Posted on January 31, 2011 by David Flannery
EPA proposed its Clean Air Transport Rule (CATR) on August 2, 2010. The CATR would require extensive additional emissions controls on Electric Generating Units, or EGUs, in a 31 state area, purportedly for the purpose of attaining ozone and PM2.5 NAAQS and eliminating “significant contribution” to nonattainment (transport) from upwind states to downwind states.
The electric power industry submitted extensive comments on the CATR which provided EPA with new studies that demonstrate EPA’s failure to account for dramatic improvements in air quality in recent years and its failure to recognize future air quality improvement due to existing regulatory requirements. In particular, this data show that the proposed CATR ozone objectives can be achieved with no new controls beyond the existing regulatory requirements. The same study also concluded that PM2.5 objectives of the proposed CATR can be achieved with no new controls beyond the existing regulatory requirements, with the possible exception of additional local controls at the Allegheny County, PA and Brooke County, WV locations.
On January 7, 2011, EPA published its third Notice of Data Availability (NODA) with respect to CATR. The latest NODA provides data on potential allocation mechanisms and seeks comments on alternative approaches. EPA received numerous comments on allocation issues as a result of proposing the CATR. Following up on the comments, EPA analyzed allocation mechanisms for existing EGUs and is now providing data that it believes might support two alternative allocation mechanisms.
The two options include:
Option 1, which would allocate a state’s existing unit budget based on each unit’s proportionate share of the state’s total historic heat input. For each covered unit, annual heat input values for the baseline period of 2005 through 2009 would be identified using data reported to EPA or, where EPA data are unavailable, using data reported to the Energy Information Administration (EIA). For each unit, the three highest, non-zero annual heat input values within the 5-year baseline would be selected and averaged.
Option 2, which would yield the same initial allocation pattern as Option 1 (based on historic heat input) but would then add a constraint (i.e., a limit on allocations) based on a unit’s reasonably foreseeable maximum emissions under the proposed Transport Rule trading programs. For those units with heat input-based allocations that would exceed historic emissions, this option would limit allocations so that the units would not be given allowances in excess of their reasonably foreseeable maximum emissions.
EPA is requesting comments through February 4, 2011 on the two allocation options and four other issues, including (1) the implications of the alternative allocation methodologies for the proposed assurance provisions; (2) an alternative approach to calculate allowance surrender requirements at the designated representative level for the assurance provisions; (3) a methodology for distributing allowances to new units that locate in Indian country within the Transport Rule region; and (4) possible options for states wishing to submit State Implementation Plans (SIPs) providing for state allocation of allowances in the Transport Rule trading programs. The NODA included references to state auctions of allowances in the description of acceptable options.
In other developments related to the transport rule, U.S. EPA announced in December 2010 that it needs until July 29, 2011, to complete the ozone NAAQS. With its second transport rule intended to implement this revise ozone standard, it is now uncertain as to when that proposal can be expected.