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XL Proposal Summary

Metropolitan Chicago Regional Air Quality

and Economic Development Strategy

XL Proposal Summary

In this proposal, the Chicago Department of Environment (CDOE), is seeking to exercise Section 173(a)(1)(B) of the Clean Air Act to promote clean air and economic development. Section 173(a)(1)(B) allows the EPA Administrator, in consultation with the Secretary of Housing and Urban Development (HUD), to identify a zone in which economic development should be targeted. Chicago has dubbed such areas "smart growth zones."

Under the proposal, a new or modified major stationary source which locates in a smart growth zone (within the Chicago nonattainment area) would draw emission reductions from a growth allowance generated from the State's emission inventory in lieu of obtaining emission offsets. The growth allowance would be created using emissions reductions generated by Chicago and other municipalities. The emissions reductions would be quantified under a structure approved by the U.S. EPA and Illinois EPA.

Clean air and compliance with Federal requirements is a critical goal for the Chicago non-attainment region. Not only does the region's current non-attainment status impact regional health, it also impacts regional economic development. The traditional approach to emissions reduction has focused on larger point sources, while mobile and area sources now account for more than 80% of the region's emissions inventory.

The City of Chicago and other regional municipalities have begun to address the problem of area and mobile sources as a way to achieve additional volatile organic compound (VOC) reductions. Reduction activities include small incinerator bans, expanded alternative fuel use, and use of low VOC paints and coatings and other measures. Some of these activities have been completed, are under development or are prioritized for future implementation. Chicago and other municipalities wish to use these reductions to not only move the region toward attainment, but also to advance economic growth by making it easier for businesses to locate in the existing urbanized area. Such economic growth would take advantage existing infrastructure, create tax base to support existing communities, and preserve open space at the urban fringe.

Currently, a new major facility or a major modification to an existing facility would be required under New Source Review (NSR) to meet LAER (lowest achievable emissions reductions) requirements and obtain offset emissions at a ratio of 1.3 tons reduced per 1 ton emitted. Under this XL proposal, the source would still be required to meet LAER requirements, but would not be required to obtain offsets. Instead, Chicago and other regional municipalities would allow companies to use emissions reductions generated and quantified as a result of activities undertaken as part of the Campaigns for Clean Air and Development. The reductions would be used to create a growth allowance which would be used in lieu of NSR offsets.

The municipal activities are surplus to the reductions included in the Illinois attainment plan. Therefore, reductions will exceed what is required by the Illinois EPA and USEPA to demonstrate attainment and gain approval into the State Implementation Plan (SIP). Chicago proposes retiring 40% of the emission reductions associated with these activities toward maintaining attainment while making the rest available to sources which locate in smart growth zones. The combination of the percentage retired before source use and the 1.3 ton reduction per 1 ton emitted by the source would show a greater overall emission reduction than the currently required 1.3 ton reduction per 1 ton emitted.

The growth allowance would be available to companies who locate in smart growth zones. A smart growth zone will be defined in a Final Project XL Agreement, but would generally be an area in need of economic development and which advances environmental improvements particularly with respect to clean air.

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