[Federal Register Volume 67, Number 87 (Monday, May 6, 2002)]
[Proposed Rules]
[Pages 30418-30450]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-10872]



[[Page 30417]]

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Part II





Environmental Protection Agency





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40 CFR Part 51



Proposed Revisions to Regional Haze Rule To Incorporate Sulfur Dioxide 
Milestones and Backstop Emissions Trading Program for Nine Western 
States and Eligible Indian Tribes Within That Geographic Area; Proposed 
Rule

  Federal Register / Vol. 67, No. 87 / Monday, May 6, 2002 / Proposed 
Rules  

[[Page 30418]]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 51

[FRL-7205-4]
RIN 2060-AJ50


Proposed Revisions to Regional Haze Rule To Incorporate Sulfur 
Dioxide Milestones and Backstop Emissions Trading Program for Nine 
Western States and Eligible Indian Tribes Within That Geographic Area

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: The purpose of this proposal is to request comment on 
revisions to the EPA's regional haze rule to incorporate certain 
provisions for Western States and eligible Indian Tribes.
    The Western Regional Air Partnership (WRAP) submitted an Annex to 
the 1996 report of the Grand Canyon Visibility Transport Commission 
(GCVTC) to EPA on September 29, 2000. This submittal was required under 
the regional haze rule in order for nine Western States (and Indian 
Tribes within the same geographic region) to have the option of 
submitting plans implementing the GCVTC recommendations. The Annex 
contains recommendations for implementing the regional haze rule in the 
West, including a set of recommended regional emissions milestones for 
2003-2018 sulfur dioxide (SO2), a key precursor to the 
formation of fine particles and regional haze.
    In this proposal, EPA proposes to approve the provisions of the 
Annex submitted by the WRAP as meeting the requirements of the regional 
haze rule and applicable requirements under the Clean Air Act (CAA). In 
this proposal, we include specific proposed changes to the regional 
haze rule to incorporate recommendations from the Annex.

DATES: Comments: We are requesting written comments by July 5, 2002.
    Public Hearings: The public hearing will be held on June 4, 2002 at 
2 p.m.

ADDRESSES: Comments: You should submit comments on today's proposal and 
the materials referenced herein (in duplicate if possible) to the Air 
and Radiation Docket and Information Center (6102), Attention: Docket 
No. A-2000-51, U.S. EPA, 1200 Pennsylvania Avenue, NW, Washington, DC 
20460. You may also submit comments to EPA by electronic mail at the 
following address: [email protected]. Electronic comments 
must be submitted as an ASCII file avoiding the use of special 
characters and any form of encryption. All comments and data in 
electronic form must be identified by the docket number [A-2000-51]. 
Electronic comments on this proposed rule also may be filed online at 
many Federal Depository Libraries.
    Public Hearings: The public hearing will be held in rooms 1709 and 
1710, Arizona Department of Environmental Quality, 3033 North Central, 
Phoenix, Arizona, located on the South Mall.
    If you wish to attend the public hearing or wish to present oral 
testimony, please send notification no later than one week prior to the 
date of the public hearing to Ms. Marty Robin, Air Division (AIR-1), 
U.S. EPA Region 9, 75 Hawthorne Street, San Francisco, CA 94105, 
telephone (415) 947-4143, email [email protected].
    Written statements (duplicate copies preferred) should be submitted 
to docket number A-2000-51 at the address listed above for submitting 
comments. The hearing schedule, including lists of speakers, will be 
posted on EPA's webpage at http://www.epa.gov/air/visibility/whatsnew.html.
    A verbatim transcript of the hearings and written statements will 
be made available for copying during normal working hours at the Air 
and Radiation Docket and Information Center at the address listed 
above.
    Docket: Information related to this proposal is available for 
inspection at the Air and Radiation Docket and Information Center, 
docket number A-2000-51. The docket is located at the U.S. EPA, 401 M 
Street, SW., Room M-1500, Washington, DC 20460, telephone (202) 260-
7548. The docket is available for public inspection and copying between 
8 a.m. and 5:30 p.m., Monday through Friday, excluding legal holidays. 
A reasonable fee may be charged for copying.

FOR FURTHER INFORMATION CONTACT: Tim Smith (telephone 919-541-4718) , 
Mail Code C504-02 , EPA, Air Quality Strategies and Standards Division, 
Research Triangle Park, North Carolina, 27711, or Steve Frey (telephone 
415-972-3990), EPA Region 9 (AIR-5), 75 Hawthorne Street, San 
Francisco, CA 94105. Internet addresses: [email protected] and 
[email protected].

SUPPLEMENTARY INFORMATION: We are providing the public with the 
opportunity to comment on EPA's incorporation of SO2 
milestones and a backstop emissions trading program for nine Western 
states and eligible Indian Tribes within that geographic area.
    Oral testimony at the public hearing will be limited to 5 minutes 
each. The hearing will be strictly limited to the subject matter of the 
proposal, the scope of which is discussed below. Any member of the 
public may file a written statement by the close of the comment period.

Table of Contents

I. Overview of the Proposed Stationary Source SO2 
Reduction Program
    A. What is the Regional Haze Rule?
    B. What are the Special Provisions for Western States and 
Eligible Indian Tribes in 40 CFR 51.309 of the Regional Haze Rule?
    C. What was Required to be Included in the Annex to the GCVTC 
Report?
    D. What Topics are Covered in this Preamble?
    E. What is the Next Step if the Regional Haze Rule is Revised?
II. Proposed Program Details
    A. What are the Proposed Regional SO2 Emission 
Milestones?
    B. What Future Adjustments to the Milestones are Allowed by the 
Proposed Rule?
    C. What is the Annual Process for Determining Whether a Trading 
Program is Triggered?
    D. What Must Each Participating State and Tribe's Implementation 
Plan Include for Administering the Trading Program, if it is 
Triggered?
    E. What Additional Provisions Must the SIP or TIP Include 
Regarding the Market Trading Program?
    F. What Happens to the Program After the Year 2018?
III. Implementation of the Regional SO2 Emissions 
Reductions Program in Indian Country
    G. Current Stationary Source SO2 Emissions in the 
Region
    H. ``Set-Aside'' for Tribes in the Market Trading Program
    I. Background on Provisions for Tribal Air Quality Programs in 
the CAA and in EPA Regulations
    J. Discussion of the TAR as it Relates to Tribal Participation 
in the SO2 Reduction Program
    K. Current Thinking on Tribal Program Assistance
IV. Administrative Requirements
    A. Executive Order 12866: Regulatory Planning and Review by the 
Office of Management and Budget
    B. Regulatory Flexibility Act
    C. Paperwork Reduction Act--Impact on Reporting Requirements
    D. Unfunded Mandates Reform Act
    E. Executive Order 12898: Environmental Justice
    F. Executive Order 13045: Protection of Children from 
Environmental Health Risks and Safety Risks
    G. Executive Order 13132: Federalism
    H. Executive Order 13175: Consultation and Coordination with 
Indian Tribal Governments

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    I. National Technology Transfer and Advancement Act
    J. Executive Order 13211: Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use

I. Overview of the Proposed Stationary Source SO2 
Reduction Program

    The purpose of this rulemaking is to propose revisions to 40 CFR 
51.309 of the regional haze rule to incorporate additional provisions 
to address visibility impairment in the 16 Class I areas on the 
Colorado Plateau.

A. What Is the Regional Haze Rule?

    The CAA, in section 169A establishes a national goal for protecting 
visibility in 156 scenic areas. These 156 ``Class I'' areas are 
federally protected areas and include national parks and wilderness 
areas. The national visibility goal is to remedy existing impairment 
and prevent future impairment in these Class I areas, consistent with 
the requirements of sections 169A and 169B of the CAA.
    Regional haze is a type of visibility impairment caused by air 
pollutant emissions from a broad region. The EPA uses the term regional 
haze to distinguish these types of visibility problems for those which 
are more local in nature. In 1999, EPA issued a regional haze rule 
requiring States to develop implementation plans designed to make 
``reasonable progress'' toward the national visibility goal. The first 
State plans for regional haze are due between 2003 and 2008, (64 FR 
35714, July 1, 1999). The regional haze rule provisions appear at 40 
CFR 51.308 and 40 CFR 51.309.

B. What Are the Special Provisions for Western States and Eligible 
Indian Tribes in 40 CFR 51.309 of the Regional Haze Rule?

    The regional haze rule at 40 CFR 51.308 sets forth the requirements 
for State implementation plans (SIPs) under the regional haze program. 
The rule requires State plans to include visibility progress goals for 
each Class I area, as well as emissions reductions strategies and other 
measures needed to meet these goals. The rule also provides an optional 
approach, described in 40 CFR 51.309, that may be followed by the nine 
Western States (Arizona, California, Colorado, Idaho, Nevada, New 
Mexico, Oregon, Utah, and Wyoming) that comprise the transport region 
analyzed by the GCVTC during the 1990's. This optional approach is also 
available to eligible Indian Tribes within this geographic region. The 
regulatory provisions at 40 CFR 51.309 are based on the final report 
issued by the GCVTC in 1996,\1\ which included a number of recommended 
emissions reductions strategies designed to improve visibility at the 
16 Class I areas on the Colorado Plateau.
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    \1\ Recommendations for Improving Western Vistas. Grand Canyon 
Visibility Transport Commission, June 10, 1996.
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    In developing the regional haze rule, EPA received a number of 
comments on the proposed rule encouraging the Agency to recognize 
explicitly the work of the GCVTC. In addition, in June 1998, Governor 
Leavitt of Utah provided comments to EPA on behalf of the Western 
Governors Association (WGA), further emphasizing the commitment of 
Western States to implementing the GCVTC recommendations. The WGA 
comments also suggested the translation of the GCVTC recommendations 
into a separate section of the rule. The EPA issued a Notice of 
Availability during the fall of 1998 requesting further comment on the 
WGA proposal and a draft translation into regulatory language. Based on 
the comments received on this Federal Register notice, EPA developed 
the provisions set forth in 40 CFR 51.309 that allow the nine Transport 
Region States and eligible Tribes within that geographic area to 
implement many of the GCVTC recommendations within the framework of the 
national regional haze rule.
    The provisions in 40 CFR 51.309 comprise a comprehensive long-term 
strategy for addressing sources that contribute to visibility 
impairment within this geographic region. The strategy addresses the 
time period between the year 2003,\2\ when the implementation plans are 
due, and the year 2018. The provisions address emissions from 
stationary sources, mobile sources, and area sources such as emissions 
from fires and windblown dust.
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    \2\ As explained in unit III of this preamble, Indian Tribes are 
given the flexibility under EPA regulations to submit implementation 
plans and opt into the program after the 2003 deadline.
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    One element of the GCVTC's strategy to address regional haze is a 
program to reduce stationary source emissions of SO2. This 
program calls for setting a series of declining caps on emissions of 
SO2. These declining caps on emissions are referred to as 
emissions milestones and provide for a reduction in SO2 
emissions over time. In designing this program, the GCVTC intended for 
these milestones to be reduced through voluntary measures, but also 
included provisions for an enforceable market-based program that would 
serve as a ``backstop'' if voluntary measures did not succeed. At the 
time the regional haze rule was published, however, it was broadly 
recognized that the specific emission milestones, and the details of 
how both the voluntary and enforceable phases of the program would be 
implemented, were necessary elements of a regulatory program. 
Accordingly, the regional haze rule, in 40 CFR 51.309(f), required the 
development of an ``Annex'' to the report of the GCVTC that would fill 
in these details. The regional haze rule provided that the option 
afforded by 40 CFR 51.309 would only be available if an Annex 
addressing the specific requirements of 40 CFR 51.309(f) was submitted 
to EPA by October 1, 2000. The EPA required the submission of an Annex 
by this date to ensure that EPA would be able to act on it before the 
December 31, 2003 deadline for SIPs under 40 CFR 51.309(c).

C. What Was Required To Be Included in the Annex to the GCVTC Report?

    The regional haze rule required the GCVTC (or a regional planning 
body formed to implement the Commission recommendations, i.e., the 
WRAP) to provide recommendations to fill in the details for two main 
aspects of the program:

--Emissions reductions milestones for stationary source SO2 
emissions for the years 2003, 2008, 2013, and 2018. The milestones must 
provide for ``steady and continuing emissions reductions'' for the 
2003-2018 time period. In addition, the milestones must ensure greater 
reasonable progress than would be achieved by application of best 
available retrofit technology (BART) pursuant to section 51.308(e)(2).
--Documentation for implementing a market trading program in the event 
that voluntary measures are not sufficient to meet the required 
milestones. This documentation must include model rules, memoranda of 
understanding, and other documentation describing in detail how 
emissions reductions progress will be monitored, what conditions will 
require the market trading program to be activated, how allocations 
will be performed, and how the program will operate.

    The EPA received the Annex from the WRAP in a timely manner, on 
September 29, 2000. The EPA recognizes the significant amount of work 
that was devoted to developing the Annex and we commend the WRAP 
participants for their efforts. Under 40 CFR 51.309(f)(3), if EPA finds 
that the Annex meets the requirements of the regional haze rule, EPA 
committed to revise the regional haze rule based on

[[Page 30420]]

the Annex to incorporate provisions requiring compliance with the 
milestones and backstop trading program. Along with the existing 
elements of 40 CFR 51.309, these new provisions would also be addressed 
in the 2003 SIPs by the Transport Region States. This proposed rule is 
the first step in revising section 51.309 based on the Annex.

D. What Topics Are Covered in This Preamble?

    The preamble addresses the following topics:
     The proposed regional SO2 milestones and WRAP's 
determination that the milestones meet the criteria for approval in the 
regional haze rule. The EPA has reviewed the WRAP's methodology for 
developing specific milestones for SO2 for the years between 
2003 and 2018. The EPA proposes to approve the milestones as satisfying 
the broad requirements of the regional haze rule. The EPA believes that 
the milestones provide for ``steady and continuing emissions 
reductions.'' The EPA also believes that the milestones provide for 
``greater reasonable progress'' than the BART emission limits that 
would otherwise be required by the regional haze rule.
     Ways in which the milestones may be adjusted in the 
future. The preamble discusses the limited circumstances under which 
the milestones may be adjusted in the future and the proposed 
administrative process for making those changes.
     The stationary sources of SO2 that are included 
in the program. This unit of the preamble discusses the stationary 
sources of SO2 that would be required to participate in the 
program, and whose cumulative emissions would be compared to the 
milestones.
     The annual process for determining whether a milestone is 
exceeded, thereby triggering the trading program. This section 
describes the steps to be followed in evaluating emissions data at the 
State, tribal and regional levels. It also describes a mechanism by 
which States and Tribes can activate the trading program in 2013 if 
evidence indicates that the 2018 milestone will not be reached without 
such action.
     Key trading program elements that are required in SIPs and 
Tribal implementation plans (TIPs). This unit of the preamble covers 
issuance of and compliance with allowances, emissions quantification 
protocols and tracking system, the annual reconciliation process, and 
penalty provisions.
     Status of the program after 2018. This unit of the 
preamble discusses what happens to the milestones and backstop trading 
program at the completion of the first implementation period, in 2018.
    Unit II of the preamble describes each of these programmatic areas 
in detail, including EPA's review of the relevant portion of the WRAP 
submittal. Unit III discusses issues related to implementation of this 
program in Indian country. Unit IV documents that this proposal 
complies with the administrative requirements of various Executive 
Orders and statutes.

E. What Is the Next Step If the Regional Haze Rule Is Revised?

    If this proposal is finalized, it will modify the requirements in 
40 CFR 51.309 of the regional haze rule. As a result, 40 CFR 51.309 
will then provide the complete regulatory framework to be used by 
Western States and Tribes in developing regional haze implementation 
plans. The EPA will continue to work closely with the States and Tribes 
to support their efforts to develop plans that meet the applicable 
requirements of the regional haze rule. Once State and tribal plans 
that meet the applicable requirements of the regional haze rule are 
reviewed and approved by EPA, they will be federally enforceable.
    The requirements in 40 CFR 51.309, if revised, will be the product 
of a substantial effort by many States, Tribes, Federal agencies, and 
other interested parties, extending over a number of years from the 
work of the GCVTC to that of the WRAP. The EPA recognizes, however, 
that the States and Tribes do have the option of implementing the 
regional haze rule under 40 CFR 51.308 rather than 40 CFR 51.309. 
Because the objective of 40 CFR 51.309 is to provide a regional 
approach to protecting air quality at the 16 Class I areas on the 
Colorado Plateau, EPA believes that there must be a ``critical mass'' 
of States participating for 40 CFR 51.309 SIPs to be approvable.

II. Proposed Program Details

    Today's proposal closely follows the provisions of the Annex 
submitted by the WRAP on September 29, 2000, and the supplement to the 
Annex submitted on June 1, 2001.\3\ \4\ The EPA proposes to incorporate 
those provisions into 40 CFR 51.309 of the regional haze rule by adding 
a new paragraph (h), by adding language to refer to this new paragraph, 
and by adding a few new definitions.
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    \3\ Supplementary Submittal to EPA in Support of the SO2 
Annex to the Grand Canyon Visibility Transport Commission Report. 
Submitted to EPA by the Western Regional Air Partnership, June 1, 
2001.
    \4\ The WRAP submitted a satisfactory Annex, which included all 
of the elements listed in 40 CFR 51.309(f)(1) (i) and (ii). This 
enabled EPA to begin work immediately on assessing the substance of 
the WRAP's strategy for addressing visibility impairment in the 16 
Class I areas covered by 40 CFR 51.309(f). The October 1, 2000 
deadline was accordingly met. The supplemental information submitted 
by the WRAP after the October 1, 2000 deadline has served to improve 
the clarity of today's proposal and will improve the implementation 
of the program.
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    In this section of the preamble, we discuss the details of the 
proposed regional emission tracking and backstop trading program for 
stationary source SO2 emissions. For each provision of the 
program, we provide:

--An overview of the provision,
--The requirements that apply to the provision in 40 CFR 51.309(f)(1) 
of the regional haze rule,
--The section of the Annex and/or supporting documents where the WRAP 
discusses the provision and its rationale,
--A discussion of EPA's proposed finding that the provision meets the 
requirements of the CAA and the regional haze rule, and
--A description of how EPA proposes to incorporate the provision into 
the regional haze rule.

A. What Are the Proposed Regional SO2 Emission Milestones? 
\5\
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    \5\ In 40 CFR 51.309 of the regional haze rule issued on July 1, 
1999, we defined the term ``milestone'' as a reduction in emissions 
relative to a 1990 actual emissions baseline. In discussions of the 
WRAP, and in the Annex itself, the term almost has most often been 
used to mean an emissions cap for the region that reflects a 
reduction in emissions. To avoid any confusion, EPA is proposing to 
revise the definition of ``milestone'' to more closely conform to 
the way it is used in the Annex.
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    A key provision of the WRAP's SO2 reduction program is a 
set of SO2 emissions milestones. The Annex includes a set of 
milestones, which represent targets for the total annual amounts of 
SO2 emissions that may be emitted from stationary sources of 
SO2 within the nine-State region. The program is designed to 
ensure that these milestones will be met. The EPA agrees with the 
WRAP's conclusion that these milestones meet the requirements of the 
CAA and the regional haze rule, and EPA proposes to amend the regional 
haze rule to incorporate the milestones into the rule. The rationale 
for EPA's position is set forth in this unit of the preamble.
    1. Background. Requirement in the Regional Haze Rule that the 
Milestones Must Provide for ``Greater Reasonable Progress'' than BART 
and for ``Steady and Continuing'' Progress.
    The regional haze rule, in 40 CFR 51.309(f)(1)(i), requires the 
Annex to contain milestones for the years 2003, 2008, 2013, and 2018. 
Moreover,

[[Page 30421]]

paragraph 40 CFR 51.309(f)(1)(i) requires that the milestones ``must be 
shown to provide for greater reasonable progress than would be achieved 
by application of best available retrofit technology (BART) pursuant to 
Sec. 51.308(e)(2).''
    In order to understand the implications of these requirements for 
``greater reasonable progress * * * than * * * BART,'' it is important 
to understand the basic provisions for BART in the CAA and in the 
regional haze rule. The CAA, in section 169A(b)(2) requires that SIPs 
for visibility protection must apply BART to certain large-emitting 
sources. More specifically, BART is required for sources that: \6\
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    \6\ In the regional haze rule, EPA uses the term ``BART-eligible 
source'' to refer to sources meeting criteria (1) to (3), and uses 
the term ``sources subject to BART'' to refer to sources meeting all 
four criteria.
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    (1) Are in one of 26 specific listed source categories;
    (2) Were in existence as of August 1977 but were not in operation 
in August of 1962;
    (3) Have the potential to emit 250 tons per year; and
    (4) Emit an air pollutant that ``may reasonably be anticipated to 
cause or contribute to any impairment of visibility'' in any of 156 
protected scenic areas.
    When EPA published its regulations for regional haze SIPs in 1999, 
we included a requirement for BART. In their regional haze SIPs, States 
must identify sources subject to the BART requirement, and for these 
sources there are two options. The first option, set forth in 40 CFR 
51.308(e)(1), is to establish case-by-case BART emissions limits for 
each source subject to BART. The second option, set forth in 40 CFR 
51.308(e)(2), is to develop an alternative program, such as an emission 
trading program, that provides for ``greater reasonable progress'' in 
visibility improvement than would be achieved through the case-by-case 
imposition of BART. The BART requirements of the regional haze rule are 
described in detail in the preamble to the regional haze rule, (64 FR 
35737, July 1, 1999). Additionally, the EPA has proposed guidelines for 
implementing the BART requirement, (66 FR 38108, July 20, 2001).
    Paragraph 40 CFR 51.309(f)(1)(i) requires that the milestones:

Must provide for steady and continuing emissions reductions for the 
2003-2018 time period consistent with the Commission's definition of 
reasonable progress, its goal of 50 to 70 percent reduction in 
sulfur dioxide emissions from 1990 actual emission levels by 2040, 
applicable requirements under the CAA, and the timing of 
implementation plan assessments and identification of deficiencies 
which will be due in the years 2008, 2013, and 2018.

    The requirement for ``steady and continuing'' emissions reductions 
originated in a recommendation of the 1996 report of the GCVTC 
(Recommendations for Improving Western Vistas. Report of the Grand 
Canyon Visibility Transport Commission to the United States EPA, p. 
34).
    The Annex includes the WRAP's recommended milestones. The 
milestones are listed Table 1 in section III (page 55) of the Annex, 
and are also listed and discussed further in section II (pages 9-15) of 
the Annex and in Attachment C of the Annex. The WRAP has concluded that 
the milestones meet the requirements of the regional haze rule 
discussed above. The EPA agrees with the WRAP's conclusions and is 
proposing to amend the regional haze rule to incorporate these 
milestones into the rule. The following discussion sets forth the 
technical analysis and rationale for (1) EPA's proposed conclusion that 
the year 2018 milestone provides for ``greater reasonable progress than 
BART,'' and (2) EPA's conclusion that the milestones provide for 
``steady and continuing progress.''
    2. Milestone for the Year 2018. Rationale for EPA's Proposal that 
the Year 2018 Milestone Represents ``Greater Reasonable Progress'' than 
BART.
    Attachment C to the Annex discusses (1) the WRAP's process for 
developing a regional emissions milestone for SO2 for the 
year 2018, and (2) the WRAP's determination that the regional milestone 
will provide for greater reasonable progress than would be achieved by 
BART. Considerable discussions, technical analyses, and negotiations 
were held within the WRAP to develop the year 2018 milestone.\7\
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    \7\ You will find complete information on discussions related to 
this milestone at the WRAP's website (http://www.wrapair.org. These 
discussions generally took place within the WRAP's Market Trading 
Forum.
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    To identify the year 2018 milestone, the WRAP:

--Estimated the baseline SO2 emissions for the year 2018, 
(e.g., the predicted SO2 emissions in the year 2018 in the 
absence of a program to reduce SO2 emissions);
--Developed a list of BART-eligible sources in the region;
--Estimated the emissions reductions that BART sources could achieve, 
and
--Selected a year 2018 milestone that reduces the baseline emissions by 
an amount that would achieve greater reasonable progress in improving 
visibility than by requiring each BART-eligible source to install BART. 
The EPA agrees with the WRAP that these are appropriate steps for 
demonstrating that the year 2018 milestone is consistent with the 
regional haze rule requirement for achieving greater reasonable 
progress than BART if source-specific BART is not applied.

    Baseline emissions. The WRAP conducted a technical analysis to 
calculate a best estimate of the projected actual SO2 
emissions baseline for the year 2018. Based upon a review of the 
documentation of this analysis, and based upon EPA's participation in 
the WRAP's technical forums and committees, the EPA believes that the 
data used and assumptions made by the WRAP for projecting the baseline 
are reasonable. The EPA invites comment on these baseline emission 
estimates, including whether there are any elements of the calculations 
for which alternative assumptions would be more technically 
appropriate. The point source SO2 emission inventory for the 
nine-State region can be subdivided into four broad classes: (1) 
Electric utility boilers, (2) cogeneration facilities, (3) copper 
smelters, and (4) other sources. Electric utility boilers are by far 
the largest emitting category, comprising about two-thirds of the 
overall SO2 inventory. Copper smelters are the next largest 
source of SO2 emissions. A host of smaller sources 
contribute to the ``other source'' category, including industrial 
boilers, petroleum refineries, cement kilns, paper mills, and natural 
gas production plants.
    For each of these broad classes, estimation of any future year's 
emissions involves the estimation of actual emissions for a year in the 
recent past, and then making assumptions on how those emissions will 
change in the future. We provide an overview here of how the WRAP 
developed the year 2018 baseline by taking emissions estimates for the 
most recently available year (generally 1998 or 1999) and by making 
assumptions on how those emissions would change by the year 2018. 
Further details are available in the technical support information 
provided by the WRAP.\8\
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    \8\ Technical Support Documentation. Voluntary Emission 
Reduction Program for Major Industrial Sources of Sulfur Dioxide in 
Nine Western States and a Backstop Trading Program. WRAP, October 
16, 2000.

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[[Page 30422]]

    The WRAP estimated utility emissions for the year 2018 using, as a 
starting point, 1999 emissions data that the utilities submitted to EPA 
to comply with the requirements of the national acid rain program. In 
order to estimate how these current emissions would change for the year 
2018, the WRAP took into account several considerations. The resulting 
utility emissions forecast for the year 2018, taking into account all 
of these considerations, is 415,000 tons.
    First, the WRAP took into account for utilities the expected future 
operations at coal-fired power plants. The WRAP assumed that boilers 
would be shut down by the year 2018 if they had been in operation more 
than 60 years by that date (that is, sources which began operation in 
the year 1957 or before). For the remaining boilers, the WRAP assumed 
they would continue to operate and would increase their utilization of 
capacity from current rates (typically less than 80 percent of name 
plate capacity) to an 85 percent utilization rate. In developing the 
emission forecasts, the WRAP took into account future demand growth. 
The WRAP assumed there would be an increase of 1.4 percent per year in 
net generation in the GCVTC region. As noted above, the WRAP assumed 
that existing sources would continue to be used until they reached 85 
percent of capacity. When existing available generation is exhausted, 
new sources are assumed to emit on average 0.02 pounds per million BTU. 
The 0.02 pounds per million BTU figure assumes that well-controlled 
coal-fired boilers would comprise 20 percent of the new generation 
capacity, with the remainder of generation using gas-firing (either 
natural gas or from coal gasification). Documentation of the WRAP's 
assumptions for power generation is found in section 2.C of the 
document entitled Technical Support Documentation. Voluntary Emissions 
Reduction Program for Major Industrial Sources of Sulfur Dioxide in 
Nine Western States and a Backstop Trading Program. Submitted by the 
WRAP to the U.S. EPA, October 16, 2000.
    Second, the WRAP considered the expected reductions in 
SO2 emissions from the Mohave Generating Station in Nevada 
and from a number of plants on the Colorado Front Range. For the Mohave 
Generating Station, the plant's owners and a number of environmental 
organizations entered into a consent decree on December 21, 1999. A 
proposed revision to the Federal Implementation Plan (FIP) for Nevada, 
reflecting the terms of the consent decree, was published in the 
Federal Register on February 8, 2002, (67 FR 6130). For the Colorado 
Front Range plants, reductions are expected from a voluntary agreement 
between Public Service Company of Colorado and the Colorado Air 
Pollution Control Division.\9\
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    \9\ ``Voluntary Emissions Reduction Agreement between the 
Colorado Air Pollution Control Division and Public Service Company 
of Colorado,'' submitted for approval to the Air Quality Control 
Commission, July 16, 1998.
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    Third, the WRAP applied a 10,000 ton downward adjustment to account 
for the expected effects of a recent revision to the procedure for 
measuring the stack flow rate, which is an integral part of the 
measurement of SO2 emissions using a continuous emission 
monitor (CEM). The procedure in place before the revision, which was 
used in the calculation of the 1999 baseline emissions, could 
overestimate the flow rate for certain types of stacks, and thus lead 
to an overestimate of the measured emissions. This same overestimate 
would also be present in estimates of future year emissions for the 
2003 to 2018 time period, which used the 1999 emissions as a starting 
point. Accordingly, the new procedure, if used, would lead to a 
decrease in the measured and forecasted emissions even if the emitting 
characteristics of the boiler (fuel used and sulfur content) did not 
change. Such a ``paper'' decrease would not represent real emissions 
reductions. The WRAP estimated that for the year 2018, there will be 
10,000 tons of emission decreases that will be solely due to expected 
changes in the flow rate measurement method for the boiler population. 
Thus, 10,000 tons were subtracted from the year 2018 milestone.
    Finally, the WRAP included an upward adjustment to account for 
continued operation of three of the Colorado Front Range boilers that 
would be operating more than 60 years in the year 2018. Even though the 
general methods used to forecast emissions assumed that these boilers 
would shut down after 60 years, the WRAP believed that planned capital 
investments would likely extend the operations of these three boilers 
for a longer time period. The WRAP's estimated emissions increase, to 
account for these three boilers, is 4,000 tons.
    For cogeneration facilities, the WRAP assumed that year 1999 
emissions of 8,000 tons would remain constant through the year 2018, 
with no growth or retirement of these plants.
    For copper smelters, the WRAP used emissions data for 1998 \10\ 
provided by the State air quality agencies as the starting point for 
projecting SO2 emissions for 2018. Since 1998, two smelters 
have temporarily suspended operations. It is difficult to predict the 
national and international market conditions that would influence 
whether these smelters will resume operation. Accordingly, the WRAP 
decided to include two separate emissions forecasts for the year 2018 
for smelters. The first forecast assumes that the two suspended 
smelters will be permanently shut down by the year 2018, and emissions 
from the remaining smelters would be 48,000 tons. The second forecast 
operations at the two currently suspended smelters will have resumed, 
which results in an overall smelter emissions total of 78,000 tons.
---------------------------------------------------------------------------

    \10\ For all other sources besides utility boilers, the year 
1998 was the most recent year of data available to the WRAP at the 
time the Annex was developed.
---------------------------------------------------------------------------

    For the broad ``other source'' category, the WRAP used recent 
inventory data as the starting point for future projections. To 
forecast emissions to the year 2018, the WRAP used general growth and 
retirement rates that are included in the Integrated Assessment System 
(IAS) used by the GCVTC. The growth and retirement rates in the IAS are 
annual percentages that are applied to the base year inventory 
total.\11\ The inventory amount is reduced according to the retirement 
rates, and increased according to the growth rates. The WRAP funded a 
technical review of the emissions for the ``other source'' category, 
which was completed in July 2000. This report, Historical and Future 
SO2 Emissions Analysis. 9 State Western Region Draft Report, 
is included as section 2.A of the WRAP's technical support 
documentation. For these sources, emissions were predicted to decline 
from the 1998 total of about 162,000 tons to 141,000 tons in the year 
2018.
---------------------------------------------------------------------------

    \11\ For non-utility sources, the WRAP's IAS took demand growth 
into account through an economic model called the Regional Economics 
Model, Inc (REMI) model. The REMI model predicts changes in economic 
indicators for source categories and regions within the overall 
geographic area studied. The REMI model was used to determine the 
degree to which activity levels are predicted to increase for a 
given source type and sub-region.

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

[[Page 30423]]

    In summary, the WRAP estimates year 2018 emissions as follows:

 
 
 
Electric utility boilers \12\................................    415,000
Cogeneration units...........................................      8,000
Copper smelters..............................................     48,000
                                                                      or
                                                                  78,000
Other stationary sources.....................................    141,000
                                                              ----------
  Total (if suspended smelters remain closed)................    612,000
  Total (if suspended smelters resume operation).............   642,000
 
\12\ Including adjustment for new flow rate method, and including the
  retirement adjustment for Colorado Front Range plants. This value
  represents the 421,000 tons for ``utility emissions'' on page C-8 of
  the Annex, plus the 4,000 tons for ``front range adjustment'' on page
  C-8, minus the 10,000 tons referred to as ``CEMS bias adjustment'' on
  page C-11 of the Annex.

    List of BART-eligible sources. The WRAP, as described in Appendix C 
of the Annex, pages C-2 and C-3, developed a list of BART-eligible 
sources using the definitions in the regional haze rule and a number of 
assumptions. Subsequent to the submittal of the Annex, the EPA formally 
proposed BART guidelines in a rulemaking proposal published on July 20, 
2001 (66 FR 38108). These proposed guidelines include proposed methods 
for identifying BART-eligible sources. In order to meet the October 
2000 deadline for the Annex, the WRAP needed to identify BART-eligible 
sources before the guidelines were proposed by EPA.
    In identifying BART-eligible sources, the WRAP identified 
individual emission units that have a potential to emit more than 250 
tons per year. In the proposed BART guidelines, the EPA takes a 
slightly different approach. Using the method in the proposed BART 
guidelines, a source would be BART-eligible when the sum of the 
potential emissions over all emission units built between the 1962-1977 
time period is greater than 250 tons per year. For example, assume a 
plant had two emission units built within the 1962-1977 time period, 
emission unit A with a potential to emit 125 tons per year of 
SO2, and unit B with a potential to emit 150 tons per year 
of SO2. Under the proposed BART guidelines, you would add 
the potential emissions of both units. Thus, both of these units would 
be BART-eligible under EPA's proposed BART guidelines because their 
combined potential to emit exceeds 250 tons per year. Under the system 
used by the WRAP, these units would not have been identified as BART-
eligible.
    The EPA believes that even if the BART guidelines are finalized as 
proposed, the BART-eligible sources identified by the WRAP, and the 
SO2 emissions resulting from those sources, would be nearly 
identical to those identified under the BART guidelines. The EPA 
estimates that the difference in emissions coverage between the method 
used by the WRAP and the method in EPA's proposed guidelines is at most 
a few thousand tons. We request comment on this assessment.
    Emissions reductions from BART-eligible sources. The WRAP's next 
step was to calculate the emissions reductions that would be achieved 
by requiring the installation and operation of BART on all BART-
eligible sources in the region. The first step in this process was to 
identify the ``appropriate'' retrofit technologies for categories of 
BART-eligible sources. This is described in section C of Annex 
Attachment C. The WRAP discusses in Attachment C, page C-4, that the 
factors to consider for BART, including cost, energy and non-air 
environmental impacts, existing pollution controls, and remaining 
useful life were addressed in a broad way through the identification of 
technologies that were currently being used as retrofits in the region. 
The WRAP's Market Trading Forum looked at ranges of potential retrofit 
controls and established a level that it expected to be valid as a 
regional average. Further documentation of the technology analysis is 
found in section 6 of the Technical Support Document (Technical Support 
Documentation. Voluntary Emissions Reduction Program for Major 
Industrial Sources of Sulfur Dioxide in Nine Western States and a 
Backstop Trading Program. Submitted by the WRAP, October 16, 2000). 
This technology analysis was performed on a source category basis, as 
is allowed by the regional haze rule.
    The WRAP developed a series of control technology assumptions for 
specific categories in the region. These control technology assumptions 
are summarized in Annex Table 1, page C-5. Another table describing the 
types of controls considered is included as Table 1 on pages 12-18 of 
Section 6.A of the Technical Support Document. The technology 
determination with the greatest effect on emissions was for utility 
boilers, which represent about \2/3\ of projected 2018 emissions, and 
which also have the greatest potential for further emissions control. 
For utility boilers, the WRAP developed a three-tier system as follows. 
For uncontrolled utility boilers, and for boilers currently with 
controls achieving less than a 70 percent reduction in SO2 
emissions, the WRAP assumed an ``appropriate'' technology level of 85 
percent control. For boilers currently achieving a 70 to 80 percent 
reduction in SO2 emissions, the WRAP assumed that control 
efficiencies could be increased by five percent. For example, if a 
boiler is currently achieving 72 percent reduction in SO2 
emissions, the WRAP assumed it would be controlled to 77 percent. For 
utility boilers currently achieving greater than 80 percent reduction 
in SO2 emissions, no additional reductions were assumed.
    In developing the three-tier system for boilers, the WRAP assumed 
that emissions can be reduced by flue gas desulfurization, and made 
broad judgments on the level of control that this technology could 
achieve. These judgments included a general discussion of whether any 
of the statutory factors for BART would likely mitigate against 
application of the technology. As noted in Table 1, page C-5 of the 
Annex, the WRAP assumed controls for additional categories as follows:

--Petroleum refineries. For sulfur recovery units, the WRAP assumed 
BART was 98 percent control or the equivalent of a 3-stage Claus unit. 
For catalytic crackers, the WRAP assumed 90 percent control level. For 
flares, the WRAP assumed no additional control.
--Industrial boilers. For non-utility boilers, the WRAP used the same 
3-tier assumptions as for utility boilers.
--All other categories, including cement kilns, recovery furnaces at 
kraft pulp mills, and copper smelters. The WRAP assumed that BART would 
require no additional SO2 control.

    The WRAP calculated the emissions reductions for the BART-eligible 
sources for the year 2018 as outlined in section 6.B of the Technical 
Support Documentation. By applying the 3-tier approach to utility 
boilers, and the assumptions noted above for refineries and industrial 
boilers, the WRAP calculated emissions reductions from BART-eligible 
sources of about 168,000 tons for the year 2018. Of this amount, the 
great majority of the reductions (152,000 of the 168,000) were from 
utility boilers.
    During May 2000, EPA provided the WRAP with a technical review of 
the control technology judgments made by the WRAP for utility 
boilers.\13\ As noted in this technical review, EPA believes that for 
utility boilers that are currently uncontrolled, emissions reductions 
of 90 percent or better are readily achievable. Of the total of 53 
BART-eligible utility boilers in the WRAP

[[Page 30424]]

region, 21 are currently uncontrolled. The EPA's technical analysis 
also provided upper and lower-bound estimates of the degree to which 
the 30 units with existing wet scrubbers could be upgraded. This 
technical analysis resulted in emissions reductions of 170,000 to 
190,000 tons, which were about 15,000 to 35,000 tons greater than 
estimated by the WRAP.\14\
---------------------------------------------------------------------------

    \13\ May 22, 2000 letter from Lydia Wegman, Richard R. Long, and 
Deborah Jordan, EPA to Colleen Delaney, co-chair, WRAP Market 
Trading Forum.
    \14\ Subsequent to EPA's May 2000 analysis, the WRAP developed 
refined estimates of the year 2000 emissions baseline. This estimate 
of 170,000 to 190,000 tons was based on the emissions information 
available at the time of EPA's May 2000 analysis.
---------------------------------------------------------------------------

    Inclusion of an additional amount of emissions to account for 
``uncertainty'' and ``headroom.'' In calculating the year 2018 
milestone, the WRAP included 35,000 tons for ``uncertainty'' and 
``operational headroom.'' This is discussed on pages C-9 through C-11 
of Annex Attachment C.
    The WRAP uses the term ``headroom'' generally to mean an amount 
that accounts for unexpected future events. For example, if a WRAP-
developed milestone is established at 800,000 tons, and expected 
emissions are 750,000 tons, then the difference--50,000 tons--is 
``headroom'' that provides additional assurances that the milestone 
would not be expected to be exceeded.
    The WRAP uses the term ``uncertainty'' generally in the context of 
data parameters whose actual values in the future may differ from 
current projections. All parties to the WRAP discussions agree that 
there is a fair degree of uncertainty in projecting emissions nearly 20 
years in the future. Projections for the year 2018 involve numerous 
inherent assumptions about economic and other conditions, and the 
SO2 emissions results of those conditions. For example, the 
tool used for emissions forecasting, the IAS, assumes a certain 
percentages of plant retirements, and emissions reductions from those 
plant retirements. There is nothing that would prohibit these sources 
that are assumed to retire from continuing operating, or even 
increasing their operations. Scenarios different from those projected 
by the IAS would result in emission increases for the ``other source'' 
category of several tens of thousands of tons per year. Another example 
of uncertainty leading to an unexpected increase in emissions would be 
an increase in the overall average sulfur content of coal used in coal-
fired boilers. If this value increased by 5 percent, for example, then 
the forecasted emission baseline for utility boilers would increase by 
more than 20,000 tons. It is also possible that boilers that are 
currently burning natural gas could switch to fuel oil if the relative 
prices of the two fuels were to change. Finally, there are 
uncertainties regarding the number of new coal-fired utility boilers 
that will be built in the region, and the emissions from such boilers.
    The EPA agrees with the WRAP that long-term emissions predictions 
are uncertain and that it is accordingly difficult to predict with 
accuracy the level of SO2 emissions for the region in 2018. 
We request comment on the WRAP's use of the 35,000 tons per year of 
``headroom/uncertainty'' as an amount that is included in the 
calculation of a year 2018 milestone.
    Milestones for the year 2018 selected by the WRAP. The WRAP 
determined the milestone for the year 2018 by taking the projected 
baseline amount, subtracting the 168,000 tons for ``appropriate'' 
control technology, and adding the 35,000 tons for ``uncertainty and 
headroom.'' Because the WRAP projected two cases for future smelter 
operations, there were two associated milestones for the year 2018. For 
the case without operation of the two smelters, the WRAP determined 
that the milestone would be 612,000 - 168,000 + 35,000, or 480,000 tons 
(the WRAP rounded the value of 479,000 tons up to 480,000). For the 
case which assumes that the two smelters will resume operation, similar 
calculations yield a milestone of 510,000 tons.
    Discussion of EPA's finding that the year 2018 milestone meets the 
requirements of the regional haze rule. The EPA believes that the year 
2018 milestone fulfills the requirement in 40 CFR 51.309(f)(1)(ii) of 
the regional haze rule that ``the milestones must be shown to provide 
for greater reasonable progress than would be achieved by application 
of BART under 51.308(e)(2).'' 40 CFR 51.308(e)(2) of the regional haze 
regulations requires that the analysis of whether ``greater reasonable 
progress'' would be achieved must include the following:

--A list of all BART-eligible sources,
--A source-specific or category-wide analysis of possible BART 
controls, taking into consideration the technology available, the 
costs of compliance, the energy and non-air quality environmental 
impacts of compliance, any pollution control equipment in use, and 
the remaining useful life, and
--An analysis of the degree of visibility improvement that would be 
achieved from application of BART-level controls.

    The EPA believes that the WRAP's analysis, described above, meets 
these requirements. The WRAP has provided a list of BART-eligible 
sources, and a sufficient category-wide analysis of the possible BART 
controls. The WRAP also provided an analysis of the visibility 
improvement from the SO2 emissions reduction program, in 
addition to a number of possible scenarios for BART-level controls. 
This visibility analysis is discussed in section F of Attachment C to 
the Annex. Supplemental information, which included additional 
visibility analyses, was submitted to EPA on September 24, 2001 in a 
document entitled ``Sensitivity Analysis to Quantify the Benefits 
Achieved by an Emission Cap.''
    The EPA has reviewed the calculations, analyses and other 
documentation provided by the WRAP in order to judge whether the 2018 
SO2 milestone provides for greater reasonable progress than 
BART. One important consideration in making this judgment, as noted by 
the WRAP in the Annex, is that the program establishes an enforceable 
cap for the Region on the emissions of SO2 from all 
stationary sources in the region emitting more than 100 tons per year. 
In contrast, a program that addressed only the BART sources would 
result in a reduction in emissions from the sources covered by the BART 
requirements, but it would not limit the overall emissions of 
SO2 in the WRAP region.
    It is an inherently uncertain exercise to predict future 
SO2 emissions in the absence of this program, and there is 
also uncertainty in predicting what appropriate BART-level emissions 
controls would be for the year 2018. The EPA believes that the future 
emissions in the WRAP region could plausibly be greater than or less 
than those forecasted by the WRAP. For the utility sector, we believe 
there is a relatively low probability that existing utility boilers 
will increase their use of capacity by a greater percentage than the 
overall capacity factor of 85 percent assumed by the WRAP. There is, 
however, a growing likelihood that there will be more new coal-fired 
power plants in place in 2018 than assumed when the Annex was submitted 
to EPA. For copper smelters, it is unlikely that emissions would 
increase by any appreciable amount above those forecasted in the two 
scenarios developed by the WRAP. For the ``other'' source category 
incorporating all non-utility and non-smelter sources, greater use of 
capacity or new source growth could plausibly lead to emissions that 
are greater than the 141,000 tons forecasted by the WRAP. In summary, 
taking into account all of these categories, it is possible that future 
emissions could be more or less than calculated by the WRAP.
    Likewise, the EPA believes there is some uncertainty regarding the 
level of

[[Page 30425]]

emissions control that would be achieved by applying SO2 
controls to the BART-eligible source population on a source-by-source 
basis. While EPA, as noted above, calculates a somewhat greater degree 
of possible SO2 reductions than the WRAP, it is also 
possible that a State-by-State, source-specific analysis of BART would 
result in a lesser degree of control on some sources.
    The visibility analyses conducted by the WRAP attempted to capture 
the uncertainty that exists in comparing a program with a fixed cap on 
emissions to a program that would achieve a given level of control on 
the BART population. The emissions reductions from the trading program 
are guaranteed, because they assure that emissions will not exceed the 
milestones. On the other hand, the overall effect of emissions 
reductions from application of BART is best expressed as a range of 
results. Because of the factors States and Tribes may consider when 
determining BART for individual sources, there is no guarantee of the 
amount of reductions application of BART would achieve.
    The uncertainty of the comparison is compounded to a degree by the 
fact that under a trading program, it is not possible to predict with 
precision where the emissions reductions would occur. The modeling 
results showed that the visibility impacts of the trading program are 
likely to be very similar to those for the range of possible BART 
results, and that the visibility impacts of the trading program could 
be slightly greater or slightly less than a BART-only program would 
achieve.
    Taking all of these uncertainties into account, EPA believes that 
it is reasonable to conclude that the year 2018 milestone meets the 
requirements for ``greater reasonable progress'' in the regional haze 
rule. The WRAP has satisfied the requirements of the regional haze rule 
that the milestones provided for greater reasonable progress than would 
be achieved by BART, and the WRAP has provided the necessary 
documentation to support that conclusion. Central to their finding of 
greater reasonable progress is that the program provides for an overall 
cap instead of individual emission limits which do not guarantee the 
same emissions reductions. Modeling scenarios show that the trading 
program is likely to achieve results equivalent to, or greater than, an 
emission limit-based program. Although not determinative of whether the 
program achieves better than BART reductions, EPA believes that it is 
also important to recognize that the WRAP program has resulted from a 
consensus effort, which included broad-based participation of many 
Western stakeholders.
    3. Milestones for the Interim Years (2003 through 2017). Rationale 
for EPA's Proposal that the Milestones Represent ``Steady and 
Continuing'' Progress.
    As discussed above, 40 CFR 51.309 (f)(1)(i) of the regional haze 
rule requires that the milestones in the Annex:

Must provide for steady and continuing emission reductions for the 
2003-2018 time period consistent with the Commission's definition of 
reasonable progress, its goal of 50 to 70 percent reduction in 
sulfur dioxide emissions from 1990 actual emission levels by 2040, 
applicable requirements under the CAA, and the timing of 
implementation plan assessments and identification of deficiencies 
which will be due in the years 2008, 2013, and 2018.

    The WRAP discusses the milestones for these interim years in 
section II.b, pages 11-15, of the Annex. The milestones selected by the 
WRAP in the Annex are as follows:

     Table 1.--WRAP's Proposed Regional Dioxide Milestones for Stationary Sources Emitting More Than 100 TPY
                                       [Amounts listed are tons per year]
----------------------------------------------------------------------------------------------------------------
                                                     Each year       Each year       Each year
                      Year                         between 2003    between 2008    between 2013        2018
                                                   through 2007    through 2012      and 2017
----------------------------------------------------------------------------------------------------------------
Maximum Milestone (smelters in).................         720,000         715,000         655,000         510,000
Minimum Milestone (smelters out)................         682,000         677,000         625,000         480,000
----------------------------------------------------------------------------------------------------------------

    The EPA believes that these milestones provide for ``steady and 
continuing'' emissions reductions and the requirements of 40 CFR 
51.309(f)(1)(i). Taking each phrase of 40 CFR 51.309(f)(1) separately, 
our rationale for this finding is as follows.
    First, 40 CFR 51.309(f)(1)(i) requires steady and continuing 
progress ``consistent with the Commission's definition of reasonable 
progress.'' As noted in section II.A.1.b of the Annex, the GCVTC 
defined reasonable progress as follows:

    Reasonable progress towards the national visibility goal is 
achieving continuous emission reductions necessary to reduce 
existing impairment and attain steady improvement of visibility in 
mandatory Class I areas, and managing emissions growth so as to 
prevent perceptible degradation of clean air days.

For the reasons set forth below, EPA is proposing to find that the 
milestones listed above are consistent with this definition in the 
Commission report.
    In its analysis of whether the milestones provide for 
``continuous'' or ``continuing'' reductions for the 2003 to 2018 time 
period, the WRAP uses as its starting point, or frame of reference, the 
Commission's goal of achieving a 13 percent reduction in 1990 baseline 
emissions by the year 2000, rather than an estimate of actual emissions 
for 2000. A 13 percent reduction from the 1990 baseline emission of 
about 830,000 tons results in emissions of about 720,000 tons. Using 
the emission inventory estimates for the most recently available year 
at the time of the Annex, generally from 1998 or 1999, the WRAP 
estimated that the total actual emissions for the 1998-1999 time period 
were about 652,000 tons, roughly a 22 percent reduction from the 1990 
baseline. Thus, the milestones, which range from 677,000 tons to 
715,000 tons for the 2008-2012 time period, allow for actual emission 
increases to occur between this 1998/1999 time period and this time 
period. The EPA agrees that the WRAP may use the 13 percent level, 
rather than current actual emissions, as the basis for determining that 
``steady'' reductions are occurring. Otherwise, EPA believes that the 
region would in essence be penalized for achieving early reductions in 
emissions. Also, there is future emission growth expected due to 
increased use of operating capacity at utility boilers and other source 
types. Accordingly, a relatively ``flat'' line between 2003 and 2012 
can represent a significant reduction in emissions that would have 
otherwise been expected. The EPA requests comment on this finding.
    Second, 40 CFR 51.309(f)(1)(i) requires steady and continuing 
progress ``consistent with * * * (the Commission's) * * * goal of 50 to 
70

[[Page 30426]]

percent reduction in sulfur dioxide emissions from 1990 actual emission 
levels by 2040.'' Because the 1990 actual emissions of SO2 
for the region were 830,000 tons per year, the 2018 milestones proposed 
by the WRAP for 2018 represent a 39 to 43 percent reduction from 1990 
baseline emissions. Emissions reductions consistent with the 2018 
milestone will achieve a substantial portion of the Commission's goal 
set by the Commission for the 50-year period, 1990 to 2040. The EPA 
believes that the criterion for steady and continuing emissions 
reductions consistent with this long-term goal of 50-70 percent 
reduction in SO2 emissions is clearly met.
    Third, 40 CFR 51.309(f)(1)(i) requires steady and continuing 
progress ``consistent with applicable requirements under the CAA.'' The 
EPA believes that the milestones recommended by the WRAP are consistent 
with all applicable requirements of the CAA. As noted above, EPA 
proposes that the milestones constitute ``greater reasonable progress'' 
than would be achieved through implementation of the BART requirements 
in section 169A of the CAA.
    Finally, 40 CFR 51.309(f)(1)(i) requires steady and continuing 
progress ``consistent with the timing of implementation plan 
assessments and identification of deficiencies which will be due in the 
years 2008, 2013, and 2018.'' In the Annex, the WRAP has established an 
annual process for comparing emissions with milestones. This annual 
process, discussed in greater detail below, ensures that emissions will 
be compared against the milestones each year, and not just in 2008, 
2013, and 2018. The EPA believes that this annual check is a helpful 
clarification of the way the program will be implemented, and that it 
will ensure that ample information will be available at the time of the 
5-year program reviews required by 40 CFR 51.309(d)(10) of the regional 
haze rule.
    In summary, EPA believes that the milestones in the Annex fulfill 
all of the requirements for ``steady and continuing'' progress. We 
request comment on this proposed finding.
    4. How the Milestones are Listed in the Proposed Amendments to 40 
CFR 51.309.
    The Annex, in sections II.A.3.b and III.A.6.b, clarifies that the 
annual process for comparing emissions to the milestones will, with one 
exception, involve a comparison of multi-year averages. Because the 
program does not begin until 2003, compliance with the 2003 milestone 
will be based on 2003 emissions data only. Compliance with the program 
in 2004 will be based on an average of 2003 and 2004 emissions data. In 
subsequent years, compliance with the milestones will be determined by 
using a 3-year average of emissions. The Annex also makes clear that 
for the 2005 through 2017 time period, compliance will be determined by 
comparing 3-year averages of emissions with 3-year averages of the 
milestones. For example, the milestones for 2006, 2007, and 2008 are 
677,000 682,000, and 682,000 tons, respectively (see Table 1 above, 
smelters out). The 3-year average of the milestones is: (682,000 + 
682,000 + 677,000)/3, or about 680,000 tons. Thus, after the end of 
calendar year 2008, under the system of averaging contained in the 
Annex, the participating States and Tribes will compare the 3-year 
average of emissions (that is, the average of emissions for the years 
2006, 2007, and 2008) against 680,000 tons.
    To minimize any confusion from this system of averaging, EPA has 
included in the proposed amendments to 40 CFR 51.309 a table which sets 
out, for each year of the program, the emission inventory years to be 
used, and the amount of tons per year that the emissions will be 
compared against. This is included in the proposed rule amendments as 
Table 1 in proposed paragraph 40 CFR 51.309(f)(1). This table also 
makes clear that for the year 2018, participating States and Tribes 
will compare the year 2018 inventory to the year 2018 milestone, 
without any averaging of previous years.

B. What Future Adjustments to the Milestones Are Allowed by the 
Proposed Rule?

    The Annex provides for future adjustments to the milestones under 
certain prescribed circumstances. The EPA understands that the WRAP's 
negotiations succeeded largely because the participants were able to 
reach agreement on milestones that addressed stakeholder interests, met 
the requirements of the CAA, provided certainty to the regulated 
community, and provided interest groups with a fixed set of milestones 
that would ensure long-term progress in reducing SO2 
emissions and improving visibility. However, the WRAP did anticipate 
that there were a number of specific circumstances under which the 
milestones should be adjusted. The EPA believes that these are the only 
circumstances that should lead to changed milestones. The EPA requests 
comment on the appropriateness of these adjustments and whether 
additional adjustment to the milestones may be appropriate. These 
adjustments are described in sections III.A.3, III.A.4, and III.A.5 of 
the Annex and are discussed further in section II.A.2 of the Annex. The 
EPA believes that each of these adjustments is consistent with the 
requirements of the regional haze rule.
    The WRAP identified the following seven possible adjustments to the 
milestones:
    (1) Adjustments to be made at the outset of the program if certain 
States and Tribes choose not to participate in the program, and for 
Tribes that choose to opt into the program after the 2003 deadline;
    (2) Adjustments to account for specific contingencies
    regarding the future operations of copper smelters;
    (3) Adjustments for changes in emission measurement
    techniques;
    (4) Adjustments for changes in flow rate measurement
    methods;
    (5) Adjustments for illegal emissions;
    (6) Adjustments due to periodic reviews and audits; and
    (7) Adjustments for individual sources opting into the program.
    For the first adjustments (1) and (2), the specific amounts by 
which the milestones would change are listed in the proposed amendments 
to 40 CFR 51.309 of the regional haze rule. For adjustment (4), a 
specific defined process for calculating the adjustment can be 
specified in the rule. The specifics of each of the adjustments are 
described in detail below. In addition, for three adjustments, (1) (2) 
and (4), we are proposing in today's amendments the specific 
circumstances under which the adjustments would occur and the 
procedures for making these types of adjustments to the milestones. 
Because we are proposing the specific emission quantities, 
circumstances and procedures in the rule, and are taking comment on 
these specific details, we are also proposing to allow States and 
eligible Tribes to make these adjustments without triggering a 
requirement to revise their SIP. For the remaining adjustments, we are 
proposing to require States and eligible Tribes to revise their 
implementation plans, consistent with the procedures at 40 CFR 51.102 
and 40 CFR 51.103, before making the adjustment.
1. Adjustment for States and Tribes That Choose Not To Participate in 
the Program, and for Tribes That Choose To Opt Into the Program After 
2003
    As noted previously, 40 CFR 51.309 of the regional haze rule 
provides nine Western States with an optional

[[Page 30427]]

program to meet the requirements of the CAA and the regional haze rule. 
States that choose to meet the requirements of 40 CFR 51.309 are 
assured of having an approvable long-range visibility strategy for 16 
Class I areas in the vicinity of the Grand Canyon. It is not yet known, 
however, which States will choose to exercise the option under 40 CFR 
51.309. Accordingly, the Annex, including the supplemental information 
submitted in June 2001\15\, provides for adjustments to the milestones 
in the event that not all eligible States and Tribes choose to 
participate.
---------------------------------------------------------------------------

    \15\ Supplementary Submittal to EPA in Support of the SO2 
Annex to the Grand Canyon Visibility Transport Commission Report. 
Western Regional Air Partnership, June 1, 2001.
---------------------------------------------------------------------------

    The WRAP has identified for each State, and for each year from 2003 
to 2018, the amount of emissions that would be deducted from the 
milestones for each State that chooses not to participate. The 
methodology and data sources for determining these individual State 
opt-out amounts are explained further in the WRAP's supplementary 
information submitted to EPA in June 2001. The EPA includes in the 
proposed amendments to 40 CFR 51.309 of the regional haze rule a table 
(Table 2) displaying the opt-out amounts.
    The EPA notes that the emissions amount budgeted in this table are 
only for the purpose of determining the milestones at the outset of the 
program should some States and Tribes choose not to participate. The 
amounts budgeted to each State in this table are not necessarily the 
amounts that will be allocated to sources in the State if a trading 
program is triggered. Further discussion on the requirements for source 
allocations under a trading program are discussed below in unit II.D. 
of the preamble.
    The EPA believes that for the program under 40 CFR 51.309 to 
achieve the WRAP's objectives and the objectives of the GCVTC, a 
sufficient number of States must participate in the program. The WRAP 
recognizes this issue of ``critical mass'' as well and has funded a 
study to review the results of a number of scenarios for possible 
participation in the program. The EPA proposes to defer to the WRAP's 
judgment on the issue of ``critical mass,'' and we request comment on 
this proposal.
    The process for taking the State opt-out amounts into account would 
happen automatically at the outset of the program and would be 
reflected in the SIPs submitted in 2003. For the States that opted out, 
the amounts in Table 2 of the rule (included in the proposed rule in 40 
CFR 51.309(h)(1)(i)) would be deducted from the amounts in Table 1 for 
purposes of establishing the program milestones.
    As is discussed below in unit III.D of this preamble, Tribes have 
the flexibility to opt into the program after the 2003 deadline. The 
process for taking into account the tribal amounts in Table 2 of the 
rule needs to take this into account. For Tribes that have not opted 
into the program by the 2003 date, the amounts in Table 2 will be 
deducted from the amounts in Table 1 at the outset of the program. For 
Tribes that opt into the program at a later date, these amounts will be 
automatically added to the amounts in Table 1, beginning with the first 
year after the TIP implementing 40 CFR 51.309 is approved by EPA.\16\
---------------------------------------------------------------------------

    \16\ If EPA promulgates a FIP implementing 40 CFR 51.309 for a 
Tribe, that FIP will be treated in the same manner as a TIP for 
purposes of this provision.
---------------------------------------------------------------------------

2. Adjustment for Smelter Operations
    Currently, two of the copper smelters in the nine-State Visibility 
Transport Region are temporarily shutdown due to economic conditions. 
These smelters are the Phelps Dodge Corporation's Hidalgo Smelter in 
New Mexico, and the BHP Company San Manuel Smelter in Arizona. As noted 
above, it is difficult to predict whether long-term economic conditions 
may lead to resumed operation of these two smelters. Because of the 
significance of these smelters, the Annex makes provisions to adjust 
the milestones upward if either of the two smelters resume operation. 
The Annex also has a provision to adjust the milestones upward if 
either one, or both, of the two smelters remain shutdown, but other 
smelters in the region increase copper production such that 
SO2 emissions exceed the year 2000 baseline level. This 
adjustment for the currently suspended smelters is described in section 
III.A.3.a. of the Annex and is discussed further in section II.A.2.a of 
the Annex.
    During the last full year of operation of the two smelters, 1998, 
the Phelps Dodge Hidalgo smelter emitted 22,000 tons of SO2, 
while the BHP San Manuel Smelter emitted 16,000 tons. These two 
smelters have air quality permits from the respective State air 
agencies, and the Annex states that they would be allowed to resume 
full operation at any time. The Annex provides for the following 
adjustments if one or both of these smelters resumes full operation 
consistent with its existing permitted levels:

--22,000 tons is added to each of the milestones if Phelps Dodge 
Hidalgo resumes operation but BHP San Manuel does not resume operation,
--16,000 tons is added to each of the milestones if BHP San Manuel 
resumes operation but Phelps Dodge Hidalgo does not resume operation, 
and
--If both smelters resume operation, then 38,000 tons is added to the 
milestones for each subsequent year up to the year 2012, and 30,000 
tons is added to each milestone for the year 2013 through the year 
2018.

    The Annex describes two sets of circumstances under which resumed 
operations of the smelters could result in emissions that are less than 
historical levels. The first is if a smelter were to operate in a 
``substantially different'' manner than it had operated in the past. 
For example, if only a portion of a plant were to resume operation, 
then emissions would fall below past levels. This would happen, for 
example, if the plant were to resume operation but used the acid plant 
to produce acid from elemental sulfur, rather than to resume copper 
production. The Annex states that in such a case, the State will reduce 
the emissions adjustment amount to reflect such conditions in the 
milestones.
    The second set of circumstances addressed in the Annex for reducing 
the adjustments is when one or both of the two smelters resumes 
operations in a manner that triggers new source review requirements 
under parts C or D of title I of the CAA. The Annex recognizes that 
this new source review process might lead to a change in the level of 
SO2 emission levels as compared to past levels. The Annex 
states that under such circumstances the State will determine an 
``appropriate'' adjustment to the milestone based upon the emission 
levels allowed by the new source review permit. For this case, the 
``appropriate'' emission level will be added to the milestone for each 
subsequent year after the source remains in operation at the newly 
permitted levels. The Annex clarifies that in no instances may the 
adjustments exceed 22,000 tons for the Hidalgo smelter or 16,000 tons 
for the San Manuel smelter.
    The final consideration in the Annex for making adjustments to the 
milestones to reflect future changes in smelter operations involves 
those smelters in the region other than Phelps Dodge Hidalgo or BHP San 
Manuel. The Annex provides for smelter-specific adjustments to the 
milestones if two conditions are met:

    (1) Either the Phelps Dodge Hidalgo or BHP San Manuel smelter 
has not resumed operations, and

[[Page 30428]]

    (2) One of the remaining smelters increases its actual emissions 
\17\ above its year 2000 baseline level.

    \17\ Although not stated explicitly in the Annex, EPA interprets 
this to mean legally permissible increases in actual emissions 
within levels allowed by permits and regulations.
---------------------------------------------------------------------------

    The following table illustrates the smelter-specific adjustments 
provided for in the Annex.

                 Table 2.--Smelter-Specific Adjustments
------------------------------------------------------------------------
                                                     Maximum adjustment
                                                    to the milestone for
       Company/smelter         Baseline emissions      any year where
                                 (tons per year)      emissions exceed
                                                    2000 baseline levels
------------------------------------------------------------------------
BHP San Manuel..............                16,000                 1,500
Asarco Hayden...............                23,000                 3,000
Phelps Dodge Chino..........                16,000                 3,000
Phelps Dodge Hidalgo........                22,000                 4,000
Phelps Dodge Miami..........                 8,000                 2,000
Kennecott Salt Lake.........                 1,000                   100
------------------------------------------------------------------------

The EPA interprets the Annex as providing for an adjustment to the 
milestones by the amount by which a smelter's actual emissions exceed 
the baseline levels, up to the amount listed in the right-hand column. 
For example, if in the year 2006 BHP San Manuel has not resumed 
operation and Asarco Hayden's actual emissions for that year are 25,000 
tons (2,000 tons more than Asarco Hayden's baseline emissions), then 
the milestone would increase by 2,000 tons. If, on the other hand, 
Asarco Hayden's actual emissions are 28,000 tons, (5,000 tons more than 
baseline emissions), the milestone would be adjusted by 3,000 tons, the 
maximum amount listed in the table.
    40 CFR 51.309(h)(1)(ii) of the proposed rule identifies the 
adjustments to the milestones under the various operating scenarios 
identified in the Annex by the WRAP. The EPA has attempted to clarify 
the adjustments with a series of ``if-then'' tables consistent with 
EPA's plain language guidelines. We request comment on these 
adjustments, and whether these tables properly interpret the procedures 
in section III.A.3.a of the Annex. In addition, EPA has included in the 
proposed rule a requirement that any adjustments to the milestones made 
to reflect changes in smelter operating conditions, and the basis for 
those adjustments, must be clearly identified by the States and Tribes 
in the annual process to determine whether the milestone is exceeded. 
(This annual process is described further in unit II.C of this 
preamble).
3. Adjustment for Changes in Emissions Calculation Methods
    The Annex provides for adjusting the milestones if there are 
changes in emissions calculation methods. Such changes could result, 
for example, if States or Tribes were to find errors in the 1998/99 
inventories used to establish the milestones, or based on State, tribal 
and EPA efforts to improve the accuracy of emissions calculation 
methods.
    In establishing an emissions baseline, the WRAP has used a number 
of different techniques to estimate or measure the emissions from the 
sources covered by the program. These current methods vary in their 
accuracy and reliability. For example, EPA believes that the most 
reliable method for measuring emissions is that currently being used to 
monitor electric utility boilers under the CAA acid rain program. This 
monitoring method measures the amount of SO2 in the exhaust 
from the boilers and the quantity (flow) of exhaust on a continuous 
basis. This allows the hourly tracking of SO2 emissions. 
Another method for calculating SO2 emissions for industrial 
coal-fired boilers is to measure the amount of sulfur in the coal and 
the quantity of coal burned, and to use EPA emission factors to 
determine the SO2 emissions. The EPA considers this method 
to be less accurate than the method for monitoring emissions for the 
acid rain program because coal is a heterogeneous mixture. As such, 
there are variations in the fuel sulfur which result in inherent 
uncertainties in knowing whether a given fuel sulfur measurement is 
representative of the entire quantity of fuel combusted. The copper 
smelters in the WRAP region are also considered to have a reliable 
method of determining their SO2 emissions, relying on a 
combination of monitoring and mass balance.\18\ For a number of other 
source types--such as portland cement plants, fluid cat cracker 
regenerators and sulfur plants, emissions are usually estimated using 
emission factors (that is, multipliers that are expressed in terms of 
amount emitted per amount of throughput or production). For sources 
relying on emission factors or other calculation techniques, there is a 
greater probability that there will be future improvements in the 
emission estimation methods.
---------------------------------------------------------------------------

    \18\ ``Mass balance'' (also sometimes called ``material 
balance'') techniques use data on the total amount of pollutant 
present, along with the amount that ends up in product or wastes, to 
deduce the amount that is emitted to the air. For some source 
categories, this can be a highly accurate method for determining the 
emissions. For others, it is much more uncertain.
---------------------------------------------------------------------------

    As the WRAP's SO2 program progresses, it is likely that 
some facilities that have relied on emission factors and other less 
accurate methods for determining the emissions will improve the 
accuracy of the emission estimates. The Annex provides for adjustments 
to the milestones when emission calculation techniques change is to 
avoid the creation of ``paper'' increases or decreases in emissions 
that do not reflect actual changes in emissions. As an example, assume 
that in their baseline inventory, a State in the WRAP region estimated 
emissions for a portland cement plant using an emission factor that a 
subsequent source test shows to be inaccurate. If the source test 
indicated that the plant is emitting 10 percent more emissions per unit 
of production than predicted by the emission factor, the emission 
estimate for the portland cement plant would increase even if 
production levels remained the same. While the new information shows 
that the emissions from the plant are more than previously thought, 
this does not mean that emissions have increased. Similarly, a

[[Page 30429]]

new method of calculating emissions that shows that emissions per unit 
of production are less than previously estimated would not indicate 
that emissions have decreased. Accordingly, in a program which depends 
on long-term comparisons of emission inventories relative to initial 
expectations, EPA agrees with the WRAP that it is important that the 
system avoid creating such ``paper'' increases and decreases.
    This provision for making these adjustments is discussed in 
sections II.A.d. and III.a.4.b of the Annex, and in a supplemental 
paper entitled ``Emission Tracking Prior to Triggering the Backstop 
Trading Program.'' In summary, the Annex provides for:

--Documenting the method of estimating or measuring emissions that was 
used in developing a baseline for the program,
--Keeping track of when these emission calculations methods change 
relative to the baseline,
--Periodically revising the SIPs to adjust the milestones to reflect 
these changes, and
--Using the method in place pending the SIP revision.

    The Annex provides that the implementation plan submittals must 
document how the emissions were determined for each unit that is part 
of the program. This information will be used to track the changes that 
occur over the years in the emission estimating and measuring 
techniques. As noted below in unit II.C of this preamble, States will 
report these changes annually in ``exceptions reports,'' which are 
reports that are intended to facilitate public review of the annual 
inventories by highlighting items of interest. The EPA agrees with the 
WRAP that future adjustments to the milestones for currently unknown 
changes in emissions calculation methods should only be made through 
revisions of SIPs/TIPs. The milestones are a fundamental component of 
the SO2 reduction program. Accordingly, it is important that 
any changes to those milestones be transparent to the public in order 
to ensure the overall integrity of the program. The implementation plan 
revision process assures that such a public review will take place. At 
the same time, we agree with the WRAP that it is not practical to 
provide for SIP revisions every year to account for such adjustments. 
In the supplemental paper, the WRAP recommends that these adjustments 
be made every 5 years and be included in the SIP revisions required by 
40 CFR 51.309(d)(10). The EPA believes that this is a reasonable time 
frame for making these changes. The EPA notes, however, that during the 
time period between the date the calculation method changes and the 
date that the SIP is revised, it is equally important to ensure that 
there not be ``paper'' emissions increases and decreases relative to 
the milestones. This would occur if emissions were reported using a new 
method, while the milestone reflected baseline estimates based on the 
previous method. The EPA agrees with the WRAP's suggestion that for 
purposes of the annual determination, the same method be used for 
reporting emissions, that is, the old method (on which the baseline 
emissions were calculated), pending the completion of the periodic SIP 
revision. The WRAP's process would accomplish this by having the 
regional planning body identify and account for any such ``paper'' 
increases and decreases in the annual determination process.
    The EPA has incorporated the proposed adjustment for emission 
calculation method changes in the proposed rule as paragraph 40 CFR 
51.309(h)(1)(iii).
    4. Adjustments for Utility Boilers Opting to Use More Refined Flow 
Rate Methods.
    In 1999, EPA adopted revisions to EPA's Reference Method 2, the 
standard method for measuring stack flow rates, (64 FR 26484, May 14, 
1999). The revisions provided three new procedures: Methods 2F, 2G, and 
2H. The new procedures, if used for a given source, allow for a more 
detailed assessment of the stack flow rates to provide more accurate 
results. The changes addressed concerns raised by utilities that 
Reference Method 2 may over-estimate flow in certain cases, such as 
when the flow is not going straight up the stack. If the flow rate is 
over-estimated, this would also lead to the overestimation of 
SO2 emissions because the facility's continuous flow rate 
monitor is calibrated to correspond to the flow test method. Facilities 
subject to the acid rain program under title IV of the CAA must perform 
these flow tests at least once a year to determine the accuracy of 
their continuous flow monitors. Facilities have an option to use either 
the old Method 2, or one or more of the new methods.
    When the WRAP made its emission projections for purposes of 
developing the milestones, the new methods were not yet in place. 
Accordingly, if a source owner chooses to use the new flow methods, and 
if as expected it results in a reduced flow rate for the same level of 
operation, then there will be a corresponding decrease in the emissions 
estimate. The EPA agrees with the WRAP that this would create the 
possibility of a ``paper'' decrease relative to the milestone if the 
milestone reflects the old method. As discussed in section III.A.5 of 
the Annex, the WRAP notes that a protocol is needed for adjusting the 
milestones to reflect changes in the baseline emission for utility 
boilers any time that a source opts to change its CEMs method. The WRAP 
addressed this issue in greater detail in a supplemental paper entitled 
``Emissions Tracking Prior to Triggering the Backstop Trading 
Program,'' which was submitted to EPA on June 1, 2001.
    The WRAP has identified three possible technical procedures for 
developing an ``adjustment factor'' for the new flow method. The EPA 
agrees that any of these three procedures would be acceptable. Under 
the first procedure, there would be a side-by-side comparison of flow 
rates using both the new and the old flow reference methods. For 
example, if the new method measured 760,000 cubic feet per minute, and 
the old method measured 800,000 feet per minute, the adjustment factor 
would be (760,000/800,000), or 0.95. The second method would use annual 
average heat rate, which is reported to the Energy Information 
Administration (EIA), as a surrogate for the flow rate. Under this 
method, the flow adjustment factor would be calculated using the annual 
average heat rate using acid rain heat input data (MMBtu) and total 
generation (MWHrs) reported to EIA, calculated as the following ratio:

Heat Input/MW for first full year of data using new flow rate method
Heat Input/MW for last full year of data using old flow rate method

The third method would use data reported to EPA's acid rain program. 
Under this method, there would be a comparison of the standard cubic 
feet per minute (CFM) per megawatt (MW) before and after the new flow 
reference method based on CEMs data, as follows:

SCF/Unit of Generation for first full year of data using new flow 
rate method
SCF/Unit of Generation for last full year of data using old flow 
rate method

    In the supplemental information paper, the WRAP identified three 
possible approaches for using the adjustment factors for making a 
correct comparison of emissions to the milestones. The WRAP did not 
indicate a preference for any single approach. The three options are as 
follows:
    (a) Using one of the options described above for determining the 
flow adjustment factor, revise the source's baseline emissions forecast 
for 2003,

[[Page 30430]]

2008 and 2013. For each year following the adoption of the new flow 
reference method through 2017, reduce the interim milestone by the 
corresponding amount. Using the example above where the adjustment 
factor is 0.95, this means that the previous baseline emissions for 
that source would be multiplied by 0.95. The annual compliance check 
will then be done by comparing regional SO2 emissions 
(unadjusted, as reported to EPA's acid rain program) to the revised 
milestone.
    (b) Using one of the options described above for determining the 
flow adjustment factor, revise the source's reported emissions on an 
annual basis, and do not adjust the milestone. For the example noted 
above, the emissions reported to EPA's acid rain program would be 
adjusted upward by multiplying the amount times (1/0.95). For each year 
following the adoption of the new flow reference method through 2017, 
the annual compliance check will be done by comparing the adjusted 
regional SO2 emissions to the unadjusted milestones.
    (c) Use a combination of the two approaches. Under this approach, 
interim milestones would be adjusted only every 5 years [using option 
(a) above] and the reported emissions for additional sources making the 
change in the intervening years are adjusted for comparison to the 
milestones [using option (b) above].
    The EPA believes that any one of these three approaches would be 
acceptable, but that a specific approach needs to be selected for the 
final rule. The EPA also believes that these adjustments to the 
milestone or to the reported emissions would not necessarily require 
SIP or TIP revisions, because the precise method for making the 
adjustment, and the publicly available data elements that will be used 
for making the adjustment, could be specifically identified in the 
final rule.
5. Adjustments for Illegal Emissions
    The Annex at section III.A.4.d. provides for future decreases to 
the milestones if it is determined that ``the milestones were based on 
illegal emissions.'' The Annex also includes a discussion of this 
adjustment in Attachment A, Draft Model Rule, sections A3.3(b)(4) and 
C4.6. These sections of the Annex provide a brief discussion of this 
adjustment and noted that ``the specific mechanism for this adjustment 
needs further discussion by the WRAP.''
    In developing the milestones, the WRAP identified the baseline 
emissions for each source during the base year, and estimated emissions 
for the source during the 2003 to 2018 time period, taking into 
consideration growth, utilization, retirement, and the absence of any 
additional requirements. The compilation of these source-specific 
baseline emissions resulted in the baseline emission inventory totals, 
which serve as a ``starting point'' for measuring progress from the 
program. The WRAP recognized in the Annex that if a source was in 
violation during the base year when its emissions were determined, the 
baseline emissions during 2003-2018 would be overestimated.For example, 
assume the baseline emissions for a boiler were calculated based upon 
an emission factor of 0.6 pounds per million BTU, and using actual and 
projected fuel amounts, the baseline emissions source were 10,000 tons 
in the year 1998, increasing to 20,000 tons in the year 2008 and 
continuing at 20,000 tons for the years between 2008 and 2018. For this 
example case, it is later discovered that the source has been in 
violation since 1998 of an emission limit of 0.3 pounds per million 
BTU. Based on a final enforcement action that takes place in the year 
2007, it is determined that if the source was in compliance with its 
limit, baseline emissions would have been 5000 tons in the year 1998, 
increasing to 10,000 tons in the year 2008 and continuing at 10,000 
tons for the years between 2008 and 2018. For this example case, 
baseline emissions for each year between 1998 and 2018 would be 
overestimated, by amounts that vary from 5,000 to 10,000 tons.
    The Annex and the WRAP's supplementary information include this 
provision without any further explanation of what should be considered 
as illegal emissions, who makes the determination, or what is the 
process for making this adjustment. The EPA is proposing the rule with 
the language consistent with the Annex, and we solicit comments on 
whether the term ``illegal emissions'' should be further clarified in 
the final rule.
    There are many types of outcomes between plaintiffs and defendants 
when resolving a dispute over illegal emissions. The most obvious 
example is when a case goes to court and there is a court decision that 
the emissions were not legal. This is the rarest of the dispute 
resolution methods. It is more typical that the disputing parties 
resolve their differences through one of the following two methods:

--A consent decree that is either entered through Federal or State 
courts, or
--An administrative enforcement proceedings by either States, Tribes, 
or EPA.

    Under these two methods of resolving an allegation of an illegal 
emission, it is typical that the defendant neither admits nor denies 
the alleged violation. They simply agree to correct the situation 
through injunctive relief and often pay penalties for being in 
violation.
    Sometimes, States and EPA disagree over whether or not a particular 
alleged violation was correct. This is typical in cases when EPA files 
a case that a State has opted not to pursue. There also can be 
disagreement when citizen groups pursue violations. Many of these cases 
are due to a difference in the federally enforceable SIP regulations 
and the current State regulations.
    Because of the issues referred to above, EPA is soliciting comment 
on how these types of settlements should affect the milestones. An 
important consideration to note is that under any of the options 
described below, adjustments to the milestone would occur only after 
the source in the enforcement case has achieved the additional control 
of their SO2 emissions. Consequently, adjustments to the 
milestone will have no affect on any other facility's operation because 
all of the reductions are being achieved by the source subject to the 
enforcement action. We seek comment on the following possible options:
    Option 1. Under this option, the rule would require that if there 
is any resolution to an alleged illegal SO2 emission, then 
all of the reductions would be considered as ``illegal emissions.'' 
Taking into account these reductions, there would be a ``re-forecast'' 
of the source's emissions and its effect on the milestone. ``Re-
forecast'' means to re-apply the forecasting process, that is the 
process the WRAP originally used to project future emissions and 
develop the milestones, using the corrected baseline sulfur dioxide 
emissions for the affected source. A comparison of this re-forecasted 
emission level with the previously forecasted emissions would yield a 
calculation of the amount of the adjustment for each year up through 
2018.
    Option 2. Under this option, the rule would allow for case-by-case 
judgments on the appropriateness of the adjustment, and would clarify 
the entity responsible for deciding whether a case involves illegal 
emissions warranting an adjustment to the milestones. Under this 
option, we also seek comment on the entity responsible for this 
determination, that is whether the rule should clarify whether the 
parties entering into a settlement, the States, the Tribes, the WRAP, 
or EPA would

[[Page 30431]]

determine the settlement's impact on the milestones.
    Another issue that EPA is soliciting comments on is how to treat 
any extra SO2 emissions reductions that a facility might 
achieve as a result of a settlement. The EPA will often allow a company 
that is settling through a consent decree or consent agreement to 
perform a ``supplementary environmental project'' and allow the 
expenditures on this project to partially offset penalties that the 
company would be assessed. If the milestones are not reduced by the 
amount of extra emissions reductions from this type project, then the 
environment may see little benefit, since another company would be 
allowed more SO2 emissions. We seek input on whether these 
``extra'' emissions reductions should be considered part of this 
``illegal emission'' adjustment and factored into a recalculation of 
the milestone.
    In the proposed rule, EPA includes, at 40 CFR 51.309(h)(1)(v), the 
Annex's provision for decreasing the milestone for illegal emissions. 
The EPA requests comment on how we have incorporated this provision, 
including whether the final rule should add further detail on the 
timing of the adjustment, and on the administrative steps that would be 
followed in making the adjustment. For example, EPA believes it may be 
useful to clarify that the adjustment to the milestone should be made 
beginning with the year that the source comes into compliance, rather 
than beginning with the date of the enforcement action.
6. Adjustment Based Upon Findings of Future Program Audits
    As will be discussed in greater detail below, there are several 
types of program reviews and audits that are part of this program. The 
Annex includes a provision to adjust the milestones if these program 
reviews and audits identify reasons for an adjustment. The Annex 
describes this adjustment in section III.A.4.c. and in Attachment A, 
Draft Model Rule sections B5 and C14.2. The WRAP has further clarified 
this process in the Supplemental Paper, ``Emissions Tracking Prior to 
Triggering the Trading Program.''
    There are three types of program reviews and audits in this 
program: (1) Audits of the data quality and administrative aspects of 
the program if the trading program is not triggered, (2) a review of 
data quality, administrative process and other issues related to the 
trading program if it is triggered, and (3) the 5-year SIP or TIP 
review (due in 2008, 2013, and 2018) required by the regional haze rule 
in 40 CFR 51.309(d)(10). The WRAP recommends, and EPA agrees, that such 
program reviews and independent party audits may identify the need for 
adjustments to the milestones to correct errors that do not fit into 
any of the other categories of adjustments discussed above. 
Accordingly, the Annex and the proposed rule provide a process for 
making such adjustments as appropriate.
    As indicated, in a supplemental paper to the Annex,\19\ the pre-
trigger audits of the program will be completed by the third year of 
each 5-year cycle (that is, by 2006, 2011, and 2016). A requirement for 
these audits is included in the proposed rule at 40 CFR 
51.309(h)(3)(v). The timing of these pre-trigger audits is designed to 
provide participating States and Tribes with sufficient lead-time to 
make any necessary changes during the general program review due 2 
years later (in 2008, 2013, and 2018, respectively).
---------------------------------------------------------------------------

    \19\ Supplementary Submittal to EPA in Support of the SO2 
Annex to the Grand Canyon Visibility Transport Commission Report. 
Submitted to EPA by the Western Regional Air Partnership, June 1, 
2001.
---------------------------------------------------------------------------

    The EPA includes the requirement to adjust milestones based on the 
results of the three types of data and program audits described above. 
This provision is included in the proposed rule as 40 CFR 
51.309(h)(1)(vi). The proposed rule also requires that if, during any 
audit or program review, the WRAP finds that changes need to be made 
then they will be incorporated at the time of the next SIP revision 
required under 40 CFR 51.309(d)(10).
    The EPA wishes to clarify that each
5-year SIP review under 40 CFR 51.309(d)(10) should include an 
evaluation of:
    (1) Key program assumptions against current findings, (2) the 
adequacy of State and tribal resources to implement the program, and 
(3) the effectiveness of interstate coordination and memoranda of 
understanding between the States and Tribes implementing the program.
7. Adjustments for Individual Sources Opting Into the Program
    The Annex, in section III.A.4.a. on page 58, and in section 
II.A.2.c on pages 21 and 22, provides for possible adjustments to the 
milestones for small sources that choose to participate in the program. 
Because the program includes all sources whose emissions exceed 100 
tons per year, any such source opting into the program would be one 
that emits less than this amount.
    The EPA does not view the individual source opt-in as an essential 
element of the regional SO2 program, but we do not object to 
its inclusion. We believe that if the program allows an expansion of 
the universe of sources subject to the program, it is reasonable that 
the milestones be adjusted upward to account for the inclusion of 
additional sources. The proposed rule, in proposed 40 CFR 
51.309(h)(1)(vii), allows for adjustments to the milestones if such 
sources opt into the program. In addition, the proposed rule requires 
that the adjustment be done through SIP revision procedures.

C. What Is the Annual Process for Determining Whether a Trading Program 
Is Triggered?

    The regional haze rule requires the Annex to identify the specific 
process for determining whether the milestones are exceeded. The WRAP 
included in the Annex a discussion of an annual process for making the 
determination, and in a supplemental paper submitted to EPA in June 
2001. In this unit of the preamble, we discuss this annual process and 
how EPA has incorporated this process into the proposed rule.
Regional Haze Rule Requirements for Specifying How the Market Trading 
Program Would Be Activated
    The regional haze rule, in 40 CFR 51.309(f)(1)(ii) requires that 
the Annex provide documentation ``describing in detail how emissions 
reduction progress will be monitored, and what conditions will require 
the market trading program to be activated. * * *'' In addition, 40 CFR 
51.309(d)(4)(i) requires that implementation plans submitted under 40 
CFR 51.309 must

include provisions requiring the monitoring and reporting of actual 
stationary source sulfur dioxide emissions within the State. The 
monitoring and reporting must be sufficient to determine whether a 
13 percent reduction in actual stationary source emissions has 
occurred between the years 1990 and 2000, and whether milestones 
required by paragraph * * * [40 CFR 51.309(f)(1)(i)] * * * have been 
achieved for the transport region. The plan submission must provide 
for reporting of these data by the State to the Administrator. Where 
procedures developed under paragraph (f)(1)(ii) of this section and 
agreed upon by the State include reporting to a regional planning 
organization, the plan submission must provide for reporting to the 
regional planning body in addition to the Administrator.

Finally, 40 CFR 51.309(d)(4)(ii) requires that implementation plans 
submitted under 40 CFR 51.309 must include ``the criteria and 
procedures for activating a market trading program or other program 
consistent with paragraph (f)(1)(i) of this section if an applicable 
regional milestone is exceeded, * * *'', that is, consistent with the 
Annex.

[[Page 30432]]

How the Regional Haze Rule Requirements for Program Activation Are 
Addressed in the Annex
    The WRAP addresses the requirements for documenting how the program 
would be activated in the Annex, and in a June 2001 supplemental paper 
entitled ``Emissions Tracking Prior to Triggering the Emissions Trading 
Program.'' Regarding the requirement to ``include provisions requiring 
the monitoring and reporting of actual stationary source sulfur dioxide 
emissions,'' the Annex provides that participating States and Tribes 
will compile an annual emissions report indicating the emissions of all 
stationary sources with actual SO2 emissions greater than 
100 tons per year, beginning with the year 2003 inventory. Any source 
which reduces emissions below 100 tons per year in later years will 
continue to be subject to the program.
    As further described in the Annex (III.A.6.b and II.A.3.b), 
participating States and Tribes must determine annually from 2003 to 
2018 whether the market trading program is triggered by comparing the 
regional SO2 emissions from stationary sources covered by 
the program to the applicable milestone. Compliance with the milestone 
is measured by using a 3-year average of total regional emissions with 
the 3-year average of the milestones except for the years 2003, 2004, 
and 2018. For 2003, the determination is based on 2003 emissions data 
only. For 2004, the program will use an average of 2003 and 2004 
emissions data. Compliance using a 3-year average will begin with the 
2003-05 emissions data for comparison with the year 2005 milestone. For 
the year 2018, total emissions will be compared to the 2018 milestone, 
not a 3-year average.
    As outlined in greater detail in the supplemental paper cited 
above, the annual process that participating States and Tribes will use 
consists of the following steps:
    (1) Each participating State and Tribe will compile annual 
emissions reports from all sources within their jurisdiction that are 
subject to the program (this includes all sources with actual emissions 
of 100 tons/year or greater of SO2 during the year 2003 or 
any subsequent year),
    (2) Each State and Tribe will solicit public comment on its annual 
emissions report for stationary sources,
    (3) States and Tribes will submit their annual emissions report to 
the WRAP. The annual emissions report would be due by September 30 of 
the following year. (For example, the emissions report for calendar 
year 2003 would be due September 30, 2004),
    (4) The WRAP will consolidate the data into a regional emissions 
report, assure the integrity of the regional reporting process and the 
quality of the data, and issue a draft regional emissions report. The 
draft regional emissions report will compare regional emissions to the 
milestone. (Note: This function could also be carried out by another 
State and tribal designee approved by EPA, for example, a regional 
modeling center or other program tracking administrator.) The draft 
regional emissions report will be completed by December 31 of the 
following year (for example, the draft finding for the year 2003 will 
be completed by the end of calendar year 2004), and
    (5) Taking into account public comment, participating States and 
Tribes will review and approve the final regional emissions report and 
make a formal submittal to EPA documenting their final determination of 
whether the milestone has been exceeded. The WRAP's supplementary 
information paper clarifies that this final submittal will be due the 
following March (for example, March 2005 for the emissions report for 
the year 2003), and this March deadline is included in the proposed 
rule. If the regional inventory exceeds the applicable milestone, 
participating States and Tribes will formally trigger the program by 
notifying EPA and the public at the time that the final report is 
submitted.
Special Provisions for the Year 2018
    As discussed in sections III.A.6.c and II.A.3.c of the Annex, the 
participating States and Tribes will compare the total regional 
emissions of SO2 for 2018 against the year 2018 milestone. 
Unlike for the comparison for years before 2018, there is no averaging 
of the emissions for 2018 with emissions of previous years. If 
emissions in 2018 are greater than the 2018 milestone, then source-
specific penalties will be imposed if sources exceed their trading 
program emissions allowances.\20\
Option for Triggering the Program in the Year 2013 Based Upon Projected 
Emissions for the Year 2018
    The Annex provides participating States and Tribes an option for 
triggering the market trading program in the year 2013 even if the 
milestone has not been exceeded. This 2013 trigger option will be 
implemented by consensus of those States and Tribes that have 
implementation plans under 40 CFR 51.309. Implementation of the early 
trigger will be based on emissions forecasts indicating that compliance 
with the 2018 milestone is not expected. The purpose of the optional 
trigger is to help sources to avoid penalties for the year 2018 by 
formally triggering the trading program in advance. Triggering the 
trading program early would also help ensure that actual emissions in 
the year 2018 will be less than the milestone.
---------------------------------------------------------------------------

    \20\ See preamble unit II.D below for a further discussion of 
the trading program allowances.
---------------------------------------------------------------------------

Special Provisions for Mohave Electric Generation Station for the Years 
Between 2003 and 2006
    The Annex also provides for special provisions in the annual 
emissions reporting for the Mohave Electric Generating Station for the 
years between 2003 and 2006. For this plant, controls will be installed 
by the year 2006 consistent with the Consent Decree for Grand Canyon 
Trust v. Southern California Edison (District of Nevada CV-S-98-00305-
LDG, dated December 15, 1999).
    When the interim milestones were first recommended by the WRAP 
Initiatives Oversight Committee (IOC), there was an error in the 
baseline emissions projection for the Mohave Generating Station. In 
estimating this baseline, the WRAP assumed that controls required for 
the Mohave Electric Generating Station in 2006 would be in place in 
2003. Therefore, as discussed in Annex sections III.a.6.d. and 
II.A.3.d, the WRAP has included a correction for this error that will 
be used when measuring compliance with the milestones for 2003 through 
2006. For these years, emissions from the Mohave Generating Station 
will be calculated using an SO2 emissions rate of 0.15 pound 
per million BTU of coal input, consistent with the maximum allowable 
emissions rate effective in 2006 under the Consent Decree. These 
calculated emissions for Mohave will be substituted for the actual 
emissions in 2003, 2004, and 2005. For the year 2006, the emissions 
will be calculated based upon 05 pound per million BTU for any part of 
2006 prior to the installation of the controls.
Reliance on Current Emissions Reporting Requirements
    The WRAP, in the Annex, recommends that the current inventory 
techniques and requirements that States are using in the development of 
emissions inventories should be sufficient for quantifying the regional 
SO2 emissions on an annual basis for the pre-trigger 
program. Consistent with this recommendation, the Annex does

[[Page 30433]]

not provide for the development of emission quantification protocols 
for the pre-trigger phase of the program. The WRAP recommends that this 
should be adequate since the large majority of emissions come from the 
coal-fired power plants and the copper smelters, which are accurately 
measured using current methods. As noted above, the Annex includes 
adjustments to the milestones to take into account any changes to 
emission estimating or measuring techniques. If the trading program is 
triggered, as discussed below, the WRAP recognizes the need for 
protocols for consistent and ``best available'' emission monitoring and 
reporting for each source category. The EPA proposes to agree with the 
WRAP's recommendation that existing emissions reporting requirements 
are sufficient for the pre-trigger phase. However, EPA recognizes that 
there is some measure of uncertainty in the program because there is 
currently less information on the specific methods being used for 
reporting emissions from the other sources (that is, other than 
utilities and smelters), and the level of accuracy with the methods for 
each of these sources is not as well understood. Reliance on current 
inventory techniques and requirements will also result in sources in 
the same source category using different methodologies since the 
inventory reporting process allows for such variability. There will 
also be variability from State to State, or Tribe to Tribe, since there 
is no requirement for consistency between States or Tribes. We request 
comment on the acceptability of reliance on current emission inventory 
methods being used for sources in the region.

Exceptions Reports

    The supplemental information provided by the WRAP indicates that 
the program will include a requirement for participating States and 
Tribes to include what are termed ``exceptions reports.'' These 
exceptions reports will contain the following information:

--Identification of any new or additional SO2 sources 
greater than 100 tons per year that were not contained in the previous 
inventory;
--Identification of sources shut down or removed from the previous 
inventory;
--Explanation for emissions variations at any covered source that 
exceeds plus or minus 20 percent from the previous year's emissions; 
and
--Identification and explanation of new emissions reporting methods at 
any source.
Incorporation of the Annual Process Into the Proposed Rule
    The EPA believes that the detailed information provided by the WRAP 
in the Annex and in supplemental materials fulfills the requirements 
for the Annex that are contained in 40 CFR 51.309(f)(1)(ii) for 
``documentation describing in detail how emissions reduction progress 
will be monitored.'' In addition, EPA believes that State SIPs and 
tribal TIPs submitted consistent with these provisions will satisfy the 
requirements of 40 CFR 51.309(d)(4)(i) for monitoring and reporting of 
SO2 emissions.
How EPA Proposes To Incorporate the Annual Process Into 40 CFR 51.309 
of the Regional Haze Rule
    In the proposed rule, EPA includes the WRAP program's requirements 
for an annual process for determining whether the milestones are 
exceeded. This process appears in the proposed rule at 40 CFR 
51.309(h)(2) and (3). The EPA proposes that the Annex (including the 
supplemental papers) meets all of the requirements of 40 CFR 51.309 of 
the regional haze rule for ``describing in detail how emission progress 
will be monitored, and what conditions will require the market trading 
program to be activated.''
    Proposed paragraph 40 CFR 51.309(h)(2) describes the process for 
collecting emissions data each year and for the reporting of such data 
by each participating State and Tribe. This includes provisions 
describing which sources must be included in the program, a requirement 
for States to submit emissions reports for the previous year by 
September 30th of each year, a requirement that the annual emissions 
report include exceptions reports, the special provisions for the 
Mohave Generating Stations for the years 2003 through 2006, and the 
option for including year 2018 emissions projections in the year 2013.
    The regional haze rule requires, as noted above, that:

    The plan submission must provide for reporting of these data by 
the State to the Administrator. Where procedures developed under 
paragraph (f)(1)(ii) of this section and agreed upon by the State 
include reporting to a regional planning organization, the plan 
submission must provide for reporting to the regional planning body 
in addition to the Administrator. 40 CFR 51.309(d)(4)(i).

This provision does not require participating States and Tribes to 
report the relevant data to a regional planning organization, but it 
does give the WRAP the ability to include procedures in the Annex for 
the collection of data by a regional planning body. Such procedure 
would facilitate each State and Tribe's ability to determine whether 
the milestones are exceeded.
    As indicated in the WRAP's supplemental paper ``Emissions Tracking 
Prior to Triggering the Emissions Trading Program'' the Annex includes 
a regional planning body, that is, the WRAP, for the reporting of 
emissions. Assuming that each participating State and Tribe designates 
the WRAP as the ``regional planning body,'' each State and Tribe would 
report to the WRAP. The EPA, therefore, expects that the WRAP will be 
compiling the information from each participating State and Tribe.
    The EPA assumes at this point that the participating States and 
Tribes will agree on the procedures for reporting data to the WRAP. 
However, to ensure that there would be a process in place in the 
unlikely instance that the participating States and Tribes do not 
designate a regional planning body for this purpose, or do not agree on 
the reporting procedures, the proposed rule provides that each State 
and Tribe would make the determination of whether a milestone is 
exceeded based on the information submitted to them by the other 
participating States and Tribes.
    Proposed paragraph 40 CFR 51.309(h)(3) describes the process for 
making the annual determination of whether the milestone was met. A 
draft determination would be submitted by the regional planning body 
(which EPA assumes will be the WRAP) or each State or Tribe by the end 
of the following year (for example, the end of 2004 for the 
determination for the year 2003). The proposed rule requires a final 
determination, based on comments received on the draft determination, 
by the end of the following March (for example, the end of March 2005 
for the year 2003).

D. What Must Each Participating State and Tribe's Implementation Plan 
Include for Administering the Trading Program, If It Is Triggered?

    The regional haze rule, at 40 CFR 51.309(d)(4)(iii) and (iv), 
requires that SIPs/TIPs provide for a market trading program that would 
serve as a ``backstop'' to ensure that SO2 emissions would 
not exceed the milestone. The regional haze rule, at 40 CFR 
51.309(f)(1)(ii), requires that the annex provide information on this 
market trading program, consistent with 51.309(d)(4). This provision 
requires that the Annex must contain ``documentation'' of the market 
trading program, including model rules,

[[Page 30434]]

memoranda of understanding, and other documentation describing in 
detail how emissions reduction progress will be monitored, what 
conditions will require the market trading program to be activated, how 
allocations will be performed, and how the program will operate.
    The regional haze rule, in 40 CFR 51.309(d)(4)(iii) requires that 
the implementation plans submitted under 40 CFR 51.309 must:

--Contain provisions to activate the market trading program or other 
program within 12 months after the emissions for the region are 
determined to exceed the applicable emissions reductions milestone, and
--Must assure that all affected sources are incompliance with 
allocation and other requirements within 5 years after the emissions 
for the region are determined to exceed the applicable emissions 
reductions milestone.

Additionally, 40 CFR 51.309(d)(4)(iv) requires that the implementation 
plans include provisions for market trading program compliance 
reporting, and provisions requiring the State to provide annual reports 
assuring that all sources are in compliance with the market trading 
program.
    The Annex includes documentation of the market trading program in 
sections II.D and II.E of the Annex, pages 28-53, and in section III.D 
of the Annex, pages 63-67. A draft model rule is included as Appendix A 
to the Annex. A draft memoranda of understanding is included as 
Appendix B. A few clarifications on trading program issues are included 
in the supplemental information submitted by the WRAP during June 2001.
    These sections of the Annex provide the ``documentation'' required 
by 40 CFR 51.309(f)(2)(ii), and they include ``model rules, memoranda 
of understanding, and other documentation describing in detail how 
emissions reduction progress will be monitored, what conditions will 
require the market trading program to be activated, how allocations 
will be performed, and how the program will operate.'' Therefore, EPA 
proposes a finding that the information submitted in the Annex, 
including the Appendices and supplemental information, satisfies the 
requirements in 40 CFR 51.309(f)(2)(ii) of the regional haze rule.
    The EPA also proposes a finding that the Annex provides for a 
trading program which, if followed in the 2003 SIP submittals, will 
satisfy the requirements in 40 CFR 51.309(d)(4)(iii) and (iv). The June 
2001 supplemental information makes clear that the backstop market 
trading provisions will be activated within 12 months after the 
emissions for the region are determined to exceed the applicable 
emissions reductions milestone. The Annex also, as clarified with the 
example in section II.D.1 on page 29, provides that all affected 
sources must be in compliance with allocation and other requirements 
within 5 years after the emissions for the region are determined to 
exceed the applicable emissions reductions milestone. The Annex 
includes provisions requiring annual reports assuring that all sources 
are in compliance with applicable requirements of the market trading 
program.
Incorporation of Annex Trading Program Provisions in the Proposed Rule
    The EPA has incorporated the Annex provisions for a market trading 
program in proposed 40 CFR 51.309(h)(4). In the proposed rule, EPA also 
has included a list of fundamental elements that the SIPs must contain, 
and the basic requirements for those elements that will help guide 
EPA's review of the SIPs. These fundamental elements are aimed at 
ensuring the integrity of the market trading program, and are 
consistent with the provisions of EPA's guidance for economic incentive 
programs (EIPs). (Improving Air Quality with Economic Incentive 
Programs EPA-452/R-01-001, January 2001). The fundamental elements are 
as follows:

    (1) Provisions for the allocation of allowances to each source 
in the program;
    (2) Emissions quantification protocols;
    (3) Provisions for the monitoring, record keeping and reporting 
of emissions;
    (4) Provisions for a centralized system to track allowances and 
emissions;
    (5) Provisions requiring the identification of an authorized 
account representative for each source in the program;
    (6) Provisions requiring the account representative to 
demonstrate annual compliance with allowances;
    (7) Provisions for the process of transferring allowances 
between parties;
    (8) Provisions describing the ``banking'' of extra emissions 
reductions for use in future years, if the implementation plan 
allows for banked allowances;
    (9) Provisions establishing enforcement penalties for 
noncompliance with the trading program; and
    (10) Provisions for periodic evaluation of the trading program.

    The EPA believes that the detailed draft model rule, which is 
Appendix A to the Annex, addresses these general principles. The draft 
model rule is intended to provide detailed regulatory language to 
implement the program and will serve as a template that individual 
States and Tribes can use to develop their SIPs under 40 CFR 51.309. 
The EPA intends to work together with States and Tribes to ensure that 
the final model rule, and the resulting State and tribal plans, are 
consistent with the requirements of the regional haze rule, with the 
provisions for TIPs contained in 40 CFR part 49, and with other 
requirements that are common to all State/tribal implementation plans 
and EIPs. The EPA believes that completion of this model rule effort in 
a timely manner is very important to the overall success of the 
program. In a supplemental paper entitled, ``State Rulemaking Schedules 
for 309,'' the WRAP provided estimated timelines for each of the 9 
States in the transport region to complete a SIP under 40 CFR 51.309. 
Based on this paper, it appears that the WRAP intends to refine and 
finalize the model rule by early 2002.
    The EPA believes that the Annex provisions in 40 CFR 51.309 do not 
require the WRAP's submittal to contain the same level of detail that 
is required in the final model rule. First, EPA believes that it need 
not incorporate into 40 CFR 51.309 the same level of detail regarding 
the trading program that will be set forth in the model rule. Second, 
the model rule addresses details that are essential to the program, but 
may not be appropriate as Federal mandates. For example, while it is 
essential that the program issue specific emissions allocations to each 
source under the trading program, it is not necessary or appropriate 
for EPA to dictate that a specific method be used. Finally, we believe 
that if SIPs/TIPs submitted under 40 CFR 51.309 adequately address the 
basic fundamental criteria that we are proposing, they will provide for 
a sound program consistent with EPA regulations and policies.
    The following is a description of each of the trading program 
requirements that are included in proposed 40 CFR 51.309(h)(4). For 
each of these proposed requirements, EPA requests comment on whether we 
have addressed the requirement to an appropriate level of detail, and 
on whether the substance of the requirement is sufficient to ensure 
program integrity for the backstop market trading program.
Allowances. 40 CFR 51.309(h)(4)(i) and (ii)
    Allowances are a key feature of the backstop market trading 
program. An allowance authorizes a source to emit one ton of 
SO2 during a given year or (with some exceptions) in a 
future year. At the end of the compliance period, which is a 12-month 
period ending with each calendar year, a source owner's

[[Page 30435]]

allowances must exceed or equal its annual emissions. For example, a 
source that emits 5,000 tons of SO2 in a given year must 
hold at least 5,000 allowances for that year.
    Allowances are fully marketable commodities. Once allocated, 
allowances may be bought, sold, traded, or (where allowed) banked for 
use in future years. If the trading program is triggered, allowances 
are the currency with which compliance with the SO2 
emissions requirements is achieved. Sources that reduce their emissions 
below the number of allowances they hold may transfer allowances to 
other units in their system, sell or trade allowances to other sources 
or private parties on the open market, or bank them to cover emissions 
in future years. Allowance trading provides incentives for energy 
conservation and technology innovation that can both lower the cost of 
compliance and yield pollution prevention benefits.
    The Annex includes a hypothetical timeline in section II.D.1. on 
page 29 of the Annex, which clarifies how the market trading program 
would be implemented. This Annex shows sources must hold sufficient 
allowances to cover their emissions by the 6th year following the 
calendar year for which emissions exceed a milestone. For example, if 
the milestone is exceeded in 2004, then the first calendar year for 
which a source would have to comply with allowances would be the 
calendar year 2010. As a result, the milestones become an enforceable 
``cap'' on emissions, and the total amount of allowances issued for 
participating States may not exceed this ``cap.'' A table listing the 
allowance totals by year is included in the proposed rule as Table 
4.\21\
---------------------------------------------------------------------------

    \21\ Note that while the Annex provides for averaging of 
emissions reporting and milestones for purposes of making the annual 
determination of whether the milestone is exceeded, once a trading 
program is in place, there is no averaging of the milestones for 
purposes of the trading program. For example, milestones for the 
year 2013 must add up to 655,000 (with suspended smelters) or 
625,000 tons (without suspended smelters). There is no averaging of 
the year 2013 with 2012 and 2011 as is done for the annual 
determination.
---------------------------------------------------------------------------

    The proposed rule requires States and Tribes to include initial 
source-specific allowance allocations for each source in their 
implementation plans submitted under 40 CFR 51.309. These initial 
allocations must specify the tons per year allocated for each source 
for each year between 2009 and 2018.
    The Annex, in section II.D (pages 28-37) and in section III.D.7 
(pages 63-67) contains a detailed discussion of the methodology that 
the WRAP proposes for distributing allowances to sources. This 
methodology outlines in detail the parameters and considerations that 
States and Tribes will use for issuing initial allowances to sources, 
and for adjusting those allowances with time. The EPA proposes not to 
include the details of this methodology in 40 CFR 51.309. So long as 
the SIPs/TIPs contain source-specific allowances for each source 
included within the program, and those allowances add up to the 
appropriate regional total, EPA believes the objectives of the program 
are met. The EPA views the choice of method, and the implementation of 
the method, to be primarily an issue for States and Tribes to address.
    There is one element of the allocation methodology that EPA has 
chosen to include in the proposed rule to ensure that it is included in 
the program. This element, a 20,000 ton ``set-aside'' for use by 
Tribes, over and above any amount allocated in the process described 
above, can probably be assured only if EPA includes a requirement in 
the rule. Accordingly, 40 CFR 51.309(h)(4) requires that before issuing 
allowances to individual sources, 20,000 tons must be subtracted from 
the total for use by Tribes. The EPA believes that this 20,000 ton set-
aside should not be used for issuing initial allowances to tribal 
sources of SO2 included within the program, and for 
adjusting those allowances with time. Further discussion of issues 
related to tribal participation in the program, and use of the ``set-
aside'' for Tribes, is included below in unit III of this preamble.
Emissions Quantification Protocol, and Monitoring, Recordkeeping and 
Reporting Provisions. 40 CFR 51.309(h)(4)(iii) and (iv)
    The proposed rule requires that States include specific emissions 
quantification protocols, that is the procedures for determining actual 
emissions. These procedures will be used to measure, or determine, 
annual emissions if the trading program is triggered. The proposed rule 
also requires that States include the necessary monitoring, record 
keeping, and reporting provisions to measure and track results.
    The WRAP recognized the need to have detailed and prescribed 
emission quantification protocols and proposes that the participating 
States and Tribes establish such provisions in the SIPs submitted under 
40 CFR 51.309. The Annex describes the WRAP's approach to monitoring in 
section II, pages 39-41, in section III, item III.D.3 on page 64, and 
in Attachment A, Draft Model Rule section C.2.3 Monitoring 
Requirements, and section C9 Emissions Monitoring. In particular, the 
WRAP recognized the need for emission monitoring protocols which ensure 
that emissions are accurate and comparable for participating sources. 
For the trading program, the emissions amount becomes a tradeable, 
fungible commodity. Accordingly, it is important to the integrity of 
the program to ensure that one ton of emissions from one source is 
equivalent to one ton of emissions from another source. The WRAP plans 
to develop the specific emissions quantification protocols in a 
subsequent collaborative process involving States, Tribes, and EPA.
    Under this program, the WRAP in the Annex proposes that sources 
subject to the acid rain program under title IV of the CAA will 
continue to follow the continuous emission monitoring procedures in the 
acid rain program, which appear on 40 CFR part 75. As a result, EPA 
would not develop or require separate emission protocols for these 
sources as part of implementing 40 CFR 51.309.
    For the other source categories not covered by part 75, the WRAP in 
the Annex recognizes the need to develop protocols based upon ``best 
available'' monitoring techniques for each source category. The EPA 
proposes that the criteria for acceptability of these protocols in the 
implementation plans are the same criteria as listed in section 5.2 and 
5.3 of the EIP guidelines. These guidelines state that emission 
quantification protocols:

--Must ensure reliable results, and that they must ensure that repeated 
application of the protocol obtains results equivalent to EPA-approved 
test methods;
--Must be replicable, that is, the protocol ensures that different 
users will obtain the same or equivalent results in calculating the 
amount of emissions and/or emissions reductions.

These guidelines also specify that trading programs need to include 
monitoring, record keeping, and reporting provisions to provide 
adequate information for determining a source's compliance with the 
program. Adequate monitoring, record keeping and reporting procedures 
have several key attributes, including representativeness 
(characteristic of the source category and available monitoring 
techniques), reliability, replicability, frequency (that is, the 
monitoring is sufficiently repeated within the compliance period), 
enforceability (that is, the monitoring is independently verifiable), 
and timeliness.

[[Page 30436]]

Tracking Process. 40 CFR 51.309(h)(4)(v)
    The proposed rule requires that the implementation plans submitted 
under 40 CFR 51.309 must include provisions identifying a specific 
tracking process to track allowances and emissions. Consistent with the 
EIP guidance, the proposed rule requires that the implementation plans 
must provide that all emissions, allowance, and transaction information 
is transparent and publicly available in a secure, centralized data 
base.
    The WRAP, in the Annex and draft model rule, has included numerous 
provisions detailing the system that States and Tribes intend to use to 
satisfy this proposed requirement. These provisions are outlined in 
detail in the draft Model Rule section C.8 and on pages 64-65 of the 
Annex. The overall program is referred to as the Western Emission 
Budget, or WEB. The tracking system includes a centralized tracking 
systems administrator who would be appointed by States and Tribes as 
the administrator of a ``WEB allowance tracking system'' and a ``WEB 
emissions tracking system.'' The WRAP and EPA recognize that in 
assigning duties to any such tracking system administrator, States and 
Tribes may not delegate any inherent governmental responsibilities. For 
example, emissions data certification and program enforcement must 
remain with the States and Tribes. The WRAP envisions that the central 
tracking system will serve a number of functions: To identify which 
sources hold allowances in the program, to identify how many allowances 
a source owner holds, and to record allowance transactions. Another 
function of the tracking system administrator in the trading system is 
to record allowance transfers and to ensure at the end of the year that 
a source's emissions do not exceed the number of allowances it holds. 
The tracking system serves as the official record and operates much 
like a bank account.
    The allowance accounts are the official records for allowance 
holdings for compliance purposes. It is for that reason that the EIP 
requires that these systems be secure and allow for frequent updates 
(EIP, section 7.4(g)). Also consistent with the EIP, there must be a 
way to uniquely identify each allowance and there must be enforceable 
procedures for recording data.
Responsible Party. 40 CFR 51.309(h)(4)(vi)
    The EPA believes that it is important that each source owner or 
operator designate a person who is responsible for the data reported 
for that source. The proposed rule includes a requirement that the 
SIPs/TIPs must include such a provision.
    The market trading program described in the Annex includes this 
requirement and refers to this person as the Authorized Account 
Representative (AAR). The Annex discusses the role and responsibilities 
of the AAR on pages 44 and 45 and in section C3 of the Draft Model 
Rule. The representative's responsibilities include performing permit, 
compliance, and allowance related actions for the WEB Program. That 
person will be responsible for certification for each emissions and 
allowance transaction.
Requirement for Annual Demonstration of Compliance. 40 CFR 
51.309(h)(4)(vii)
    The proposed rule requires that the SIPs/TIPs include a provision 
requiring the responsible party for each source to demonstrate that the 
source holds a quantity of allowances equal to or greater than the 
amount of SO2 emitted during that year. The responsible 
party must make this determination within a specified number of days 
following the end of each calendar year. The responsible party must 
determine the amount of SO2 emitted in accordance with the 
approved emissions quantification protocols and monitoring, record 
keeping and reporting provisions developed by the participating States 
and Tribes or the WRAP as part of this program. The EPA believes that 
60 days should be generally sufficient for preparing this 
demonstration. This time period is consistent with the national acid 
rain program, and thus has been demonstrated as a reasonable time 
period for utility boiler sources covered by that program. The WRAP has 
indicated that the time necessary for determining compliance will be 
dependent on emission quantification protocols adopted. As these 
protocols are still under development, the WRAP believes that it is 
possible that a longer time period may be warranted in some cases. The 
EPA proposes that the WRAP deadline be 60 days unless a specific need 
is identified. We request comment on whether EPA should include a 
specific, generally applicable, deadline in the final rule.
Requirement for Provisions Detailing the Process for Transferring 
Allowances Between Parties. 40 CFR 51.309(h)(4)(viii)
    The proposed rule requires that SIPs/TIPs must contain provisions 
detailing the process for transferring allowances from one source to 
another. Section C6 of the Draft Model Rule in the Annex provides a 
detailed description of allowance transfer procedures. The program 
would provide procedures for sources to request an allowance transfer, 
for the Tracking System Administrator to record the requests, and for 
notification of the source and the public of each transfer and request.
Banking Provisions. 40 CFR 51.309(h)(4)(ix)
    The banking of allowances occurs when allowances that have not been 
used for compliance are set aside for use in a later compliance period. 
Banking provides flexibility to sources, encourages early reductions, 
and encourages early application of innovative technology. However, 
banking also carries an associated risk of delayed or impaired 
achievement of air quality goals due to the use of banked allowances.
    The Annex discusses banking on page 64 and the Draft Model Rule 
outlines the banking procedures in section C7. The Annex states that 
the use of banked allowances in the compliance process will be 
regulated by management provisions, which would act as a disincentive 
for sources to use banked allowances in years where there is a 
substantial bank of allowances available to use in compliance. The 
purpose of these management provisions, sometimes referred to as ``flow 
control'' is to ensure that there would not be a substantial increase 
in emissions in a year for which a relatively large fraction of banked 
emissions were used. This provision, accordingly, will help to ensure 
that the milestones continue to be met.
    The proposed rule allows trading programs to include provisions for 
banked allowances, so long as the SIPs/TIPs clearly identify how unused 
allowances may be kept for use in future years, and the restrictions 
for use of any such banked allowances. Because a key objective of the 
Annex is to ensure that actual emissions will not exceed the milestone 
for the year 2018, the proposed rule requires that any banking 
provision of the trading program must be designed in a way that would 
not allow actual emissions to exceed this milestone.
    Allowing the use of banking raises a potential issue regarding 
records retention. While records are normally required to be retained 
for a minimum of 5 years from their creation, banking allows for the 
possibility that an unused allowance could be banked for some time 
before being used. Consequently, in order to ensure that records are 
retained for a sufficient period of time

[[Page 30437]]

to provide for enforceability of the program, the proposed rule 
requires that records relating to the banked allowances must be 
retained for at least 5 years after the use of those allowances. For 
example, if an unused allowance from the year 2009 is used in 2012, the 
source owner or operator must retain records relating to that allowance 
for 5 years after its use, which in this example would be 2017.
Enforcement Penalties. 40 CFR 51.309(h)(4)(x)
    The proposed rule requires that the trading program describe the 
specific enforcement penalties that will be applied if a source's 
emissions exceed its allowances. The EPA agrees with the WRAP that it 
is important to provide automatic and stringent penalties to provide 
for sufficient incentive for source owners to comply with their 
allowances.\22\
---------------------------------------------------------------------------

    \22\ It should be noted that EPA policy for the Administration 
of Environmental Programs on Indian Reservations, reaffirmed by the 
Administrator on July 11, 2001 and the EPA Office of Enforcement and 
Compliance Assurance (OECA) Guidance on the Enforcement Principles 
outlined in the 1984 Indian Policy dated January 17, 2001 provide 
guidance on EPA's response to noncompliance at tribal facilities. 
The EPA intends to act in a manner consistent with the Indian Policy 
and OECA guidance with regard to enforcement actions that would be 
taken under this program against tribal facilities.
---------------------------------------------------------------------------

    The EPA requires all market trading programs to include provisions 
for imposing penalties when a source fails to hold enough allowances to 
cover emissions, violates its record keeping obligations, or violates 
any other obligations under the program. The program must define a 
violation, establish the procedure for determining the magnitude of a 
violation, set potential penalties, and maintain the ability to impose 
the maximum monetary penalty consistent with the CAA. The EIP (section 
7.4(h)) outlines the compliance provisions EPA considers to be 
essential in multi-source emission cap-and-trade programs.
    The EIP also outlines the provisions for assessing liability, in 
section 6.1(a). Emission trading, unlike traditional regulatory 
mechanisms, generally involves more than one party. These parties can 
be not only the owners or operators of the sources participating in the 
program but sometimes another party who facilitated the trade (e.g., a 
broker). To ensure integrity in the trading system, all parties are 
normally responsible for ensuring the validity of the trades or their 
use of emissions reductions.
    The penalty provisions in the emissions trading program must 
include mechanisms that enable the State to assess monetary penalties 
and impose corrective actions against the sources participating in the 
trading program.
    The Annex outlines the enforcement elements developed by the WRAP 
in section II.E.6.f and in Draft Model Rule section C13. These 
provisions include two automatic penalties for excess emissions. First, 
there would be an automatic surrendering of two future year allowances 
for every one ton of excess emissions. Second, there would be a 
financial penalty that would exceed by a factor of three to four the 
projected range of prices for allowances. In addition to these 
penalties for excess emissions, the Annex provides for penalties for 
failure to comply with other program requirements, such as the 
monitoring, record keeping and reporting requirements, that would be 
consistent with CAA civil and criminal penalties.
Provisions for Periodic Evaluation of the Trading Program. 40 CFR 
51.309(h)(4)(xi)
    The proposed rule requires the backstop trading program to include 
a provision for periodic evaluations of the program. Such periodic 
evaluations are required as a means of determining whether the program, 
in its actual implementation, needs any mid-course corrections. The 
EPA, in the proposed rule, includes a list of questions that the 
program evaluations should address. These questions are derived from 
the EIP, section 5.3(b).

E. What Additional Provisions Must the SIP or TIP Include Regarding the 
Market Trading Program?

    As included in the proposed rule in 40 CFR 51.309(h)(5), EPA 
proposes to include two provisions of the Annex that provide for 
integration with other CAA programs.
    The proposed language in 40 CFR 51.309(5)(i) notes that the 
requirements of this program, including the backstop market trading 
program, are applicable requirements of the CAA that must be included 
in permits issued under title V of the CAA. The EPA expects that most, 
if not all, sources included within the program will have title V 
permits. The program requires participation by all sources with actual 
emissions of SO2 of more than 100 tons per year. These 
sources would also have a potential to emit of more than 100 tons per 
year. As the requirements of title V apply to sources with the 
potential to emit 100 tons per year of any air pollutant, EPA 
anticipates that almost all sources in the program would have a title V 
permit. The only likely sources which may not have title V permits 
would be any source that chose to opt into the program with potential 
emissions of less than 100 tons per year. In the Annex in section 
II.E.4., the WRAP discusses permit requirements for the program. This 
discussion describes in detail the mechanisms that would be used to 
ensure that any such opt-in sources have federally enforceable permit 
requirements. The EPA does not believe it is necessary in 40 CFR 51.309 
to include this same level of detail for opt-in sources. The proposed 
rule does include in 40 CFR 51.309(h)(5)(i) a requirement that all 
requirements of the program be enforceable by EPA, and by citizens to 
the extent permitted under the CAA.
    As the WRAP noted in section III.D. on page 47 of the Annex, the 
market trading program must not interfere with other provisions of the 
CAA. The program must also provide for provisions to ensure its 
integration with other programs. For example, some sources in the 
market trading program may be subject to title IV of the CAA or the 
Southern California RECLAIM program and these sources would be subject 
to more than one trading program. We have included as 40 CFR 
51.309(h)(5)(ii) a requirement that the SIPs submitted in 2003 must 
ensure that this program does not eliminate or interfere with any other 
requirements a source may have under the CAA.

F. What Happens to the Program After the Year 2018?

    It is EPA's understanding that the Annex did not attempt to address 
the fate of this program beyond calendar year 2018. The regional haze 
rule requires that SIPs be submitted in the year 2018 for a long-term 
regional haze strategy covering the time period between 2018 and 2028. 
There may be significant technological advances between now and the 
time that these SIPs/TIPs are developed that affect the possible 
measures for visibility protection, or the reasonableness of existing 
measures. Accordingly, EPA believes it is reasonable to defer until 
that time the judgment on the specific levels of SO2 that 
can be achieved.
    At the same time, EPA believes it is important to recognize that 
any actions that occur after 2018 should not be allowed to increase 
SO2 emissions beyond the 2018 milestone. Accordingly, we 
note in the discussions of the milestones in Table 1 of the proposed 
rule that any milestone developed for years after 2018 must not allow 
increases over and above those for the year 2018.

[[Page 30438]]

III. Implementation of the Regional SO2 Emissions 
Reduction Program in Indian Country

    The provisions in 40 CFR 51.309 of the regional haze rule provide 
for a regional visibility program within a geographic area of nine 
Western States. Within that geographic area, there are more than 200 
federally recognized Indian Tribes. Throughout the development of the 
GCVTC report, and in the subsequent activities of the WRAP, including 
the development of the Annex, Indian Tribes have been involved in the 
discussions. The GCVTC and the WRAP have clearly benefitted from their 
understanding of the tribal perspective. These discussions have also 
served the Tribes in ensuring that unique issues of importance to 
Tribes have been carefully considered by both entities. The GCVTC 
report included section IV, ``Tribal Perspectives and Position 
Regarding Recommendations.'' The Annex includes specific consideration 
of tribal interests, including a specific provision of the program for 
Tribes in the market trading program that is described in Attachment F 
to the Annex.
    As demonstrated by the Tribes' participation in the WRAP, EPA 
believes that continued involvement by Tribes is important to any 
program for visibility protection in the Western United States, 
including the program in the Annex for stationary source SO2 
emissions. In this unit of the preamble, we discuss issues related to 
tribal implementation of the SO2 program contained in the 
Annex.

A. Current Stationary Source SO2 Emissions in the Region

    The Annex includes only those sources whose annual emissions exceed 
100 tons per year. Although as noted previously there are more than 200 
Indian reservations in the geographic region potentially covered by the 
Annex, it appears that only four currently have stationary sources that 
would be affected by the program.\23\ The EPA is aware of only six such 
sources located in Indian country within the geographic area covered by 
the Annex, as noted in the following table:
---------------------------------------------------------------------------

    \23\ To date, EPA has not received any TIPs from these four 
Tribes. Nothing in this preamble is intended to suggest that these 
Tribes are authorized by EPA to administer CAA regulatory programs.

----------------------------------------------------------------------------------------------------------------
              Reservation                                Source                    Base year emissions (tons/yr)
----------------------------------------------------------------------------------------------------------------
Navajo (NM)...........................  Four Corners Power Plant................  42,522 (1999)
Navajo (AZ)...........................  Navajo Generating Station...............   9,162 (1999)
Fort Hall (ID)........................  Astaris-Idaho elemental phosphorous        4,994 (1998)
                                         production facility.
Wind River (WY).......................  Snyder Oil..............................     147 (1998)
Wind River (WY).......................  Koch Sulfur Products....................   1,237 (1998)
Uintah and Ouray (UT).................  Bonanza Power Plant.....................   1,135 (1999)
                                                                                 -------------------------------
      Total...........................  ........................................  59,197
----------------------------------------------------------------------------------------------------------------

Together, these sources represent about nine percent of the total base 
year stationary source inventory of 652,000 tons of SO2 
emissions in the region.

B. ``Set-Aside'' for Tribes in the Market Trading Program

    A key feature of the Annex program provides that if the market 
trading program is triggered, a 20,000 ton amount will be allocated to 
Tribes. This amount is in addition to any allocations to the six 
individual sources within Indian country (see table above), and is also 
in addition to specific amounts in the Annex that are allocated for new 
source growth. As discussed in Attachment F to the Annex, this 20,000 
ton set-aside is intended to help ensure equitable treatment for tribal 
economies and to prevent barriers to economic development. The 20,000 
ton amount of allowances would be available to Tribes to either: (1) 
Allow for new source growth over and above the amounts allocated for 
new sources by the Annex program, (2) sell for revenue, such that the 
source owners could purchase the allowances and increase their 
emissions or (3) retire the allowances, which would mean they would not 
be sold and would therefore lead to emission decreases relative to the 
milestones.
    The process for allocating the tribal set-aside allowances is still 
to be determined. In Attachment F to the Annex, the WRAP states that:

    In order to insure that all Tribes in the region have a fair and 
meaningful opportunity to take part in this determination, it must 
be done in the context of government-to-government consultation 
between EPA and the Tribes, during the rule making process to amend 
40 CFR 51.309.

    While EPA agrees with the need for meaningful consultation, EPA 
proposes that the process of allocating need not be determined during 
the rulemaking process to amend 40 CFR 51.309. For example, the 
proposed rule for participating States and Tribes, as noted above, 
allows for initial allocations in the SIPs/TIPs submitted in the year 
2003. Moreover, States and Tribes could amend these initial allocations 
later consistent with a methodology they include in their SIPs/TIPs. 
The EPA proposes that allocation of the additional 20,000 tons for 
Tribes could take place over a more extended time frame.

C. Background on Provisions for Tribal Air Quality Programs in the CAA 
and in EPA Regulations

    On November 8, 1984, the EPA adopted a policy entitled ``EPA Policy 
for the Administration of Environmental Programs on Indian 
Reservations.'' This policy, available on the Internet at 
http://www.epa.gov/indian/1984.htm, establishes a number of principles 
that guide EPA in the conduct of our congressionally mandated 
responsibilities. In particular, EPA will pursue the principle of 
tribal ``self-government'' and will work with tribal governments on a 
``government-to-government'' basis. The EPA will work with interested 
tribal governments in developing environmental programs for Indian 
country. Generally, EPA will retain responsibility for protecting 
tribal air quality until such time as Tribes administer their own air 
quality protection programs. Administrator Whitman reaffirmed the 1984 
EPA Indian policy on July 11, 2001.
    The CAA, as amended in 1990, added section 301(d) which authorizes 
EPA to ``treat Tribes as States'' for the purposes of administering CAA 
programs. Section 301(d) requires that EPA promulgate regulations 
listing CAA provisions for which it would be appropriate to treat

[[Page 30439]]

Tribes as States and establishing the criteria that Tribes must meet in 
order to be eligible for such treatment under the CAA. The EPA proposed 
these regulations on August 25, 1994 (59 FR 43956), and finalized the 
rule on February 12, 1998 (63 FR 7254). Much of the regulatory language 
in this rule is codified in the CFR as a new 40 CFR part 49. This rule 
is generally referred to as the Tribal Authority Rule or TAR.
    The TAR includes general eligibility requirements, codified in 40 
CFR 49.6, for Tribes interested in assuming program responsibilities. 
Tribes may request a formal eligibility determination using 
administrative procedures contained in 40 CFR 49.7. Tribes may also use 
the administrative procedures in 40 CFR 49.7 to seek approval to 
implement CAA programs. As noted in 40 CFR 49.7(c), Tribes that are 
interested in seeking EPA approval to implement air quality programs 
under the CAA may request approval to implement only partial elements 
of a CAA program, so long as the elements of the partial program are 
``reasonably severable.''
    Section 301(d)(4) of the CAA confers discretionary authority on EPA 
to provide through regulation alternative means of air quality 
protection in cases where it determines that treating Tribes as 
``identical`` to States would be inappropriate or administratively 
infeasible. In promulgating the TAR, EPA provided flexibility to Tribes 
seeking to implement the CAA. Some flexibility is established by virtue 
of EPA's decision, under 40 CFR 49.4 of the final rule, not to treat 
Tribes as States for specified provisions of the CAA. The rationale for 
this approach is discussed in the preamble to the TAR (63 FR 7264-7265) 
and in the preamble to the proposed rule (59 FR 43964-43968). For 
example, unlike States, Tribes are not required by the TAR to adopt and 
implement CAA plans or programs. Tribes are also not subject to 
mandatory deadlines for submittal of implementation plans. As discussed 
in the preamble previously, EPA believes that it generally would not be 
reasonable to impose the same types of deadlines on Tribes as on 
States. Among the CAA provisions for which EPA has determined it will 
not treat Tribes as States is section 110(c)(1) of the CAA, which 
requires EPA to intervene and ensure air quality protection within 2 
years after a State either fails to adopt a SIP or does not win EPA 
approval for a SIP that was determined to be deficient. The EPA did not 
apply this provision to Tribes because the section 110(c) obligation on 
EPA to promulgate a FIP is based on failures with respect to required 
submittals, and, as noted above, tribal submissions under the TAR are 
voluntary, not mandatory. Instead, pursuant to its section 301(d)(4) 
discretionary authority, EPA has provided in the TAR that, where 
necessary and appropriate, it will promulgate FIPs within reasonable 
timeframes to protect air quality in Indian Country. See 40 CFR 
49.11(a).

D. Discussion of the TAR as it Relates to Tribal Participation in the 
SO2 Reduction Program

    The EPA believes that clarification is needed on whether Tribes, 
like States, must develop and submit implementation plans by the end of 
the year 2003 in order to exercise the option provided by 40 CFR 
51.309. Regarding this year 2003 deadline, in the preamble to the 
regional haze rule we laid out the framework for waiving the 51.309(c) 
deadline with respect to Indian Tribes. Section 309(c) requires that, 
in order to exercise the option provided by section 309, each Transport 
Region State must submit an implementation plan addressing regional 
haze visibility impairment in the sixteen Class I areas by December 31, 
2003. The preamble reiterates the Agency's recognition that some Tribes 
have limited resources and/or expertise to participate in regional 
planning efforts for regional haze, stating:

    [i]n order to encourage Tribes to develop self-sufficient 
programs, the TAR provides Tribes with the flexibility of submitting 
programs as they are developed, rather than in accordance with 
statutory deadlines. This means that Tribes that choose to develop 
programs, where necessary may take additional time to submit 
implementation plans for regional haze over and above the deadlines 
in the Transportation Equity Act for the 21st Century (TEA-21) 
legislation as codified in today's final rule. (See unit III.B for 
discussion of those deadlines.) (64 FR 35759, July 1, 1999).

    Unit III.B of the preamble, entitled, ``Timetable for Submitting 
the First Regional Haze State Implementation Plan (SIP)'' includes in 
the summary of the timetable for submitting SIPs, the 40 CFR 51.309 
deadline of Dec. 31, 2003.
    The preamble further discusses the link between the TEA-21 
legislation changing the SIP deadlines for regional haze, and the TAR 
49.4(f) provision waiving the section 169(b)(e)(2) SIP submittal 
deadline with regard to Indian Tribes.
    The TEA-21 legislation changed the deadlines for State submission 
of SIP revisions to address regional haze, which were originally set 
out in section 169(B)(e)(2) of the CAA. Section 49.4(a) of the TAR 
provides that specific plan submittal and implementation deadlines for 
NAAQS-related requirements do not apply to Tribes. Section 49.4(e) 
states that Tribes will not be subject to specific visibility 
implementation plan submittal deadlines established under 169A of the 
CAA. Section 49.4(f) of the TAR provides that deadlines related to SIP 
submittals under section 169(B)(e)(2) do not apply to Tribes. Under 
section 49.4(f) Tribes will not be treated in the same manner as States 
with regard to, ``[specific implementation plan submittal deadlines 
related to sections 169B(e)(2), 184(b)(1) & (c)(5) of the Act. For 
eligible Tribes participating as members of such commissions, the 
Administrator shall establish those submittal deadlines that are 
determined to be practicable or, as with other non-participating Tribes 
in an affected transport region, provide for federal implementation of 
necessary measures.''
    Under 40 CFR 51.309(c), each Transport Region State must submit an 
implementation plan addressing regional haze visibility impairment in 
the sixteen Class I areas by December 31, 2003. Otherwise, the State 
must submit SIPs consistent with 40 CFR 51.308. Based on the above 
provisions of the TAR, however, Tribes are not required to develop and 
submit implementation plans by the end of the year 2003 and may choose 
to opt-in to the program at a later date. We encourage Tribes choosing 
to develop implementation plans to make every effort to submit by the 
deadlines to ensure that the plans are integrated with and coordinated 
with regional planning efforts.

E. Current Thinking on Tribal Program Assistance

    For Tribes which choose to implement 40 CFR 51.309, EPA believes 
there are a number of ways that EPA can provide assistance. As 
discussed above, a number of major sources of SO2 are 
located on areas within Indian country. The EPA would like to help the 
Tribes that have major SO2 sources to comply with the pre-
trigger emission tracking requirements of the program, and to help them 
develop ways to participate in the backstop trading program.
    The EPA also sees a possible need to help facilitate allocation of 
the 20,000 tons allocated to Tribes under the backstop market trading 
program. The EPA believes, however, that the critical need for the 
allocation does not exist until a trading program is triggered. As 
discussed above in unit II.D of this preamble, the earliest year for 
compliance with allowances is the year 2009. While it is preferable to 
have any allowances in place well in advance of

[[Page 30440]]

this date, EPA does not see the distribution of the tribal set-aside as 
a critical issue for EPA involvement in the near term. The EPA expects 
that Tribes will develop a method for allocating the 20,000 tons. The 
EPA will seek to provide assistance as necessary to facilitate the 
process.
    In summary, EPA is committed to ensuring protection of tribal air 
resources, building tribal air program capacity and working with Tribes 
on a government-to-government basis. We request comment from Tribes on 
how we can implement this program in the best way consistent with EPA's 
Indian Policy.

IV. Administrative Requirements

    In preparing any proposed rule, EPA must meet the administrative 
requirements contained in a number of statutes and executive orders. In 
this unit of the preamble, we discuss how today's regulatory proposal 
for incorporating the provisions of the WRAP Annex addresses these 
administrative requirements.

A. Executive Order 12866: Regulatory Planning and Review by the Office 
of Management and Budget (OMB)

    Under Executive Order 12866 (58 FR 51735, October 4, 1993) the 
Agency must determine whether the regulatory action is ``significant'' 
and, therefore, subject to OMB review and the requirements of the 
Executive Order. The Order defines ``significant regulatory action'' as 
one that is likely to result in a rule that may:
    (1) Have an annual effect on the economy of $100 million or more or 
adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or tribal governments or 
communities;
    (2) Create a serious inconsistency or otherwise interfere with an 
action taken or planned by another agency;
    (3) Materially alter the budgetary impacts of entitlements, grants, 
user fees, or loan programs or the rights and obligations of recipients 
thereof; or
    (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order.
    Pursuant to the terms of Executive Order 12866, it has been 
determined that this rule is a ``significant regulatory action.'' As 
such, this action was submitted to OMB for review. Changes made in 
response to OMB suggestions or recommendations will be documented in 
the public record.
    Today's proposed rulemaking would amend the regional haze rule by 
incorporating a specific set of SO2 emission targets for 
region-wide stationary sources of SO2 emissions for a nine-
State region in the western United States. The emission targets would 
affect and have potential economic impacts only for States choosing to 
participate in the optional program provided by 40 CFR 51.309 of the 
regional haze rule. The emissions reductions resulting from the program 
vary over the 2003 to 2018 time period. If all nine States participate 
in the program, the WRAP estimates that for the year 2018, 
SO2 emissions would be reduced from a projected baseline of 
612,000-642,000 tons to an enforceable milestone of 480,000-510,000 
tons (described above in unit II.A.). If the milestones are not 
achieved through voluntary emissions reductions by the affected 
sources, then they will be achieved through an enforceable backstop 
market trading program.
    The EPA believes that in order to understand the possible 
regulatory impacts of today's proposed rule, it is important to review 
the previous analysis that EPA completed for the regional haze program 
overall. In 1999, the EPA prepared a Regulatory Impact Analysis (RIA) 
for the regional haze rule (available in the docket for the regional 
haze rule (A-95-38)). In that RIA, the EPA assessed ``the costs, 
economic impacts, and benefits for four illustrative progress goals, 
two sets of control strategies, two sets of assumptions for estimating 
benefits, and systems of national uniform verus regionally varying 
progress goals,'' (64 FR 35760, July 1, 1999). Because EPA had no way 
of predicting the visibility goals each State would pick under the 
regional haze rule requirements, EPA conducted an extensive analysis of 
``what if'' scenarios. For example, one of the scenarios assumed that 
all States would choose to achieve a 10 percent improvement in 
visibility (measured in deciviews) over a 10-year period, while another 
of the scenarios assumed a 1.0 deciview improvement over a 15-year 
period. For each scenario, the RIA determined the control measures that 
would be needed to achieve the given degree of visibility improvement, 
and the cost of those control measures. In addition to calculating the 
national impacts of the regional haze rule under the various scenarios, 
the RIA also presented results for six specific sub-regions. Four of 
the sub-regions (``Rocky Mountain,'' ``West,'' ``Northwest,'' and 
``South Central'') contained one or more States within the nine-State 
region addressed by the WRAP Annex. The regional approach reflected the 
distinction across regions in the nature of the impairment in the Class 
I areas, the causes of the visibility impairment, and the costs of 
achieving the various progress objectives in each region. Emission 
reductions under the various scenarios by sub-region are provided in 
the RIA in tables 6-7 and 6-8.
    The EPA believes that some of the emission reductions resulting 
from the Annex provisions for stationary source SO2 
(assuming that States exercise the option for this program) may result 
from other environmental obligations under the CAA. For example, 
SO2 reductions may be required for attainment of the 
national ambient air quality standard for PM2.5. To the 
extent that this is the case, the emissions reductions required by the 
WRAP's SO2 milestones and backstop trading program may have 
already been addressed in other regulatory impact analyses for those 
programs.
    The remainder of the emissions reductions resulting from the WRAP's 
program for stationary source SO2 would be over and above 
those required to meet other environmental obligations. Where this is 
the case, EPA believes that the control costs and other potential 
economic consequences of achieving the reductions are reflected in the 
RIA for the 1999 regional haze rule. The range of results for the eight 
scenarios analyzed in the RIA resulted in predicted sulfur dioxide 
emission reductions that are within the range of emission reductions 
included in the Annex. Two of the eight scenarios resulted in 284,000 
tons of stationary source reductions in regions containing one or more 
of the WRAP Annex States. Five other scenarios included sulfur dioxide 
emissions reductions ranging from 95,000 to 128,000 tons per year. 
Hence, the costs and benefits associated with the WRAP's program are 
captured in the RIA for the 1999 final regional haze rule.

B. Regulatory Flexibility Act (RFA), as Amended by the Small Business 
Regulatory Enforcement Fairness Act of 1996 (SBREFA), 5 U.S.C. 601 et 
seq.

    The RFA generally requires an agency to prepare a regulatory 
flexibility analysis of any rule subject to notice and comment 
rulemaking requirements under the Administrative Procedure Act or any 
other statute unless the agency certifies that the rule will not have a 
significant economic impact on a substantial number of small entities. 
Small entities include small businesses, small organizations, and small 
governmental jurisdictions.

[[Page 30441]]

    For purposes of assessing the impacts of today's proposed rule on 
small entities, small entity is defined as: (1) A small business that 
is a small industrial entity as defined in the U.S. Small Business 
Administration (SBA) size standards (as discussed on the SBA website at 
http://www.sba.gov/size/SIC2NAICSmain.html); (2) a small governmental 
jurisdiction that is a government of a city, county, town, school 
district or special district with a population of less than 50,000; and 
(3) a small organization that is any not-for-profit enterprise which is 
independently owned and operated and is not dominant in its field.
    After considering the potential for economic impacts of today's 
proposed rule on small entities, I certify that this action will not 
have a significant economic impact on a substantial number of small 
entities. Today's proposed rule amends the requirements of the regional 
haze program to provide nine western States and a number of Tribes with 
an optional method for complying with the requirements of the CAA. No 
State or Tribe is required to submit an implementation plan meeting its 
requirements. For States or Tribes that choose to submit an 
implementation plan under this optional program, however, today's 
proposed rule requires those States and/or Tribes to meet a series of 
regional SO2 emission milestones. The EPA will determine 
whether these milestones are met based on the actual emissions from 
stationary sources with SO2 emissions of more than 100 tons 
per year. From data EPA obtained from the WRAP's website, it appears 
that there are 197 establishments meeting the 100 tons per year of 
SO2 criterion for this program, including 39 utility power 
plants, and 158 non-utility sources.\24\ The vast majority of these 
establishments--which include sources such as power plant boilers, 
copper smelters, chemical plants, petroleum refineries, natural gas 
production plants, large manufacturing operations, paper mills--are not 
small entities. The EPA estimates that 12 facilities are likely to be 
small entities, and 166 are not small. The EPA has been unable to 
determine the size of 16 entities at this time.\25\ Even if all 16 were 
determined to be small entities, and all nine States and those Tribes 
with covered sources adopted the optional approach to complying with 
the visibility requirements of the CAA, less than 30 small entities 
would be potentially affected by this proposed rule. The goal of the 
WRAP is for the regional SO2 milestones established by the 
rule to be met through voluntary measures, see Annex at 23, and EPA 
believes that participating States and Tribes may be able to meet the 
milestones through such measures. However, as a backstop in the event 
the milestones are not met in this manner, the proposed rule requires 
the implementation of a market trading program to ensure that emissions 
in the relevant region do not exceed the milestones. The proposed rule 
gives the States and Tribes the discretion to structure the emissions 
trading program, including the discretion to allocate emissions credits 
to sources, as the States and Tribes determine appropriate. Thus, 
ultimately, the impact on small entities will be determined not by this 
rule, but rather by how the relevant State or Tribe exercises its 
discretion in adopting the optional program and allocating emissions 
credits. The EPA encourages the States to consider the impact of its 
market trading program on small entities in structuring the program, 
but EPA cannot predict the impact of the rule on small entities. 
Nonetheless, EPA believes that no more than 28 small entities will be 
effected by this rule, and most likely less, given that EPA does not 
anticipate that all 9 States with the option of adopting this program 
will do so. Thus, EPA believes that this action will not have a 
significant economic impact on a substantial number of small entities.
---------------------------------------------------------------------------

    \24\ The number of power plants was obtained from ``Data 
Worksheets from ICF Consulting Detailing Utility Emissions 
Projections,'' Item 3 in supplemental information transmitted to Tim 
Smith, EPA, from Patrick Cummins, WRAP. June 29, 2001. The non-
utility estimate was obtained from: Technical Support Documentation. 
Voluntary Emissions Reduction Program for Major Industrial Sources 
of Sulfur Dioxide in Nine Western States and a Backstop Market 
Trading Program. Section 2.A. Revised Appendix A for the Pechan 
Report, table A-1.
    \25\ The EPA provides documentation of these estimates in a 
technical memorandum, ``Size of Potentially Affected Entities Should 
the Western Regional Air Partnership States Choose to Adopt 
Regulations in Accordance with the Draft Proposed Rule Revising 
Section 51.309(h).'' Allen Basala, EPA, October 17, 2001. This 
memorandum is included in the docket for today's proposal.
---------------------------------------------------------------------------

    We continue to be interested in the potential impacts of the 
proposed rule on small entities and welcome comments on issues related 
to such impacts.

C. Paperwork Reduction Act--Impact on Reporting Requirements

    The information collection requirements in this proposal have been 
submitted to OMB under the Paperwork Reduction Act, 44 U.S.C. 3501 et 
seq. An Information Collection Request (ICR) document has been prepared 
by EPA (ICR No. 1813.03) and a copy may be obtained from Sandy Farmer, 
by mail at Collection Strategies Division; U.S. EPA (2822) 1200 
Pennsylvania Avenue, NW, Washington, DC 20460, by e-mail at 
[email protected], or by calling (202) 260-2740. A copy may also be 
downloaded off the Internet at http://www.epa.gov/icr.
    This ICR contains burden estimates specific to the implementation 
of the WRAP's program for stationary sources of SO2. Because 
this proposed rule is an amendment to the regional haze rule, this ICR 
will revise the existing ICR for the regional haze rule (ICR 1813.02). 
For future ICR renewals for the regional haze rule, EPA will 
incorporate the effects of this rule.
    The EPA has prepared burden estimates for the specific burden 
impacts of today's proposed rule. These burden estimates are calculated 
using the assumption that 7 eligible States and 4 Tribes would 
participate in the program. The results of the calculations indicate 
16,100 hours to 19,990 hours for affected sources, 14,010 to 14,430 
hours for States, 2520 to 2600 hours for Tribes, and 1305 to 1375 for 
the Federal government.
    Burden means the total time, effort, or financial resources 
expended by persons to generate, maintain, retain, or disclose or 
provide information to or for a Federal agency. This includes the time 
needed to review instructions; develop, acquire, install, and utilize 
technology and systems for the purposes of collecting, validating, and 
verifying information, processing and maintaining information, and 
disclosing and providing information; adjust the existing ways to 
comply with any previously applicable instructions and requirements; 
train personnel to be able to respond to a collection of information; 
search data sources; complete and review the collection of information; 
and transmit or otherwise disclose the information.
    An agency may not conduct or sponsor, and a person is not required 
to respond to a collection of information unless it displays a 
currently valid OMB control number. The OMB control numbers for EPA's 
regulations are listed in 40 CFR part 9 and 48 CFR chapter 15.
    Comments are requested on the Agency's need for this information, 
the accuracy of the provided burden estimates, and any suggested 
methods for minimizing respondent burden, including through the use of 
automated collection techniques. Send comments on the ICR to the 
Director, Collection Strategies Division; U.S. Environmental Protection 
Agency (2822); 1200

[[Page 30442]]

Pennsylvania Ave., NW, Washington, DC 20460; and to the Office of 
Information and Regulatory Affairs, Office of Management and Budget, 
725 17th St., NW, Washington, DC 20503, marked ``Attention: Desk 
Officer for EPA.'' Include the ICR number in any correspondence. Since 
OMB is required to make a decision concerning the ICR between 30 and 60 
days after May 6, 2002, a comment to OMB is best assured of having its 
full effect if OMB receives it by June 5, 2002. The final rule will 
respond to any OMB or public comments on the information collection 
requirements contained in this proposal.

D. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-
4) (UMRA), establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and tribal 
governments and the private sector. Under section 202 of the UMRA, 2 
U.S.C. 1532, EPA generally must prepare a written statement, including 
a cost-benefit analysis, for any proposed or final rule that ``includes 
any Federal mandate that may result in the expenditure by State, local, 
and tribal governments, in the aggregate, or by the private sector, of 
$100,000,000 or more * * * in any one year.'' A ``Federal mandate'' is 
defined under section 421(6), 2 U.S.C. 658(6), to include a ``Federal 
intergovernmental mandate'' and a ``Federal private sector mandate.'' A 
``Federal intergovernmental mandate,'' in turn, is defined to include a 
regulation that ``would impose an enforceable duty upon State, local, 
or tribal governments,'' section 421(5)(A)(i), 2 U.S.C. 658(5)(A)(i), 
except for, among other things, a duty that is ``a condition of Federal 
assistance,'' section 421(5)(A)(i)(I). A ``Federal private sector 
mandate'' includes a regulation that ``would impose an enforceable duty 
upon the private sector,'' with certain exceptions, section 421(7)(A), 
2 U.S.C. 658(7)(A).
    Before promulgating an EPA rule for which a written statement is 
needed under section 202 of the UMRA, section 205, 2 U.S.C. 1535, of 
the UMRA generally requires EPA to identify and consider a reasonable 
number of regulatory alternatives and adopt the least costly, most 
cost-effective, or least burdensome alternative that achieves the 
objectives of the rule.
    By proposing to incorporate into the regional haze rule the 
provisions of the Annex for a voluntary emissions reductions program 
and backstop trading program, EPA is not directly establishing any 
regulatory requirements that may significantly or uniquely affect small 
governments, including tribal governments. The entire program under 40 
CFR 51.309, including the proposed amendments, is an option that each 
of the States may choose to exercise. The program is not required and 
thus is clearly not a ``mandate.'' Thus, EPA is not obligated to 
develop under section 203 of the UMRA a small government agency plan.
    The EPA also believes that because today's proposal provides those 
States potentially subject to the proposed rule with substantial 
flexibility, the proposed rule meets the UMRA requirement in section 
205 to select the least costly and burdensome alternative in light of 
the statutory mandate for SIPs for visibility protection that address 
BART. The proposed rule provides States and sources with the 
flexibility to achieve regional SO2 reductions in a way that 
is cost effective and administratively effective. Sources are given the 
opportunity to achieve voluntary reductions. If such reductions do not 
occur, the rule provides for the establishment of a trading program to 
achieve targeted emissions reductions. If a trading program is 
implemented, sources have the flexibility to buy and sell allowances in 
order to reach emissions reduction milestones in the most cost-
effective way. The proposed rule therefore, inherently provides for 
adoption of the least costly, most cost-effective, or least-burdensome 
alternative that achieves the objective of the rule.
    The EPA believes that this rulemaking action is not subject to the 
requirements of UMRA. For regional haze SIPs overall, it is 
questionable whether a requirement to submit a SIP revision constitutes 
a Federal mandate, as discussed in the preamble to the regional haze 
rule, (64 FR 35761, July 1, 1999). However, today's proposed rule 
contains no Federal mandates (under the regulatory provisions of title 
II of the UMRA) for States, local, or tribal governments or the private 
sector. The program contained in 40 CFR 51.309, including today's 
proposed amendments, is an optional program.

E. Executive Order 12898: Environmental Justice

    Executive Order 12898 requires that each Federal agency make 
achieving environmental justice part of its mission by identifying and 
addressing, as appropriate, disproportionately high and adverse human 
health or environmental effects of its programs, policies, and 
activities on minorities and low-income populations.
    The EPA believes that this proposed rule should not raise any 
environmental justice issues. The overall result of the program is 
regional reductions in SO2. Because this program would 
likely reduce regional and local SO2 levels in the air, and 
because there are separate programs under the CAA to ensure that 
SO2 levels do not exceed national ambient air quality 
standards, it appears unlikely that this program would permit any 
adverse affects on local populations.

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

    Executive Order 13045: ``Protection of Children from Environmental 
Health Risks and Safety Risks'' (62 FR 19885, April 23, 1997) applies 
to any rule that: (1) Is determined to be ``economically significant'' 
as defined under Executive Order 12866, and (2) concerns an 
environmental health or safety risk that EPA has reason to believe may 
have a disproportionate effect on children. If the regulatory action 
meets both criteria, the Agency must evaluate the environmental health 
or safety effects of the planned rule on children, and explain why the 
planned regulation is preferable to other potentially effective and 
reasonably feasible alternatives considered by the Agency. The EPA 
interprets Executive Order 13045 as applying only to those regulatory 
actions that are based on health or safety risks, such that the 
analysis required under section 5-501 of the Order has the potential to 
influence the regulation. The proposal to codify the SO2 
emissions reduction program is not subject to Executive Order 13045 
because it does not establish an environmental standard intended to 
mitigate health or safety risks.

G. Executive Order 13132: Federalism

    Executive Order 13132, entitled Federalism (64 FR 43255, August 10, 
1999), requires EPA to develop an accountable process to ensure 
``meaningful and timely input by State and local officials in the 
development of regulatory policies that have federalism implications.'' 
``Policies that have federalism implications'' is defined in the 
Executive Order to include regulations that have ``substantial direct 
effects on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government.''
    Under section 6(b) of Executive Order 13132, EPA may not issue a 
regulation that has federalism implications, that imposes substantial 
direct compliance costs, and that is not required by statute, unless 
the Federal government provides the funds necessary to pay the direct

[[Page 30443]]

compliance costs incurred by State and local governments, or EPA 
consults with State and local officials early in the process of 
developing the proposed regulation. Under section 6(c) of Executive 
Order 13132, EPA may not issue a regulation that has federalism 
implications and that preempts State law, unless the Agency consults 
with State and local officials early in the process of developing the 
proposed regulation.
    This proposed rule does not have federalism implications. It will 
not have substantial direct effects on the States, on the relationship 
between the national government and the States, or on the distribution 
of power and responsibilities among the various levels of government, 
as specified in Executive Order 13132. As an optional program, the 
proposed rule will not directly impose significant new requirements on 
State and local governments. In addition, even if the proposed rule did 
have federalism implications, it will not impose substantial direct 
compliance costs on State or local governments, nor will it preempt 
State law.
    Consistent with EPA policy, EPA nonetheless consulted with State 
and local officials early in the process of developing the proposed 
regulation, to provide them an opportunity for meaningful and timely 
input into its development. These consultations included a working 
meeting with State and local officials, and numerous discussions with 
committees and forums of the WRAP. In the spirit of Executive Order 
13132, and consistent with EPA policy to promote communications between 
EPA and State and local governments, EPA specifically solicits comment 
on this proposed rule from State and local officials.

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

    Executive Order 13175, entitled ``Consultation and Coordination 
with Indian Tribal Governments'' (65 FR 67249, November 6, 2000), 
requires EPA to, among other things, ensure ``meaningful and timely 
input by tribal officials in the development of regulatory policies 
that have tribal implications.'' ``Policies that have tribal 
implications'' is defined in the Executive Order to include regulations 
that have ``substantial direct effects on one or more Indian Tribes, on 
the relationship between the Federal government and the Indian Tribes, 
or on the distribution of power and responsibilities between the 
Federal government and Indian Tribes.''
    Under section 5(b) of Executive Order 13175, EPA may not issue a 
regulation that has tribal implications, that imposes substantial 
direct compliance costs, and that is not required by statute, unless 
the Federal government provides the funds necessary to pay the direct 
compliance costs incurred by tribal governments, or EPA consults with 
tribal officials early in the process of developing the proposed 
regulation. Under section 5(c) of the Executive Order, EPA may not 
issue a regulation that has tribal implications and that preempts 
tribal law, unless the Agency consults with tribal officials early in 
the process of developing the proposed regulation.
    This proposed rule may have tribal implications, but EPA believes 
that it will neither impose substantial direct compliance costs on the 
Tribes nor preempt tribal law. The EPA is seeking input from 
potentially affected Tribes before reaching a conclusion on whether 
this rule will have tribal implications. This is due, in large part, to 
the voluntary nature of this program and the uncertainty of potential 
impacts on Tribes in the event a State or Tribe chooses to participate 
in the program. Possible impacts on Tribes choosing to opt into the 
program are discussed above in unit III of this preamble. The EPA 
specifically requests comments from tribal governments on whether this 
proposed rule, if finalized, constitutes a policy that has tribal 
implications as defined in E.O. 13175.
    The EPA notes that the WRAP consulted extensively with tribal 
representatives in the development of the Annex, the document which 
provided the basis for today's proposed rulemaking. The Annex provides 
recognition of Tribes throughout the document and a specific discussion 
of tribal issues in Attachment F. Today's rulemaking closely mirrors 
the recommendations of the WRAP and therefore reflects discussions 
between the WRAP and Tribes.
    In any case, prior to the issuance of the final rule, EPA will 
provide additional opportunities for consultation with tribal officials 
or authorized representatives of tribal governments on the potential 
impacts of the proposed rule on Tribes and whether the rule has tribal 
implications. The EPA will consider concerns expressed by tribal 
officials during these consultations in the development of the final 
rule. This consultation will be conducted consistent with the 
requirements of E.O. 13175 and afford Tribes opportunities to provide 
additional input into the development of this rule. In the preamble to 
the final rule, EPA will include a discussion of the consultation we 
have undertaken and our conclusions regarding tribal implications. The 
EPA specifically solicits additional comment on this proposed rule from 
tribal officials.

I. National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (``NTTAA''), Public Law 104-113, Section 12(d) (15 U.S.C. 
272 note) directs EPA to use voluntary consensus standards in its 
regulatory activities unless to do so would be inconsistent with 
applicable law or otherwise impractical. Voluntary consensus standards 
are technical standards (e.g., materials specifications, test methods, 
sampling procedures, and business practices) that are developed or 
adopted by voluntary consensus standards bodies. The NTTAA directs EPA 
to provide Congress, through OMB, explanations when the Agency decides 
not to use available and applicable voluntary consensus standards.
    However, this action does not incorporate any requirements to use 
any particular technical standards, such as specific measurement or 
monitoring techniques. Therefore, EPA is not considering the use of any 
voluntary consensus standards in this rulemaking. The proposed rule 
does require States to develop emissions quantification protocols and 
monitoring procedures for their SIPs as part of the market trading 
program. However, EPA generally defers to the choices the States make 
in their SIPs when the CAA does not prescribe requirements, so EPA is 
not proposing to require the use of specific, prescribed techniques or 
methods in those SIPs. Nevertheless, while EPA believes that it is not 
necessary to consider the use of any voluntary consensus standards for 
this proposal, we will encourage States and tribes to consider the use 
of such standards in the development of these protocols.
    We welcome comments on this aspect of the proposed rulemaking.

J. Executive Order 13211: Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use

    Executive Order 13211, ``Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use,'' (66 FR 
28355, May 22, 2001), provides that agencies shall prepare and submit 
to the Administrator of the Office of Information and Regulatory 
Affairs, OMB, a Statement of Energy Effects for certain actions 
identified as ``significant

[[Page 30444]]

energy actions.'' Section 4(b) of Executive Order 13211 defines 
``significant energy actions'' as ``any action by an agency (normally 
published in the Federal Register) that promulgates or is expected to 
lead to the promulgation of a final rule or regulation, including 
notices of inquiry, advance notices of proposed rulemaking, and notices 
of proposed rulemaking: (1)(i) That is a significant regulatory action 
under Executive Order 12866 or any successor order, and (ii) is likely 
to have a significant adverse effect on the supply, distribution, or 
use of energy; or (2) that is designated by the Administrator of the 
Office of Information and Regulatory Affairs as a significant energy 
action.'' Under Executive Order 13211, a Statement of Energy Effects is 
a detailed statement by the agency responsible for the significant 
energy action relating to: (i) Any adverse effects on energy supply, 
distribution, or use including a shortfall in supply, price increases, 
and increased use of foreign supplies should the proposal be 
implemented, and (ii) reasonable alternatives to the action with 
adverse energy effects and the expected effects of such alternatives on 
energy supply, distribution, and use.
    While this rulemaking is a ``significant regulatory action'' under 
Executive Order 12866, EPA has determined that this rulemaking is not a 
significant energy action because it is not likely to have a 
significant adverse effect on the supply, distribution, or use of 
energy. In the proposed rule, if States chose to implement the option 
provided by 40 CFR 51.309, this would lead to a regional reduction in 
SO2 emissions in order to meet the WRAP's SO2 
milestones for the 2003-2018 time period. The WRAP's analysis of the 
program's requirements results in the following projections: \26\
---------------------------------------------------------------------------

    \26\ ICF consulting, Final Report on Regional Economic Impacts 
of Annex. Transmitted to Tim Smith, EPA/OAQPS by Patrick Cummins, 
WRAP Co-Project Manager, June 29, 2001.

--No reduction in crude oil supply;
--No reduction in fuel production;
--0.0 percent to 0.2 percent increase in wholesale electricity prices 
in 2018;
--Production cuts in coal in the western States balanced by increases 
in coal production in the Appalachian region;
--No increase in energy distribution costs;
--No significantly increased dependence on foreign supplies of energy;
--Adverse impacts on employment, gross regional product, and real 
disposable incomes in the affected western States of less than 0.05 
percent in 2018;
--Room for new sources of electrical generating capacity within the 
target SO2 emission levels.

    Given the particular concern in the West regarding needed 
electrical generating capacity, EPA believes it important to note the 
WGA statement that ``the conclusion [* * * of their analysis * * *] is 
that sulfur dioxide emissions reductions milestones should in no way 
impede the construction of new coal-fired power plants in the West \27\ 
* * *''
---------------------------------------------------------------------------

    \27\ Memorandum from Jim Souby to Staff Council, State 
Environmental Directors and State Air Directors, ``Energy and Air 
Quality Issues.'' February 23, 2001.
---------------------------------------------------------------------------

    Furthermore, an assessment by WGA of the effects of the WRAP Annex 
indicates that it is possible to build 7000 megawatts or more of new 
coal fired generation at any time between 2001 and 2018 without 
exceeding the SO2 emission milestones in the Annex.\28\ 
However the amount of megawatts that could be built is affected by 
analytical assumptions regarding fuel mix and quality, capacity 
utilization, control levels, and the demarcation of fuel use regions. 
Additional scenarios included in the WGA analysis show that there could 
be room for 19,000 megawatts of generation capacity.
---------------------------------------------------------------------------

    \28\ Technical Memorandum, ``Analysis of New Coal-Fired Power 
Plants Under the Proposed Sulfur Dioxide Emission Reduction 
Milestones for the Nine-State Grand Canyon Visibility Transport 
Region.'' February 22, 2001.
---------------------------------------------------------------------------

    The EPA believes that the program contained in the Annex and in 
today's proposed rule will not result in energy reduction of 500 or 
more megawatts installed production capacity. Under this program, 
considerable flexibility is afforded to electricity generators on how 
to comply with the program. Even if the trading program is triggered 
and sources must comply with allowances, we believe that the least-cost 
solutions afforded by the trading program, and the ability to secure 
emissions reductions from other sources, will make it very unlikely 
that the program would lead to plant shutdowns.

List of Subjects in 40 CFR Part 51

    Environmental protection, Administrative practice and procedure, 
Air pollution control, Carbon monoxide, Nitrogen dioxide, Particulate 
matter, Sulfur oxides, Volatile organic compounds.

    Dated: April 25, 2002.
Christine Todd Whitman,
Administrator.
    For the reasons set forth in the preamble, part 51 of chapter I of 
title 40 of the Code of Federal Regulations is proposed to be amended 
as follows:

PART 51--REQUIREMENTS FOR PREPARATION, ADOPTION, AND SUBMITTAL OF 
IMPLEMENTATION PLANS

Subpart P--Protection of Visibility

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

    Authority: 42 U.S.C. 7410-7671q.

    2. Section 51.309 is amended by:
    a. Revising paragraph (b)(5).
    b. Adding paragraphs (b)(8) and (b)(9).
    c. Revising paragraph (c).
    d. Revising paragraphs (d)(4)(i) through (d)(4)(iv).
    e. Revising paragraph (f)(1)(i).
    f. Adding paragraph (h).
    The revisions and additions read as follows:


Sec. 51.309  Requirements Related to the Grand Canyon Visibility 
Transport Commission.

* * * * *
    (b) * * *
    (5) Milestone means the maximum level of annual regional sulfur 
dioxide emissions for a given year, assessed annually consistent with 
paragraph (h)(2) of this section beginning in the year 2003.
* * * * *
    (8) BHP San Manuel means:
    (i) The copper smelter located in San Manuel, Arizona which 
operated during 1990, but whose operations were suspended during the 
year 2000,
    (ii) The same smelter in the event of a change of name or 
ownership.
    (9) Phelps Dodge Hidalgo means:
    (i) The copper smelter located in Hidalgo, New Mexico which 
operated during 1990, but whose operations were suspended during the 
year 2000,
    (ii) The same smelter in the event of a change of name or 
ownership.
    (c) Each Transport Region State may meet the requirements of 
Sec. 51.308(b) through (e) by electing to submit an implementation plan 
that complies with the requirements of this section. Each Transport 
Region State must submit an implementation plan addressing regional 
haze visibility impairment in the 16 Class I areas no later than 
December 31, 2003. Indian Tribes may submit implementation plans after 
the December 31, 2003 deadline. A Transport Region State that elects 
not to submit an implementation plan that complies with the 
requirements of this section (or whose plan does not comply with all of 
the requirements of this section) is subject to the requirements of 
Sec. 51.308 in the same manner and to the same extent as any State not 
included within the Transport Region.
* * * * *

[[Page 30445]]

    (d) * * *
    (4) * * *
    (i) Sulfur dioxide milestones consistent with paragraph (h)(1) of 
this section.
    (ii) Monitoring and reporting of sulfur dioxide emissions. The plan 
submission must include provisions requiring the annual monitoring and 
reporting of actual stationary source sulfur dioxide emissions within 
the State. The monitoring and reporting data must be sufficient to 
determine whether a 13 percent reduction in actual emissions has 
occurred between the years 1990 and 2000, and for determining annually 
whether the milestone for each year between 2003 and 2018 is exceeded, 
consistent with paragraph (h)(2) of this section. The plan submission 
must provide for reporting of these data by the State to the 
Administrator and to the regional planning organization consistent with 
paragraph (h)(2) of this section.
    (iii) Criteria and Procedures for a Market Trading Program. The 
plan must include the criteria and procedures for activating a market 
trading program within 5 years consistent with paragraph (h)(3) of this 
section if an applicable milestone is exceeded. The plan must also 
provide for implementation plan assessments of the program in the years 
2008, 2013, and 2018.
    (iv) Provisions for market trading program compliance reporting 
consistent with paragraph (h)(3) of this section.
* * * * *
    (f) * * *
    (1) * * *
    (i) The annex must contain quantitative emissions milestones for 
stationary source sulfur dioxide emissions for the reporting years 
2003, 2008, 2013 and 2018. The milestones must provide for steady and 
continuing emissions reductions for the 2003-2018 time period 
consistent with the Commission's definition of reasonable progress, its 
goal of 50 to 70 percent reduction in sulfur dioxide emissions from 
1990 actual emission levels by 2040, applicable requirements under the 
CAA, and the timing of implementation plan assessments of progress and 
identification of deficiencies which will be due in the years 2008, 
2013, and 2018. The milestones must be shown to provide for greater 
reasonable progress than would be achieved by application of best 
available retrofit technology (BART) pursuant to Sec. 51.308(e)(2) and 
would be approvable in lieu of BART.
* * * * *
    (h) Emissions Reduction Program for Major Industrial Sources of 
Sulfur Dioxide. The first implementation plan submission must include a 
stationary source emissions reduction program for major industrial 
sources of sulfur dioxide that meets the following requirements:
    (1) Regional sulfur dioxide milestones. The plan must include the 
milestones in Table 1, and provide for the adjustments in paragraphs 
(h)(1)(i) through (iv) of this section. Table 1 follows:

                                                      Table 1.--Sulfur Dioxide Emissions Milestones
--------------------------------------------------------------------------------------------------------------------------------------------------------
              Column 1                                  Column 2                                      Column 3                           Column 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                  * * * and the emission
                                                                                     * * * if neither BHP San Manuel nor Phelps   inventories for these
                                        * * * if BHP San Manuel and Phelps Dodge        Dodge Hidalgo resumes operation, the       years will determine
           For the year--                 Hidalgo resume operation, the maximum      minimum regional sulfur dioxide milestone    whether emissions are
                                         regional sulfur dioxide milestone is--                         is--                       greater than or less
                                                                                                                                   than the milestone--
--------------------------------------------------------------------------------------------------------------------------------------------------------
2003................................  720,000 tons................................  682,000 tons...............................  2003.
2004................................  720,000 tons................................  682,000 tons...............................  Average of 2003 and
                                                                                                                                  2004.
2005................................  720,000 tons................................  682,000 tons...............................  Average of 2003, 2004
                                                                                                                                  and 2005.
2006................................  720,000 tons................................  682,000 tons...............................  Average of 2004, 2005
                                                                                                                                  and 2006.
2007................................  720,000 tons................................  682,000 tons...............................  Average of 2005, 2006,
                                                                                                                                  and 2007.
2008................................  718,333 tons................................  680,333 tons...............................  Average of 2006, 2007,
                                                                                                                                  and 2008.
2009................................  716,667 tons................................  678,667 tons...............................  Average of 2007, 2008
                                                                                                                                  and 2009.
2010................................  715,000 tons................................  677,000 tons...............................  Average of 2008, 2009
                                                                                                                                  and 2010.
2011................................  715,000 tons................................  677,000 tons...............................  Average of 2009, 2010,
                                                                                                                                  and 2011.
2012................................  715,000 tons................................  677,000 tons...............................  Average of 2010, 2011,
                                                                                                                                  and 2012.
2013................................  695,000 tons................................  659,667 tons...............................  Average of 2011, 2012,
                                                                                                                                  and 2013.
2014................................  675,000 tons................................  642,333 tons...............................  Average of 2012, 2013,
                                                                                                                                  and 2014.
2015................................  655,000 tons................................  625,000 tons...............................  Average of 2013, 2014,
                                                                                                                                  and 2015.
2016................................  655,000 tons................................  625,000 tons...............................  Average of 2014, 2015,
                                                                                                                                  and 2016.
2017................................  655,000 tons................................  625,000 tons...............................  Average of 2015, 2016,
                                                                                                                                  and 2017.
2018................................  510,000 tons................................  480,000 tons...............................  Year 2018 only.
each year after 2018................  no more than 510,000 tons...................  no more than 480,000 tons..................  Three-year average of
                                                                                                                                  the year and the two
                                                                                                                                  previous years, or any
                                                                                                                                  alternative provided
                                                                                                                                  in a future plan
                                                                                                                                  revisions under Sec.
                                                                                                                                  51.308(f).
--------------------------------------------------------------------------------------------------------------------------------------------------------

    (i) Adjustment for States and Tribes Which Choose Not to 
Participate in the Program, and for Tribes that choose to opt into the 
program after the 2003 deadline. If a State or Tribe chooses not to 
submit an implementation plan under the option provided in this 
section, the amounts for that State or Tribe which are listed in Table 
2 must be subtracted from the milestones that are included in the 
implementation plans for the remaining States and Tribes. For Tribes 
that opt into the program after 2003, the amounts in Table 2 of this 
paragraph will be automatically added to the milestones that are 
included in the implementation plans for the participating States and 
Tribes, beginning with the first year after the tribal implementation 
plan implementing this section is approved by the Administrator. The 
amounts listed in Table 2 are for purposes of adjusting the milestones 
only, and they do not represent amounts that must be allocated under 
any future trading program. Table 2 follows:

[[Page 30446]]



Table 2.--Amounts Subtracted From the Milestones for States and Tribes Which Do Not Exercise the Option Provided
                                                 by Sec.  51.309
----------------------------------------------------------------------------------------------------------------
         State or Tribe             2003      2004      2005      2006      2007      2008      2009      2010
----------------------------------------------------------------------------------------------------------------
1 Arizona.......................   117,372   117,372   117,372   117,372   117,372   117,941   118,511   119,080
2. California...................    37,343    37,343    37,343    37,784    37,343    36,363    35,382    34,402
3. Colorado.....................    98,897    98,897    98,897    98,897    98,897    98,443    97,991    97,537
4. Idaho........................    18,016    18,016    18,016    18,016    18,016    17,482    16,948    16,414
5. Nevada.......................    20,187    20,187    20,187    20,187    20,187    20,282    20,379    20,474
6. New Mexico...................    84,624    84,624    84,624    84,624    84,624    84,143    83,663    83,182
7. Oregon.......................    26,268    26,268    26,268    26,268    26,268    26,284    26,300    26,316
8. Utah.........................    42,782    42,782    42,782    42,782    42,782    42,795    42,806    42,819
9. Wyoming......................   155,858   155,858   155,858   155,858   155,858   155,851   155,843   155,836
10. Navajo Nation...............    53,147    53,147    53,147    53,147    53,147    53,240    53,334    53,427
11. Shoshone-Bannock Tribe of        4,994     4,994     4,994     4,994     4,994     4,994     4,994     4,994
 the Fort Hall Reservation......
12. Ute Indian Tribe of the          1,129     1,129     1,129     1,129     1,129     1,131     1,133     1,135
 Uintah and Ouray Reservation...
13. Wind River Reservation......     1,384     1,384     1,384     1,384     1,384     1,384     1,384     1,384
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
         State or Tribe             2011      2012      2013      2014      2015      2016      2017      2018
----------------------------------------------------------------------------------------------------------------
1. Arizona......................   119,080   119,080   116,053   113,025   109,998   109,998   109,998    82,302
2. California...................    34,402    34,402    33,265    32,128    30,991    30,991    30,991    27,491
3. Colorado.....................    97,537    97,537    94,456    91,375    88,294    88,294    88,294    57,675
4. Idaho........................    16,414    16,414    15,805    15,197    14,588    14,588    14,588    13,227
5. Nevada.......................    20,474    20,474    20,466    20,457    20,449    20,449    20,449    20,232
6. New Mexico...................    83,182    83,182    81,682    80,182    78,682    78,682    78,682    70,000
7. Oregon.......................    26,316    26,316    24,796    23,277    21,757    21,757    21,757     8,281
8. Utah.........................    42,819    42,819    41,692    40,563    39,436    39,436    39,436    30,746
9. Wyoming......................   155,836   155,836   151,232   146,629   142,025   142,025   142,025    97,758
10. Navajo Nation...............    53,427    53,427    52,707    51,986    51,266    51,266    51,266    44,772
11. Shoshone-Bannock Tribe of        4,994     4,994     4,994     4,994     4,994     4,994     4,994     4,994
 the Fort Hall Reservation......
12. Ute Indian Tribe of the          1,135     1,135     1,135     1,135     1,135     1,135     1,135     1,135
 Uintah and Ouray Reservation...
13. Northern Arapaho and             1,384     1,384     1,384     1,384     1,384     1,384     1,384     1,384
 Shoshone Tribes of the Wind
 River Reservation..............
----------------------------------------------------------------------------------------------------------------

    (ii) Adjustment for Future Operation of Copper Smelters.
    (A) The plan must provide for adjustments to the milestones in the 
event that Phelps Dodge Hidalgo and/or BHP San Manuel resume operations 
or that other smelters increase their operations.
    (B) The plan must provide for adjustments to the milestones 
according to Tables 3a and 3b of this paragraph except that if either 
the Hidalgo or San Manuel smelters resumes operation and is required to 
obtain a permit under 40 CFR 52.21 or 40 CFR 51.166, the adjustment to 
the milestone must be based upon the levels allowed by the permit. In 
no instance may the adjustment to the milestone be greater than 22,000 
tons for the Phelps Dodge Hidalgo, greater than 16,000 tons for BHP San 
Manuel, or more than 30,000 tons for the combination of the Phelps 
Dodge Hidalgo and BHP San Manuel smelters for the years 2013 through 
2018. Tables 3a and 3b follow:

                Table 3a.--Adjustments to the Milestones for Future Operations of Copper Smelters
----------------------------------------------------------------------------------------------------------------
                                                                                        * * * then you calculate
                                                                                        the milestone by adding
     Scenario                  If this happens-              * * * and this happens--   this amount to the value
                                                                                       in column 3 of Table 1:--
----------------------------------------------------------------------------------------------------------------
1.................  Phelps Dodge Hidalgo resumes            Phelps Dodge Hidalgo       A. Beginning with the
                     operation, but BHP San Manuel does      resumes production         year that production
                     not.                                    consistent with past       resumes, and for each
                                                             operations and emissions.  year up to the year
                                                                                        2012, the milestone
                                                                                        increases by:
                                                                                       (1) 22,000 tons PLUS
                                                                                       (2) Any amounts
                                                                                        identified in Table 3b.
                                                                                       B. For the years 2013
                                                                                        through 2018, the
                                                                                        milestone increases by
                                                                                        this amount or by 30,000
                                                                                        tons, whichever is less.

[[Page 30447]]

 
2.................  Phelps Dodge Hidalgo resumes            Phelps Dodge Hidalgo       A. Beginning with the
                     operation, but BHP San Manuel does      resumes operation in a     year that production
                     not.                                    substantially different    resumes, and for each
                                                             manner such that           year up to the year
                                                             emissions will be less     2012, the milestone
                                                             than for past operations   increases by:
                                                             (an example would be      (1) Expected emissions
                                                             running only one portion   for Phelps Dodge Hidalgo
                                                             of the plant to produce    (not to exceed 22,000
                                                             sulfur acid only).         tons), PLUS
                                                                                       (2) Any amounts
                                                                                        identified in Table 3b.
                                                                                       B. For the years 2013
                                                                                        through 2018, the
                                                                                        milestone increases by
                                                                                        this amount or by 30,000
                                                                                        tons, whichever is less.
3.................  BHP San Manuel BHP San Manuel           BHP San Manuel BHP San     A. 16,000 tons PLUS
                     operation, but Phelps Dodge Hidalgo     Manuel resumes            B. Any amounts identified
                     does not.                               production consistent      in Table 3b.
                                                             with past operations and
                                                             emissions.
4.................  BHP San Manuel resumes operation, but   BHP San Manuel resumes     A. Expected emissions
                     Phelps Dodge Hidalgo does not.          operations in a            (not to exceed 16,000
                                                             substantially different    tons) PLUS
                                                             manner such that          B. Any amounts identified
                                                             emissions be less than     in Table 3b.
                                                             for past operations (an
                                                             example would be running
                                                             only one portion of the
                                                             plant to produce sulfur
                                                             acid only).
5.................  Both Phelps Dodge Hidalgo and BHP San   Both smelters resume       A. Beginning with the
                     Manuel resume operations.               production consistent      year that production
                                                             with past operations and   resumes, and for each
                                                             emissions.                 year up to the year
                                                                                        2012, the milestone
                                                                                        increase by 38,000 tons.
                                                                                       B. For the years 2013
                                                                                        through 2018, the
                                                                                        milestone increases by
                                                                                        30,000 tons.
6.................  Both Phelps Dodge Hidalgo and BHP San   Phelps Dodge Hidalgo       A. For the year that
                     Manuel resumes operations.              resumes production         production resumes, and
                                                             consistent with past       for each year up to the
                                                             operations and             year 2012, the milestone
                                                             emissions, but BHP         increases by:
                                                             Manuel operations in a    (1) 22,000 PLUS
                                                             substantially different   (2) Expected emissions
                                                             manner such that           San Manuel (not to
                                                             emissions will be less     exceed 16,000 tons).
                                                             than for past operations  B. For the years 2013
                                                             (an example would be       though 2018, the
                                                             running only one portion   milestone increases by
                                                             of the plant to produce    this same amount, or by
                                                             sulfur acid only).         30,000 tons, whichever
                                                                                        is less.
7.................  Both Phelps Dodge Hidalgo and BHP San   BHP San Manuel resumes     A. For the year that
                     Manuel resume operations.               production consistent      production resumes, and
                                                             with past operations and   for each year up to the
                                                             emissions, but Phelps      year 2012, the milestone
                                                             Dodge Hidalgo resumes      increases by:
                                                             operations in a           (1) 16,000 PLUS
                                                             substantially different   (2) expected Hidalgo
                                                             manner such that           emissions (not 22,000
                                                             emissions will be less     tons).
                                                             than for past operations  B. For the years 2013
                                                             (an example to exceed      though 2018, the
                                                             would be running only      milestone increases by
                                                             one portion of the plant   this same amount, or by
                                                             to produce sulfur acid     30,000 tons, whichever
                                                             only).                     is less.
8.................  Both Phelps Dodge Hidalgo and BHP San     .......................  A. Any amounts identified
                     Manuel do not resume operations.                                   in Table 3b.
----------------------------------------------------------------------------------------------------------------


             Table 3b. Adjustments for Certain Copper Smelters Which Operate Above Baseline Levels.
----------------------------------------------------------------------------------------------------------------
                                            Complies with existing
                                            permits but has actual        * * * the milestone increases by the
  Where it applies in table 3a, if the   annual emissions that exceed   difference between actual emissions and
          following smelter--               the following baseline       the baseline level, OR  the following
                                                    level--                    amount, whichever is less.
----------------------------------------------------------------------------------------------------------------
Asarco Hayden..........................  23,000 tons.................  3,000 tons.
BHP San Manuel.........................  16,000 tons.................  1,500 tons.
Kennecott Salt Lake....................  1,000 tons..................  100 tons.
Phelps Dodge Chino.....................  16,000 tons.................  3,000 tons.
Phelps Dodge Hidalgo...................  22,000 tons.................  4,000 tons.
Phelps Dodge Miami.....................  8,000 tons..................  2,000 tons.
----------------------------------------------------------------------------------------------------------------

    (iii) Adjustments for changes in emission monitoring or calculation 
methods. The plan must provide for adjustments to the milestone to 
reflect changes in sulfur dioxide emission monitoring or measurement 
methods for a source that is included in the program, including changes 
identified under paragraph (h)(2)(iii)(D) of this section. Any such 
adjustment based upon changes to emissions monitoring or measurement 
methods must be made in the form of an implementation plan revision 
that complies with the procedural requirements of Sec. 51.102 and 
Sec. 51.103. The implementation plan revision must be submitted to the 
Administrator no later than the first due

[[Page 30448]]

date for a periodic report under paragraph(d)(10) of this section 
following the change in emission monitoring or measurement method.
    (iv) Adjustments for changes in flow rate measurement methods. The 
implementation plan must provide for adjustments to the milestones for 
sources using the methods contained in 40 CFR part 60, appendix A, 
Methods 2F, 2G, and 2H.
    (v) Adjustments for illegal emissions. The implementation plan must 
provide for adjustments to the milestones if any source in the program 
decreases its sulfur dioxide emissions in order to comply with 
applicable regulations which were in effect prior to the calculation of 
the source's baseline sulfur dioxide emissions. The plan must provide 
that the milestone must be decreased by an appropriate amount based on 
a reforecasted calculation of the source's decreased sulfur dioxide 
emissions. Any such adjustment based upon illegal emissions must be 
made in the form of an implementation plan revision that complies with 
the procedural requirements of Secs. 51.102 and 51.103.
    (vi) Adjustment based upon program audits. The plan must provide 
for appropriate adjustments to the milestones based upon the results of 
program audits. Any such adjustment based upon audits must be made in 
the form of an implementation plan revision that complies with the 
procedural requirements of Secs. 51.102 and 51.103. The implementation 
plan revision must be submitted to the Administrator no later than the 
first due date after the audit for a periodic report under paragraph 
(d)(10) of this section.
    (vii) Adjustment for individual sources opting into the program. 
The plan must provide for adjustments to the milestones for any source 
choosing to participate in the program even though they do not meet the 
100 tons per year criterion for inclusion. Any such adjustments must be 
made in the form of an implementation plan revision that complies with 
the procedural requirements of Secs. 51.102 and 51.103.
    (2) Requirements for monitoring, record keeping and reporting of 
actual annual emissions of sulfur dioxide.
    (i) Sources included in the program. The implementation plan must 
provide for annual emission monitoring and reporting, beginning with 
calendar year 2003, for all sources whose actual emissions of sulfur 
dioxide are 100 tons per year or more as of 2003, and all sources whose 
actual emissions are 100 tons or more per year in any subsequent year. 
States and Tribes may include other sources, if the implementation plan 
provides for the same procedures and monitoring as for other sources in 
a way that is federally enforceable.
    (ii) Documentation of emissions calculation methods. The 
implementation plan must provide documentation, consistent with EPA's 
applicable guidance on preparation of emissions inventories, of the 
specific methodology used to calculate emissions for each emitting unit 
during the base year. The implementation plan must also provide for 
documentation for each emission unit of any change to the specific 
methodology for each year after the base year.
    (iii) Record keeping. The implementation plan must provide for the 
retention of records for at least 5 years from the establishment of the 
record. If a record will be the basis for an adjustment to the 
milestone as provided for in paragraph (h)(1) of this section, that 
record must be retained for at least 5 years after the date of the SIP 
revision which reflects the adjustment.
    (iv) Completion and submission of emissions reports. The 
implementation plan must provide for collection of the emissions data, 
quality assurance, and public review and submission to the 
Administrator and to each State and Tribe which has submitted an 
implementation plan under this section by no later than September 30 of 
the following year. For sources for which changes in emission 
quantification methods require adjustments under paragraph (h)(1)(iii) 
of this section, the emissions reports must reflect the method in place 
before the change, for each year until the milestone has been adjusted. 
If each of the States which have submitted an implementation plan under 
this section have identified a regional planning organization to 
coordinate the annual comparison with the milestone, the implementation 
plan must provide for reporting of this information to the regional 
planning body.
    (v) Exceptions reports. The emissions report submitted by each 
State and Tribe under paragraph (h)(2)(ii) of this section must provide 
for exceptions reports containing the following:

    (A) Identification of new or additional sulfur dioxide sources 
greater than 100 tons per year that were not contained in the 
previous year emissions report;
    (B) Identification of sources shut down or removed from the 
previous year emissions report;
    (C) Explanation for emissions variations at any covered source 
that exceeds plus or minus 20 percent from the previous year 
emissions report;
    (D) Identification and explanation of new emissions monitoring 
and reporting methods at any source. The use of any new methods 
requires an adjustment to the milestones according to paragraph 
(h)(1)(iii) of this section.

    (vi) Reporting of emissions for the Mohave Generating Station for 
the years 2003 through 2006. For the years 2003, 2004, 2005, and for 
any part of the year 2006 before installation and operation of sulfur 
dioxide controls at the Mohave Generating Station, emissions from the 
Mohave Generating Station will be calculated using a sulfur dioxide 
emission factor of 0.15 pounds per million BTU.
    (vii) Special provision for the year 2013. The implementation plan 
must provide that in the emissions report for calendar year 2012, which 
is due by September 30, 2013 under paragraph (h)(2)(ii) of this 
section, each State has the option of including calendar year 2018 
emission projections for each source, in addition to the actual 
emissions for each source for calendar year 2012.
    (3) Annual comparison of emissions to the milestone.
    (i) The implementation plan must provide for a comparison each year 
of annual SO2 emissions for the region against the 
appropriate milestone. In making this comparison:
    (A) Each State or Tribe must make the comparison, using its annual 
emissions report and emissions reports from other States and Tribes 
reported under paragraph (h)(2)(ii) of this section, or
    (B) Where each State or Tribe has designated a regional planning 
organization for this purpose, the regional planning organization makes 
the comparison, using information provided by each State and Tribe.
    (ii) Beginning with an initial public review draft report due 
December 31, 2004 that makes the comparison for the year 2003 
milestone, the implementation plan must provide the public with a 
public review draft comparison by no later than December 31 of each 
year. This public review draft must be issued by each State or Tribe or 
in a coordinated report by the regional planning body.
    (iii) The implementation plan must provide for a final 
determination by each State or Tribe, or by the regional planning 
organization designated by each State or Tribe, of whether or not the 
annual milestone is exceeded. The determination must take into account 
public comments on the draft report. This determination must be 
submitted to the Administrator by the end of March of the year 
following issuance of the initial public review draft report. The first 
final determination will be due to the Administrator on March 31, 2005.

[[Page 30449]]

    (iv) Special considerations for year 2012 report. If each State or 
Tribe has included calendar year 2018 emission projections under 
paragraph (h)(2)(v) of this section, then the report for the year 2012 
milestone which is due by December 31, 2013 under paragraph (h)(3)(ii) 
of this section may also include a comparison of the regional year 2018 
emissions projection with the milestone for calendar year 2018. If the 
report indicates that the year 2018 milestone will be exceeded, then 
each State or Tribe, or the regional planning organization may choose 
to implement the market trading program beginning in the year 2018.
    (v) Independent review. The implementation plan shall provide for 
reviews of the annual emissions reporting program by an independent 
third party. This independent review is not required if a determination 
has been made under paragraph (h)(3)(iii) of this section to implement 
the market trading program. The independent review shall be completed 
by the end of 2006, and every 5 years thereafter, and shall include an 
analysis of:
    (A) The uncertainty of the reported emissions data;
    (B) Whether the uncertainty of the reported emissions data is 
likely to have an adverse impact on the annual determination of 
emissions relative to the milestone; and,
    (C) Whether there are any necessary improvements for the annual 
administrative process for collecting the emissions data, reporting the 
data, and obtaining public review of the data.
    (4) Market trading program. The implementation plan must provide 
for implementation of a market trading program if the determination 
required by paragraph (h)(3)(iii) of this section indicates that a 
milestone has been exceeded. The implementation plan must provide for 
the option of implementation of a market trading program if a report 
under paragraph (h)(3)(iv) of this section indicates that projected 
emissions for the year 2018 will exceed the year 2018 milestone. The 
implementation plan must provide for a market trading program whose 
provisions are the same for each State or Tribe submitting an 
implementation plan under this section. The implementation plan must 
include the following market trading program provisions:
    (i) Allowances. For each source in the program, the implementation 
plan must identify the specific allocation of allowances, on a tons per 
year basis, for each calendar year from 2009 to 2018. The total of the 
tons per year allowances across all participating States and Tribes may 
not exceed the amounts in Table 4 of this paragraph, less a 20,000 ton 
amount that must be set aside for use by Tribes. The implementation 
plan may include procedures for redistributing the allowances in future 
years, so long as the amounts in Table 4 of this paragraph, less a 
20,000 ton amount, are not exceeded. The implementation plan must 
provide that any adjustment for a calendar year applied to the 
milestones under paragraphs (h)(1)(i) through (v) of this section must 
also be applied to the amounts in Table 4. Table 4 follows:

              Table 4.--Total Amount of Allowances by Year
------------------------------------------------------------------------
                                                     If the two smelters
                               If the two smelters      do not resume
                               resume operations,      operations, the
                               the total number of     total number of
       For this year--        allowances issued by  allowances issued by
                                States and Tribes     States and Tribes
                               may not exceed this   may not exceed this
                                    amount--              amount--
------------------------------------------------------------------------
2009........................               715,000               677,000
2010........................               715,000               677,000
2011........................               715,000               677,000
2012........................               715,000               677,000
2013........................               655,000               625,000
2014........................               655,000               625,000
2015........................               655,000               625,000
2016........................               655,000               625,000
2017........................               655,000               625,000
2018........................               510,000               480,000
------------------------------------------------------------------------

    (ii) Compliance with allowances. The implementation plan provide 
that, beginning with the compliance period 6 years following the 
calendar year for which emissions exceeded the milestone and for each 
compliance period thereafter, each source owner must hold allowances 
for each ton of sulfur dioxide emitted.
    (iii) Emissions quantification protocols. The implementation plan 
must include specific emissions quantification protocols for each 
source category included within the program, including the 
identification of sources subject to part 75 of this chapter. For 
sources subject to part 75 of this chapter, the implementation plan may 
rely on the emissions quantification protocol in part 75. For source 
categories with sources in more than one State submitting an 
implementation plan under this section, each State must use the same 
protocol. The protocols must provide consistent approaches for all 
sources within a given source category. The protocols must provide for 
reliability (repeated application obtains results equivalent to EPA-
approved test methods), and replicability (different users obtain the 
same or equivalent results that are independently verifiable). The 
protocols must include procedures for addressing missing data, which 
provide for conservative calculations of emissions and provide 
sufficient incentives for sources to comply with the monitoring 
provisions.
    (iv) Monitoring and Record keeping. The implementation plan must 
include monitoring provisions which are consistent with the emissions 
quantification protocol. Monitoring required by these provisions must 
be timely, of sufficient frequency, and ensure the enforceability of 
the program. The implementation plan must also include requirements 
that source owners or operators keep records consistent with the 
emissions quantification protocols, and keep all records used to 
determine compliance for at least 5 years, unless a longer period is 
required by paragraph (h)(2)(iii) of this section. For source owners or 
operators which use banked allowances, all records relating to the

[[Page 30450]]

banked allowance must be kept for at least 5 years after the banked 
allowances are used.
    (v) Tracking system. The implementation plan must provide for 
submitting data to a centralized system for the tracking of allowances 
and emissions. The implementation plan must provide that all necessary 
information regarding emissions, allowances, and transactions is 
publicly available in a secure, centralized database. The system must 
ensure that each allowance may be uniquely identified, allow for 
frequent updates, and include enforceable procedures for recording 
data.
    (vi) Authorized account representative. The implementation plan 
must include provisions requiring the owner or operator of each source 
in the program to identify an authorized account representative. The 
implementation plan must provide that all matters pertaining to the 
account, including, but not limited to, the deduction and transfer of 
allowances in the account, and certifications of the completeness and 
accuracy of emissions and allowances transactions required in the 
annual report under paragraph (h)(4)(vi) of this section shall be 
undertaken only by the authorized account representative.
    (vii) Annual report. The implementation plan must include 
provisions requiring the authorized account representative for each 
source in the program to demonstrate and report within a specified time 
period following the end of each calendar year that the source holds 
allowances for each ton per year of SO2 emitted. The 
implementation plan shall require the authorized account representative 
to submit the report within 60 days of the end of each calendar year, 
unless an alternative deadline is specified consistent with emission 
monitoring and reporting procedures.
    (viii) Allowance transfers. The implementation plan must include 
provisions detailing the process for transferring allowances between 
parties.
    (ix) Emissions banking. The implementation plan may provide 
provisions for the banking of unused allowances. Any such provisions 
must state whether unused allowances may be kept for use in future 
years and describe any restrictions on the use of any such allowances. 
Allowances kept for use in future years may be used in calendar year 
2018 only to the extent that the implementation plan ensures that such 
allowances would not interfere with the achievement of the year 2018 
amount in Table 4 in paragraph (h)(4)(i) of this section.
    (x) Penalties. The implementation plan must include specific 
enforcement penalties to be applied if emissions from a source in the 
program exceed the allowances held by the source. In establishing 
specific enforcement penalties, the State or Tribe must ensure that:
    (A) When emissions from a source in the program exceed the 
allowances held by the source, each day of the year is a separate 
violation; and
    (B) Each ton of excess emissions is a separate violation.
    (xi) Provisions for periodic evaluation of the trading program. The 
implementation plan must provide for an evaluation of the trading 
program no later than 3 years following the first full year of the 
trading program, and at least every 5 years thereafter. Any changes 
warranted by the evaluation should be incorporated into the next 
periodic SIP or TIP revision required under paragraph (d)(10) of this 
section. The evaluation should be conducted by an independent third 
party and should include an analysis of:
    (A) Whether the total actual emissions could exceed the values in 
paragraph (h)(4)(i) of this section, even though sources comply with 
their allowances;
    (B) Whether the program achieved the overall emission milestone it 
was intended to reach, and a discussion of actions that have been 
necessary to reach the milestone;
    (C) The effectiveness of the compliance, enforcement and penalty 
provisions;
    (D) The administrative costs of the program to sources and to State 
and tribal regulators, including a discussion of whether States and 
Tribes have enough resources to implement the trading program;
    (E) Whether the market trading program has likely led to decreased 
costs for reaching the milestone relative to a non-market based 
approach, including a discussion of the market price of allowances 
relative to control costs that might have otherwise been incurred;
    (F) Whether the trading program resulted in any unexpected 
beneficial effects, or any unintended detrimental effects;
    (G) Whether the actions taken to reduce sulfur dioxide have led to 
any unintended increases in other pollutants;
    (H) Whether there are any changes needed in emissions monitoring 
and reporting protocols, or in the administrative procedures for 
program administration and tracking;
    (I) The effectiveness of the provisions for interstate trading, and 
whether there are any procedural changes needed to make the interstate 
nature of the program more effective.
    (5) What other provisions are required for the program?
    The implementation plan must provide for:
    (i) Permitting of affected sources. For sources subject to part 70 
or part 71 of this chapter, the implementation plan requirements for 
emissions reporting and for the trading program under paragraph (h) of 
this section must be incorporated into the part 70 or part 71 permit. 
For sources not subject to part 70 or part 71, the requirements must be 
incorporated into a permit that is enforceable as a practical matter by 
the Administrator, and by citizens to the extent permitted under the 
CAA.
    (ii) Integration with other programs. In addition to the 
requirements of paragraph (h) of this section, the restrictions of 
State, tribal and local rules, and State, tribal and Federal law remain 
in place. No provision of paragraph (h) of this section should be 
interpreted as exempting any source from compliance with any other 
provision of State, tribal or local law, the applicable and approved 
implementation plan, the tribal implementation plan, a federally 
enforceable permit, or implementing regulations under the CAA.

[FR Doc. 02-10872 Filed 5-3-02; 8:45 am]
BILLING CODE 6560-50-P