parameters from the EPA's Modeling Guidance to stress and examine the model and modeling inputs. Once MANE-VU determined the model performance to be acceptable, MANE-VU used the model to assess the 2018 RPGs using the current and future year air quality modeling predictions, and compared the RPGs to the uniform rate of progress.

In accordance with 40 CFR 51.308(d)(3), New Jersey provided the supporting documentation for all required analyses used to determine the State's LTS. The technical analyses and modeling used to develop the glide path and to support the LTS are consistent with EPA's RHR, and interim and final EPA Modeling Guidance. EPA accepts the MANE-VU technical modeling to support the LTS and determine visibility improvement for the uniform rate of progress because the modeling system was chosen and used in accordance with EPA Modeling Guidance. EPA agrees with the MANE-VU model performance procedures and results, and that the CMAQ is an appropriate tool for the regional haze assessments for the New Jersey LTS and Regional Haze SIP.

An important step toward identifying reasonable progress measures is to identify the key pollutants contributing to visibility impairment at each Class I area. To understand the relative benefit of further reducing emissions from different pollutants, MANE-VU developed emission sensitivity model runs using CMAQ to evaluate visibility and air quality impacts from various groups of emissions and pollutant scenarios in the Class I areas on the 20 percent worst visibility days.

MANE-VU's contribution assessment demonstrated that sulfate is the major contributor to PM 2.5 mass and visibility impairment at Class I areas in the Northeast and Mid-Atlantic Region. Sulfate particles commonly account for more than 50 percent of particle-related light extinction at northeastern Class I areas on the clearest days and for as much as or more than 80 percent on the haziest days. In particular, for the Brigantine National Wildlife Refuge Class I area, on the 20 percent worst visibility days in 2000-2004, sulfate accounted for 66 percent of the particles responsible for light extinction. After sulfate, organic carbon (OC) consistently accounts for the next largest fraction of light extinction due to particles. Organic carbon accounted for 13 percent of light extinction on the 20 percent worst visibility days for Brigantine, followed by nitrate that accounts for 9 percent of light extinction.

The emissions sensitivity analyses conducted by MANE-VU predict that reductions in SO 2 emissions from EGU and non-EGU industrial point sources will result in the greatest improvements in visibility in the Class I areas in the MANE-VU region, more than any other visibility-impairing pollutant. As a result of the dominant role of sulfate in the formation of regional haze in the Northeast and Mid-Atlantic Region, MANE-VU concluded that an effective emissions management approach should rely heavily on broad-based regional SO 2 control efforts in the eastern United States. EPA proposes to accept this conclusion as a reasonable strategy in the eastern United States where reductions in SO 2 emissions will result in the greatest improvements in visibility.

New Jersey contains a Class I area, the Brigantine National Wildlife Refuge Class I area, located on the New Jersey shoreline, north of Atlantic City. The RHR at 40 CFR 51.308(d)(1) requires states to establish RPGs for each Class I area within the state (expressed in deciviews) that provide for reasonable progress towards achieving natural visibility. MANE-VU calculated the RPG for the Class I areas in the MANE-VU states, and the CMAQ projections of the effect of emission reductions on visibility in the target year at the end of the first period, 2018, as shown in Table 4.