Rule2024-28739
Federal “Good Neighbor Plan” for the 2015 Ozone National Ambient Air Quality Standards; Notice on Remand of the Record of the Good Neighbor Plan To Respond to Certain Comments
Primary source
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Published
December 10, 2024
Issuing agencies
Environmental Protection Agency
Abstract
The Environmental Protection Agency (EPA) is addressing certain comments that were submitted on the proposed Good Neighbor Plan that the Supreme Court of the United States concluded the EPA had likely not sufficiently addressed in the final Good Neighbor Plan. The EPA is providing a fuller explanation of its reasoning at the time of its action in response to these comments. The Good Neighbor Plan addressed 23 states' obligations to eliminate significant contribution to nonattainment or interference with maintenance of the 2015 ozone national ambient air quality standards (NAAQS), pursuant to the "good neighbor" provision of the Clean Air Act (CAA or Act). On September 12, 2024, the D.C. Circuit Court of Appeals remanded the record of the Good Neighbor Plan to the EPA to permit the Agency to further respond to comments related to the Good Neighbor Plan's operation if one or more upwind States were no longer participating. In this document, the EPA responds to the comments by more fully explaining why the Good Neighbor Plan appropriately defines each state's obligations, regardless of the status of the rule in other states, and can be implemented without modification in any individual state or combination of states covered by the rule.
Full Text
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<title>Federal Register, Volume 89 Issue 237 (Tuesday, December 10, 2024)</title>
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[Federal Register Volume 89, Number 237 (Tuesday, December 10, 2024)]
[Rules and Regulations]
[Pages 99105-99129]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-28739]
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Parts 52, 75, 78, and 97
[EPA-HQ-OAR-2021-0668; FRL-8670.5-02-OAR]
RIN 2060-AW47
Federal ``Good Neighbor Plan'' for the 2015 Ozone National
Ambient Air Quality Standards; Notice on Remand of the Record of the
Good Neighbor Plan To Respond to Certain Comments
AGENCY: Environmental Protection Agency (EPA).
ACTION: Notice; supplemental response to comments.
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SUMMARY: The Environmental Protection Agency (EPA) is addressing
certain comments that were submitted on the proposed Good Neighbor Plan
that the Supreme Court of the United States concluded the EPA had
likely not sufficiently addressed in the final Good Neighbor Plan. The
EPA is providing a fuller explanation of its reasoning at the time of
its action in response to these comments. The Good Neighbor Plan
addressed 23 states' obligations to eliminate significant contribution
to nonattainment or interference with maintenance of the 2015 ozone
national ambient air quality standards (NAAQS), pursuant to the ``good
neighbor'' provision of the Clean Air Act (CAA or Act). On September
12, 2024, the D.C. Circuit Court of Appeals remanded the record of the
Good Neighbor Plan to the EPA to permit the Agency to further respond
to comments related to the Good Neighbor Plan's operation if one or
more upwind States were no longer participating. In this document, the
EPA responds to the comments by more fully explaining why the Good
Neighbor Plan appropriately defines each state's obligations,
regardless of the status of the rule in other states, and can be
implemented without modification in any individual state or combination
of states covered by the rule.
DATES: December 10, 2024.
ADDRESSES: The EPA has established a docket for this document under
Docket ID No. EPA-HQ-OAR-2021-0668. All documents in the docket are
listed on the <a href="https://www.regulations.gov">https://www.regulations.gov</a> website. Although listed in
the index, some information is not publicly available, e.g.,
Confidential Business Information (CBI) or other information whose
disclosure is restricted by statute. Certain other material, such as
copyrighted material, is not placed on the internet and will be
publicly available only in hard copy form. Publicly available docket
materials are available electronically through <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
FOR FURTHER INFORMATION CONTACT: Gwyndolyn Sofka, OAQPS-AQPD (C541-04),
Environmental Protection Agency, 109 TW Alexander Dr, Research Triangle
Park, NC 27711; telephone number: (919)-541-5121; email address:
<a href="/cdn-cgi/l/email-protection#e2918d848983cc85959b8c868d8e9b8ca2879283cc858d94"><span class="__cf_email__" data-cfemail="f78498919c96d990808e9993989b8e99b7928796d9909881">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
Throughout this document ``we,'' ``us,'' and ``our'' refer to the
EPA.
I. General Information
The EPA is responding to a set of comments that together raise a
question regarding the method by which the Agency developed the Good
Neighbor Plan (88 FR 36654; June 5, 2023). Namely: would the
conclusions the EPA reached regarding states' obligations under CAA
section 110(a)(2)(D)(i)(I) for the 2015 ozone NAAQS have been
different, had the rule been promulgated for, or if it covered, a
smaller or different group of states than the 23 states that were
included in that the rule? In short, for reasons that are provided in
the record of the Good Neighbor Plan itself and elaborated upon in this
document, the answer to that question is no. The EPA applied its 4-step
interstate transport analytical framework in the Good Neighbor Plan to
determine each included state's obligations. That framework, which
accounts for the multistate ``collective contribution'' nature of ozone
problems throughout the United States, nonetheless defines the amount
of emissions from each state that constitutes ``significant
contribution to nonattainment or interference with maintenance'' of the
NAAQS in other states and implements programs to prohibit those
emissions through federal implementation plans (FIPs) promulgated for
each state accordingly. As the Good Neighbor Plan itself indicated, the
EPA's methodology is designed to be applicable in any state that may
become subject to a federal plan to address its ``significant
contribution'' to other states' ozone problems for the 2015 ozone
NAAQS; it provides an equitable and efficient solution to a ``thorny
causation problem,'' EME Homer City, 572 U.S. 489, 514 (2014), by
holding any linked state's largest industrial NO<INF>X</INF>-emitting
sources to widely achievable emissions levels, and ensures fairness
among states by not being dependent on the order in which they are
addressed.
By issuing this document, the Agency is addressing a particular
issue that the
[[Page 99106]]
U.S. Supreme Court preliminarily found had been raised by commenters
with reasonable specificity, but which the Court considered the Agency
had likely failed to adequately address when it originally promulgated
the rule. See Ohio v. EPA, 144 S. Ct. 2040 (2024) (granting
applications to stay enforcement of the Good Neighbor Plan pending
judicial review). This document summarizes the relevant comments
identified by the Supreme Court and, after summarizing our initial
responses to these comments in section II.B., provides a fuller
response in section III. of this document concerning how these comments
relate or could be read as relating to the question of the Good
Neighbor Plan's application and severability on a state-by-state basis,
consolidating material and discussions from the existing administrative
record at the time the EPA issued the action. To provide the most
complete possible response to the issues identified by the Supreme
Court, the Agency has considered these comments from all angles, even
considering arguments that are not evident on the face of the comments
themselves. For this reason, we do not concede that each of the topics
discussed in this document was in fact raised with ``reasonable
specificity'' by the commenters themselves, as required by CAA section
307(d)(7)(B), but the Agency views it to be appropriate in light of the
Court's preliminary findings in Ohio to address all of the issues
commenters potentially could be seen to have raised, to ensure a
thorough and complete response to the commenters' concerns.
In responding to these comments, the Agency is relying solely on
the information and data available in the record at the time the Good
Neighbor Plan was signed by the EPA Administrator and promulgated on
March 15, 2023 (88 FR 36654; June 5, 2023). See CAA section
307(d)(6)(C) (limiting the basis for CAA rules issued under section
307(d) to ``information [and] data . . . placed in the docket as of the
date of [ ] promulgation''). The purpose of this document is not to
supplement the record of the Good Neighbor Plan with new findings,
information, data, or new record support, but rather only to
consolidate the existing material in the record to more fully respond
to the relevant comments received during the public comment period
following proposal of the Good Neighbor Plan. In this document, we
provide an ``amplified articulation'' of the methodology underlying the
design of the Good Neighbor Plan to more fully explain why, at the time
the EPA issued the Good Neighbor Plan, it understood the Good Neighbor
Plan's requirements to reasonably function on a state-by-state basis
and therefore to be severable by state. See Dep't of Homeland Sec. v.
Regents of the Univ. of Cal., 591 U.S. 1, 20-21 (2020) (quoting
Alpharma, Inc. v. Leavitt, 460 F. 3d 1, 5-6 (D.C. Cir. 2006)).
Thus, in this document, we compile and present together discussions
and components of the analysis that are already in the record and
explain how they relate to one another and together demonstrate that
the Good Neighbor Plan fulfills the statutory mandate for each state
regardless of the number of states included in the rule at any given
time.
As described in more detail in section II.A. of this document,
following the Supreme Court's opinion in Ohio, the EPA sought a
voluntary partial remand of the Good Neighbor Plan from the D.C.
Circuit to provide the explanation that the Supreme Court concluded was
likely lacking in the Good Neighbor Plan. The D.C. Circuit ordered
``that the record be remanded to permit the Environmental Protection
Agency to further respond to comments in the record.'' State of Utah et
al. v. EPA, No. 23-1157 (D.C. Cir. September 12, 2024).
The statutory authority for the Good Neighbor Plan is provided by
the CAA as amended (42 U.S.C. 7401 et seq.). The most relevant portions
of CAA section 110 are subsections 110(a)(1), 110(a)(2) (including
110(a)(2)(D)(i)(I)), and 110(c)(1). For further information, see
section II.C. of the preamble for the Good Neighbor Plan, 88 FR 36667-
68.
II. Background
A. Procedural History
On March 15, 2023, in accordance with CAA sections
110(a)(2)(D)(i)(I) and 110(c)(1), the EPA promulgated the Good Neighbor
Plan, a rule determining the good neighbor obligations of 23 states
with respect to the 2015 ozone NAAQS and establishing for these states
federal implementation plans (FIPs) for emissions sources in these
states to address each state's obligations by reducing emissions of
nitrogen oxides (NO<INF>X</INF>), an ozone precursor.\1\ Prior to
promulgating the Good Neighbor Plan, the EPA had disapproved state
implementation plans for 21 of those states and had found that several
states had failed to submit complete plans--predicates to EPA's
authority to promulgate FIPs for those states.\2\ Following the Good
Neighbor Plan's promulgation, in response to judicial orders partially
staying the SIP Disapproval as to several states, the EPA issued two
sets of interim amendments (referred to here as the First and Second
Interim Final Rules) staying the Good Neighbor Plan's effectiveness for
emissions sources in those states pending the resolution of judicial
review of that action and further EPA rulemaking.\3\ As modified by the
First and Second Interim Final Rules, the Good Neighbor Plan's FIPs
applied to electric generating units (EGUs) within the borders of
Illinois, Indiana, Maryland, Michigan, New Jersey, New York, Ohio,
Pennsylvania, Virginia, and Wisconsin and to non-EGU sources within the
borders of nine of the same ten states (all except Wisconsin) as well
as California.\4\
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\1\ Federal ``Good Neighbor Plan'' for the 2015 Ozone National
Ambient Air Quality Standards, 88 FR 36654 (June 5, 2023).
\2\ Air Plan Disapprovals; Interstate Transport of Air Pollution
for the 2015 8-Hour Ozone National Ambient Air Quality Standards, 88
FR 9336 (February 13, 2023) (``SIP Disapproval''); Findings of
Failure to Submit a Clean Air Act Section 110 State Implementation
Plan for Interstate Transport for the 2015 Ozone National Ambient
Air Quality Standards (NAAQS), 84 FR 66612 (December 5, 2019)
(including Pennsylvania, Utah, and Virginia).
\3\ Federal ``Good Neighbor Plan'' for the 2015 Ozone National
Ambient Air Quality Standards; Response to Judicial Stays of SIP
Disapproval Action for Certain States, 88 FR 49295 (July 31, 2023);
Federal ``Good Neighbor Plan'' for the 2015 Ozone National Ambient
Air Quality Standards; Response to Additional Judicial Stays of SIP
Disapproval Action for Certain States, 88 FR 67102 (September 29,
2023).
\4\ The Good Neighbor Plan's emissions reduction requirements
apply to all emissions sources meeting the Good Neighbor Plan's
applicability criteria within the borders of each covered state,
including sources in Indian country within the borders of the state.
See 88 FR 36690.
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In October 2023, after the United States Court of Appeals for the
District of Columbia Circuit (D.C. Circuit) denied motions to stay the
Good Neighbor Plan pending judicial review,\5\ four sets of parties
submitted emergency applications to the United States Supreme Court
seeking a stay of some or all of the Good Neighbor Plan's
requirements.\6\ In an opinion issued on
[[Page 99107]]
June 27, 2024 (referred to here as the Stay Order), the Supreme Court
granted the emergency applications and ordered that ``[e]nforcement of
EPA's rule against the applicants shall be stayed'' while judicial
review of the Good Neighbor Plan on the merits proceeds, first in the
D.C. Circuit and then potentially in the Supreme Court.\7\
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\5\ Orders, Utah v. EPA, No. 23-1157 (D.C. Cir. September 25,
2023, and October 11, 2023); see also Order, Utah v. EPA, No. 23-
1157 (D.C. Cir. December 4, 2023) (denying additional stay motions).
\6\ Ohio v. EPA, No. 23A349 (U.S. docketed October 18, 2023)
(other named applicants are Indiana and West Virginia); Kinder
Morgan, Inc. v. EPA, No. 23A350 (U.S. docketed October 18, 2023)
(other named applicants are Enbridge (U.S.) Inc., TransCanada
PipeLine USA Ltd., Interstate Natural Gas Association of America,
and American Petroleum Institute); American Forest & Paper
Association v. EPA, No. 23A351 (U.S. docketed October 18, 2023)
(other named applicants are America's Power, Associated Electric
Cooperative, Inc., Deseret Power Electric Cooperative, Midwest Ozone
Group, National Mining Association, National Rural Electric
Cooperative Association, Ohio Valley Electric Corporation, Portland
Cement Association, and Wabash Valley Power Alliance); United States
Steel Corporation v. EPA, No. 23A384 (U.S. docketed October 31,
2023).
\7\ Ohio v. EPA, 144 S. Ct. 2040, 2058 (2024).
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The Court found that, with respect to the ``explanation why the
number and identity of participating States does not affect what
measures maximize cost-effective downwind air-quality improvements,''
the stay applicants ``are likely to prevail on their argument that
EPA's final rule was not `reasonably explained,' that the agency failed
to supply `a satisfactory explanation for its action[,]' and that it
instead ignored `an important aspect of the problem' before it''. Ohio
v. EPA, 144 S. Ct. 2040, 2054 (2024) (citations omitted). The Court
focused in particular on the fact that the Good Neighbor Plan's FIPs
had been stayed in several states pending judicial review of the EPA's
disapproval of those states' state implementation plan (SIP)
submissions. 144 S. Ct. at 2051-52. Stay applicants had argued that the
``EPA's plan rested on an assumption that all 23 upwind States would
adopt emissions-reduction tools up to a `uniform' level of `costs' to
the point of diminishing returns'' and the EPA had not explained how
the rule was substantiated for a smaller number of states. Id. at 2053
(citations omitted). The Court preliminarily interpreted several
comments filed on the proposed Good Neighbor Plan as raising this
concern, i.e., that if a different number or grouping of states were
subject to the EPA's FIPs promulgated in the Good Neighbor Plan
rulemaking, then the EPA's cost-effectiveness analysis would have
changed, and therefore the obligations would or could be different for
the remaining states. Id. at 2050-51. The Court did not conclude that
the EPA's methodology was unlawful, or that petitioners were correct in
their assessment that the Good Neighbor Plan's obligations could change
depending on the number or group of states subject to it. Rather, the
Court preliminarily found that the EPA had failed to adequately respond
to the relevant comments and thus the rule was likely not ``reasonably
explained.'' Id. at 2054. The Court noted that the rule's
``severability'' discussion did not adequately address the issue, since
that discussion, in itself, contained no supporting analysis. Id. at
2054-55.
On March 27, 2024, several months before the Supreme Court issued
this ruling, the EPA partially denied several petitions for
reconsideration of the Good Neighbor Plan objecting to the rule on the
basis that it had been stayed in certain states and was no longer
lawful or workable in the remaining states, as well as objecting that
the rule should not have been published at all following judicial stays
of the SIP Disapproval as to certain states. The EPA's ``basis for
denial'' addressed both issues and determined that these objections
were not ``centrally relevant'' because, after examining the objections
in detail, the EPA concluded they failed to establish that the rule
should be revised. See 89 FR 23526 (April 4, 2024) (providing notice of
issuance of the partial denial).\8\ The Supreme Court declined to
consider the EPA's Denial in evaluating the applications for stay. See
144 S. Ct. at 2068 n.11.
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\8\ See also ``Letter Enclosure: The EPA's Basis for Partially
Denying Petitions for Reconsideration of the Good Neighbor Plan on
Ground Related to Judicial Stays of the SIP Disapproval Act as to 12
States,'' available at <a href="https://www.epa.gov/Cross-State-Air-Pollution/response-four-petitions-reconsideration">https://www.epa.gov/Cross-State-Air-Pollution/response-four-petitions-reconsideration</a> and at <a href="https://www.regulations.gov/document/EPA-HQ-OAR-2021-0668-1255">https://www.regulations.gov/document/EPA-HQ-OAR-2021-0668-1255</a>.
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Following the Supreme Court's decision granting the applications to
stay enforcement of the Good Neighbor Plan, the EPA implemented the
Court's stay of the effectiveness of the Good Neighbor Plan's
requirements for the sources that would have been subject to the rule
pursuant to the 23 states' FIPs originally promulgated, pending
judicial review. See 89 FR 87960 (November 6, 2024). In addition, the
EPA sought a voluntary partial remand of the Good Neighbor Plan. The
D.C. Circuit granted a remand of the record of the rule so that the EPA
might respond to the comments related to the rule's appropriateness for
each state and operation. State of Utah et al. v. EPA, No. 23-1157
(D.C. Cir. September 12, 2024). The D.C. Circuit retains jurisdiction
of the case, has placed the case in abeyance pending further order of
the court, and has directed the parties to file motions to govern
future proceedings in the case within 30 days after completion of this
remand or December 30, 2024, whichever is earlier. Id.
The following section, II.B. of this document, summarizes the
comments identified by the Supreme Court as relevant to the issue of
the Good Neighbor Plan's operation if one or more upwind States were no
longer participating and provides a summary of the EPA's responses to
these comments in the Good Neighbor Plan with citations to the
record.\9\ The EPA does not intend to reopen its prior response to
those comments through this document by summarizing those prior
responses. Section III. of this document provides a fuller explanation
in response to a specific issue identified by the Supreme Court derived
from these comments: whether the Good Neighbor Plan would lawfully
define and implement good neighbor obligations for any particular state
if it were not in effect for some other state or states. As the EPA
originally concluded based on the information in the record at the time
of promulgation, the Good Neighbor Plan appropriately defines each
state's obligations on an individual basis and is severable on a state-
by-state basis. See 88 FR 36693.
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\9\ We have focused specifically on the comments that the
Supreme Court identified in Ohio v. EPA. While other commenters
raised issues similar to these comments, these comments present a
representative set of perspectives on those issues that the Supreme
Court viewed as most closely related to the question of the Good
Neighbor Plan's severability by state.
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B. Summary of Comments Identified by the Supreme Court and Citation to
Prior Responses to Comments
Comment category 1 (SIP/FIP sequencing): Multiple commenters (the
Missouri Department of Natural Resources (MO DNR), the Louisiana
Department of Environmental Quality (LA DEQ), and the Texas Commission
on Environmental Quality (TX CEQ)) expressed concern that the EPA had
proposed FIPs prior to finalization of the SIP disapprovals for states
included in the FIP rulemaking, without knowing which states would
ultimately be covered by a FIP. Commenters state that this kept the EPA
from being able to receive and consider the technical, procedural, and
legal issues that they identified in their comments. Commenters state
that the proposed FIPs presume the result of the proposed disapproval
of SIPs even though the comment period for the SIP Disapproval action
was ongoing at the time of the proposed FIPs.
Commenters (LA DEQ and TX CEQ) requested that the EPA withdraw both
the proposed FIPs for their states and the proposed SIP disapproval so
that both states could have a further opportunity to show that their
respective SIPs address their supposed significant contribution to
nonattainment or interference with maintenance in downwind states. One
commenter (MO DNR) requested that the EPA withdraw the proposed FIP for
[[Page 99108]]
Missouri and other states so that the EPA can consider and respond to
all comments received on the SIP Disapproval action. The commenter goes
on to request that the EPA respond to all comments on the proposed
disapproval of the Missouri SIP in the final action for the Good
Neighbor Plan if it does not withdraw the proposed FIP, as the SIP
Disapproval action and the proposed FIP are ``inextricably linked.''
\10\ Relevant portions of the comment are included immediately below.
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\10\ See the Missouri Department of Natural Resources June 17,
2022, comment letter Docket Id No. EPA-HQ-OAR-2021-0668-0289, at 4.
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Missouri Department of Natural Resources
EPA is now proposing good neighbor FIPs, which are the subject
of this comment letter, before even finalizing the SIP disapprovals
for Missouri and numerous other states. The Air Program and several
other entities submitted adverse comments on EPA's proposed SIP
disapproval for Missouri's 2019 Good Neighbor SIP. Those comments
were all submitted after the publication of EPA's proposed good
neighbor FIP in the Federal Register. Therefore, EPA did not even
give itself a chance to receive, and much less, consider all the
technical, legal, and procedural issues for the proposed disapproval
that were identified in those comments before it moved forward with
the proposed FIP. It follows then, that EPA's proposed FIP is
extremely premature, and EPA should withdraw the proposal and be
obligated to consider and respond to all of the comments it received
on the proposed disapprovals before it can propose FIPs for these
states.\11\
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\11\ See id. at 3.
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Louisiana Department of Environmental Quality
The EPA's proposed FIP presumed the result of its proposed
disapproval of Louisiana's SIP submission, even though public notice
and comment were ongoing. EPA must consider comments received on its
proposed actions. The EPA cannot consider LDEQ's comment on the
proposed disapproval of the SIP in good faith, when it has already
proposed a FIP prior to the close of the comment period . . .
Louisiana requests that this proposed FIP be withdrawn, allowing
the state to either prove its original SIP submittal through
modeling or to provide specific enforceable measures to adequately
prohibit the contribution of pollution to downwind states.\12\
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\12\ See the Louisiana Department of Environmental Quality June
21, 2022, comment letter Docket Id No. EPA-HQ-OAR-2021-0668-0365, at
2.
Texas Commission on Environmental Quality
Based on the numerous technical and legal errors discussed in
our comments, the TCEQ respectfully requests that the EPA withdraw
its proposed FIP, either in whole, or in part as it pertains to
Texas. In the alternative, the TCEQ respectfully requests that the
EPA address and remedy the numerous technical and legal errors
identified by the TCEQ . . .\13\ The inclusion of Texas in the
proposed FIP is dependent on the EPA finalizing its proposed
disapproval of the transport SIP that Texas timely submitted for the
2015 ozone NAAQS.\14\
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\13\ See the Texas Commission on Environmental Quality June 21,
2022, comment letter Docket Id No. EPA-HQ-OAR-2021-0668-0505, at 1.
\14\ Id. at 2.
Citations to previous responses: The EPA explained that FIPs can be
proposed before final action is taken on SIP disapprovals, because the
statute provides that the EPA is required to promulgate a FIP ``at any
time within 2 years'' of a SIP disapproval or a finding of failure to
submit. This statutory sequence necessarily permits the proposal of a
FIP before the finalization of a SIP disapproval. See 88 FR 36689
(citing CAA section 110(c)(1); EME Homer City, 572 U.S. 489, 509). The
EPA was clear in both the proposed and final rulemaking documents that
it was issuing FIPs on a state-by-state basis, with adjustments in the
scope of states covered by the Good Neighbor Plan's uniform regulatory
programs occurring from proposal to final based on changes in the
underlying analytics, similar to changes in state coverage that had
occurred under prior good neighbor rulemakings.\15\ The EPA explained
that it had predicate FIP authority for each of the 23 covered states
at the time of signature and promulgation of the Good Neighbor Plan.
See 88 FR 36688-89 and the Good Neighbor Plan Response to Comments
(RTC) Document at 6-8.\16\ The EPA explained the timing of its action
to promulgate FIPs in relation to the need to address good neighbor
obligations as expeditiously as practicable, and to the extent possible
by the 2023 ozone season, 88 FR 36690, and explained why we would not
delay our action to afford states additional opportunities to develop
new submissions or instead issue a call for SIP revisions, though we
noted that states remain free to develop and submit SIP revisions at
any time. See Good Neighbor Plan RTC at 12-15. The EPA further
explained its reasoning concerning the sequencing of its actions and
that this sequencing did not prejudice the Agency's evaluation of
states' SIP submissions in the separate SIP Disapproval action. See
Good Neighbor Plan RTC at 149-51. The EPA noted that it was not
finalizing its proposed FIPs for several states, and the EPA
acknowledged that several states remained to be addressed for which it
either lacked predicate authority to issue a FIP or because further
rulemaking proceedings were appropriate. 88 FR 36658. The EPA explained
that specific technical or legal objections to the SIP Disapproval were
addressed in that action and were out of scope of the Good Neighbor
Plan. Id. at 144-45, 155.
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\15\ See, e.g., 87 FR 20036, 20038, 20039, 20040 n.8, 20041,
20044, 20045, 20051 n.39, 20051-2-52, 20058, 20067 n.115, 20073, and
20140 (April 6, 2022); 88 FR 36654, 36656, 36657, 36658, 36659 n.9,
36659, 36662, 36664, 36668 n.41 & 44, 36668/3, 36669, 36673/2, 36688
n.99, and 36689 (June 5, 2023).
\16\ Available in the docket at <a href="https://www.regulations.gov/document/EPA-HQ-OAR-2021-0668-1127">https://www.regulations.gov/document/EPA-HQ-OAR-2021-0668-1127</a>.
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Comment category 2 (potential for new modeling at Steps 1 and 2):
Comments from the Air Stewardship Coalition (ASC) and the Portland
Cement Association (PCA) asserted that if the EPA took different action
on SIPs than contemplated in the FIP rulemaking proposal, the EPA would
be required to conduct a new assessment and modeling of contribution
and subject those findings to public comment. In a section titled ``EPA
Step Two Screening is Premised on the Premature Disapproval of 19
Upwind States Good Neighbor SIPs'' (sections III.C. and II.C. of their
respective comments) the ASC and the PCA stated that the EPA's
screening at Step 2 of the 4-step interstate transport framework for
the Proposed Good Neighbor Plan included states that already had good
neighbor SIPs for the 2015 ozone NAAQS. Commenters state the EPA should
not have included these states in this proposed rule's screening as the
final disapproval of said SIPs was not issued prior to the proposed
FIP. The commenters claim that the EPA rushed to take final action on
its good neighbor SIPs when the EPA proposed to disapprove 19 good
neighbor SIP submissions and four findings of failure to issue a
complete SIP on February 22, 2022. Commenters state that in doing so
the EPA prejudged the outcome of the pending SIP actions in their
separate FIP action and did not account for the possibility that the
EPA may take a different course of action at final than what was
proposed in the SIP Disapproval action.
Commenters indicate that as a consequence of this prejudgment the
EPA may need to conduct a new assessment and modeling of contribution
at Step 2 of the 4-step interstate transport framework if the EPA
chooses to take a different action on any of the SIPs they have
proposed to disapprove or found as having failed to issue a complete
SIP. As such,
[[Page 99109]]
commenters urged the EPA to stay action on the proposals and coordinate
with states to ensure the appropriate sequence of actions is taken. The
relevant text of the ASC's comment is included immediately below.\17\
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\17\ See Portland Cement Association's June 21, 2022, comment
letter Docket Id No. EPA-HQ-OAR-2021-0668-0516, at 7, for section
II.C. of the PCA comment as referenced.
Yet, it appears EPA is rushing to take final action as EPA on
February 22, 2022, proposed to disapprove 19 Good Neighbor SIP
submissions. EPA also issued proposed findings of failure to issue a
complete SIP for NM, PA, UT, and VA. The proposed FIP essentially
prejudges the outcome of those pending SIP actions and, in the event
EPA takes a different action on those SIPs than contemplated in this
proposal, it would be required to conduct a new assessment and
modeling of contribution and subject those findings to public
comment.\18\
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\18\ See Air Stewardship Coalition's June 21, 2022, comment
letter Docket Id No. EPA-HQ-OAR- 2021-0668-0518, at 13-14.
Citations to previous responses: The EPA explained that, partially
in response to comments concerning technical issues with the modeling
used at proposal for Steps 1 and 2, it conducted a new round of
modeling and air quality analysis at Steps 1 and 2 in taking final
action on the SIP Disapproval and the Good Neighbor Plan. 88 FR 36673-
74; 88 FR 9339. The EPA explained that it also reviewed recent ozone
monitoring data indicating persistent elevated ozone levels at many
locations throughout the country. Id. at 36704-05. The EPA explained
that for most states its updated air quality analysis for the final
rule was confirmatory of its proposed findings concerning which states
contribute to downwind receptors at Step 2, and even its older 2011-
based modeling. Id. at 36674, 36707. The EPA explained that where its
updated analysis at Steps 1 and 2 indicated that a state was not
contributing or that the basis for finding contribution had changed, it
was not finalizing a FIP for that state in the Good Neighbor Plan; the
EPA indicated its intent to address these and other states in
subsequent actions. Id. at 36656, 36658, 36689; see also SIP
Disapproval, 88 FR 9354.\19\
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\19\ The EPA has conducted or is in the process of conducting
additional notice-and-comment rulemaking to address the obligations
of those states. See 88 FR 87720 (December 19, 2023) (Wyoming); 89
FR 12666 (February 16, 2024) Supplemental Air Plan Actions:
Interstate Transport of Air Pollution for the 2015 8-Hour Ozone
National Ambient Air Quality Standards and Supplemental Federal
``Good Neighbor Plan'' Requirements for the 2015 8- Hour Ozone
National Ambient Air Quality Standards (``Supplemental Rulemaking'')
(proposing action for Arizona, Iowa, Kansas, New Mexico, and
Tennessee).
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Comment category 3 (cost-effectiveness at Step 3): Comments from
ASC, PCA, the Indiana Municipal Power Agency (IMPA), the Lower Colorado
River Authority (LCRA), and the Wisconsin Paper Council (WPC) question
the methodology by which the EPA identified a cost-threshold used to
establish the cost-effectiveness of the proposed controls.
Commenters (ASC and PCA) both ask the EPA to reconsider the $7,500/
ton average marginal cost-effectiveness threshold used for non-EGUs
stating that it is too high and a departure from past practices. Both
commenters state the EPA has failed to explain why the EPA relied on a
``knee in the curve'' approach instead of the past ``clear breakpoint''
approach to determine the $7,500/ton number. Commenters state that
there is no noticeable break at that point for Tier 1 industries but
there is a break at $1,600/ton mark; however, commenters concede there
is a difference at $7,500/ton in Tier 2 industries and the combined
Tier 1 and 2 industries line. In addition, commenters question why the
EPA departed from the cost-effectiveness threshold used in the 2021
Revised CSAPR Update Rule ($2,000/ton in $2016) as it appears to
commenters that the EPA had not collected any new information on costs
or technologies or used different implementation timelines since the
Revised CSAPR Update Rule. The relevant text of the Air Stewardship
Coalition's comment is included immediately below.\20\
---------------------------------------------------------------------------
\20\ The Portland Cement Association's comment on this topic is
nearly identical and can be found at Docket Id No. EPA-HQ-OAR-2021-
0668-0516, at 22.
The Agency's sole analysis is that there was a ``knee in the
curve'' that identified $7,500 per ton, but that is not obvious to a
reviewer. There is no noticeable difference around $7,500 in the
plotted line for Tier 1 industries, instead the Tier 1 line reflects
a break around the $1,600 mark. While the Tier 2 and combined Tier 1
and 2 lines show some difference around $7,500 mark, there is no
explanation for EPA's reliance on a ``knee in the curve'' as opposed
to past transport rules that have relied upon a ``clear break
point'' at this step. Further, EPA has provided no explanation for
why the Tier 1 and 2 industries were subject to different
contribution thresholds, as described above, yet they were combined
when developing the cost-effective control threshold.
In addition, EPA fails to explain why the threshold departs from
prior transport rule cost-effectiveness thresholds for non-EGUs. In
particular, less than one year before EPA released the Proposed
Rule, in the 2021 Revised CSAPR Update Rule, EPA said the non-EGU
data demonstrated ``a clear break point'' (versus a ``knee in the
curve'') at approximately $2,000 (in $2016) per ton. According to
EPA, EPA adopted ``that analysis using the best available current
data,'' including the ``identified available control technologies,''
their ``costs and potential emissions reductions,'' and ``the
information it has regarding control technology implementation
timeframes, including information on such timeframes provided by
commenters on the proposed rule.'' Further, to identify levels of
control for non-EGUs, EPA used the Control Strategy Tool (CoST) and
the projected 2023 inventory from the 2016v1 modeling platform, just
as EPA has done in this Proposed Rule. Indeed, there is no
indication in the Proposed Rule that EPA collected any new
information on costs or technologies or implementation timelines
that differed in any material way from the information it analyzed
in the Revised CSAPR Update Rule.\21\
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\21\ See Air Stewardship Coalition's June 21, 2022, comment
letter Docket Id No. EPA-HQ-OAR-2021-0668-0518, at 27.
Other commenters (IMPA, LCRA, and the WPC) state that cost-
effectiveness varies based on operational characteristics of the unit
in question, that installing controls on existing EGUs may not be cost-
effective, and that emissions from certain industries (specifically
pulp and paper mills) would have a negligible effect on air quality.
One commenter (IMPA) objected that requiring a specific type of
emissions control will result in a lack of flexibility. They state that
the cost-effectiveness of employing selective non-catalytic reduction
(SNCR) will be highly variable, and that units employed at peak
timeframes will not see similar emissions reductions to those that are
used as base load generation. The commenter then states that technology
specific dictates are not the best means of emissions control but would
prefer controls that maintain flexibility.
To support their claim that the EPA's EGU controls are unlawful
because they are not cost-effective, another commenter (LCRA) states
that the installation of controls on existing sources (as compared to
new sources) is not ``per se reasonable or cost-effective.'' \22\ The
commenter goes on to state that EGUs that have already invested in
state-of-the-art combustion controls have already undertaken
significant costs and will have less to gain from additional controls
such as an selective catalytic reduction (SCR) retrofit.
---------------------------------------------------------------------------
\22\ See Lower Colorado River Authority's June 21, 2022, comment
letter Docket Id No. EPA-HQ-OAR-2021-0668-0395, at 21.
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Finally, one commenter (WPC) states that the emissions reductions
coming from adding controls to pulp and paper mills ``would have a
negligible effect on
[[Page 99110]]
air quality.'' \23\ The commenter states that this, coupled with a
continued decreasing trend of Wisconsin-based stationary source
NO<INF>X</INF> emissions, anticipated mobile source NO<INF>X</INF>
reductions, and additional reductions that they assert were not
accounted for in the EPA's analysis, indicates that inclusion of
Wisconsin pulp and paper mills are not needed to achieve downwind air
quality improvement.
---------------------------------------------------------------------------
\23\ See Wisconsin Paper Council's June 21, 2022, comment letter
Docket Id No. EPA-HQ-OAR-2021-0668-0338, at 2.
---------------------------------------------------------------------------
The relevant text of the various commenters is included immediately
below.
Indiana Municipal Power Agency
Not every unit can install or activate SNCR in a way that is
cost effective, relative to the actual emissions reductions that the
units will experience. Inflated assumptions as to achievable
emissions reductions, and underestimated implementation costs have
led EPA to presume that compelling the use of SNCR with no regard
for the individual circumstances of the EGU in question will be a
cost effective means of reducing NO<INF>X</INF> emissions. This is
not always the case. In IMPA's experience, the effectiveness of SNCR
system is highly variable depending on the operational
characteristics of the unit, and the level and consistency of its
load. Units deployed during peak timeframes, such as IMPA's WWVS
units, will not see the same emissions reductions as base load
generation. The cost effectiveness of the requirement to employ SNCR
will be highly variable, and is unlikely to meet EPA expectations in
even the most optimistic case.\24\
---------------------------------------------------------------------------
\24\ See Indiana Municipal Power Agency's June 20, 2022, comment
letter Docket Id No. EPA-HQ-OAR-2021-0668-0361, at 9.
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Lower Colorado River Authority
It is clear that Congress believed existing source standards
would never exceed new source standards: ``[m]ore stringent
requirements are imposed on new sources because engineering
considerations allow for cheaper and more effective pollution
control when the effort is incorporated in the design and
construction of the facility.'' In fact, EPA has previously
recognized that less (not more) stringent standards are appropriate
for existing units because ``controls cannot be included in the
design of an existing facility and because physical limitations may
make installation of particular control systems impossible or
unreasonably expensive in some cases.'' Controls identified as part
of a transport plan should take into account the difficulties of
installing controls at existing facilities, but EPA does not do so
in this Proposal.
While installing selective catalytic reduction may be the common
practice for a new fossil-fueled EGU, that does not mean that it is
per se reasonable or cost-effective for existing plants, especially
those that have already invested in other controls to lower their
NO<INF>X</INF> emissions. Due to the lower emission rate starting
point, plants that have already invested in state-of-the-art
combustion controls, such as low-NO<INF>X</INF> burners and overfire
air, have already undertaken significant costs to achieve
NO<INF>X</INF> reductions and have less to gain from additional
control installation, such as SCR and SNCR.\25\
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\25\ See Lower Colorado River Authority's June 21, 2022, comment
letter Docket Id No. EPA-HQ-OAR-2021-0668-0395, at 2 (footnotes
omitted).
---------------------------------------------------------------------------
Wisconsin Paper Council
Furthermore, pulp and paper mill boilers contribute a small
amount of the overall NO<INF>X</INF>
emissions from sources in the 23 states identified by EPA for
emission reductions. Based upon the 2017 National Emissions
Inventory, point sources in those states emitted approximately 1.5
million tons of NO<INF>X</INF>, while pulp and paper mill boilers
emitted only about 35,000 tons in those states (2% of point source
emissions). In addition, those states also have mobile source
emissions of approximately 3.3 million tons per year of
NO<INF>X</INF>, and another 1 million tons of NO<INF>X</INF>
emissions from biogenic sources, wildfires and prescribed burns.
It is also important to note that the reduction in emissions
from pulp and paper mills would have a negligible effect on air
quality. For example, the maximum estimated improvement at any
receptor for emission controls on 25 pulp and paper mills is 0.0117
ppb, which is significantly below the detection limit of ambient air
quality monitors. Thus, the benefit in air quality is too small to
even measure.\26\
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\26\ See Wisconsin Paper Council's June 21, 2022, comment letter
Docket Id No. EPA-HQ-OAR-2021-0668-0338, at 2.
Citations to previous responses: The EPA explained that, as it had
in all prior good neighbor rulemakings for ozone, it was establishing
uniform emissions control levels for all covered states, using a
comparative analysis of the cost-effectiveness of different emissions
control technologies as a key metric to establish the appropriate
degree of stringency to define ``significant contribution.'' 88 FR
36675-77, 36678-79, 36683, 36718-19, 36741. The EPA explained that it
determined in the final Good Neighbor Plan it would require controls up
to the $11,000/ton representative cost threshold identified for EGUs
associated with retrofit of SCR post-combustion control technology and
that non-EGU costs on a per ton basis were generally commensurate with
this level of control stringency. 88 FR 36746-47. The EPA explained
there could be variation in costs for particular units depending on
their configurations or level of operation but that this variation did
not impact its selection of the overall appropriate level of
stringency. Id.; id. at 36740-41. The EPA explained it was not relying
on the $7,500/ton preliminary threshold identified in the Non-EGU
Screening Assessment, recognizing costs were more heterogeneous than
that single figure, and that nonetheless, the Screening Assessment
adequately served its function of helping the EPA target the most
impactful non-EGU emissions control strategies in defining
``significant contribution.'' Id.; Good Neighbor Plan RTC at 113-15.
The EPA explained that for EGUs, the trading program would allow for
cost-efficient compliance planning for all sources and adjusted its
proposed trading program ``enhancements'' to preserve greater
flexibility for EGUs through the 2020s, id. at 36729-30, 36684, while
for non-EGUs, the EPA made available flexibilities such as alternative
emissions limits for any units facing excessively high costs or
technical infeasibility, id. at 36818-19. The EPA explained that it
believed its selected level of stringency as compared to prior
transport rules was appropriate in light of the more protective 2015
ozone NAAQS and its projections of persistent elevated ozone levels.
Id. at 36660. It explained how its analysis compared and was consistent
with the determinations in the Revised CSAPR Update and other previous
rulemakings taken pursuant to CAA section 110(a)(2)(D)(i)(I). 88 FR
36660; Good Neighbor Plan RTC at 37-39, 92-93. The EPA explained how it
had derived its estimates of representative costs for both EGUs and
non-EGUs, which accounted for a range of costs associated with retrofit
of controls on existing sources. 88 FR at 36720-31, 36738-40. The EPA
explained how its selected level of control was also roughly
commensurate with the level of control required of existing sources in
downwind states. Good Neighbor Plan RTC at 62-63.
The EPA explained how it evaluated the air quality factor in its
Step 3 analysis, viewing it as serving a confirmatory role that an
appropriate level of emissions control stringency would be achieved
overall, that (based on available information) no cost-effective
strategies had been overlooked, and that if the identified cost-
effective level of control stringency were applied uniformly across the
linked upwind states, there would be, on average and in the aggregate,
widespread reductions in ozone levels at downwind receptors. Id. at
36683, 36741, 36748-50.
The EPA explained that it generally focused on large stationary
sources of NO<INF>X</INF> emissions in upwind states, consistent with
the science of regional-scale ozone transport and all of its prior good
neighbor rulemakings for ozone. Id. at 36660, 36671, 36719. The EPA
explained it recognized that air quality improvement from any
particular source
[[Page 99111]]
or group of sources may appear relatively small, but this is simply an
expression of the ``collective contribution'' problem that ozone
presents. Good Neighbor Plan RTC at 98, 103-04. The EPA explained why,
given this problem and the need to control many sources over a wide
area, it makes sense to define obligations for each state subject to a
FIP through the application of a uniform level of emissions control
across the linked states and to regulate on an industry-by-industry
basis across those states, as a matter of both efficiency and equity.
88 FR 36673, 36675-76, 36677, 36680, 36683, 36691, 36719, 36741; Good
Neighbor Plan RTC at 8, 48, 56-58, 83, 92-93, 118.
The EPA explained that it considered boilers in several industries
to be impactful and controllable non-EGU types and that boilers in the
pulp and paper industry were among those sources with well-
demonstrated, cost-effective NO<INF>X</INF>-emissions control options.
88 FR 36681-82, 36736, 36739-40; Good Neighbor Plan RTC at 93, 97, 99-
100, 107, 119-21. The EPA explained that it was nevertheless not
including non-EGU requirements for Wisconsin in the final rule because
based on the updated modeling used for the final rule, Wisconsin was no
longer projected to be linked to downwind receptors in the 2026
analytic year. Id. at 118.
The EPA addressed SNCR operating characteristics and effectiveness
for existing EGUs, both in terms of optimizing SNCR controls that had
already been installed, and in terms of installing new SNCRs on
existing EGUs. 88 FR 36725-26. The EPA evaluated comments concerning
SNCR performance where specifically raised, see, e.g., Good Neighbor
Plan RTC at 229. The EPA also gave consideration to certain EGUs that
have widely varying operating levels because they serve a ``peaking''
function rather than supplying baseload power to the grid and did not
include them in setting the stringency of the rule for EGUs at Step 3.
88 FR 36732.
III. Analysis of Severability in Response to Comments
In this section, the EPA provides a fuller explanation why the Good
Neighbor Plan can and should apply on a state-by-state basis for any
state for which the EPA has a responsibility to promulgate a FIP,
regardless of the number of states covered at any given time. Drawing
together the Agency's legal and technical reasoning, based on the
information and data available at the time, provided in the record when
the Good Neighbor Plan was signed and promulgated, the EPA provides a
more thorough response to the relevant comments that together can be
read to have raised that issue.
A. Summary of Response
As the EPA stated in the final rule, the Good Neighbor Plan by
design is severable by state. 88 FR 36693. The rule implements the
statute's prohibition on ``significant contribution'' under CAA section
110(a)(2)(D)(i)(I) for the 2015 ozone NAAQS by promulgating state-level
FIPs that require the industries in each contributing upwind state to
achieve at least minimum levels of emissions performance deemed to be
cost-effective. Id. at 36741. So long as they meet that level of
performance, the industries in any state regulated under the Good
Neighbor Plan are understood to have lawfully addressed good neighbor
obligations and eliminated that portion of a state's significant
contribution to downwind air pollution. While the EPA must necessarily
account for the multi-state nature of the interstate-ozone problem,
consistent with the statute and case law, the Good Neighbor Plan
imposes obligations on sources in each individual state that are
appropriate for those sources and are achievable.
Those requirements result from the application of a longstanding
analytical framework that the EPA has applied when evaluating
interstate transport obligations for multiple prior ozone NAAQS. 88 FR
36660, 36668-69. Shaped through the years by input from state air
agencies \27\ and other stakeholders on the EPA's prior interstate
transport rulemakings and SIP submission actions,\28\ as well as court
decisions, the EPA has developed and used a ``4-step interstate
transport framework'' to evaluate states' obligations to eliminate
interstate transport emissions under the interstate transport provision
for each prior ozone NAAQS: (Step 1) identify monitoring sites that are
projected to have problems attaining and/or maintaining the NAAQS
(i.e., nonattainment and/or maintenance receptors); (Step 2) identify
states that impact those air quality problems in other (i.e., downwind)
states sufficiently such that the states are considered to
``contribute'' (i.e., are considered ``linked'') to those receptors and
whose emissions therefore warrant further review and analysis; (Step 3)
identify the emissions reductions necessary (if any), applying a
multifactor analysis, to eliminate each linked upwind State's
significant contribution to nonattainment or interference with
maintenance of the NAAQS at the locations identified in Step 1; and
(Step 4) adopt permanent and enforceable measures needed to achieve
those emissions reductions. The EPA does not require states to use the
4-step interstate transport framework in good neighbor SIP submissions,
nor has the EPA ever maintained that this is the only way states could
satisfy their obligations under CAA section 110(a)(2)(D)(i)(I).
However, it is a useful organizational tool and evaluation framework
that comports with the statutory text and structure of the Act. The
application of uniform levels of emissions control stringency at Step 3
across all linked states has been upheld by the Supreme Court as
``permissible, workable, and equitable.'' EPA v. EME Homer City
Generation, L.P., 572 U.S. 489, 524 (2014). The Supreme Court there
expressly rejected that the Act mandates a definition of
``significance'' that is directly proportional to each state's
contribution, finding that reading ``appears to work neither
mathematically nor in practical application.'' Id. at 516. As the EPA
explained in the Good Neighbor Plan, the 4-step interstate transport
framework, including the application of uniform minimum control
stringency, remains a particularly fair and equitable approach to apply
in the case of a multistate pollution problem like ozone, characterized
by ``collective contribution'' and in which widespread emissions
reductions of a single precursor pollutant (nitrogen oxides or
NO<INF>X</INF>) over a wide geographic area are known to be effective
in improving ozone levels downwind. 88 FR 36719.
---------------------------------------------------------------------------
\27\ See 63 FR 57356, 57361 (October 27, 1998).
\28\ In addition to CSAPR rulemakings, other regional
rulemakings addressing ozone transport include the ``NO<INF>X</INF>
SIP Call,'' 63 FR 57356 (October 27, 1998), and the ``Clean Air
Interstate Rule'' (CAIR), 70 FR 25162 (May 12, 2005).
---------------------------------------------------------------------------
Because the methodology for defining those obligations ultimately
relies on a determination regarding what level of widely available
emissions performance each type of regulated source can cost-
effectively achieve, the obligations set for sources in each state are
independent of the number of states included in the Good Neighbor Plan.
Accordingly, the fact that obligations may be suspended or not yet
operative with regard to some states does not impact the Good Neighbor
Plan's conclusions as they apply in other states. Rather, as the EPA
explained, the framework yields an ``amount'' of pollution for ``each
State'' that the EPA is authorized to ``prohibit,'' CAA section
110(a)(2)(D)(i), standing in the shoes of
[[Page 99112]]
a state, CAA section 110(c)(1), based on the amounts of pollution that
would be avoided in that state by applying the control technologies the
EPA determined were cost-effective for the covered industries. 88 FR
36675. The amounts to be prohibited are thus premised on reasonable
levels of pollution control upwind rather than on a specific, aggregate
quantum of ozone reduction that must be achieved downwind. Michigan v.
EPA, 213 F.3d 663, 674-80 (D.C. Cir. 2000).
Under this framework, while the emissions-control requirements are
uniform across the same types of sources in each state, the size of
each state's total incremental emissions-reductions obligation under
the Good Neighbor Plan, and the resulting improvement in air quality
downwind, depends on the particular sources present in that state and
the level of pollution reduction those sources are already achieving.
88 FR 36683. If a state's sources are already well-controlled, they
will have less to do to meet the EPA's defined level of control
stringency; if the state's sources are not already well-controlled,
they will have to do more. But these state-specific obligations derive
from the application of common, uniform levels of emissions control
stringency calculated for each type of source based on the demonstrated
performance of pollution control technologies that can be replicated in
any linked upwind state. EME Homer City, 572 U.S. at 519-20.
Calculating ``significance'' according to source type and concluding
that the good neighbor provision can be reasonably implemented by
bringing all covered sources up to a common level of control ensures
the EPA can fairly administer the program in any state that becomes
subject to a need for federal regulation, while avoiding inequities
that could arise if state plans (and relevant sources) were addressed
seriatim. See 88 FR 36749 (explaining the need to avoid a ``which state
goes first'' problem). The achievement of that level of performance for
any particular state is not dependent on the number of states in the
Good Neighbor Plan, nor on the order in which the states are addressed.
In this way, the Good Neighbor Plan prohibits each covered state's
``significant contribution'' to downwind ozone problems in a
``permissible, workable, and equitable'' manner. 572 U.S. at 524.
Given this statutory structure and regulatory framework, the Good
Neighbor Plan is ``modular'' by nature, defining and implementing the
obligations for each state.
First, in line with the statutory text, structure, and case law,
the EPA determines the ``significant contribution'' that must be
prohibited at the individual state level. See 88 FR 36687 (citing North
Carolina v. EPA, 531 F.3d 896, 906-08, 921 (D.C. Cir. 2008)). None of
the steps in the 4-step interstate transport framework differ based on
the number of states included in the Good Neighbor Plan. For example,
the control technologies and cost-effectiveness figures the EPA
considers at Step 3 do not depend on the number of states included.
Instead, the Good Neighbor Plan regulates certain relatively large
emitting sources in each included state (including both new and
existing sources meeting the relevant criteria), up to a uniform level
of pollution control that is common across sources of that type in all
potentially contributing states. Once the ``amount'' of pollution for
each state is determined, whether the 4-step interstate transport
framework is applied to one state or fifty, it would yield the same
emissions control obligations for the included states. That means that
when the number of states whose sources are included in the Good
Neighbor Plan's regulatory programs for EGUs or non-EGUs changes from
the number included at promulgation, which is historically common in
interstate transport rules and consistent with states' authority under
the Act to replace federal plans with state plans, the emissions
reduction obligations of the states remaining in the Good Neighbor
Plan's programs stay the same, and the obligations of states joining
the Good Neighbor Plan's programs are the same as those that were
applied to the states already included.
Second, given the state-specific statutory mandate, for those
components of the Good Neighbor Plan that necessitate consideration of
multi-state effects, the EPA is careful to avoid creating any
interdependency among the particular states included, both in the
Agency's analytical methodology and in the Good Neighbor Plan's
regulatory requirements. As the EPA explained in the rule, interstate
ozone pollution continues to present a ``collective contribution''
challenge wherein many sources of emissions over a wide geographic area
comprise a substantial portion of the ozone problems downwind. 88 FR
36678, 36712. Where the EPA is called upon to fill a gap in state
planning efforts, it must therefore develop solutions for the relevant
state(s) that reasonably account for the efforts other states may
undertake, even in the face of uncertainty concerning what those states
may do. Id. at 36695-96. For example, when evaluating the Good Neighbor
Plan to ensure it did not ``overcontrol'' (i.e., yield more reductions
than necessary), the EPA did not just look at the states included in
the original Good Neighbor Plan, but also looked at all of the other
states the modeling showed were potentially affecting downwind air
quality above the ``contribution'' threshold (as well as each
receptor's ``home'' state), even if those states were not included in
the Good Neighbor Plan.\29\ See infra note 47 supra and accompanying
text (providing record citations). Taking this broad view, the EPA
found that even making all cost-effective reductions available in all
linked upwind states, and assuming equivalent emissions reductions from
the two downwind states not included in the Good Neighbor Plan, the
rule would not constitute overcontrol. 88 FR 36749-50. Accordingly,
because the overcontrol analysis already assumes the emissions
reductions that can reasonably be anticipated from the implementation
of the good neighbor provision for a given NAAQS, requiring available
emissions reductions in any subset of those states does not constitute
overcontrol of those upwind states. See section III.B.2.c. of this
document (providing record citations). Finally, the Good Neighbor
Plan's regulatory requirements, including the emissions trading program
for power plants, are designed to be fully implementable in each
individual state and do not depend on participation from a minimum
number of states. See section III.B.3. of this document (providing
record citations). In these ways, the EPA's methodological approach to
devising good neighbor FIPs for ozone ensures against inter-dependency
among states, through accounting for the effects of emissions
reductions within a web of ``overlapping and interwoven'' linkages
among many states, EME Homer City, 572 U.S. at 496-97, while at the
same time setting technology-based emissions limits and other control
measures that the sources in each state can meet. 88 FR 36741, 36749.
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\29\ These states are now included in a supplemental rulemaking
to address their obligations. See supra note 19.
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Third, while equity and consistency in obligations among states are
at the core of the statute and the EPA's 4-step interstate transport
framework, the suspension or removal of the Good Neighbor Plan's
requirements in some states does not provide a lawful basis to suspend
them in others. Just as each state has an individual obligation to
[[Page 99113]]
satisfy the good neighbor requirements of CAA section 110(a)(2)(D),
regardless of whether other states have done so, the EPA has a
statutory obligation to address the good neighbor obligations of ``each
State'' where it has a federal responsibility to act. CAA section
110(c)(1). Indeed, the goals of equity and consistency extend to the
downwind states for whom the good neighbor provision was enacted. The
good neighbor provision's requirement of consistency with the rest of
the CAA, see CAA section 110(a)(2)(D)(i), including the air quality
attainment schedules that are the ``heart'' of the Act, Train v. NRDC,
421 U.S. 60, 66 (1975), means that each downwind state with identified
air quality problems has a statutory right to timely relief from the
public health and regulatory burdens of upwind pollution. See 88 FR
36694 (discussing case law). It would be contrary to this statutory
purpose to revise or suspend the Good Neighbor Plan as to upwind states
for which the EPA is under a statutory requirement to act because the
Good Neighbor Plan's requirements were suspended for other states.
These principles are applicable in a variety of circumstances where
the EPA may approve a state's SIP as sufficiently meeting its good
neighbor obligations even if the state's approach is different than the
EPA's approach, for that state or for other states. The EPA's
interstate ozone transport actions are typically taken on a national
basis and with the goal of ensuring consistency, including in terms of
alignment of the timing of obligations, because doing so ensures
equitable treatment of all states and is administratively efficient
given the commonality in analysis and obligations across many states,
particularly in the case of interstate ozone transport. In addition,
the establishment of interstate emissions trading programs has allowed
for more cost-efficient compliance activities, and it is far more
efficient to establish these programs through a consolidated,
multistate rulemaking action. Historically, this has also been coupled
with the EPA's practice of seeking consolidated judicial review of such
actions in the D.C. Circuit to ensure that a consistent caselaw regime
applies across the entire country on matters of interstate ozone
pollution and is not varied by which federal judicial circuit a state
happens to be located in. 88 FR 36859-60.\30\
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\30\ See also, e.g., 86 FR 23054, 23163-64 (April 30, 2021); 84
FR 56058, 56093 (October 18, 2019); 83 FR 65878, 65923-24 (December
21, 2018); 83 FR 50444, 50472 (October 5, 2018); 81 FR 74504, 74585-
86 (October 26, 2016); 76 FR 80760, 80773-74 (December 27, 2011); 76
FR 48208, 48352 (August 8, 2011); 71 FR 25328, 25329 (April 28,
2006); 70 FR 25162, 25316 (May 12, 2005); 65 FR 2674, 2725 (January
18, 2000); 63 FR 57356, 57480 (October 27, 1998).
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Nonetheless, the EPA acknowledged states' ability to develop
alternative, potentially approvable approaches to meeting their good
neighbor obligations. See 88 FR 36838-43. In evaluating alternative
approaches, the EPA must consider interstate consistency, 88 FR 36839-
40; id. n.405; 87 FR 9338, 9380-81, but it has never been the Agency's
view that its methodology for defining one state's obligations would
have to be redone simply because it found an approach in another state
also approvable.
Thus, as explained in more detail in section III.B., the comments
asserting that the EPA should stay, revise, or withdraw the Good
Neighbor Plan for any particular state depending on the status of
implementation of good neighbor obligations of other upwind states
cannot be squared with the state-specific mandate of the Act, nor would
this be compelled as a result of any element of the EPA's 4-step
interstate transport framework. For those states where the Good
Neighbor Plan may be currently suspended, good neighbor obligations
will ultimately be met, either through an approved state plan or a
federal plan as necessary. Meanwhile, sources in upwind states
regulated by the Good Neighbor Plan would be under the same legal
obligation to control their pollution even if the EPA developed a
federal plan containing just those states or some subset of them or
separate federal plans for each state.
B. Step-by-Step Review of the 4-Step Interstate Transport Framework
A review of the EPA's methodology demonstrates why each upwind
state would bear the same emissions reduction obligations, regardless
of how many states were included in a particular rulemaking. The EPA's
method for defining good neighbor obligations, while applied
consistently across the nation and respectful of the multistate
``collective contribution'' nature of the interstate ozone problem,
produces a definition of ``significant contribution'' \31\ for the
sources in each individual state, and provides for the prohibition of
such emissions in a manner that is not dependent on the inclusion of
any particular number or grouping of states. As tested and refined
through case law over the past quarter-century, the EPA's methodology
is consistent with the state-specific structure of the Act and the
fundamental statutory obligation to define and prohibit each state's
own significant contribution. See CAA section 110(a)(1) and
110(a)(2)(D); Wisconsin v. EPA, 938 F.3d 303, 324-25 (D.C. Cir. 2019);
North Carolina, 531 F.3d at 906-08, 920-21.
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\31\ ``Significant contribution'' is often used as a shorthand
to refer to the identification of those amounts of emissions that
significantly contribute to nonattainment or interfere with
maintenance of the NAAQS in other states and therefore must be
prohibited under the good neighbor provision. See CAA section
110(a)(2)(D)(i)(I).
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Consistent with the statutory text and structure and judicial
precedent, the EPA's 4-step interstate transport framework was designed
to be independent of the number or scope of included states. Because
the statute allows states to replace a FIP with a SIP--and because as a
practical matter the EPA does not necessarily receive or act on each
state's SIP submission at the same time--the Good Neighbor Plan is
expressly designed to allow states to be added to or removed from the
federal emissions control program over time, as circumstances require
(including where a state submits an approvable SIP to replace their
FIP, see 88 FR 36838-39). The Good Neighbor Plan does so primarily by
setting good neighbor obligations based on the available, cost-
effective technologies that can be applied to each type of high-
emitting source--a technology-focused definition of ``significant
contribution'' that the Supreme Court upheld in EME Homer City and that
can be evenhandedly applied to existing sources and those that may be
newly located in any contributing State in the future. 88 FR 36675-77,
36678-79, 36683, 36718-19, 36741. This ensures fairness and consistency
across all states when the EPA must act pursuant to its FIP authority
to implement CAA section 110(a)(2)(D)(i)(I), regardless of when any
particular state is addressed--it avoids the problem of ``which state
goes first''; that is, it avoids producing unfairly varying levels of
emissions-control stringency depending on the order in which states'
obligations are addressed. 88 FR 36749. As the Supreme Court aptly
illustrated in EME Homer City, where multiple states contribute to
multiple other states (as remains the case across the contiguous U.S.
for the 2015 ozone NAAQS), addressing each state's obligations in
proportion to its contribution to each receptor in seriatim fashion
becomes mathematically unworkable and economically inefficient. 572
U.S. at 516. The EPA's approach to developing ozone good neighbor FIPs
avoids these pitfalls, avoids interdependence, and avoids unfairness--
it works for each state that may need federal regulation of its
[[Page 99114]]
sources. Accordingly, under each step of the 4-step interstate
transport framework discussed further later, a change in the number of
states covered does not impact the obligations of the states or sources
that remain covered.
1. Steps 1 and 2
The EPA identifies receptors based on nationwide modeling and
monitoring data and evaluates each state's contribution to receptors in
downwind states on an individual-state basis to identify upwind-state-
to-downwind-state linkages. The air quality modeling and the monitoring
data the EPA considered for Steps 1 and 2 cover the contiguous United
States. See 88 FR 36696.
At Step 1, the EPA identified downwind receptors that are expected
to have problems attaining or maintaining the NAAQS. For a detailed
explanation of what receptors are and how the EPA identified them, see
88 FR 36703-08. At Step 2, the EPA identified which upwind states
contribute to the identified receptors in amounts that would be
sufficient in the EPA's interpretation of ``contribution'' to ``link''
the individual upwind states to downwind air quality problems. For a
detailed explanation of how the EPA identified these linkages, see 88
FR 36708-12.
The nationwide identification of receptors expected to have
problems attaining or maintaining the NAAQS and of states
``contributing'' to those receptors does not rely upon nor necessarily
dictate the number of states included in a particular rulemaking. The
EPA historically has applied a common numerical threshold for
determining which states ``contribute'' to downwind air quality
problems, and the contributions from each state are evaluated
independently with respect to this threshold. 88 FR 36677-78. The
modeling of baseline conditions did not contain or rely on the
emissions reductions in the Good Neighbor Plan, and the monitoring data
were based on measurements during years prior to when the Good Neighbor
Plan was final and thus these data do not reflect the impacts of
emissions reductions from the Good Neighbor Plan.\32\ This approach
creates a level playing field from which to assess each state's level
of contribution. 88 FR 36713.
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\32\ Both the EPA and States can use air quality modeling and
monitoring information on ozone concentrations and contribution
levels to make individual determinations for each state concerning
whether it is contributing to any out-of-state receptors. See, e.g.,
88 FR 9365 n.286 (identifying individualized approvals of SIPs using
modeling at Steps 1 and 2).
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In addition to promoting national consistency, the EPA has
explained that using a single contribution threshold avoids creating
potential inter-dependencies among states. When the EPA had previously
considered whether to approve individual states' use of a higher
contribution threshold, it had proposed (for the State of Iowa) to
consider the effects of other states' efforts to reduce their pollution
at shared receptors. See 88 FR 36715. On further consideration,
however, the EPA found this would have introduced an interdependency.
Id. When the EPA gave consideration to this approach in its SIP
Disapproval action disapproving 21 state implementation plans (88 FR
9336; February 13, 2023), in response to comments, it explained that
this factor would inappropriately introduce an inequity in which some
states could evade obligations through reliance on the incidental
effects of other states' efforts.\33\ See also 88 FR at 36713
(explaining that ``use of alternative thresholds would allow certain
states to avoid further evaluation of potential emissions controls
while other states must proceed to a Step 3 analysis. This could create
significant equity and consistency problems among states.'').
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\33\ See 2015 Ozone NAAQS Interstate Transport SIP
Disapprovals--Response to Comments (RTC) Document at 296, available
at <a href="https://www.regulations.gov/document/EPA-HQ-OAR-2021-0663-0083">https://www.regulations.gov/document/EPA-HQ-OAR-2021-0663-0083</a>.
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The EPA's analytical methodology at Steps 1 and 2 ensures the EPA
can impose FIP obligations, where they may be needed, according to a
common rubric that maintains equity and consistency between the
potentially subject states. Thus, the analytic methods in both Step 1
and Step 2 to determine ``contributing'' states rely on emissions and
air quality data that are independent of which or how many states are
covered by the Good Neighbor Plan.
We note that comments from ASC and PCA in Comment Category 2
summarized in section II.B. of this document contained several
statements the meaning of which the EPA could not clearly ascertain.
Those comments said the EPA's Step 2 screening analysis included states
that ``already had Good Neighbor SIPs for the 2015 ozone NAAQS.'' See
ASC Comment Letter at 13. The meaning of this statement is unclear.
States may have made SIP submissions for these obligations, but at the
time of this comment, the EPA had not approved all of those submissions
and was in the process of disapproving many of them, and so the
statement read that way (i.e., to suggest that the States already had
approved SIPs) is factually incorrect.\34\ The sentence in the ASC
comment letter goes on to state that the EPA ``prematurely
disapproved'' these SIPs, but the disapprovals had only been proposed
at the time the comment was submitted. The commenter did not explain
what made the EPA's proposed disapprovals ``premature.''
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\34\ The commenter also asserted that the EPA had ``proposed''
findings of failure to submit for four states, New Mexico,
Pennsylvania, Utah, and Virginia. That statement was incorrect
insofar as the EPA issued a final finding of failure to submit for
these states in December of 2019, effective January 6, 2020, had an
obligation to promulgate FIPs for these states pursuant to CAA
section 110(c)(1) by January 6, 2022, and was subject to a consent
decree deadline to promulgate FIPs for these states (excluding New
Mexico) by March 15, 2023. See 88 FR 36689 n.106.
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This comment might be read as in relation to the previous approvals
of SIPs for certain states, and thus an argument that these states'
emissions should be excluded from modeling analyses. Or the comment
might be read in relation to a subsequent statement in the comment,
that states should not be included in the Good Neighbor Plan's
``screening'' at Step 2 if final action on the SIP submission had not
yet been taken. In either of these cases, the comment would be
misplaced, in that our analysis of the Steps 1 and 2 modeling looks at
the transport of pollution as a factual matter and does not remove from
consideration the emissions of states based on the procedural status of
their SIP submissions. In addition, as explained in section III.B.1.,
the EPA's baseline air quality and contribution modeling for Steps 1
and 2 is conducted for a modeling domain that includes the entire
contiguous United States and accounts for all emissions sources. 88 FR
36696. Removing emissions from certain states from this modeling would
produce erroneous, unrealistic, and counterfactual results.
These comments also stated that the EPA may need to conduct a new
analysis at Step 2 in the event the EPA takes a different action on
those SIPs than contemplated in the proposed Good Neighbor Plan. In
that case, according to commenter, the EPA ``would need to conduct a
new assessment and modeling of contribution and subject those findings
to public comment.'' ASC Comment Letter at 14. On the one hand, the EPA
agrees with the commenter to the extent they are suggesting that if
updated modeling the EPA conducted (e.g., the 2016v3 modeling used in
the final Good Neighbor Plan) showed a state was no longer contributing
at Step 2, and the
[[Page 99115]]
EPA approved that state's SIP submission or had deferred taking action,
then the EPA would not promulgate a FIP for that state given that
disapproval (or a finding of failure to submit) is a necessary
predicate to FIP authority. This is precisely how the EPA proceeded in
the final SIP Disapproval and Good Neighbor Plan and in taking
subsequent rulemaking actions for states where its final analysis at
Steps 1 and 2 had materially changed from its proposed SIP and FIP
actions. See 88 FR 36656, 36658, 36689; see also SIP Disapproval, 88 FR
9354.\35\ On the other hand, the comment might be read to suggest that
if the EPA's analysis changed for any particular state at Steps 1 or 2,
then it would have to conduct a whole new analysis of every other state
at Steps 1 or 2. If so, that comment is in error because the EPA's
baseline air quality and contribution analysis at Steps 1 and 2 already
accounts for emissions across all states regardless of their inclusion
in the rule, and the results of that analysis would not change for one
state simply because the results indicated that another state had
fallen below the Step 2 contribution threshold.
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\35\ See also supra note 19.
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Taken as a whole, this set of comments appears to be primarily
about the need for the EPA to ensure consistency in how it analyzed
each state's obligations between the separate SIP and FIP rulemakings
(a consistency that the EPA agrees is important and abided by). The
commenter did not state that the EPA's analysis must be redone if for
reasons beyond the Agency's control the Good Neighbor Plan were stayed
or not in effect for any particular state; rather, the commenter
emphasized the need for consistency in the EPA's own, substantive
analytical determinations. If the commenter intended to argue that a
change in analysis at Steps 1 or 2 for one state would necessarily
alter the EPA's substantive assessment for other states and would need
to be subjected to additional notice and comment, the commenter did not
state that, nor provide a theory or reasoning as to why that would be
the case, and for the reasons explained in this section (III.B.1.),
such an assertion would reflect a misunderstanding of how baseline air
quality and contribution analysis is conducted at Steps 1 and 2.
2. Step 3
The Act requires each state to eliminate its ``significant
contribution'' to downwind nonattainment or interference with
maintenance of air quality standards. To determine which emissions from
contributing states are ``significant'' at Step 3, the EPA analyzes
available emissions control strategies and their costs. Based on that
analysis, the EPA then identifies a uniform degree of emissions control
stringency that is reasonable to require from upwind sources,
calculated based on the emissions performance those sources would
achieve through the application of the technologies the EPA found were
most cost-effective. Step 3 is a multi-factor analysis, with its
primary focus on technology availability and associated cost, the level
of emissions reductions that are thereby achieved, and the associated
air quality benefits delivered to downwind receptors. The approach
applies uniform levels of emissions control stringency across all
upwind states, with the objective of bringing the covered sources in
each state up to a minimum level of emissions performance to reduce
ozone-precursor emissions. See 88 FR 36675-77, 36678-79, 36683, 36718-
19, 36741. This approach is tailored to a pollution problem
characterized by collective contribution from many similar sources all
emitting a similar precursor pollutant (NO<INF>X</INF>) over a wide
geographic area; it ensures an efficient and equitable solution that
avoids interdependency. Id. at 36719, 36741, 36749.
Thus, when the EPA uses the term ``uniform'' in the context of Step
3, it is not referring to the division of a specific ``pie'' of air
pollution, total emissions, or total cost divided proportionally among
the upwind states; rather it is referring to application of a pollution
technology applied equally across all applicable units of a common size
and type. 88 FR at 36746-47. One example of a uniform control
stringency level is the assumption that all EGU units with already-
installed selective catalytic reduction (SCR) technology operate and
optimize the performance of these controls. Id. at 36720-21. The EPA
estimated that this would be realized through emissions rates (on
average across the fleet) of 0.08 pounds per million British thermal
units at costs of about $1,600 per ton of NOx removed. Id. The
translation of this technology stringency into the definition of
significant contribution is specific to each state's unique group of
sources and the operating characteristics of the affected units at
those sources. Id. at 36683. In no way is the amount of emissions
mitigation required of sources in each state interdependent on another
state's mitigation responsibility. The ``amount'' of pollution that is
identified for elimination at Step 3 of the 4-step interstate transport
framework is therefore that amount of emissions that is above the level
of emissions remaining after the cost-effective emissions control
strategies are implemented. Id. at 36676. Because it is possible that a
uniform level of stringency may produce more emissions reductions than
is necessary to fully resolve a particular upwind state's linkages to
all downwind receptors, the EPA tests its identified level of
stringency for ``overcontrol.'' For a detailed explanation of how the
EPA applies Step 3, see 88 FR 36718-54.
Acknowledging that some of the factors considered in the Step 3
analysis are considered at a national scale while certain components of
that analysis account for state-level or linkage-specific data, the EPA
here explains in more detail why the selected levels of control
stringency for particular industries, and therefore the particular
obligations of individual states, do not vary depending on the number
of states subject to FIPs under the Good Neighbor Plan.
The EPA identified potential levels of emissions control stringency
that could be applied for each industry, and thus for the set of
sources found in each state, regardless of the number of States covered
by an approved SIP or a FIP or not yet covered by either. In evaluating
those potential levels of stringency, the EPA conducted a wide-ranging
survey of emissions control technologies (and associated cost data)
used throughout the United States and even internationally. Then, the
EPA conducted the air-quality-improvement and overcontrol analyses
considering the effects of the potential uniform stringency levels at
each identified receptor. The primary way in which the EPA conducts
that assessment is to apply the potential stringency levels across all
of the states linked to each particular receptor as well as the
downwind, ``home'' state for that receptor. The EPA then assesses the
average resulting improvements across all receptors as well as
tabulates the aggregate effects. This allowed the EPA to ascertain
whether a selected level of stringency was effective at achieving
improvements in the air quality downwind that were reasonable in
relation to the identified costs, while also ensuring a selected
stringency level is not more stringent than necessary to bring any
given receptor into attainment. 88 FR 36741, 36749-50. But given the
overlapping linkages among multiple upwind and downwind states, as well
as varying levels of baseline emissions control in each state, further
[[Page 99116]]
complicated by the year-to-year variability in ozone levels due to
meteorology, id. at 36750, the EPA's methodology, going back to the
original NO<INF>X</INF> SIP Call in 1998, has never attempted to
pinpoint a precise level of emissions control for each state that
maximizes cost-effectiveness in relation to each specific linkage. See
88 FR 36748 (finding the aggregate and average air quality effects of
the combined EGU and non-EGU strategies across all receptors would
achieve ``meaningful downwind air quality improvements'').
Expressed in simpler terms, the EPA's long-standing interpretation
of CAA section 110(a)(2)(D)(i)(I)--an approach that the Supreme Court
expressly upheld in EME Homer City--is that a state may satisfy its
good neighbor obligations by ensuring that its emissions do not exceed
what would result from the application of cost-effective emissions
controls. The purpose of Step 3 is to identify a set of widely
available and well-established, cost-effective emissions controls that
can be applied in any upwind state, while checking to ensure that those
emissions controls will achieve downwind improvements in air quality
without overcontrol.
As described in more detail in sections III.B.2.a.-III.B.2.c., none
of the determinations that underlie Step 3 are contingent on a
particular state or set of states being covered by the Good Neighbor
Plan. Accordingly, the EPA's Step 3 analysis can be extended to states
not covered by the Good Neighbor Plan either because the state is
covered by an approved SIP or prior FIP or because the EPA has not yet
taken action to review a SIP or impose a FIP. By identifying cost-
effective approaches to reducing multi-state ozone pollution in a
manner that does not depend on the participation of any particular
state or set of states, the EPA's approach reasonably fulfills
Congress's direction in CAA section 110(a)(2)(D)(i)(I) to address the
multi-state ozone problem in a way that defines each state's
obligations on an individualized basis.\36\
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\36\ Just as the EPA's analytical approach allows for it to
develop a good neighbor FIP for any state that may require one that
reasonably establishes emissions control obligations in the face of
uncertainty regarding what other states will do, it also allows
states themselves to conduct a similar analysis of their own
obligations in the context of developing a SIP without definitive
knowledge of what other states will do to fulfill their own
obligations. At Step 3 of the EPA's 4-step interstate transport
framework, each state found to be contributing to one or more
receptors can conduct an analysis of emissions control technologies
or measures that would be cost-effective within the state. If each
state linked to a given receptor (and the downwind state where that
receptor is located, to account for that state's own fair share),
made pollution-control efforts at these levels, a state could
demonstrate that ozone levels at the downwind receptors would be
measurably improved (without undertaking more emissions reductions
than necessary). In the context of a FIP, this approach to
evaluating air quality improvements at downwind receptors is
necessary, because to avoid overcontrol, the EPA must consider
whether applying a given control stringency level to other states
would achieve more emissions reductions than necessary to bring a
receptor into attainment.
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Specifically, the EPA took the following steps in conducting its
Step 3 analysis in the Good Neighbor Plan:
a. Technology, Cost, and Emissions Reduction Analyses
The EPA's analysis started by examining emissions control
technologies (sometimes also referred to as ``strategies'') and their
associated costs and emissions reductions. The Good Neighbor Plan
identified conventional, at-the-source, NO<INF>X</INF> emissions
control technologies that have been available in the covered industries
for many years. See, e.g., 88 FR 36738 (identifying control
technologies for EGUs); id. at 36739 (identifying control technologies
for non-EGUs). These analyses were not specific to the particular group
of upwind states whose inclusion the EPA had proposed or finalized in
the Good Neighbor Plan but looked instead at demonstrated technologies
and associated estimated costs across each industry and technology type
as a whole, without any geographic limitation. The EPA reasonably
considered a wide range of technology and cost information (including
information from examples and technical literature throughout the U.S.
or even internationally) rather than just the data available in any
particular state or regional grouping, since this allows for a more
comprehensive assessment of the technologies available and associated
costs for each source type.\37\
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\37\ In response to comments, the EPA conducted a sensitivity
analysis for EGUs to see if looking at control costs on a regional
basis would change the results and found that it would not. EGU
NO<INF>X</INF> Mitigation Strategies Final Rule TSD at 49-50. The
fact that the EPA conducted this as a sensitivity analysis to
address a comment further illustrates that the primary technology
and cost analysis the EPA conducted, as described earlier, was not
limited to a 23-state geography and would not be altered if that
geography were different.
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For EGUs, the EPA conducted an inquiry nearly identical to prior
good neighbor rules, looking at several widely available and well-
understood NO<INF>X</INF> control strategies that can be and have been
applied to EGUs for decades throughout the United States. See 88 FR
36720. For non-EGUs, the EPA similarly consulted a wide range of
sources of information, starting with national databases like the
National Emissions Inventory and the Control Measures Database (CMDB),
and proceeding from there to additional national and international
technical literature, as well as a variety of existing state and
federal NO<INF>X</INF> control requirements. See id. at 36732-33; see
generally Non-EGU Sectors Final Rule Technical Support Document (TSD);
\38\ EGU NO<INF>X</INF> Mitigation Strategies Final Rule TSD.\39\ These
included trade association literature; academic studies; multi-state
regional organization publications; state rules and publications;
contractor studies; EPA rules, publications, and databases like the
RACT/BACT/LAER Clearinghouse; European Commission publications;
operating permits; and data on what emissions limits specific
facilities or companies were achieving. See, e.g., Non-EGU Sectors
Final Rule TSD at 9-11 (reciprocating internal combustion engines
(RICE)), 27-29 (cement kilns), 35-39 (reheat furnaces), 42-43, 45-47
(glass furnaces), 62-65, 68-84 (boilers), 92-94 (Municipal Waste
Combustors (MWCs)).
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\38\ Available in the docket at <a href="https://www.regulations.gov/document/EPA-HQ-OAR-2021-0668-1110">https://www.regulations.gov/document/EPA-HQ-OAR-2021-0668-1110</a>.
\39\ Available in the docket at <a href="https://www.regulations.gov/document/EPA-HQ-OAR-2021-0668-1092">https://www.regulations.gov/document/EPA-HQ-OAR-2021-0668-1092</a>.
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The EPA derived estimated ``representative'' costs for particular
control strategies for EGUs through a wide-ranging analysis of the
likely costs associated with capital, material, equipment, and labor.
See generally EGU NO<INF>X</INF> Mitigation Strategies Final Rule TSD.
The EPA derived its cost estimates for non-EGUs primarily from the
CMDB, which contains a compilation of a variety of sources of technical
literature and examples.\40\ The ``representative'' costs that the EPA
identified for different levels of control stringency and for different
industries were derived from this nationwide analysis and were not
specific to the particular states included in the proposed or final
Good Neighbor Plan. See 88 FR 36727 (explaining derivation of $11,000/
ton estimate). The EPA reasonably considered a wider range of cost
information than the data that might be available in any particular
state since it allows for a more comprehensive assessment of the costs
each source type might be expected to
[[Page 99117]]
face.\41\ While the EPA provided for more individualized consideration
of the costs particular facilities might bear and made available
alternative emissions limits through its implementing regulations that
could be justified on the basis of excessive cost, see 88 FR 36818-19,
the EPA explained that cost in the Step 3 analysis ``is not intended to
represent the maximum cost any facility may need to expend but is
rather intended to be a representative figure for evaluating
technologies to allow for a relative comparison between different
levels of control stringency.'' 88 FR 36740.
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\40\ See Summary of Final Rule Applicability Criteria and
Emissions Limits for Non-EGU Emissions Units, Assumed Control
Technologies for Meeting the Final Emissions Limits, and Estimated
Emissions Units, Emissions Reductions, and Costs at 5-7 (Non-EGU
Memorandum), available in the docket at <a href="https://www.regulations.gov/document/EPA-HQ-OAR-2021-0668-0956">https://www.regulations.gov/document/EPA-HQ-OAR-2021-0668-0956</a>.
\41\ In response to comments, the EPA conducted a sensitivity
analysis for EGUs to see if looking at control costs on a regional
basis would change the results and found that it would not. EGU
NO<INF>X</INF> Mitigation Strategies Final Rule TSD at 49-50. The
fact that the EPA conducted this as a sensitivity analysis to
address a comment further illustrates that the primary technology
and cost analysis the EPA conducted, as described in section
III.B.2.a., was not limited to a 23-state geography and would not be
altered if that geography were different.
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The EPA also used its technology analysis to calculate the
anticipated emissions reductions that could be achieved if those
strategies were applied to the population of sources in each state
potentially contributing to at least one downwind receptor. 88 FR
36737-40. At this stage of the analysis, the EPA's assessment of the
emissions reductions expected from particular control strategies under
consideration again did not depend on the number or identity of the
states included in the Good Neighbor Plan rulemaking itself. Rather,
these estimates provided the inputs by which air quality benefits and
overcontrol could then be assessed in the next stages of the Step 3
analysis (discussed next).
b. Air Quality Benefits
After compiling the data on available technologies, their relative
cost-per-ton, and the expected emissions reductions that would result
from each state, the EPA's Step 3 methodology then proceeded to
evaluate the effect those emissions control strategies would have on
downwind ozone levels. 88 FR 36741-42. This component of the EPA's
analysis looked at the incremental ozone improvement that would be
accomplished at each receptor from the reductions accruing from the
upwind states linked to that particular receptor (whether included in a
particular rule or not) at each of the assessed stringency levels. The
analysis of air quality improvement as the EPA has conducted it (in the
Good Neighbor Plan and in the prior CSAPR rulemakings) displays the
improvements that are incremental to an uneven baseline in which states
have imposed differing levels of control stringency. Another way to
think about the level of air quality benefit achieved would be to
assume an uncontrolled baseline across all states and then apply the
different levels of control stringency that were evaluated. This would
illustrate far higher levels of air quality benefit as the uniform
stringency levels are increased but would not credit the achievements
in emissions control that some states have already adopted compared to
others.
To calculate air quality change for any given upwind state-receptor
linkage, the relevant group of states assumed to make comparable
emissions reductions will vary, and in the EPA's primary method of
analysis, it does not matter whether the other upwind states or the
downwind state are in fact subject to the same emissions control
requirements. Rather the purpose of the analytical exercise is to
isolate, for comparative purposes, the effects of the potential
stringency levels just to the states that are linked to a receptor
while also assuming that the ``home'' state undertakes an equivalent
level of stringency with respect to its own sources. See 88 FR 36742,
36748-50. Thus, the total number of states where the EPA has assumed
emissions control stringencies as part of its Step 3 air quality
assessment for purposes of the Good Neighbor Plan is 30 states. That
is, the total of the 23 states included in the Good Neighbor Plan, the
five other states that the EPA's analysis identified as potentially or
likely to be linked at Step 2, plus, for their own receptors, Colorado
and Connecticut as home states, even though they are not linked to
other states' receptors.
The EPA's conclusions in the Good Neighbor Plan did not depend on a
particular improvement at each individual receptor, but rather on an
assessment that there would be widespread improvement in ozone levels
across receptors in the aggregate and on average when the selected
level of control stringency is applied uniformly across upwind states.
See 88 FR 36742-43, 36747-48. In the Good Neighbor Plan, as relevant
metrics, the EPA displayed how ozone levels would be expected to change
at each receptor, what the average effect of the potential stringency
levels would be across all receptors, and what the aggregated effect of
the potential stringency levels would be across all receptors. Id. at
36742-43, 36747-48. This analytical exercise allowed the EPA to
evaluate what level of stringency was appropriate in terms of
delivering an acceptable level of air quality benefit to downwind
receptors considering associated costs.
The role of the air-quality factor in the Good Neighbor Plan is
essentially no different than in CSAPR. 88 FR 36678. The CSAPR analysis
was conducted on a nationwide scale and focused on cost-breakpoints of
different technologies, while also accounting for multiple factors
other than a singular ``knee-in-the-curve;'' CSAPR looked holistically
at both the ``pattern'' of linkages and the ``average'' air quality
benefits that could be realized at representative cost/ton thresholds
if those technologies were applied uniformly; CSAPR selected stringency
levels that appeared to deliver the greatest air quality improvement on
average, not state- or linkage-specific. See id.; 76 FR 48255-59.
Likewise, in the Good Neighbor Plan, the Agency focused on mandating
those NO<INF>X</INF> reduction strategies across contributing states
that were found to be relatively widely-adopted and cost-effective on a
per-ton basis, with the understanding that if these strategies were
implemented uniformly across the upwind-state region, widespread air
quality improvement would be achieved--without tethering that
conclusion to some precise knee-in-the-curve specific to each linkage
or receptor. See 88 FR 36741.
Commenters allege that this analysis necessarily depends on the
specific group of states for which it is conducted, since different
groups of states would have different sets of sources, with varying
levels of emissions control already installed, and the application of
emissions control strategies will have varying effects on downwind air
quality. Effectively, these commenters seem to assert, for its
methodology to function on an individual basis for each state, the EPA
must determine for each state what level of emissions control applied
only to its own sources would maximize cost-effectiveness relative to
reducing ozone levels at a given downwind receptor. Under this theory,
if the EPA conducted such an analysis, the appropriate level of
stringency would vary for any particular state from what the EPA
determined was appropriate in the Good Neighbor Plan on a uniform basis
across states--and perhaps a lesser degree of stringency would be
warranted for particular states.
Fundamentally, these comments misapprehend the role of air quality
improvement in the EPA's Step 3 analysis and are, in effect, at odds
with the EPA's historical approach that the Supreme Court's opinion in
EME Homer City upheld, i.e., the use of uniform control stringency
(using cost as a proxy for technology type and compliance burden) to
allocate responsibility across
[[Page 99118]]
multiple upwind states despite varying effects of that stringency to
downwind receptors. 572 U.S. at 518-19. Consistent with the same
statutory interpretation and methodology the EPA has applied throughout
each of its prior good neighbor rulemakings for ozone, the Good
Neighbor Plan is not premised on accomplishing a precise, aggregate air
quality result at each receptor, such that the omission of some states
(even if they were legally exempted from obligations rather than simply
under a temporary stay order or did not yet have their obligations
addressed through a SIP or FIP) would increase the ``share'' of the
problem that must be addressed by the remaining states. Rather, the
Good Neighbor Plan holds the industries in each contributing upwind
state subject to a federal plan to a uniform, minimum level of
emissions performance deemed to be cost-effective. So long as they meet
that level of performance, the industries in any state regulated under
the Good Neighbor Plan are understood to have lawfully addressed good
neighbor obligations and eliminated that portion of a state's
significant contribution to downwind air pollution.
Even though this methodology does not purport to achieve attainment
at all downwind receptors, it is consistent with the EPA's and the
courts' understanding of the good neighbor provision. Under that
provision, it is not upwind states' responsibility to ensure that
downwind receptors are brought into attainment; each state must only
eliminate its own significant contribution to nonattainment or
interference with maintenance of the NAAQS in other states. CAA section
110(a)(2)(D)(i)(I). In reviewing the division of responsibility under
this contribution standard, courts have upheld the EPA's approach as a
reasonable way to allocate good neighbor obligations among multiple
states for regional-scale pollutants like ozone, even though the air
quality benefits resulting from a particular degree of control
stringency will necessarily vary by state and receptor. This variation
in effect is the consequence of an approach that respects several well-
understood characteristics of the interstate ozone problem: the
``overlapping and interwoven linkages between upwind and downwind
States,'' ``the vagaries of the wind'' (i.e., the variability in
meteorological conditions that makes precise ozone projections
impossible), and the wide variation in the degree of baseline levels of
emissions control that different states have already achieved. EME
Homer City, 572 U.S. at 496-97, 519-20; see also Wisconsin, 938 F.3d at
322; Michigan, 213 F.3d at 679-80. Commenters may believe that the EPA
could at least establish different levels of cost-effective control
stringency for each group of states linked to a particular receptor,
rather than considering air quality improvement in the aggregate across
all receptors--i.e., to pick a knee in the curve that is specific to
each particular receptor. Setting aside the problem of meteorological
variability, this still presents the same problem the EPA faced in
CSAPR, as recognized in EME Homer City: each set of states for one
receptor has overlap with a different set of states for a different
receptor.\42\ Thus, for any given state, there cannot mathematically be
a single, ``correct'' ``knee-in-the-curve'' that defines a maximally
cost-effective stringency. EME Homer City, 572 U.S. at 514-18. Thus, as
was the case in CSAPR, an approach that requires high-emitting sources
in each state to come up to a uniform level of cost-effective emissions
control, so long as it does not overcontrol, functions as a reasonable
definition of each covered state's ``significant contribution,'' and
fulfills those covered upwind states' legal obligations under the good
neighbor provision. 88 FR 36675-76, 36741.
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\42\ See Air Quality Modeling Final Rule TSD, 2015 ozone NAAQS
Good Neighbor Plan, appendix E, available in the docket at <a href="https://www.regulations.gov/document/EPA-HQ-OAR-2021-0668-1157">https://www.regulations.gov/document/EPA-HQ-OAR-2021-0668-1157</a>.
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Both the Supreme Court and the D.C. Circuit have recognized that
variation in what a good neighbor rule will achieve at any particular
receptor is a logical consequence of defining ``significance'' through
identifying a uniform level of emissions control based on cost-
effectiveness. As the Supreme Court explained in EME Homer City, ``by
imposing uniform cost thresholds on regulated States, EPA's rule
subjects to stricter regulation those States that have done relatively
less in the past to control their pollution'' and ensures that
``[u]pwind States that have not yet implemented pollution controls of
the same stringency as their neighbors will be stopped from free riding
on their neighbors' efforts to reduce pollution.'' EME Homer City, 572
U.S. at 519. The fact that a particular state may have a very small
emissions reduction obligation, and so improve downwind air quality by
a very small amount, does not call the approach into question. The fact
that a state may have less to do to meet the EPA's selected levels of
emissions control may reflect that its sources are already well
controlled. But whether a state's required reductions under a FIP
applying this methodology are large or small, the approach allows for a
fair alignment of investments in pollution control across all of the
contributing states, which is at the heart of the methodological
construct the Court approved in EME Homer City. See Wisconsin, 938 F.3d
at 322 (concluding that the EPA reasonably regulated sources in
Wisconsin, a contributing upwind state whose available cost-effective
reductions would only benefit downwind air quality ``by just two ten-
thousandths of a part per billion'').
This is not to say that delivering air quality improvement to the
downwind receptors is not important--indeed, it is, as the EPA
described in the Good Neighbor Plan, a ``central component'' of the
EPA's analysis. 88 FR 36741. If the identified control strategies that
were cost-effective on a cost-per-ton basis did not have any effect on
downwind air quality at any receptors, this may call into question
whether requiring those strategies was worth it.\43\ Thus, the Good
Neighbor Plan explains that the purpose of the EPA's air quality
analysis at Step 3 is to check on whether a level of emissions
reduction that appeared cost-effective on a cost-per-ton basis would in
fact deliver measurable progress toward attainment of the 2015 ozone
NAAQS at the downwind receptors. ``These analytical findings cement
EPA's identification of the selected EGU and non-EGU mitigation
measures as the appropriate control stringency . . . .'' 88 FR 36741.
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\43\ Even here, however, caution is in order. A highly cost-
effective strategy may not deliver incremental air quality
improvement from a given baseline because that strategy has already
been adopted by sources in a particular state or states. In that
case, a rule imposing that strategy would not create new emissions
reduction obligations but would be appropriate to prevent
backsliding. Cf. EME Homer, 572 U.S. at 519-20 (noting the uniform
approach appropriately treats states where sources have already
invested in pollution control). Likewise, the EPA's good neighbor
rules have always applied to both new and existing sources. See 88
FR 36685. If a particular industry is not currently present in a
particular state but could have high uncontrolled emissions if it
located there, good neighbor rules serve as a backstop to ensure a
minimum level of emissions performance will be maintained from those
sources, in those states that have been deemed to contribute to
another state's nonattainment or maintenance issues. Nonetheless,
the basic emissions-performance requirements of a good neighbor rule
in those cases should not be onerous for a new source.
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The EPA's analysis in the Good Neighbor Plan demonstrates that with
each incremental increase in the stringency of the assessed control
strategies, there is also incremental improvement in air quality at the
receptors. See, e.g., 88 FR 36743, 36747-
[[Page 99119]]
48 (tables showing air quality improvement at each receptor); Ozone
Transport Policy Analysis Final Rule TSD at 70 (table C-12) (Ozone
Policy TSD) (showing reductions in the maximum contribution of each
upwind State to receptors in 2026).\44\ Further, the Agency explained
that it could not identify a point of diminishing returns within the
suite of emissions control strategies that it ultimately selected. 88
FR 36741. The Agency also cautioned that the purpose of this exercise
was not to pinpoint a precise ``knee-in-the-curve'' but to serve as ``a
useful indicator for informing potential stopping points.'' Id. Thus,
the EPA's review of the effects of different emissions-reduction
strategies on air quality primarily helps the Agency ensure that no
impactful emissions reduction strategies have been overlooked and that
those selected can be anticipated to deliver reductions in ozone at the
identified receptors if applied consistently across all of the upwind
states linked to each receptor (including each receptor's home state).
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\44\ Available in the docket at <a href="https://www.regulations.gov/document/EPA-HQ-OAR-2021-0668-1080">https://www.regulations.gov/document/EPA-HQ-OAR-2021-0668-1080</a>.
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Commenters have not put forward an alternative, more cost-effective
methodology or set of emissions-control strategies for reducing ozone
at the downwind receptors; rather, they seek to avoid emissions control
obligations in one state on the basis that the Good Neighbor Plan may
not be operative in another. However, the EPA has an ongoing statutory
obligation to issue FIPs for those states where it has issued a SIP
disapproval or made a finding of failure to submit. In the absence of
information detailing that cost-effective emissions reduction
opportunities have been overlooked that would have an even greater
benefit on ozone levels at downwind receptors, the EPA reasonably
concluded that its identification of emissions limitations consistent
with the cost-effective emissions control technologies that it has
identified to be widely available at the new and existing EGU and non-
EGU sources in the states covered by the Good Neighbor Plan passed its
Step 3 air quality check, and these measures would constitute a
sufficient and appropriate definition of ``significant contribution''
for these states.\45\
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\45\ As always, states remain free to identify different
emissions control measures through a SIP than the EPA has included
in a FIP, and it may be possible for a state to demonstrate that it
can control other sources to obtain equivalent or greater air
quality results at its receptors. A SIP submission to the EPA
obtaining those emissions reductions through permanent and
enforceable measures applied to its in-state emissions sources
accompanied by the appropriate analytical and technical
justifications would likely be approvable to replace a good neighbor
FIP.
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Although the air quality benefits to downwind receptors anticipated
in the Good Neighbor Plan would not be fully realized so long as
certain states have not yet fulfilled their obligations, this does not
serve as a justification for allowing these obligations for those
states where the EPA has a responsibility to act to go unaddressed or
to be altered. Simply put, the CAA requires each state to address its
own contributions to downwind air quality problems, regardless of
whether other states have taken action to do so under a SIP or a FIP.
That other states contributing to downwind receptors may have their
good neighbor obligations stayed or not yet addressed does not relieve
other states covered by the Good Neighbor Plan of their own good
neighbor obligations under CAA section 110. Given the state-by-state
procedural framework of the Act and the need for the EPA to develop
equitable and consistent FIPs, it cannot be the case that the EPA must
successfully simultaneously resolve all states' good neighbor
obligations at once or lose the authority to act. Though the EPA has
done its best to achieve consistent, timely, and concordant
implementation of these obligations, like the construction of a jigsaw
puzzle, each individual piece (i.e., each individual state's
obligations) is necessary to complete the whole picture, and not every
piece may be connected at once.
Commenters attempt to fault the EPA for developing a methodology
that they claim necessarily depends on the inclusion of other states.
Setting aside that for the reasons explained here the methodology does
not depend on simultaneous inclusion (or even full inclusion, if states
address their good neighbor obligations in some other adequate way
through a SIP), the problem commenters identify is not in the
particular methodology that the EPA uses but in the science of ozone
transport as a multistate problem characterized by meteorological
variability and overlapping linkages, coupled with the state-by-state
implementation structure of the Act. Under these constraints, any
methodology would need to take into account the relative contributions
of and the effects of air pollution control technologies in other
states.
To perform the air quality check for any particular receptor, it
makes sense to consider the effect of emissions reductions from all of
the states linked to that receptor, not just those covered by a
particular FIP rulemaking, because all states must ultimately discharge
their good neighbor obligations whether through an approved SIP or a
FIP. Thus, the Step 3 air quality analysis is a ``test'' that serves to
confirm that an appropriate degree of emissions-control stringency has
been reached for any given state without overcontrolling. It does not
depend on the actual, simultaneous inclusion of a certain number of
states in a given rulemaking; however, it appropriately accounts for
the reality that multiple states are linked to multiple other states
and that the amount of emissions reduction necessary to achieve
attainment varies among receptors. This complexity, recognized for
years by the EPA and by the Supreme Court in EME Homer City, 572 U.S.
at 514-17, makes it analytically inappropriate if not impossible to
assign an obligation to each state that is simply proportional to its
contribution to a particular receptor. See 88 FR 36683.\46\
Nonetheless, that does not prevent the EPA (or for that matter an
individual upwind State) from being able to conduct a Step 3 test
looking at the effects of uniform control stringencies using a publicly
available tool such as the Air Quality Assessment Tool (AQAT). Given
the multistate nature of the interstate ozone pollution problem,
analysis of the air quality benefit produced by regulating sources in
any particular upwind state assumes that other states linked to a
common receptor and the home state of that receptor make emissions
reductions at a comparable level of emissions control
[[Page 99120]]
regardless of whether they are covered by the Good Neighbor Plan.
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\46\ The EPA has previously evaluated Step 3 alternatives to the
``uniform approach'' taken in the Good Neighbor Plan and prior ozone
transport rules, including an evaluation of methods such as a
receptor-specific proportionality approach. The alternative methods,
as well as potential issues that the Agency identified can be found
in the ``Alternative Significant Contribution Approaches Evaluated
TSD'' included in the CSAPR rulemaking docket (Docket ID No. EPA-HQ-
OAR-2009-0491-0077). In responding to comments in that rulemaking
about ``proportionality'' approaches, the Agency identified concerns
that included, but were not limited to, requirements of an
``extremely high level of accuracy in both the emissions modeling .
. . and the air quality modeling'' and that ``finer-scale emissions
data from all sectors . . . . and fine-scale air quality modeling
could be needed to resolve differences in cost per air quality
impact.'' The EPA explained that ``these data and modeling
techniques do not exist and/or are too computationally demanding to
be operationally implemented.'' The EPA continued, ``A second
challenge for this approach was to identify a single reduction
requirement for a particular upwind State, since the reduction
requirements relevant to different downwind receptors would vary
significantly.'' See CSAPR ``Transport Rule Primary RTC'' document
743 (Docket ID No. EPA-HQ-OAR-2009-0491-0077).
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It is true that the EPA's analysis of air quality change at Step 3
uses state-specific data and calibration factors. See Ozone Transport
Policy Analysis Final Rule TSD at 43. Commenters may have had
uncertainty concerning the respective roles of state-level versus
national-level analytical determinations within the air quality
analysis at Step 3, with a potential concern being that if the EPA was
relying on state-level determinations, then the stringency of the Good
Neighbor Plan would be dependent on particular state groupings. But
this would over-interpret the role of these particular datapoints in
the larger analysis. State-level emissions data and calibration factors
ensure an accurate representation of the effects of emissions
reductions across the different States. However, this does not imply
the Good Neighbor Plan fails to define obligations on a reasonable
basis for each state. To the contrary, it confirms that the EPA's
analysis already accounts for the emissions reductions and air quality
change that can be anticipated from each state individually, rather
than merely treating them as an undifferentiated regional mass specific
to the group of states included in a particular rulemaking. More
importantly, as described above, the regulatory conclusions the EPA
drew from the AQAT analysis focused not on the individualized outcomes
of each linkage but rather on the averaged and aggregated data drawn
from that analysis for the entire country, which ``cemented'' the EPA's
finding that an overall appropriate level of stringency was obtained,
without overcontrolling. 88 FR 36741, 36747-48.\47\
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\47\ Notably, the EPA highlighted that its forward-looking air
quality projections are subject to inherent uncertainty given the
many factors that influence ozone formation. 88 FR 36750. And the
EPA acknowledged that states in the future may conduct updated air
quality analysis that may differ from its own analytics in the rule.
Id. at 36839-40; id. n. 405. Still, in the absence of particularized
evidence of overcontrol and faced with a concomitant duty to avoid
under-control, id. at 36684 (citing 572 U.S. at 523), the EPA's
approach yields a set of emissions reduction obligations that would
be reasonable in a robust way across all covered large-emitting
sources in any contributing state that may eventually become subject
to a good neighbor FIP for the ozone NAAQS.
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Illustrating that the Good Neighbor Plan's regulatory conclusions
were drawn from this nationwide assessment of air quality effects of
different control stringencies, rather than from the particulars of the
23-state grouping included in the Good Neighbor Plan, the EPA's primary
Step 3 air quality and overcontrol analysis in the Good Neighbor Plan
included any other linked upwind states found at Steps 1 and 2 of the
EPA's framework, regardless of whether or not they were included in the
Good Neighbor Plan, on the view that this was the most appropriate way
to analyze the collective effects of identified stringency levels at
Step 3. See Ozone Policy TSD at 46, 55 (explaining that the EPA
included all upwind states modeled to be contributing in this
assessment, i.e., including states that were not presently included in
the Good Neighbor Plan but might be through a future rule, such as
Iowa, New Mexico, and Arizona \48\). Accordingly, the EPA's Step 3 air
quality analysis did not rely on a 23-state scope of coverage, and
nowhere in the record for the Good Neighbor Plan did the EPA state or
imply that its methodology relied on a 23-state scope of coverage.\49\
For any particular receptor, the EPA's analysis looked at the group of
upwind states linked to that receptor in the modeling (the numbers of
which vary), and also assigned the home state for that receptor a
``fair share'' (i.e., the same stringency that would be imposed in the
upwind states for that receptor). 88 FR 36742 n.238. The analysis did
not depend on the actual inclusion of those particular states in the
Good Neighbor Plan; it simply looked at what the effect would be if,
for any given upwind state and any given receptor, the other upwind
linked states and the downwind state were held to the same stringency
level.
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\48\ Due to data limitations at the time of finalizing the Good
Neighbor Plan, the analysis did not include an assessment of the
effects from non-EGUs in Arizona, even though Arizona is linked
through the 2026 analytic year. Otherwise, in the AQAT analysis of
the Good Neighbor Plan, data informing the EPA's Step 3 air quality
evaluation included every monitor in the contiguous United States,
with contributions adjusted for each state that was either linked
above 1 percent of the NAAQS in the relevant analytic year or was a
home state for the receptor.
\49\ The EPA acknowledges that certain language in the Ozone
Policy TSD for the Final Good Neighbor Plan may have been inartful
or unclear on this point. For example, that document stated at page
3 that it was focused on the ``23 upwind States that were linked''
and included in that rule. This was true in a sense, because the TSD
was done in support of that rule, which covered 23 states. However,
the underlying data and evaluation of the effects of emissions
change on air quality encompassed the entire contiguous U.S., and
the TSD displayed anticipated air quality improvement at identified
receptors by reference to all upwind states (and ``home'' states)
and was not limited only to the 23 states included in that rule.
Results for Kansas and Tennessee were not displayed in the TSD
because a final determination had not been made to consider these
states linked based solely on violating-monitor receptors. See 88 FR
36707. However, the underlying AQAT spreadsheets used for the Ozone
Policy TSD analysis included the reductions from these states in the
data made available to understand the effects of the evaluated
emissions control strategies. See, e.g., Ozone AQAT Results, tab:
``2023_step3_newSCR_wIRA'', cols. I-BF, available in the docket at
<a href="https://www.regulations.gov/document/EPA-HQ-OAR-2021-0668-1116">https://www.regulations.gov/document/EPA-HQ-OAR-2021-0668-1116</a>.
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Stated differently, the EPA's analysis identified a total of 28
states as contributing at Step 2. 88 FR 36709-12. As such, subject to
the caveats in notes 48 and 49 supra concerning certain limitations in
the data, the EPA appropriately assessed the effect of applying the
uniform levels of emissions control stringency across all contributing
States to any given receptor (i.e., varying combinations of the 28
states plus home state for each receptor)--regardless of their
inclusion in the Good Neighbor Plan--in evaluating whether the Good
Neighbor Plan reasonably addresses the ``significant contribution'' of
any particular state.
The emissions control measures identified at Step 3 do not depend
on which particular states adopt cost-effective controls as part of the
EPA's analysis of air quality benefits. The role of the air quality
analysis is simply to verify that the cost-effective controls
identified by the EPA for any particular state would, in fact, have an
impact on downwind receptors if they were uniformly adopted in all
states contributing to that receptor (and the home state), without
overcontrolling. Whether all of those states ultimately adopt those
emissions controls, or do so simultaneously, or adopt equivalent
controls but on different sources, or may otherwise develop an
alternative approach that is approvable for that particular state, does
not affect the EPA's determination at Step 3 that those controls, as to
the state(s) where the EPA applies them through FIP(s), are cost-
effective--and that the sets of sources within any individual state
must achieve performance consistent with those controls to satisfy the
state's good neighbor obligations.
Thus, the EPA's analysis of air quality benefits at Step 3 was not
limited to the specific set of states expected to be covered by a FIP,
but appropriately considered the cost-effective emissions reductions
available from all upwind states linked to each downwind receptor (as
well as the receptor's home state). Consistent with the Act, that
methodology functions as an appropriate analytical method to define any
particular state's good neighbor obligations for ozone and does so
without requiring, or possessing definitive knowledge, that the same
methodology would be applied in other states.
[[Page 99121]]
c. Overcontrol Assessment
Finally, at Step 3, the EPA ``tests'' whether its selected uniform
emissions-control stringency levels result in any ``overcontrol.'' 88
FR 36749-50. In EME Homer City, the Supreme Court held that the EPA
cannot ``require[] an upwind State to reduce emissions by more than the
amount necessary to achieve attainment in every downwind State to which
it is linked.'' 572 U.S. at 521. To find overcontrol, the EPA must
conclude that the uniform control stringencies the EPA selected
produced more emissions reductions and resulting air quality
improvements than necessary to resolve all of any state's linkages to
downwind receptors, or more than necessary to bring receptors into
attainment. In that case, under the overcontrol holding in EME Homer
City, the EPA would need to adjust the requirements of the rule to
avoid overcontrol. This overcontrol assessment is conducted using the
same air quality effects analysis derived from AQAT, described in
section III.B.2.b.
If the Good Neighbor Plan were to be suspended from operation in
some number of upwind states, this could not result in overcontrol,
because the analysis (presented in the Ozone Policy TSD) demonstrates
no overcontrol even when all upwind states found to be contributing are
included--much less the 23 states included in the originally
promulgated Good Neighbor Plan itself.\50\ As long as fewer states are
making fewer emissions reductions, the downwind receptors cannot be
cleaner than they were under the Good Neighbor Plan's original scope.
See 88 FR 36749-50.
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\50\ As explained in section III.B.2.b., the primary air quality
assessment at Step 3, including for purposes of evaluating
overcontrol, looks at the effects on ozone levels of different
levels of emissions control across all upwind states found to be
contributing to a particular receptor (plus the home state), not
just the states included in a particular rulemaking. In the Good
Neighbor Plan, the EPA ran the AQAT analysis for a total of 28
linked upwind states, not just the 23 states included in the rule.
See note 49 supra.
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d. Other Elements of the Non-EGU Step 3 Analysis
To ensure a complete response to the commenters, the EPA has
reviewed in greater detail all elements of the Step 3 methodology of
the Good Neighbor Plan to evaluate whether any components of its
analysis pose a concern that the EPA's analytical findings are not
severable among the various states. Two elements of the EPA's
technology and cost analysis for non-EGUs in the Good Neighbor Plan
incorporate analytical methodologies related to some extent to the
upwind region covered by the rule and warrant further discussion here.
These are: (1) the identification of potentially impactful industries
in the ``Screening Assessment'' used in the Good Neighbor Plan to
assist the EPA in narrowing the scope of industries to be included in
its non-EGU regulations; and (2) the ``weighting'' of average costs for
two non-EGU industries and a specific emissions unit type (boilers)
where multiple control technologies were identified at Step 3. The EPA
has reviewed, based on the record for the Good Neighbor Plan, whether
either of those elements materially influenced the determination of
each state's ``significant contribution.'' As explained in the ``Use of
Screening Assessment to Identify Potentially Impactful Industries'' and
``Weighted Averaging Costs'' below, they did not. Neither of these
aspects of the analysis suggest that the EPA should reach different
conclusions as to each covered state's ``significant contribution''
while the Good Neighbor Plan applies in a different group of States.
Use of Screening Assessment To Identify Potentially Impactful
Industries
For non-EGUs, the EPA elected to screen for industries and
emissions-unit types appropriate for analysis of cost-effective
NO<INF>X</INF> reductions. While power plants have consistently been
understood to have high levels of controllable NO<INF>X</INF> emissions
and have been included in each good neighbor rulemaking, non-EGUs have
not been consistently addressed. See 88 FR 36720. Certain non-EGU
industries and emissions units/sources were included in the 1998
NO<INF>X</INF> SIP Call, but not in subsequent rules, although the EPA
had acknowledged that such sources may necessitate regulation to
prohibit significant contribution and had in the past analyzed such
sources on a ``parallel track'' to its EGU analysis at Step 3. See 88
FR 36719. For the 2015 ozone NAAQS, the EPA concluded that it could not
determine it could eliminate the entirety of the covered states'
``significant contributions'' to downwind nonattainment by addressing
power plants alone. 88 FR 36680-82. To that end, the EPA was required
to look beyond the power sector, and when it did so, the EPA determined
that certain large industrial sources have substantial amounts of
ozone-precursor emissions that could be cost-effectively controlled and
therefore, consistent with its longstanding methodology, should be
obligated to reduce those emissions, so long as such measures would not
result in ``overcontrol.'' Id. at 36660-61. Because the potential
number of industries and source types is large, the EPA used a
screening methodology to assist in narrowing the scope of industries to
be potentially regulated to those with potential cost-effective
NO<INF>X</INF> reductions.
To screen for industries and emissions-unit types to further assess
for cost-effective NO<INF>X</INF> emissions reductions, the EPA
prepared a ``Screening Assessment.'' \51\ In the Screening Assessment,
the EPA used emissions and control technology information to screen for
industries and emissions unit types where emissions reductions were
more likely to be cost-effective and to screen out industries where
emissions reductions were less likely to be cost-effective. As part of
this analysis, the EPA used air quality criteria to identify how
emissions reductions from industries and emissions units would likely
benefit downwind areas. See Screening Assessment at 1-3. This analysis
used modeled nonattainment and maintenance receptors in 2023 and an
inventory of sources in those upwind states that were identified using
the air quality modeling that was available at the time the EPA was
developing the assessment.\52\ See Screening Assessment, appendix A
(table A-3). This modeling had identified 27 states as upwind
contributors to at least one downwind receptor. In conducting its
screening analysis, the EPA took these states to be broadly
representative and appropriate for the purpose of screening non-EGU
NO<INF>X</INF> sources by industry across a large set of upwind states,
as identified by the then-available modeling.\53\
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\51\ Screening Assessment of Potential Emissions Reductions, Air
Quality Impacts, and Costs from Non-EGU Emissions Units for 2026,
available in the docket at <a href="https://www.regulations.gov/document/EPA-HQ-OAR-2021-0668-0150">https://www.regulations.gov/document/EPA-HQ-OAR-2021-0668-0150</a>.
\52\ We developed the Screening Assessment using inputs from the
air quality modeling for the Revised CSAPR Update for 2023 (2016v1),
as well as the projected 2023 annual emissions inventory from the
2016v2 emissions platform that was used for the air quality modeling
for the proposed Good Neighbor Plan. Screening Assessment at 1-2.
\53\ The differences in states identified in the 2016v1 modeling
compared to the states the EPA identified as linked for the 2023
analytic year using 2016v3 modeling and the violating-monitor
receptor identification methodology are as follows: Delaware and
Wyoming were linked in 2016v1 and Arizona, Kansas, and New Mexico
were not. The linkages used in the Screening Assessment (for 2023)
also reflected a slightly different set of states than the EPA
expected, at the time of proposal, to be linked in 2026. Compare
Screening Assessment at 2 with 87 FR 20036, 20041 (proposing to
apply non-EGU measures in 23 states, not including Alabama,
Delaware, Iowa, or Tennessee).
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The EPA concluded in finalizing the Good Neighbor Plan that this
portion of the non-EGU analysis did not need to be redone on the basis
of changes in the scope of coverage of the rule. See Good
[[Page 99122]]
Neighbor Plan RTC at 104 (``The purpose [of the Screening Assessment]
is not a precise replication of exactly which sources contributed
exactly how much to any particular receptor during a particular high-
ozone event. The purpose is to identify those industries with
relatively large emissions sufficient to have interstate effects on
ozone levels, and to analyze emissions units within those industries
further for cost-effective emissions reduction opportunities.''). Thus,
the EPA was clear in the record of the Good Neighbor Plan that the
Screening Assessment served an important but limited purpose: to screen
for industries and emissions-unit types where further analysis was
likely to identify more impactful and less costly emissions reduction
opportunities. See also 88 FR 36740; Good Neighbor Plan RTC at 90-92.
Consistent with the statutory language of the good neighbor
provision, the EPA could have chosen to forgo this analysis, which
assisted the Agency in narrowing the set of non-EGU industries and
emissions source types it considered for inclusion in the Good Neighbor
Plan, and include more stationary industrial sources of NO<INF>X</INF>.
See CAA section 110(a)(2)(D) (authorizing regulation of ``any source or
other type of emissions activity'' for significant contribution); see
also 88 FR 36680-81.\54\ However the EPA might have proceeded, in the
rule the Agency was appropriately informed by a longstanding
understanding of regional-scale ozone transport, which is that the
control of any large sources of NO<INF>X</INF> emissions in linked
upwind states will generally beneficially affect downwind ozone levels.
88 FR 36719. While states are afforded discretion under the Act to
select the control measures they would prefer to use to meet the Act's
requirements, such discretion devolves to the EPA when it steps into
the shoes of a state under CAA section 110(c). Id. at 36675 (collecting
case law). Within the exercise of that discretion, the EPA's method of
proceeding made sense. The EPA's approach provided a technically
rigorous method for narrowing the industries in a manner that treated
each industry similarly. As the EPA explained in rejecting comments
that its modeling projections in the Screening Assessment were too
imprecise, the Assessment was done not for the purpose of
``project[ing] changes in air quality in an absolute sense,'' but
rather to ``conduct a comparative analysis among different
industries,'' where the EPA's modeling techniques ``would apply
consistently and equally to each industry the EPA evaluated.'' Good
Neighbor Plan RTC at 105.\55\
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\54\ Had the EPA approached the identification of ``significant
contribution'' from non-EGU emissions sources differently, it still
would have needed to assess overcontrol and would have excluded
emissions reduction measures falling outside the range of
technologies deemed cost-effective.
\55\ Again, illustrating the EPA's consistent understanding of
this comparative purpose, the Agency rejected other comments calling
for the Screening Assessment to be redone on the basis of updated
information concerning specific non-EGU facilities, which various
commenters attempted to use to argue the EPA's data were out-of-
date. ``Even if some amount of the emissions identified as
potentially controllable in the Screening Assessment are already
being achieved, or such potentially controllable emissions cannot be
feasibly controlled and are not being required in this final rule,
that does not undermine the Agency's conclusions in the Screening
Assessment regarding the potential impact of a given industry.''
Good Neighbor Plan RTC at 120 (emphasis added).
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This approach of identifying uniform emissions control
opportunities at the industry-level rather than based on a state-by-
state or unit-by-unit impact analysis accords with the way the EPA has
analyzed emissions control opportunities from both EGUs and non-EGUs
throughout the history of implementation of the good neighbor
provision. See id. at 92 (quoting 63 FR 57399 (uniformity at industry
level ``assure[s] equity among the various source categories and the
industries they represent'')); 88 FR 36683 (explaining that the EPA's
analysis of non-EGUs sources ``parallels the analysis previously
conducted only for EGUs'' and ``relies on evaluation of uniform levels
of control stringency across all upwind states''). When commenters
argued that the EPA had not adequately established that their
particular facilities were sufficiently impactful to be worth
regulating, the EPA rejected this mode of analysis:
[I]t was entirely reasonable, and consistent with prior
transport rulemakings to focus the analysis at the industry-level
rather than attempt to identify air quality impact thresholds at the
unit- or source-specific level. To build on the response above, it
is important to keep in mind that regional interstate ozone
transport is a ``collective contribution'' problem, in which the
ozone-precursor emissions of many sources combine to create ozone
nonattainment and maintenance problems at potentially great
distances from individual source emissions points. Attribution of
responsibility for this problem is complicated by varying
meteorological conditions from year to year and even from day to
day. The EPA's Step 1 and Step 2 analysis within the 4-step
interstate transport framework is designed to robustly identify
where ozone problems are located and which states' anthropogenic
emissions contribute to those problems. At Step 3, the analysis
shifts to an evaluation of which emissions reductions from those
contributing states would be most cost-effective to achieve to
eliminate that portion of the states' emissions that are deemed
``significant'' and thus must be eliminated. Focusing on entire
industries (as the EPA has done in prior rules with its focus on
EGUs (e.g., CAIR and CSAPR)) and other industry categories in
addition to EGUs (as we did in the NO<INF>X</INF> SIP Call) presents
an efficient and equitable methodology for identifying where the
most cost-effective emissions reductions can be identified at the
regional scale.
Good Neighbor Plan RTC at 98 (citing 63 FR 57386); see also 88 FR
36685 (similar reasoning supports including new sources of the same
type as existing sources in good neighbor implementation plans); id. at
36746-47 (explaining that uniform control by unit type avoids risk of
production and emissions shifting). In short, when the EPA must devise
a federal solution to interstate ozone transport for one or more
states, its objective is to implement measures that are comprehensive,
durable, and robust, not to engage in a never-ending game of whack-a-
mole at each emissions point.
The Screening Assessment was one step along the way of focusing the
Agency's limited resources and narrowing the scope of the regulation of
NO<INF>X</INF> emissions ``sources'' and ``activities''; it was not
intended to dictate final determinations regarding ``significant
contribution.'' See, e.g., Good Neighbor Plan RTC at 97-99, 101. The
EPA concluded when finalizing the Good Neighbor Plan that its initial
Screening Assessment--although based on a slightly different group of
states than at final (and the use of other data regarding baseline
emissions levels and air quality conditions that was subject to
change)--had served its purpose in helping to identify a reasonable
starting point for further analysis of non-EGU emissions-control
opportunities and did not need to be redone. See 88 FR 36685, 36719.
The Screening Assessment served that purpose for each state where
it had a responsibility to regulate non-EGU emissions, and the Good
Neighbor Plan's ultimate identification of non-EGU emissions control
strategies to eliminate ``significant contribution'' is likewise sound
for any state or grouping of states that may necessitate such federal
regulation. Nonetheless, as is always the case with regard to meeting
the CAA's requirements, states remain free to address a different set
of sources than the EPA identified in the Good Neighbor Plan if they
prefer to regulate through a SIP in a manner different than the EPA
proceeded in the FIP. Id. at 36842.
[[Page 99123]]
``Weighted'' Averaging of Costs
In the EPA's final analysis of non-EGU representative costs in the
Good Neighbor Plan, for two industries (Pipeline Transportation of
Natural Gas and Solid Waste Combustors and Incinerators) and a specific
emissions unit type (boilers), the Agency identified a weighted average
of costs to address multiple control technologies identified in the
Step 3 analysis, rather than a single control technology. 88 FR 36739-
40 (table V.C.2-3). For those industries and for boilers, the analysis
weighted the average cost according to the control technologies that
certain sources, anticipated to be subject to the Good Neighbor Plan
across the 20 states with non-EGU requirements, might select as their
method of compliance. Representative costs for these sources were
calculated by weighting the average costs derived from national data
sources by estimated emissions reductions for the applicable control
technologies. Non-EGU Memorandum at 5-7. For these industries and for
boilers, looking at different groupings of states could result in a
different ``representative'' cost (as displayed in the Non-EGU
Memorandum at 10 (table 6)).
However, any differences in the identified ``representative'' costs
for these sources would not affect the outcome of the analysis. For
each of these types of sources, the record shows that the costs
associated with each of the different control technologies falls within
the range of costs that the EPA had concluded were reasonable to
impose. See 88 FR 36746-47. In other words, even if a different group
of states produces a higher representative cost when weighted by those
states' population of sources, the results still fall within the upper
bound of the cost-per-ton that the EPA found appropriate. The EPA's
conclusion--that the representative cost was reasonable--would be the
same.
For example, for RICE, the following table shows the data sources
and cost-per-ton estimates the EPA adapted from the CMDB to inform its
determination of representative cost for these sources. These were the
figures, adjusted to 2016 dollars, that informed the EPA's average cost
derived from national data sources used in the weighting to generate a
representative cost figure of $4,981/ton for RICE.
Table I--Data Sources and Cost Estimates for RICE Controls
------------------------------------------------------------------------
Control technology/engine type Original reference $/Ton value
------------------------------------------------------------------------
SCR, 4 Stroke Natural Gas 2003, cost $2,900 (2001
Engines, Lean Burn 17% (of information from dollars).
engines in analysis population). CARB 2001 report.
Non-Selective Catalytic 2009/2000 (from 4,538 (2013
Reduction or Layered 2009 ERLE study dollars).
Combustion, for SCCs where the and 2000 Pechan
firing technology is not Phase II NOX SIP
specified as to Rich Burn or call report).
Lean Burn 36%.
Layered Combustion, 2 Stroke 2009 (ERLE study). 4,900 (2010
Natural Gas, Lean Burn 44%. dollars).
Non-Selective Catalytic 2000 (Pechan, 422 (1999
Reduction, 4 Cycle Natural Gas, Phase II NOX SIP dollars).
Rich Burn 3%. call report).
------------------------------------------------------------------------
Likewise, for MWCs in the Solid Waste Combustors and Incinerators
industry, the EPA provided the cost assumptions used for the different
control types in appendix B of the Non-EGU Memorandum.
For boilers, the EPA explained that its cost estimates were derived
from the CMDB, and the EPA identified a number of assumptions used in
developing representative cost figures, which the EPA was clear may not
be reflective of all sources' circumstances. Non-EGU Memorandum at 7.
Noting that boilers have the highest representative costs among the
non-EGU source types, the EPA explained in the Good Neighbor Plan that
for individual sources, costs on a per-ton basis could well be higher
than the estimated $14,595/ton representative cost, but still be
commensurate with the range of costs that informed the identification
of the most stringent control strategy selected in the Good Neighbor
Plan for EGUs (for which costs at the 90th percentile ran as high as
$20,900/ton). 88 FR 36746.
The EPA also emphasized that cost-per-ton figures are only one
factor in the Step 3 multi-factor analysis, can vary widely depending
on the assumptions used, and the conclusions in the Good Neighbor Plan
regarding appropriate stringency levels were informed by a broader
review of how widely adopted and proven various control strategies had
become. Id. at 36746-47. Because of this, the determinations in the
Good Neighbor Plan regarding the appropriate level of emissions control
that could be expected of a particular type of source considered not
just cost-per-ton estimates, but analysis of which technologies were
already in wide use or on which existing standards had been based. Good
Neighbor Plan RTC at 62-63. Still, recognizing that individual sources
may face circumstances of extreme economic hardship or infeasibility,
the EPA also provided a mechanism for sources to obtain alternative
emissions limits, among other mechanisms for flexibility in the Good
Neighbor Plan, to address outlier cases. See 40 CFR 52.40(e). These
provisions are adequate to cover any potential gap in the Good Neighbor
Plan's estimate of representative costs.
Accordingly, recalculating the weighted average representative cost
for these particular non-EGU sources for any particular state or state
grouping would not produce a representative cost falling outside the
acceptable range. Thus, any change in the weighted average used to
derive ``representative'' costs for these industries and emissions unit
types resulting from looking at some subset of states would not
materially affect the analysis.
3. Step 4
At Step 4, the EPA establishes regulatory requirements to achieve
the ``prohibition'' of significant contribution identified at Step 3.
CAA section 110(a)(2)(D)(i). Under the Good Neighbor Plan,
implementation of these requirements occurs through compliance
activities at the source level, for both EGUs and for non-EGUs.
Contrary to commenters' allegations, and as explained in more detail
here, in section III.B.3., the trading program for EGUs, which is a
compliance flexibility, does not depend on an interstate trading region
for viability. Because all of the obligations of the Good Neighbor Plan
can be met by the sources in each state regardless of the application
of the Good Neighbor Plan in any other state, the implementation
framework at Step 4 is severable on a state-by-state basis.
This can be seen in the structure of the regulations themselves.
The Good Neighbor Plan determines on a state-by-state basis which of
the EGU and the non-EGU emissions-control programs (or both) should be
applied through
[[Page 99124]]
state-specific FIPs. See 40 CFR 52.38(b)(2) (as amended by 88 FR 36862-
63) (identifying states subject to the Good Neighbor Plan's ``Group 3''
EGU emissions trading program promulgated at 40 CFR part 97, subpart
GGGGG); 40 CFR 52.40(c)(2) (as promulgated at 88 FR 36869) (identifying
states subject to non-EGU emissions control requirements promulgated at
id. 52.41-46). The regulations at 40 CFR part 97, subpart GGGGG and 40
CFR 52.41-46 are uniform in nature. But states are ``enrolled'' via
FIPs into these requirements based on state-specific findings regarding
the level of their contribution to other states' ozone problems and how
long that contribution is projected to continue into the future.\56\
---------------------------------------------------------------------------
\56\ This is identical in structure to how the EPA has
promulgated federal good neighbor requirements through multiple
prior rulemakings. See 40 CFR 52.38-39 (identifying the enrollment
of states into emissions trading programs for ozone season
NO<INF>X</INF>, annual NO<INF>X</INF>, and annual sulfur dioxide
promulgated as subparts to 40 CFR part 97, as necessary to address
good neighbor obligations for other ozone and particulate matter
NAAQS).
---------------------------------------------------------------------------
It is through the application of those uniform programs, as
appropriate, in each state, via FIPs, that the Good Neighbor Plan
eliminates each covered state's significant contribution, as required
by CAA section 110(a)(2)(D)(i)(I). The state-specific coverage of the
Good Neighbor Plan (for the 23 states for which originally
promulgated), by regulatory program, is as follows:
<bullet> EGUs in all covered states except California (22 States
total) are required to participate in the Group 3 EGU emissions trading
program at the level of stringency associated with near term emissions-
control strategies that the EPA found can be implemented in 2023 and
2024.
<bullet> EGUs in Alabama, Minnesota, and Wisconsin are only subject
to this ``near-term'' stringency level within the Group 3 Trading
Program, and no more, because the EPA found these states are no longer
linked to downwind ozone problems in the 2026 analytic year.
<bullet> EGUs in 19 States (excluding the three states listed in
the preceding bullet) that are covered by the Group 3 trading program,
are subject to the enhanced stringency in the budgets that takes effect
over 2026 and 2027 because these states are linked through the 2026
analytic year.
<bullet> The EPA found California has no cost-effective fossil-fuel
fired EGU emissions reductions available at the stringency levels
determined in the Good Neighbor Plan and so is not subject to the Group
3 Trading Program at all.
<bullet> Non-EGUs in 20 states are subject to the uniform emissions
control regulations. Because the EPA found these requirements may take
up to three years to be implemented (i.e., until 2026), this number
excludes Alabama, Minnesota, and Wisconsin, for the same reason as
above: these states are not ``linked'' in 2026.
Table II--Coverage of the Good Neighbor Plan Regulatory Programs
----------------------------------------------------------------------------------------------------------------
EGU program-- EGU program--
State near term long term Non-EGU
stringency stringency
----------------------------------------------------------------------------------------------------------------
Alabama.................................................. X ................. ...............
Arkansas................................................. X X X
California............................................... ................. ................. X
Illinois................................................. X X X
Indiana.................................................. X X X
Kentucky................................................. X X X
Louisiana................................................ X X X
Maryland................................................. X X X
Michigan................................................. X X X
Minnesota................................................ X ................. ...............
Mississippi.............................................. X X X
Missouri................................................. X X X
Nevada................................................... X X X
New Jersey............................................... X X X
New York................................................. X X X
Ohio..................................................... X X X
Oklahoma................................................. X X X
Pennsylvania............................................. X X X
Texas.................................................... X X X
Utah..................................................... X X X
Virginia................................................. X X X
West Virginia............................................ X X X
Wisconsin................................................ X ................. ...............
----------------------------------------------------------------------------------------------------------------
These state groupings illustrate how the application of each set of
regulatory requirements promulgated in the Good Neighbor Plan depends
on the circumstances of each state, as determined through the
analytical application of the 4-step interstate transport framework on
a nationwide basis. No particular requirement is applicable in all 23
states, and the workability of the Good Neighbor Plan is not premised
on an assumption that it must be applicable in specifically 23 states
or any particular number of states.
As a practical matter, compliance is achievable through the at-the-
source control technologies on which the EPA's determination of
``significant contribution'' at Step 3 rested (or their equivalents,
because the Good Neighbor Plan does not mandate the use of particular
control technologies). For non-EGUs, all requirements are established
at the source-specific level. See 88 FR 36675. The same is true of
EGUs: the stringency of the Good Neighbor Plan is premised on at-the-
source, conventional control technologies. See 88 FR 36737-39 (tables
identifying technology types). The EPA also designed a market-based,
interstate emissions trading program to allow EGU sources to achieve
their
[[Page 99125]]
required emissions reductions as efficiently and cost-effectively as
possible, but that trading program is merely a more flexible means of
implementing the source-specific requirements that otherwise apply
under the Good Neighbor Plan. Indeed, the enhancements the EPA
established for the Good Neighbor Plan's trading program (as compared
to prior good neighbor trading programs) were meant to ensure the
flexibility of the trading program did not undermine the benefits of
defining source-specific emissions controls in the first place, which
helps assure that EGU sources in each state have eliminated their own
significant contribution and thus provided improvements in air quality
to the downwind receptors to which their home states are linked. See 88
FR at 36657, 36684, 36752.\57\
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\57\ Even before the Good Neighbor Plan, following North
Carolina, the EPA took measures to ensure that interstate trading
does not undermine the obligation to eliminate each state's
significant contribution. See North Carolina, 531 F.3d at 921,
modified on reh'g, 550 F.3d 1176. See, e.g., Cross-State Air
Pollution Rule (CSAPR), 76 FR 48208, 48268-71 (August 8, 2011); 88
FR 36752-53.
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Commenters may be concerned that without the participation of all
states originally included in the Good Neighbor Plan, market liquidity
will be affected, allowance prices will increase, and/or there will not
be sufficient allowances available for compliance. But the record of
the Good Neighbor Plan shows that these concerns are unjustified.
While interstate trading--especially among sources in a large group
of states--would generally increase the size of the allowance trading
market and thus may increase market liquidity in ways that can improve
market efficiency, the use of a trading program does not render
implementation of a good neighbor rule in a smaller group of states, or
even a single state, unreasonable. That is because, in the first
instance, the good neighbor provision regulates EGU sources, not
states. Even within a single state, there would be multiple
participating sources to populate and benefit from an emissions trading
program. Moreover, the history of the EPA's good neighbor rulemakings
shows that these trading programs have continued to provide valuable,
effective compliance flexibility even where they cover a smaller group
of states.\58\ Indeed, each state's budget is set in the Good Neighbor
Plan at levels that provide sufficient allowances for each state,
assuming EGUs achieve a level of reduction equivalent to what can be
achieved by the at-the-source technologies identified to eliminate
significant contribution. 88 FR 36680. And as explained further in
section III.C., all of the EPA's good neighbor rules, including the
Good Neighbor Plan, are designed with the understanding that states
have the option to develop SIPs that remove their sources from a
trading program, which necessarily changes the number of states subject
to the FIP, and that the number of states covered by FIPs may otherwise
change.
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\58\ The size of the trading region is not the only determinant
of liquidity; the relative magnitude of demand for allowances
compared to supply is an important factor. For example, inclusion in
the program of states with sources that are not well-controlled for
NO<INF>X</INF> would tend to put upward pressure on allowance prices
(and potentially reduce liquidity). If states with such sources are
removed from that program (e.g., due to stays), this may put
downward pressure on allowance prices (and potentially increase
liquidity).
---------------------------------------------------------------------------
As a consequence, the size of the trading regions used to implement
the good neighbor provision has both varied between rules and regularly
changed within trading programs over time. This has never posed a
challenge to compliance feasibility, nor does the EPA have any evidence
of allowance shortages occurring in any of these programs. See 88 FR
36687 (noting opposite problem of banked-allowance surpluses). For
example:
<bullet> Currently, Georgia is the only state whose EGUs remain in
the original CSAPR ``Group 1'' ozone season NO<INF>X</INF> trading
program, which originally included 25 states.
<bullet> In 2021, the Revised CSAPR Update created a 12-state
trading region to complete the remedy to significant contribution for
the 2008 ozone NAAQS (i.e., the original ``Group 3'' program).
<bullet> With the Revised CSAPR Update in place, the 2016 CSAPR
Update ``Group 2'' program trading region was reduced from 22 states to
10 states.
See 88 FR 36668-69 (reviewing regulatory history).
In light of these successful implementation experiences and given
the at-the-source technologies on which the Good Neighbor Plan's EGU
budgets are premised, coupled with other flexibilities, even
individual-state trading programs would not be expected to unduly
affect market liquidity or make allowances either scarce or
unaffordable. To the extent the comments may be read as asserting that
smaller trading regions would undermine grid reliability, the EPA
disagrees for the same reasons. These comments did not present any data
or analysis in support of that contention. The EPA thoroughly explained
how the Good Neighbor Plan's regulatory program for EGUs is designed to
avoid interfering with resource adequacy and grid reliability, see 88
FR 36771-75.
In short, under the Good Neighbor Plan, the sources in each
individual state are fully able to comply without regard to what
sources in other states are doing--and even where cooperative market-
based mechanisms are available to aid in that compliance, those
mechanisms remain sound for smaller state groupings or even at the
individual-state level despite a smaller marketplace. 88 FR 36760-61,
36817.
Commenters may also be concerned that the application of the Good
Neighbor Plan in some upwind states if not operative in others may
create a dynamic of competitive disadvantage. However, even if this
were the case (and commenters supplied no evidence that it would be),
this would not be sufficient justification to suspend the operation of
the rule in states where it lawfully could be in effect. As an initial
matter, because the good neighbor provision imposes legal obligations
on each state individually, it does not allow individual states to
defer compliance with their legal obligations based on circumstances in
other upwind states. That is consistent with the provision's purpose,
which is intended to ensure equity and fairness among states by
prohibiting harmful upwind state emissions that impose regulatory,
economic, and health burdens on downwind states. See 88 FR 36658,
36687, 36741; see also 64 FR 28250, 28258-62 (May 25, 1999) (reviewing
legislative history of the good neighbor provision and related
statutory provisions, which reflects an intent to ``equalize the
positions of the States with respect to interstate pollution by making
a source at least as responsible for polluting another State as it
would be for polluting its own State''). The inaction of some upwind
states is not an appropriate justification for further relaxing all
upwind states' obligations, when it is downwind states who will suffer.
That burden will fall not just on downwind communities, but on
industries in downwind states with ozone nonattainment problems, who
will likely bear greater competitive disadvantages vis-[agrave]-vis
their competitors in upwind states whose pollution is contributing to
the enhanced regulatory burdens they already face under the Act. See
EME Homer City, 489 U.S. at 519; Maryland, 958 F.3d at 1200-01, 1203-
04. This consideration is particularly acute given the August 3, 2024,
attainment date for compliance with the 2015 ozone NAAQS for Moderate
nonattainment
[[Page 99126]]
areas located throughout the country, and the Good Neighbor Plan's
objective of further assisting downwind states in time for the 2027
Serious area attainment date. 88 FR 36690, 36695.\59\ In any case, in
light of the unique ability of the power sector to shift generation
among sources in supplying electricity to the power grid, the EPA
conducted an analysis in the Good Neighbor Plan of the potential for
power generators to shift production and emissions from EGUs in states
covered by the Good Neighbor Plan to states not covered by the Good
Neighbor Plan and found that the risk, while not zero, was relatively
small. Good Neighbor Plan RTC at 604-05. Further, that risk is
attendant and unavoidable at the boundaries of any multistate or
regional program, regardless of its size and regardless of whether that
program uses emissions trading or is based on source-specific emissions
limitations, and so not particular to the circumstances here.
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\59\ This is also consistent with the EPA's determination that
it is necessary and appropriate to extend the Good Neighbor Plan's
requirements to CAA section 301(d) FIP areas located within the
borders of states whose sources were found to be significantly
contributing. The EPA explained in the Good Neighbor Plan that not
doing so would pose a risk that such areas would then be targeted
for the siting of polluting facilities to avoid the Good Neighbor
Plan's requirements, frustrating the purpose of the Good Neighbor
Plan and the statute. 88 FR 36691. This concern exists at the
``intra-State'' level. Second, while it is generally appropriate
that equity and consistency should be maintained across all
similarly situated jurisdictions, that does not extend to excusing
one upwind state of its statutory obligations simply on the basis
that the obligations of another upwind state are still pending or
unresolved.
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In short, the implementation of the regulatory requirements of the
Good Neighbor Plan, at Step 4, is achievable by the sources in each
state and is therefore severable by state.
C. Other Features of the Statute and Good Neighbor Plan Supporting
Severability
In light of the statutory text and context, the Good Neighbor Plan,
like prior interstate transport rules, is designed to be modular--i.e.,
to apply on a state-by-state basis and to whichever states are
presently subject to the EPA's responsibility to issue a FIP. That the
Good Neighbor Plan functions to appropriately define and prohibit
significant contribution on a state-by-state basis, regardless of the
number of states covered, can be seen in a number of other features and
elements of the Good Neighbor Plan and by reviewing the history of
implementation of the good neighbor provision for ozone across prior
rulemakings and case law.
First, as directed by the statute and relevant precedent, the EPA
must define significant contribution in such a way that sources in
``each State'' are held responsible for the elimination of their own
significant contribution. CAA section 110(a)(2)(D); see 88 FR 36687-88,
36762. The D.C. Circuit's review of a good neighbor rule invalidated in
North Carolina v. EPA, and the EPA's subsequent action to address a
specific holding in North Carolina concerning regional- versus state-
level compliance, helpfully illustrates why, and how, the EPA's current
approach avoids any inter-dependency among states' obligations.
In an earlier good neighbor rule, the Clean Air Interstate Rule
(CAIR), the EPA quantified emissions reduction requirements at the
regional level based on a regional analysis, and then apportioned the
responsibility for reducing each pollutant among the contributing
states based on either the total allowance allocations for the states'
EGUs under the Acid Rain Program (ARP) (in the case of required sulfur
dioxide reductions) or the total historical heat input amounts for the
states' EGUs, adjusted for the types of fuels used (in the case of
required NO<INF>X</INF> reductions). See 70 FR 25162, 25176 (May 12,
2005); see also 88 FR 36668.
In North Carolina, the D.C. Circuit found that CAIR had unlawfully
defined ``significant contribution'' at a regional level rather than on
a state-specific basis. 531 F.3d at 906-08, 919-21. After this ruling,
the EPA took care to ensure the successor rule to CAIR, CSAPR, defined
and prohibited significant contribution for each State. See 76 FR
48271. It did this by evaluating and selecting appropriate uniform
levels of control stringency for the set of upwind states linked to
identified downwind receptors and then quantifying and implementing the
required emissions reductions resulting from the selected control
stringencies independently for each upwind state. See id. In other
words, at this point in the analysis, the EPA removed from CSAPR (and
all subsequent good neighbor rules) the interdependency of a regional
solution that North Carolina had found in CAIR, as this interdependency
resulted in a failure to identify each state's own obligations. In
CSAPR, each receptor and the states linked to that receptor were
evaluated independently, which led the EPA to establish different
regional groupings of states with different levels of emissions control
stringency (e.g., in that case, the Group 1 and Group 2 SO<INF>2</INF>
control programs). See 76 FR 48252. The courts reviewing CSAPR in EME
Homer City further required that the EPA evaluate each state to ensure
an otherwise permissible uniform emissions control stringency does not
overcontrol the emissions of any particular upwind state. 572 U.S. 489,
521. Taken together, these refinements from CAIR opened up the
potential that individual states could be assigned different cost/
stringency levels based on whether their receptors (or their linkages
to those receptors) would fully resolve at different cost/stringency
levels or would fully resolve before additional emissions control
measures could be implemented. This state-specific treatment can be
seen in the Good Neighbor Plan's recognition that control strategies
only available by the 2026 analytic year are not required in Alabama,
Minnesota, or Wisconsin, given that their specific linkages were
projected to resolve by that year. For the remaining 20 states in the
Good Neighbor Plan, no overcontrol was observed in the 2026 analytic
year and so no adjustments in the program's stringency were needed. 88
FR 36749.\60\
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\60\ Likewise, in the Good Neighbor Plan, we observed a receptor
projected to resolve using an emissions control stringency level not
requiring non-EGU emissions controls. The Larimer County, Colorado,
receptor's maximum design value drops below 71 ppb when the highest
EGU stringency is applied (but before non-EGU controls are applied).
Thus, if any state were linked only to this receptor, the EGU-only
level of stringency would have been the stopping point. However, all
states linked to this receptor were also linked to other receptors
for which application of both the EGU and non-EGU emissions control
stringency did not produce overcontrol. See Ozone Policy TSD,
appendix H, at 115.
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At Step 4, CSAPR maintained an interstate EGU trading program, but
the EPA took steps to ensure that this too complied with North Carolina
and the statutory obligation to define and prohibit each state's
significant contribution. To ensure that each state would eliminate its
own significant contribution within the flexible compliance mechanism
of an interstate trading program for EGUs, the EPA imposed a constraint
on interstate trading within the trading program, through ``assurance
provisions'' that imposed a 3-to-1 allowance-surrender ratio for
emissions in excess of a certain percentage of each state's budget. As
explained in the Good Neighbor Plan, ``The establishment [in CSAPR] of
assurance levels with associated extra allowance surrender requirements
was intended to respond to the D.C. Circuit's holding in North Carolina
requiring the EPA to ensure within the context of an interstate trading
program that sources in each State are required to address their good
neighbor obligations within the State and may not simply shift those
obligations to other States by failing to reduce their own emissions
and instead surrendering surplus allowances
[[Page 99127]]
purchased from sources in other States.'' 88 FR 36786.
The features of CSAPR included to address the North Carolina
decision have been retained in the Good Neighbor Plan and enhanced to
further ensure that each state remains responsible for elimination of
its own significant contribution.\61\ See id. at 36687-88, 36762
(citing North Carolina, at 906-08, 921; see also Good Neighbor Plan RTC
at 42 (``[T]he D.C. Circuit has held that the EPA may not implement an
emissions reduction program under the good neighbor provision that
fails to ensure that each State has eliminated its own significant
contribution. North Carolina, 531 F.3d at 921.''); id. at 48 (same).
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\61\ For example, by strengthening incentives for individual
units to optimize operation of their emissions controls, the
backstop daily NO<INF>X</INF> emissions rate provisions and the
secondary emissions limitation provisions also both increase
assurance that each State's significant contribution will be
eliminated within that State. See, e.g., 88 FR 36767-68 and 36799-
800.
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Second, also consistent with the state-by-state structure of CAA
section 110, as recognized in North Carolina, the EPA made specific
findings regarding its authority to promulgate a FIP for each
individual state covered by the Good Neighbor Plan. 88 FR 36689 n.109.
Notably, the EPA had originally proposed that the Good Neighbor Plan
rulemaking would promulgate FIPs for 26 states, not 23. See 87 FR
20036, 20038 (April 6, 2022). The modeling that informed the final rule
indicated that Delaware and Wyoming were not linked to any out-of-state
receptors, and that Tennessee would only be linked to a new class of
``violating monitor'' receptors. Thus, these three states were excluded
from the final Good Neighbor Plan. Including fewer states in the final
rule than were included in the proposal did not alter the approach to
defining each remaining states' significant contribution, nor cause any
change in each covered state's obligations or the requirements imposed
on emitting sources in those covered states. The final modeling also
indicated that several additional states were potentially linked and
may ``contribute significantly,'' and thus the EPA acknowledged in the
final Good Neighbor Plan that these states' obligations still needed to
be addressed. See 88 FR 36658 (identifying Arizona, Iowa, Kansas, New
Mexico, Tennessee, and Wyoming as needing to be further addressed in a
subsequent action).\62\ Critically, under the EPA's analytical approach
to the Good Neighbor Plan, the absence of these states from the final
Good Neighbor Plan did not, in the Agency's view at the time, pose any
challenge to finalizing and moving forward with implementing the Good
Neighbor Plan for the states included.
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\62\ See supra note 19.
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Third, the Good Neighbor Plan, consistent with the statute and like
all prior good neighbor federal rulemakings, recognizes that states may
choose to replace their FIP with a SIP. See, e.g., 88 FR 36838-42
(discussing in detail various options states have for developing SIPs).
When the EPA approves a replacement SIP, that state is withdrawn from
the FIP, thus changing the number of states subject to Good Neighbor
Plan FIPs. In developing SIPs, states may opt to leave the interstate
trading program for EGUs in favor of an adequate, alternative approach
to addressing their good neighbor obligations. Id. at 36841-42. This
echoes nearly identical discussions included in prior good neighbor
rules, see, e.g., CSAPR, 76 FR 48328. Both the proposed and final Good
Neighbor Plan contained an extended discussion of how states could exit
the Good Neighbor Plan through several options for submitting
approvable SIPs. 87 FR 20149-51; see also id. at 20040 (``[T]his
proposal will provide States with as much information as the EPA can
supply at this time to support their ability to submit SIP revisions to
achieve the emissions reductions the EPA believes necessary to
eliminate significant contribution.''). In the final Good Neighbor
Plan, the EPA explained that it encouraged states to replace their FIP
with an approvable SIP, specifically identifying that states could
choose to exit the trading program, regulate different sources, or
devise adequate alternative methodologies to defining ``significant
contribution.'' See 88 FR 36839.
Fourth, the EPA's experience with prior good neighbor rules informs
its determinations concerning the ability of the Good Neighbor Plan to
function sensibly regardless of the number of states included. The EPA
has removed states from coverage of prior good neighbor rules
(including from interstate trading programs) in the past without any
loss of program viability. See 88 FR 36669. In addition, at times the
EPA has been required to remove specific states from a good neighbor
program as a result of adverse court decisions. For example, CSAPR was
remanded as to multiple states based on overcontrol concerns in the
aftermath of the Supreme Court's decision in EME Homer City, but the
D.C. Circuit expressly declined to vacate CSAPR, even as to those
states. See EME Homer City Generation, LP v. EPA, 795 F.3d 118, 132
(D.C. Cir. 2015). Subsequent rulemakings moved several states out of
the original CSAPR programs, without any issues concerning the
feasibility or propriety of the remaining states' obligations. See,
e.g., 81 FR 74504, 74506-07 (October 26, 2016); see also 86 FR 23056-
57. Similarly, in Michigan, 213 F.3d at 695, the D.C. Circuit vacated
the NO<INF>X</INF> SIP Call as to Wisconsin, Missouri, and Georgia, but
left the rule in place and remanded without vacatur as to certain
issues as to other states.\63\ The modular nature of past good neighbor
rules has functioned well and ensured that when the scope of a rule
might change based on issues specific to particular states, the rule
can continue to function properly for the states that remain covered by
the rule.
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\63\ The D.C. Circuit has in fact emphasized that the important
public health benefits of the EPA's interstate transport rules, as
well as the potential disruption to emissions trading markets,
counsel against vacatur even when some aspect of the rules may be
found unlawful or necessitate re-analysis. See North Carolina, 550
F.3d 1176, 1178 (D.C. Cir. 2008); Wisconsin, 938 F.3d at 336-37; EME
Homer City, 795 F.3d at 132.
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Finally, there are no statements in the record of the Good Neighbor
Plan that suggest the EPA considered the Good Neighbor Plan
interdependent among states or dependent on exactly 23 states or any
other minimum number of states' participation.\64\ To the contrary, the
severability section in the Good Neighbor Plan preamble indicated the
Agency's expectation that the Good Neighbor Plan could be implemented
in individual states as necessary. 88 FR 36693. While in one instance,
the Good Neighbor Plan did refer to the ``interdependent nature of
interstate
[[Page 99128]]
pollution transport,'' see 88 FR 36860, this was in reference to the
nature of the pollution problem, not the nature of the EPA's solution.
While the variable, interstate nature of ozone transport certainly
presents a ``thorny causation problem,'' EME Homer City, 489 U.S. at
514, the EPA's solution to that problem when promulgating FIPs, through
a consistent application of the 4-step interstate transport framework
to each state, is expressly designed to avoid the creation of
unworkable interdependencies.
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\64\ To the extent any discussions in the Good Neighbor Plan's
preamble or its technical support documents suggested that some
particular substantive component of the methodology was dependent on
a specific 23-state coverage, the Agency clarifies here that such
statements were inartful or incorrect. For example, the Agency has
reviewed the methodology underlying the graphs displayed in appendix
I of the Ozone Policy TSD. We have confirmed that despite headings
describing the graphs as being for 22 or for 19 states,
respectively, in fact Figures 1 and 2 were compiled using the ``Step
3 Configuration'' in AQAT that compiled the reductions of all linked
states and the home state for each receptor. Figure 3 likewise
reflected a compilation of data that was not limited to the states
subject to the original Good Neighbor Plan. The references to 22 and
19 states (for 2023 and 2026 EGU stringency, respectively) were
simply intended to indicate the number of states in the Good
Neighbor Plan for which the data informed obligations being
finalized in that rule. See 88 FR 36744-45 (explaining that Figures
1 and 2 reflected the AQAT data used to inform the Step 3
determinations concerning EGUs, while Figure 3 was intended to
illustrate why further EGU emissions-reduction strategies not
included in that analysis appeared to be well beyond a notable
breakpoint in cost-effectiveness and thus not worth pursuing in the
context of defining good neighbor obligations for the 2015 ozone
NAAQS).
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By contrast, commenters' apparent view that the analysis underlying
the Good Neighbor Plan would change depending on its scope of coverage
at any given moment misapprehends how the Good Neighbor Plan is
designed and operates. If commenters were correct that the EPA had
designed a good neighbor rule that was contingent for any particular
state on whether the rule covered other states, this would seemingly
introduce an interdependency problem and render the rule invalid under
North Carolina. It could also require that the EPA revise a good
neighbor rule every time a state opted to impose a SIP to exit its FIP
or was moved into a new FIP for a revised NAAQS or to fully address its
obligations. The practical problems of such an approach reinforce why
this would be an unreasonable way to define states' obligations. It
would render good neighbor obligations an ever-shifting target,
undermining regulatory certainty for sources and states. The Good
Neighbor Plan is designed to avoid such complications.
D. Whether Judicial Stays Would Justify Re-Analysis of the Good
Neighbor Plan
The comments discussed in section II.B. may be interpreted to argue
that the Good Neighbor Plan must be re-analyzed where a court stays, as
to a particular state or states, either the rule itself or an
antecedent action such as the SIP Disapproval that is a predicate to
the exercise of FIP authority under CAA section 110(c)(1). Courts may
enter temporary stays of agency actions pending judicial review to
preserve the status quo. A stay order is not a final judgment and in
itself does not alter or force a change in the substantive analysis an
agency has applied in taking the action under review. Thus, stay orders
would not alter the analysis of good neighbor obligations for the 2015
ozone NAAQS for any particular state, and the EPA would come to the
same result as was already reached, because the analytical
underpinnings and the implementation of the Good Neighbor Plan do not
depend on the specific number of states that it covers.
The comments may also be interpreted as an assertion that the Good
Neighbor Plan would not function or would be unreasonable because stays
may be put in place, or because a large amount of the emissions
reductions that the Good Neighbor Plan calls for would become
unenforceable pending judicial review. However, this does not serve to
identify what technical and analytical conclusions the Agency reached
through its notice-and-comment rulemaking were flawed or must be
changed. The obligations as defined for each state remain promulgated
even if they are stayed pending judicial review.
Similarly, the effects of merits holdings in the SIP Disapproval
litigation or a vacatur of the SIP Disapproval as to a particular state
would not necessarily require a change in the way the EPA may lawfully
define that state's good neighbor obligations in a FIP, much less those
of other states. To be sure, in general a vacatur of a SIP disapproval
would at a minimum require that the FIP remain stayed as to that state,
pending action on remand (if that disapproval had been the only basis
for the exercise of FIP authority). And the EPA will always comply with
the final judgments of the courts. However, the degree to which a
change in analysis for a particular state, with respect to the EPA's
action on its SIP submission, would be required following any merits
holdings in the various cases challenging the SIP Disapproval would
depend on the nature of those holdings, as to that state, which is
speculative at this time. Whether such holdings would in turn require a
change in the EPA's analysis or outcomes concerning other states' SIP
submissions is still more speculative, and whether any such changes
could then separately impact the EPA's approach to defining the
obligations of the state in question through a FIP, much less the
obligations of other states via FIPs, is more speculative still.
Several commenters urge that the EPA must simply accept their view,
or the view of commenters on the SIP Disapproval, that either or both
of the rules are legally or procedurally flawed and will not survive
judicial review. The EPA has addressed the substantive arguments raised
in such comments elsewhere in the record of the Good Neighbor Plan, or
it has indicated that it had addressed those issues in the SIP
Disapproval and those matters are not within scope of the rule. See
Good Neighbor Plan RTC at 6-8, 149-51, 155; see also section II.B.
supra (summarizing responses to comments in the original Good Neighbor
Plan record). Where the Agency has reviewed such comments and is
satisfied that it is acting lawfully, mere speculation that a reviewing
court may disagree cannot supply a reasoned basis for the Agency to
stay, modify, or withdraw its rule.
Thus, the methodology and regulatory programs of the Good Neighbor
Plan are reasonably designed and operate to define the obligations of
each state, in a manner that is severable on a state-by-state basis.
While the analytical methods, technical analyses, and policy judgments
that informed the Good Neighbor Plan were developed and conducted
consistently across the nation, they ultimately produced a
determination of significant contribution at the state level. The
implementation of the measures necessary to eliminate significant
contribution is achievable by the sources within each state,
irrespective of other states' participation. It would not matter if
there were one state or 50 states in the Good Neighbor Plan--the
methodology and the result for any particular state--i.e., the
definition of ``significant contribution to nonattainment and
interference with maintenance'' under CAA section 110(a)(2)(D)(i)(I)
for the 2015 ozone NAAQS--would remain the same.
The EPA acknowledges that although the substantive circumstances of
the states remain constant, the circumstances of the rulemaking and
litigation are likely to remain in flux in the short-to-near term.
Courts that may grant stays pending judicial review may later affirm
the SIP Disapproval or may remand the SIP Disapproval as to particular
states, with or without vacatur. Indeed, both the NO<INF>X</INF> SIP
Call and CSAPR were ultimately implemented despite initial stay orders,
and notwithstanding that some elements of each rule were remanded
without vacatur. See, e.g., EME Homer City, 795 F.3d at 138; Michigan,
213 F.3d at 695. Should there be any remand of the SIP Disapproval, the
EPA will have to act on that state's SIP submission again, in
accordance with the court's holdings. See Calcutt v. Federal Deposit
Ins. Corp., 598 U.S. 623, 629 (2023). And, at any point, any state may
submit a new SIP to the EPA, and the EPA will review that SIP.
Ultimately, under the statute, every state will need to be covered by
either an approved SIP or a FIP that meets the requirements of the good
neighbor provision--with the number subject to each potentially
changing at any point.
Finally, the EPA's conclusion that the Good Neighbor Plan is
severable also reflected the important public health
[[Page 99129]]
and environmental benefits of the rule in eliminating significant
contribution and to ensure to the greatest extent possible the ability
of both upwind states and downwind states and other relevant
stakeholders to be able to rely on the rule in their planning. 88 FR
36693. Cf. Wisconsin, 938 F.3d at 336-37 (``As a general rule, we do
not vacate regulations when doing so would risk significant harm to the
public health or the environment.''); North Carolina v. EPA, 550 F.3d
1176, 1178 (D.C. Cir. 2008) (noting the need to preserve public health
benefits).
IV. Statutory and Executive Orders Reviews
The EPA's determinations under the relevant statutory and Executive
Order reviews for the Good Neighbor Plan can be found at 88 FR 36856-
60. This document provides further explanation in response to comments
concerning a particular aspect of the Good Neighbor Plan and does not
alter or amend any of the requirements of the rule. Additional
information about the relevant statutes and Executive Orders can be
found at <a href="https://www.epa.gov/laws-regulations/laws-and-executive-orders">https://www.epa.gov/laws-regulation
[…truncated; see source link]Indexed from Federal Register on December 10, 2024.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.