1. Model Rule/MOU Update Colleen Delaney, Utah DAQ WESTAR Model Rule Working Group September 18, 2002

2. Backstop Trading Program Model Rule/MOU Update Needed to: Ensure Model Rule/MOU contain all necessary provisions –Incorporate ‘Supplement to the Annex’ –Incorporate EPA comments –Identify any unresolved policy issues Ensure consistency with state and tribal regulatory structures

3. Progress to Date: Assemble Working Group Refine Work Plan Review Model Rule/MOU in detail Review other Trading Programs (OTC, NOx SIP call, Acid Rain) Begin Model Rule/MOU revision

4. Working Group Corky Martinkovic, AZ Rita Trujillo, NM Colleen Delaney, Lenore Epstein, UT Tina Jenkins, WY Bob Gruenig, NTEC Amy Mignella, White Mountain Apache Tribe Lee Alter, WRAP Lily Wong, EPA Region 9 Laurel Dygowski, EPA Region 8 Kristin Gaston, Bob Lebens, WESTAR

5. Work to be done: Finish revisions to Model Rule, SIP/TIP Template and MOU Provide Working Draft for AMC/MTF Review Hold Workshop to educate broader audience

6. Model Rule Challenges Independent jurisdictions trying to establish a regional program – no regional authority Need to agree upon common elements of the program Uncertainty about participation Timing (submittals, and EPA approval)

7. First Issue: Enforceability U.S. Constitution Art I, § 10, cl. 3 “No State shall, without the Consent of Congress, enter into any Agreement or Compact with another State…” Clean Air Act § 102(c) “No such agreement or compact shall be binding or obligatory upon any State a party thereto unless and until it has been approved by Congress”  Based on these constraints, an MOU would not be enforceable without Congressional approval

8. Enforceability Resolution It is not necessary for the MOU to be enforceable, because the rule and the SIP become the enforceable mechanism. The SIP/TIP/FIP will ensure that the states and tribes meet their commitments, and The Rule will ensure that the sources and market traders meet their commitments

9. How Will Enforceability Issue Affect Program? Need more clarification of how enforcement will work –EPA oversight –Citizen suit provisions (does not apply to tribes) –How would this work for tribes? Plan must be federally-approved to become enforceable Timing of EPA approval of SIPs must be coordinated

10. MOU Still Needed? The MOU is a demonstration of good faith by the states and tribes that sign the agreement –It provides additional support to show EPA that the states and tribes have worked together in the development of this program and, therefore, it is more likely to be successful on a regional level

11. MOU Still Needed? Outline common understandings, schedules Possibly use to establish intent to pursue 309 option –May create difficulties because rulemaking process may be used to make decision –Timing? Ceremony of signing MOU may be important

12. Division into SIP and Rule All elements of the program must be enforceable States cannot regulate themselves –Rule establishes requirements for sources, state enforceable –SIP text outlines state’s commitment Rule and SIP text become federally enforceable

13. Division into SIP and Rule Recommendation –Split model rule into two parts: Rule language that would apply to sources SIP language that would apply to states and would also establish the commitment to develop regional inventories and to accept information from other states –Write rule and SIP text so that they apply to an individual state or tribe

14. Examples of Regional Issues addressed in Model Rule Compliance with Milestone –Common and consistent process for making decision about program trigger –Public comment –Official determination Each state and tribe must make the decision in their jurisdiction – no regional authority

15. Examples of Regional Issues addressed in Model Rule SIP Revisions –EPA routinely requires SIP revisions for program changes Need to assure that integrity and goals of program not affected –Timing issues for regional programs Multiple states and tribes may need to make the same change Regional process required

16. Examples of Regional Issues addressed in Model Rule SIP Revisions (cont) –Model Rule/SIP establishes an interim adjustment process In cooperation with EPA Public comment Rely on 5-year SIP reviews to incorporate changes into SIP –Regional recommendation needed 1½ to 2 years before SIP revision due

17. Examples of Regional Issues addressed in Model Rule Tracking System Administrator –Has no authority –States and Tribes are responsible to ensure that these functions are accomplished –Contract could outline duties –Rule rewritten to limit the role of the tracking system administrator

18. Examples of Regional Issues addressed in Model Rule Allowance Transfers –State and tribal rules establish what sources within their jurisdiction may do –No authority over account holders in other jurisdictions Allowances only have value if they can be used by a source so economics will require sellers to abide by the rules that buyers require –Existing contract law important