Clean Air Markets
CAIR Frequent Questions – CAIR FIP
Q: Why did EPA promulgate CAIR Federal Implementation Plans (FIPs) on March 15, 2006, before the CAIR SIP submission deadline of September 11, 2006?
A: In a final rule published April 25, 2005 (70 FR 21147), EPA made national findings that States failed to submit SIPs required under Clean Air Act (CAA) section 110(a)(2)(D) to address interstate transport with respect to the 8-hour ozone and PM2.5 National Ambient Air Quality Standards (NAAQS). The April 25, 2005 findings started a 2-year clock for EPA to promulgate a FIP to address the requirements of section 110(a)(2)(D). Under CAA section 110(c)(1), EPA may issue a FIP any time after such findings are made and must do so unless a SIP revision correcting the deficiency is approved by EPA before the FIP is promulgated. For States covered by CAIR, an approved SIP revision meeting the CAIR requirements satisfies the section 110(a)(2)(D) requirement.
Q: Are there sanctions or penalties associated with promulgation of the CAIR FIPs?
A: No. In no way should these FIPs be viewed as a sign of any concern about States meeting the SIP responsibilities under CAIR. EPA intends to withdraw the FIP in any state in coordination with approval of a SIP revision that meets the CAIR requirements.
Q: Do the CAIR FIPs adopt the CAIR SIP model trading rules to implement the CAIR emission reduction requirements?
A: Yes. EPA decided to adopt the CAIR SO2, NOx annual, and NOx ozone season model trading rules (modified as necessary to provide for federal rather than state implementation) as FIPs for CAIR. This creates a region-wide trading program that can include States subject to either a FIP or a SIP. By adopting as FIPs the model trading programs, EPA intends to implement the requirements of CAIR in a highly cost-effective manner and to ease the transition for sources that might initially be covered by the FIP programs and subsequently be covered by SIP programs that also adopt the model trading rules. The FIP trading programs are in 40 CFR part 97, and the SIP model trading rules are in 40 CFR part 96.
Q: Does promulgation of the CAIR FIPs prior to the CAIR SIP submission deadline limit States in their choice of control strategies to meet CAIR?
A: No. Promulgation of these CAIR FIPs in no way precludes a state from developing its SIP revision to either adopt the model trading rules (with modifications to the extent allowed for certain program elements), or to meet the CAIR emission reduction requirements through different measures of the state's choosing, as provided in CAIR. EPA will not take any steps to implement these FIPs (e.g., by recording EPA-determined NOx allocations in source accounts) that may impact a state's ability to regulate its sources in a different manner until September 2007, a year after the September 2006 SIP submission deadline.
Q: What is an abbreviated CAIR SIP revision? How is that different from a full CAIR SIP revision?
A: The final CAIR FIP (71 FR 25328) provides that each CAIR state has the option to submit limited SIP revisions - called "abbreviated SIP revisions" - that address only certain specified elements of the FIP trading programs, in lieu of submitting full SIP revisions to meet the CAIR requirements. A state can choose to submit an abbreviated SIP revision for one or more of the applicable CAIR programs in its state (i.e., for the SO2, NOx annual, or NOx ozone season program). By using an abbreviated SIP revision, a state modifies the application of certain provisions of the FIP trading program in its state. An abbreviated SIP revision doesn't replace a FIP trading program. In a state with an approved abbreviated SIP revision for a FIP trading program, the FIP program remains in force in the state, EPA is the implementing authority, and certain provisions in the FIP are modified by the abbreviated SIP to meet the state's needs. Like a full SIP revision, an abbreviated SIP revision is subject to EPA review and approval.
Note that a state rule is an abbreviated SIP revision only if the scope of the state rule is limited to any of the specified FIP program elements allowed to be modified in an abbreviated SIP. These elements are listed in the answer to the question below (what are the specific elements of the CAIR FIP trading programs that a state can choose to modify using an abbreviated SIP revision?). In contrast, a state rule that adopts an entire CAIR program (i.e., a state rule that specifies, or incorporates by reference, all elements of a CAIR SO2, NOx annual, or NOx ozone season program, which may include program elements for which the SIP model trading rules allow States flexibility) is a full SIP revision.
Q: What are the specific elements of the CAIR FIP trading programs that a state can choose to modify using an abbreviated SIP revision?
A: The final CAIR FIP (71 FR 25345-25346) provides that a state can choose to modify the application of a FIP trading program in the state through an abbreviated SIP revision that does any or all of the following (which are the same program elements for which States have flexibility in the SIP model trading rules in part 96):
- allow units that are not otherwise CAIR units to individually opt into the FIP trading programs,
- allow the state (rather than EPA) to allocate NOx annual or ozone season allowances,
- allow the state (rather than EPA) to allocate allowances from the NOx annual Compliance Supplement Pool (CSP), and
- include NOx SIP Call trading sources that are not electric generating units under CAIR in the CAIR FIP NOx ozone season trading program.
Q: Are the submission deadlines for abbreviated CAIR SIP revisions the same as the deadlines for full CAIR SIP revisions?
A: No. The submission deadlines for abbreviated CAIR SIP revisions are later than the deadlines for full CAIR SIPs, as shown in the following table:
Deadline |
Full SIP Revisions |
Abbreviated SIP Revision |
|---|---|---|
Submit SIP revision to EPA (including NOx allocation methodology) |
September 11, 2006 |
March 31, 2007 |
Submit initial set of NOx allocations (covering at least 2009-2011) |
October 31, 2006 |
April 30, 2007 |
Q: Why may a state choose to submit an abbreviated CAIR SIP revision?
A: A state choosing to adopt one or more of the part 96 CAIR model trading rules (the SO2, NOx annual, or NOx ozone season model trading rule) to address its CAIR requirements may save time and resources by avoiding development of full SIP revisions and still be able to make certain key implementation decisions (e.g., regarding the methodology for allocating NOx allowances) through the use of abbreviated SIP revisions. Note that EPA is the implementing authority under a FIP whether or not that FIP trading program is modified by an abbreviated SIP revision.
The abbreviated SIP option may also be attractive to a state that chooses to do a full CAIR SIP revision but may not be able to meet the submission deadline. If the state submits both a full SIP revision after its deadline and an abbreviated SIP revision on or before its deadline EPA may be able to approve the timely abbreviated SIP revision, but not the late full SIP submission, in time for the 2009 compliance year. The state's full SIP may be approved for subsequent years and replace the FIP at that time, and in the meantime, the state's abbreviated SIP revision may allow the state to make certain implementation decisions for the FIP trading programs (e.g., regarding NOx allocation methodology). Another, similar option is for the state to submit a full SIP revision and designate a portion of that full SIP (e.g., the NOx allocation methodology) as also being submitted for purposes of an abbreviated SIP revision, in order to get that portion approved more quickly and improve the likelihood of having the state's NOx allocations recorded in source accounts for the 2009 compliance year. When the full SIP revision is subsequently approved, EPA will withdraw the FIP in that state.
Q: In particular, why may a state choose to submit an abbreviated CAIR SIP revision for the SO2 trading program?
A: The CAIR FIP trading program elements that a state can modify for its state using an abbreviated SIP revision are: (1) to allow units that are not otherwise CAIR units to individually opt into the FIP trading program; (2) to allow the state, rather than EPA, to allocate NOx annual and/or ozone season allowances; (3) to allow the state, rather than EPA, to allocate allowances from the NOx annual CSP; or (4) to include NOx SIP Call trading sources that are not EGUs under CAIR in the CAIR FIP NOx ozone season trading program. Of these four trading program elements, the only one that is relevant to the SO2 program is the option to allow units to opt-into the FIP SO2 trading program. A state may choose to do an abbreviated SIP revision if it wants to allow units to opt-in to the FIP SO2 trading program in its state.
Q: Can a state choose that EPA implement CAIR requirements for one or more of the CAIR programs in the state indefinitely under a FIP? Is there a requirement that every state eventually implement one or more applicable CAIR programs itself under a full SIP revision?
A: A state may choose that EPA implement the CAIR requirements in the state. There are no sanctions or penalties for leaving one or more CAIR FIP trading programs in place. EPA anticipates that some States may prefer to avoid spending the time and resources necessary to submit a full SIP revision and may either just modify the application of certain elements of the FIP trading programs using an abbreviated SIP revision or choose not to modify the FIP at all.
Note that EPA is the implementing authority under a FIP whether or not a state uses an abbreviated SIP revision to modify elements of the FIP.
Q: Where will EPA list the States for which we approve abbreviated SIP revisions?
A: EPA will include appendices in 40 CFR part 97 that will be amended in the future to list any States for which EPA approves abbreviated SIP revisions covering any of the four specific elements that can be addressed using an abbreviated SIP.
Q: Is a state rule that incorporates by reference most or all of the provisions of a CAIR model trading rule an abbreviated SIP revision, or is such a state rule a full SIP revision?
A: A full SIP revision is one that adopts an entire CAIR program (i.e., a state rule that specifies, or incorporates by reference, all elements of a CAIR SO2, NOx annual, or NOx ozone season program). A state rule that incorporates by reference an entire part 96 model trading rule is a full SIP revision because such a rule adopts an entire CAIR program. Similarly, a state rule incorporating by reference most of the provisions of a part 96 model trading rule and adding provisions (replacing the rest of the model rule) for specific program elements for which States have flexibility is a full SIP revision.
A state rule is an abbreviated SIP revision only if its scope is limited to one or more of the four specific FIP trading program elements that may be modified using an abbreviated SIP revision.
Q: What happens if a State misses the CAIR SIP submission deadline (the September 11, 2006 deadline for full SIPs, or the March 31, 2007 deadline for abbreviated SIPs)?
A: EPA will endeavor to review and approve all CAIR SIP revisions as soon as practical regardless of when they are submitted. EPA believes that, if a State makes its submission later than the applicable deadline (September 11, 2006 or March 31, 2007 for a full SIP revision or abbreviated SIP revision, respectively), there may be inadequate time for EPA to review and approve the SIP revision and record State-determined NOx allocations by the deadline for recording NOx allocations for 2009, which is September 30, 2007.
Moreover, EPA will record EPA-determined allocations under the FIPs one year at a time for 2009 and 2010 to enable States to replace EPA-determined allocations by State-determined allocations as soon as possible. The current approach balances EPA's preference of using the State allocations whenever possible with the goal of providing sources with allowance allocation information as early as possible to facilitate their participation in the allowance market.
For any CAIR SIP revision submitted after its deadline, EPA intends to withdraw FIP requirements in a State as soon as practical after receiving an approvable SIP revision and will work with any State to ensure a timely withdrawal of the FIP and recording of State NOx allocations in source accounts. However, once EPA-determined NOx allocations are recorded in source accounts for a given year, the allocations will not be withdrawn and replaced by State-determined NOx allocations for that year.
Q: Can EPA review and approve more quickly a full SIP revision that incorporates by reference the part 96 model trading rules than one that doesn't incorporate by reference?
A: Yes. EPA's review is simplified to the extent a full SIP revision incorporates by reference provisions of a part 96 model rule. For example, a state whose SIP revision adopts by reference the model trading rules, except for the provisions for which the model rules allow flexibility, will greatly simplify EPA's review and will potentially enable EPA to approve the SIP revision more quickly.Note that a state rule that incorporates by reference one of the part 96 model trading rules, except for the provisions for which the model rules allow flexibility, is a full SIP revision because such a rule adopts an entire CAIR program.
Q: In order to be sure that NOx allocations determined using a state's chosen methodology (rather than EPA-determined allocations) are recorded in source accounts for the 2009 compliance period, what is the deadline for States to submit their SIP revisions and initial set of NOx allocations to EPA?
A: EPA prefers that each state determine the NOx allocations for its own sources. Although EPA will determine NOx allocations for the CAIR FIP NOx annual and NOx ozone season trading programs, we intend to only record EPA-determined allocations in allowance accounts for sources located in a state without a timely, approved full CAIR SIP revision or timely, approved abbreviated CAIR SIP revision providing for state-determined allocations. Deadlines for SIP submissions and NOx allocations are as follows:Deadline |
Full SIP Revisions |
Abbreviated SIP Revision |
|---|---|---|
Submit SIP revision to EPA (including NOx allocation methodology) |
September 11, 2006 |
March 31, 2007 |
Submit initial set of NOx allocations (covering at least 2009 - 2011) |
October 31, 2006 |
April 30, 2007 |
EPA believes that if a state makes its submission later than these submission deadlines, there may be inadequate time for EPA to review and approve the SIP revision and record state-determined NOx allocations by the deadline for recording NOx allocations for 2009, which is September 30, 2007.
For a CAIR SIP revision submitted after its deadline, EPA intends to withdraw FIP requirements in a state as soon as practical after receiving approvable SIP revisions and will work with any state to ensure a timely withdrawal of the FIP and recording of state NOx allocations in source accounts. However, once EPA-determined NOx allocations are recorded in source accounts for a given year, the allocations will not be withdrawn and replaced by state-determined NOx allocations for that year.
Deadlines for recording CAIR FIP NOx allocations and CAIR SIP NOx allocations are in Tables VI-2 and VI-3, respectively, in the preamble to the final FIP rulemaking (71 FR 25354). The following table summarizes those deadlines for the first three CAIR years.
CAIR Control Period |
Deadline for EPA to record FIP NOx allocations in source accounts (EPA-determined allocations or state-determined allocations using abbreviated SIP revision) |
Deadline for EPA to record SIP NOx allocations in source accounts (for States choosing to use allocation method in CAIR SIP model trading rules) |
|---|---|---|
2009 |
September 30, 2007 |
September 30, 2007 |
2010 |
September 30, 2008 |
September 30, 2007 |
2011 |
September 30, 2009 |
September 30, 2007 |
For more information, see the question above (what happens if a State misses the CAIR SIP submission deadline?).
Q: Several rulemakings that EPA has recently promulgated or proposed identify opportunities for States to rely on CAIR, if specific criteria are met, to show that certain requirements such as RACT and BART for some source categories have been met. Will States be able to rely on CAIR FIPs, in the same manner as CAIR SIPs, when making such submissions under Parts C and D of the Clean Air Act?
A: On March 15, 2006, EPA finalized CAIR FIPs for all States in the CAIR PM2.5 and 8-hour ozone regions. These FIPs relate to EPA’s findings, in May 2005, that States have failed to submit SIPs to satisfy the requirements of section 110(a)(2)(D)(i) of the Clean Air Act (CAA) for the 8-hour ozone and PM2.5 National Ambient Air Quality Standards (NAAQS). A State subject to a FIP may submit an abbreviated SIP to modify the application of certain FIP provisions (e.g. the allocation of NOx allowances) in that State. If a State chooses to rely on the CAIR FIP (with or without an abbreviated SIP) for meeting its obligation under section 110(a)(2)(D), the State will be able to rely on the reductions from the CAIR FIP, in the same manner as it would be able to rely on reductions from a CAIR SIP, to meet the best available retrofit technology (BART) requirements in the regional haze rule under Part C of the Act or to meet the reasonably available control technology (RACT), reasonable further progress (RFP), rate of progress (ROP), section 172(c)(9) contingency measure, and attainment demonstration requirements of Part D of the Act to the extent required for an area for the 8-hour ozone or PM-2.5 NAAQS.