Additional NOX Regulations and Trading Programs

Many urban areas do not meet the ozone standard and are classified as nonattainment areas. To address this, along with the fact that NOZ can be transported great distances, more restrictive requirements for NOx emissions from electric power generating plants and other large stationary boilers in 22 eastern states and the District of Columbia were established [22]. The requirements set statewide NOZ emissions budgets including budget components for the electric power industry and certain industrial sources. States are required to develop state implementation plans (SIPs) that include NOx emission limits for certain sources in order to achieve the required statewide emission budgets.

Title I of the 1990 CAAAs includes provisions designed to address both the continued nonattainment of the existing ozone NAAQSs and the transport of air pollutants across state boundaries. These provisions allow downwind states to petition for tighter controls on upwind states that contribute to their NAAQS nonattainment status. In general, Title I nitrogen oxide provisions with regard to ozone nonattainment regions:

• Require existing major stationary sources to apply reasonably available control technology (RACT), which is the lowest emission limitation that a particular source is capable of meeting by application of control technology that is reasonably available considering technological and economic feasibility;

• Require new or modified stationary sources to offset their emissions and install controls representing the lowest achievable emission rate, which is the minimum emissions rate accepted by the EPA for major new or modified sources in nonattainment areas;

• Require each state with an ozone nonattainment region to develop an SIP that may, in some cases, include reductions in stationary source

NOx emissions beyond those required by the RACT provisions of Title I.

Section 184 of the Clean Air Act delineated a multistate ozone transport region (OTR) in the northeast and requires specific additional nitrogen oxide and volatile organic compound controls for all areas in this region. It also established the Ozone Transport Commission (OTC) for the purpose of assessing the degree of ozone transport in the OTR and recommending strategies to mitigate the interstate transport of pollution. The OTR consists of the states of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont, the northern counties of Virginia, and the District of Columbia. The OTR states confirmed that they would implement RACT on major stationary sources of NOx (Phase I) and agreed to a phased approach for additional controls, beyond RACT, for power plants (>25 MW) and other large fuel combustion sources (industrial boilers with a rated capacity >250 million Btu per hour input; Phases II and III). This agreement, known as the OTC Memorandum of Understanding (MOU), was approved on September 27, 1994, at which time all OTR states except for Virginia signed the MOU. The MOU establishes an emission trading system to reduce the costs of compliance with the control requirements under Phase II, which began on May 1, 1999, and Phase III, which began on May 1, 2003. The OTC program capped summer-season (May 1 through September 30) NO x emissions at approximately 219,000 short tons in 1999 and 143,000 short tons in 2003, which represents approximately 55 and 70% reductions in NOx, respectively, from the 1990 baseline emission level of 490,000 short tons. While there are 13 affected regions (see Table 4-5), the actual reductions during the 1999 season reflect participation by only eight of the jurisdictions: Connecticut, Delaware, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, and Rhode Island [23].

The EPA promulgated a rule on October 27, 1998, known as the NOx SIP call, to address long-range transport of ozone. The purpose of this rule is to limit summer-season NOx emissions in 22 northeastern states and the District of Columbia that EPA considers significant contributors to ozone nonattainment in downwind areas (see Table 4-5 for affected states). These states were required to amend their SIPs through a procedure established in Section 110 of the Clean Air Act to further reduce NOx emissions by taking advantage of newer, cleaner control strategies. The EPA finalized a summer-season state NOx budget and developed a state implemented and federally enforced NOx trading program to provide for emissions trading by certain electric and industrial stationary sources. Each affected state's NOx budget is based on a population-wide 0.15 lb/MM Btu NO x emission rate for large electric generating stations and a 60% reduction from uncontrolled emissions for large electric generating units. This effort is projected to reduce

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