Detailed Information on the
EPA Acid Rain Program Assessment

Program should develop efficiency measures to track and improve overall program efficiency. Measures should consider the full cost of the program, not just the federal contribution.

Remove statutory requirements that prevent program from having more impact including (but not limited to) barriers that; set maximum emissions reduction targets, exempt certain viable facilities from contributing, and limit the scope of emission reduction credit trading. The Administration's Clear Skies proposal adequately addresses these and other statutory impediments. Program should work as appropriate to promote the enactment of the Clear Skies legislation.

Measure: Percent change in number of chronically acidic waterbodies in acid-sensitive regions.

Explanation:Progress is measured as percent reduction from 2001 baseline number of waterbodies. Acid-sensitive regions include the Northeast, Mid-Atlantic, and Upper Midwest. The program purpose is to implement Title IV of the Clean Air Act. Congress states one of the purposes as being: "??to reduce the adverse effects of acid deposition through reductions in annual emissions of sulfur dioxide ??" This measure quantifies the reduction of acid deposition to waterbodies in acid-sensitive regions.

Measure: Sulfur dioxide emissions from electric power generation sources

Explanation:The program purpose is to implement Title IV of the Clean Air Act. Congress states one of the purposes as being: "??to reduce the adverse effects of acid deposition through reductions in annual emissions of sulfur dioxide ??" This measure quantifies the reduction of SO2 emissions achieved by the Program. Progress is measured as tons reduced from 1980 baseline of 17.4 million tons. The statutory SO2 emissions cap for year 2010 and later is at 8.95 million tons which is approximately 8.5 million tons below 1980 emissions baseline. The 1980 SO2 emissions inventory, which was developed by the National Acid Precipitation Assessment Program (NAPAP), totals 17.4 million tons for electric utility sources.

Measure: Tons of sulfur dioxide emitted from electric power generation sources

Explanation:Progress is measured as tons reduced from 1980 baseline of 17.4 million tons.

Measure: Percent change in annual average nitrogen deposition

Explanation:Data is mainly from Eastern US and is reported as 3-year averages due to varying meteorological conditions and other factors. Progress is measured as percent reduction from 1990 baseline. Sulfur and nitrogen deposition contribute to acidification of lakes and streams, making them unable to support fish and other aquatic life. Reductions in both total sulfur deposition and total nitrogen deposition are critical to reducing the number of chronically acidic water bodies (which is a long-term program performance measure).

Measure: Percent change in annual average sulfur deposition.

Explanation:Data is mainly from Eastern US and is reported as 3-year averages due to varying meteorological conditions and other factors. Progress is measured as percent reduction from 1990 baseline. Sulfur and nitrogen deposition contribute to acidification of lakes and streams, making them unable to support fish and other aquatic life. Reductions in both total sulfur deposition and total nitrogen deposition are critical to reducing the number of chronically acidic water bodies (which is a long-term program performance measure).

Is the program purpose clear?

Explanation: Program purpose is to implement the requirements of Title IV of the Clean Air Act (CAA). The purposes of the title, as stated by Congress, are "to reduce the adverse effects of acid deposition through reductions in annual emissions of sulfur dioxide of ten million tons from 1980 emission levels and, in combination of other provisions of this Act, of nitrogen oxides emissions of approximately two million tons from 1980 emission levels" and "to encourage energy conservation, use of renewable and clean alternative technologies, and pollution prevention as long-range strategies."

Evidence: Sections 401(a) and (b), Findings and Purposes of Title IV of the CAA. Title IV expressly limits impact this program can have by providing explicit numeric reduction requirements and caps.

Does the program address a specific and existing problem, interest, or need?

Explanation: Program addresses the need to reduce acid deposition because it represents "a threat to natural resources, ecosystems, materials, visibility, and human health" and "reduction of total atmospheric loading of sulfur dioxides and nitrogen oxides will enhance protection of the public health and welfare and the environment." The program has made significant progress in achieving the emission reduction requirements specified in Title IV of the CAA. The statutorily-mandated reduction in nitrogen oxides (NOx) was achieved in 2000. For sulfur dioxide (SO2), the program is on track to achieve the nationwide emissions cap in 2010 as required by the statute. Recent assessments show that further reductions in both pollutants beyond those authorized in the statute are needed to address the full extent of the persistent public health and environmental problems associated with acid deposition and precursor emissions.

Evidence: Section 401(b); Purposes of Title IV of the CAA states Congressional intent to address threats from acid deposition. In the 1980s, extensive research was conducted on the causes and effects of acid deposition under the auspices of the Congressionally mandated National Acid Precipitation Assessment Program (NAPAP). NAPAP established that the effects were broad including a range of endpoints such as ecosystems, visibility, human health, and materials. NAPAP also established that long-range transport of SO2 and NOx emissions and their byproducts contribute to the acid deposition problem over large geographic regions. In 1990, Congress enacted significantly amended title IV of the CAA in response to these findings. (NAPAP, 1991. Driscoll et al, 2001)

Is the program designed so that it is not redundant or duplicative of any Federal, state, local or private effort?

Explanation: The Acid Rain Program is the only air pollution control program designed to cut total annual atmospheric loadings of both SO2 and NOx through emissions trading. It is the only national program that addresses NOx emissions from stationary sources throughout all months of the year. There are other emission reduction-related programs or efforts that employ trading schemes, such as the Ozone Transport Commission (OTC) and the Chicago Climate Exchange (CCX), but they are structured somewhat differently and do not have the same scope.

Evidence: State and local programs cannot regulate sources of pollution outside their jurisdictions. The program addresses sources of precursor emissions which are transported long distances. The States retain responsibility for all other aspects of their programs such as attainment of the National Ambient Air Quality Standards, New Source Review and Title V permitting. Program also controls NOx over entire year, which is particularly important for eliminating chronic and episodic acidity in sensitive lakes and streams, reducing nitrogen loading and eutrophication in coastal waters, and restoring visibility in national parks.

Is the program design free of major flaws that would limit the program's effectiveness or efficiency?

Explanation: The program operates efficiently and effectively within the constraints of the CAA and is the model for other trading programs, but program effectiveness is limited by the Title IV requirements. The program is not free of design flaws because Title IV expressly limits the extent of the problem that can be addressed by the program by specifying maximum levels of reductions. It has been shown that the program could effectively make further progress in addressing its human health and environmental protection mission if the Administration's Clear Skies legislation were passed. The legislation would broaden the scope and expand the emission reduction targets that currently constrain the program. Clear Skies is modeled on the cap and trade provisions of the Acid Rain Program. It would cut both SO2 and NOx emissions from power plants by approximately 70% more than the Acid Rain Program goal levels. These additional reductions, when fully implemented, will result in achieving the environmental outcome goals of both programs.

Evidence: Testimony of EPA Administrator Whitman before Committee on Environment and Public Works, U.S. Senate, April 8, 2003. 1990 NAPAP study included review and evaluation of the theory and history of market-based programs and their advantages over command-and-control programs. A conclusion from this study was that emissions trading can provide one of the strongest incentives to achieve least-cost emission reductions (Vol. IV., Section 7, "Electric Utilities: Alternative Emission Cost Control Strategies, pp. 25-233 to 25-260). Related studies: Stavins (1989), Hahn and Hester (1989), and Tietenberg (1985).

Is the program effectively targeted, so program resources reach intended beneficiaries and/or otherwise address the program's purpose directly?

Explanation: Currently, program resources effectively address the program purpose directly. All sources covered by Title IV are being addressed. Cost effective SO2 and NOx emissions reductions have been achieved, the volume of allowance trading is robust, and the price of allowances is stable. To assure continued progress toward public health and environmental goals and proper targeting of future program resources, program coverage needs to be extended to all fossil fuel-fired power generation sources and emissions limitations must change as proposed under the Clear Skies Act.

Evidence: Acid deposition has decreased in the eastern U.S., as measured by dry and wet monitoring networks, and sulfate concentrations in some northeastern lakes and streams have decreased. EPA Acid Rain Program 2001 Progress Report, EPA-430-R-02-009, pages 23-27 and 29-33, and EPA-620/R-03-001. Emissions of SO2 from utilities are capped but increasing emissions from the growth and use of non-utility power generation sources not covered by this program impede the ability to achieve the environmental and human health outcomes. For NOx, there is no cap; thus, as power generation increases, NOx emissions will climb.

Does the program have a limited number of specific long-term performance measures that focus on outcomes and meaningfully reflect the purpose of the program?

Explanation: Existing goals directly reflect statutory requirements. New outcome goal monitoring acidity of lakes in certain regions of the country has been accepted by OMB as a useful outcome measure for the program.

Evidence: One existing long-term goal related to the SO2 emission requirements in Title IV will be continued. The new outcome focuses on chronic acidity of water bodies. Further work will be needed to determine supporting annual targets. The implementation of this new goal at this point is contingent upon the enactment of Clear Skies legislation.

Does the program have ambitious targets and timeframes for its long-term measures?

Explanation: The emission reduction targets and timeframes set by Congress for SO2 and NOx were considered ambitious when the program was established in 1990. This action was precedent-setting not only due to the large size of the emissions reduction, but also because it was the first time emissions from a major industrial sector were capped. Furthermore, this was the first time NOx emission reductions were required at existing units. Program has either achieved the statutory goals ahead of schedule or is on target to meet remaining goals by 2010. Statutory requirements limit the ability of the program to increase the ambitiousness of its goals. Acid deposition and related problems which program is designed to address still exist and legislative action is required for adequate protection of public health and the environment.

Evidence: Statutory emission reductions requirements and timing: Title IV sections 404-406, 409-410. New goals and extended timeframes and targets have been proposed to address need for further action but, Clear Skies passage is necessary for their implementation. Congress is currently considering the Clear Skies Act of 2003, legislation which would reduce the current SO2 emissions cap by approximately 70%, a well as establishing the first-ever power sector annual NOx emissions cap at levels approximately 70% below 2000 levels.

Does the program have a limited number of specific annual performance measures that demonstrate progress toward achieving the program's long-term measures?

Explanation: Several adequate annual measures exist that support achievement of the program's long-term goals. They relate directly to statutory requirements.

Evidence: One annual performance measures sets annual SO2 emission reduction targets. This measure directly supports the SO2 emissions long-term goal and indirectly supports the chronic acidity long-term goal. Two other annual performance goals focus on the reduction of sulfur and nitrogen concentrations and deposition. Both measures directly support the chronic acidity long-term goal.

Does the program have baselines and ambitious targets and timeframes for its annual measures?

Explanation: Program has revised targets for annual SO2 emission reduction goal to reflect historic data that shows general increasing trend in emission reductions year to year. Baseline exists: reduce annually from 17.4 million tons SO2 emissions to 8.9 million (8.5 million ton reduction).

Evidence: See Clean Air Act Sec. 401, 403, and 407 of Title IV for overall goals and the Agency's Fiscal Year 2002 Annual Report (EPA-190-R-03-001, page II-12) for annual performance goals.

Do all partners (including grantees, sub-grantees, contractors, cost-sharing partners, etc.) commit to and work toward the annual and/or long-term goals of the program?

Explanation: The program uses contractors, state grantees (via a portion of the 105 grant), other federal agencies (NOAA, USGS) and grantees in the academic community for data analysis and collection assistance. Federal cost-sharing partners are for data collection networks only, not program implementation. Contractors and grantees (other than academic) are explicitly committed to working toward the long-term goals of the program through contract and annual grant agreements.

Evidence: EPA contract and grant procedures - performance-based contracting. EPA and state grantees have a Core Performance Measures agreement, wherein states are responsible to report progress on meeting program goals.

Are independent and quality evaluations of sufficient scope and quality conducted on a regular basis or as needed to support program improvements and evaluate effectiveness and relevance to the problem, interest, or need?

Explanation: Since its inception, the Acid Rain Program has been evaluated regularly by external bodies to determine how it is accomplishing its mission and meeting its long-term goals. In addition to evaluations that focus on its cost-effectiveness, other evaluations of the Acid Rain Program have documented the program's benefits: reducing adverse human health impacts, improving visibility, reducing acid deposition, and ecosystems response to those reductions.

Evidence: GAO: Air Pollution: Allowance Trading Offers an Opportunity to Reduce Emissions at Less Cost, 1994 and Acid Rain: Emissions Trends and Effects in the Eastern United States, March 2000. Ellerman, et al. at MIT/CEEPR: Emissions Trading under the U.S. Acid Rain Program: Evaluation of Compliance Costs and Allowance Market Performance (1997) and Markets for Clean Air: The U.S. Acid Rain Program (2000). Holland, et al. 1999. Trends in Atmospheric Sulfur and Nitrogen Species in the Eastern United States for 1989-1995; Lynch, et al. 2000. Changes in Sulfate Deposition in Eastern USA following Implementation of Phase I of Title IV of the Clean Air Act Amendments of 1990; Driscoll, et al. 2001. Acidic Deposition in the Northeastern U.S.: Sources and Inputs, Ecosystem Effects, and Management Strategies; Driscoll, et al. 2003. Nitrogen Deposition in the Northeastern United States: Sources, Effects, and Management Options; Burtraw, et al. 1997. The Costs and Benefits of Reducing Acid Rain.

Are Budget requests explicitly tied to accomplishment of the annual and long-term performance goals, and are the resource needs presented in a complete and transparent manner in the program's budget?

Explanation: The Program uses annual workplans to specify program activities. There is no tracking system that shows explicitly how these workplans tie to the various program annual and long-term goals and objectives that the program uses - no reports are available to identify which activities (and their associated funds) support which program goal. EPA managers do use up-to-date financial, policy, and regulatory information to make decisions on program management and performance. The Agency's financial information is integrated with performance and other program data to support day-to-day decision making of managers and executives.

Evidence:  

Has the program taken meaningful steps to correct its strategic planning deficiencies?

Explanation: Strategic goals, decisions, and projects are reviewed annually at the program level. Annually, program Workplans are updated and revised as appropriate. When deficiencies are identified, new workplans are developed to address the issue. The program contributes to and participates in the agency-wide strategic plan revision process (every three years). In response to the Administration's identification of the need to expand the SO2 and NOx emissions reductions to adequately protect human health and the environment, the program has been working to develop measurable long-term performance goals for environmental outcomes.

Evidence: EPA's ongoing strategic plan update and activities. Program Workplans.

Are all regulations issued by the program/agency necessary to meet the stated goals of the program, and do all regulations clearly indicate how the rules contribute to achievement of the goals?

Explanation: Provisions in rules issued subsequent to the core program rules are needed: intended to streamline or otherwise improve upon the original regulations or address regulatory gaps. Virtually all of the rule revisions have lowered the program's administrative costs and/or the regulatory burden to industry while, at the same time, reinforcing program goals.

Evidence: To make it easier for owners/operators of regulated sources, stakeholders, and others to follow successive rule changes, the program has published two unofficial consolidated versions of Part 72 (Permits) and Part 75 (Continuous Emissions Monitoring) between CFR Publications. Rule preambles are written in plain English and indicate how the rule would contribute to the achievement of specific program goals. See 61 FR 1442-1479 and 61 FR 67112-67162. Proposed and final rules for second phase of the Acid Rain NOx Emission Reduction Program (61 FR 1442-1479, January 19, 1996, and 61 FR 67112-67162, December 19, 1996). See: www.epa.gov/airmakets/monitoring/consolidated .

Does the agency regularly collect timely and credible performance information, including information from key program partners, and use it to manage the program and improve performance?

Explanation: For emissions goals, program's Emissions Tracking System (ETS) receives and processes SO2, NOx, and other emission-related data quarterly. Data is submitted electronically from continuous monitors and is subject to quality assurance checks at multiple points in the process. For deposition/concentration goals: Program manages the operation of the Clean Air Status and Trends Network (CASTNet), a dry deposition monitoring network, and provides critical operational support for the National Atmospheric Deposition Program/National Trends Network(NADP/NTN), a wet deposition network.

Evidence: EPA's Quarterly Report Review Process. Electronic data file QA checks are described at www.epa.gov/airmarkets/reporting. Information generated from CASTNet and NADP networks was used to create the EPA Acid Rain Program 2001 Progress Report (EPA-430-R-02-009). Data and analysis related to program efforts contributed significantly to the identification of the need for further protection from acid rain - the Clear Skies legislative proposal.

Are Federal managers and program partners (grantees, subgrantees, contractors, cost-sharing partners, etc.) held accountable for cost, schedule and performance results?

Explanation: Individual EPA program managers develop and submit to the management team annual project plans called workplans. These plans identify, prioritze, and organize the work they will accomplish with a given allocation of resources; they are reviewed and updated throughout the year and are the major management tool for tracking performance and expenditures. Plans outline resources needed, expected outcomes and milestones, and identify the pertinent organizational goals and objectives. Performance reviews for program level managers are based, in part, on accomplishment of these projects. Performance standards for managers include performance measurements for objectives that relate to the program goals but do directly reflect the goals themselves. The program goals are only explicitly included in the Division Director's performance plan.

Evidence: Director's and managers individual performance plans document related goals. Annually, EPA develops specific performance measures with associated activities and outputs.

Are all funds (Federal and partners') obligated in a timely manner and spent for the intended purpose?

Explanation: Annually the program develops workplans that reflect how it plans to spend its budget. Within the program, obligations can be tracked at the workplan level. At the highest level of aggregation, obligations and expenditures are tracked in the Agency's Integrated Financial Management System (IFMS) against the Operating Plan.

Evidence: Acid Rain Program workplans and associated obligations tracking reports. Agency annual financial statements. IFMS reports

Does the program have procedures (e.g., competitive sourcing/cost comparisons, IT improvements, approporaite incentives) to measure and achieve efficiencies and cost effectiveness in program execution?

Explanation: No efficiency measures are currently in use and no clear procedures exist whereby the cost-effectiveness/efficiency of the overall program is tracked and regularly evaluated by the program. Program should consider full cost of program (both federal funds and funds spent by industry) in evaluating efficiency. Program also does not regularly examine the interal efficiency of the program to ensure that all direct program funds (federal dollars) are being used as cost effectively as possible. Contracts are awarded through a competitive process. Beginning in FY 2003 the program will begin awarding their small amount of grants (~$300K) competitively by implementing a new EPA-wide policy.

Evidence: Agreement has not been reached on which efficiency measures the program will include in their annual plans.

Does the program collaborate and coordinate effectively with related programs?

Explanation: The program collaborates and coordinates with many partners in other federal agencies, state agencies, foreign governments, and the academic research community on emission control programs, environmental monitoring and assessment, and the development and application of market-based policy instruments. The program also collects feedback and performance data from stakeholders and partners. The program uses the data and feedback to re-evaluate its workplans to refine program efforts. Identified problems are addressed by developing new projects to correct or improve the program.

Evidence: Program staff maintain dialogue with the regulated industry and financial community through conferences and with States on monthly programmatic conference calls. Examples of improvements: program provides instant feedback to sources to identify data reporting problems, format errors, and inconsistencies (www.epa.gov/airmarkets/reporting); online transactions and internet reporting; and is developing regulation changes and software to help reduce costs. Examples of changes made as result of feedback from stakeholders: providing instant feedback to sourses on reporting problems, format errors, and inconsistencies and development of "Online Allowance Transfers (OATS)." Collaboration with other agencies on CASTNet and NADP has lead to better integrated networks and reduced redundancy in data collection and analysis.

Does the program use strong financial management practices?

Explanation: The program follows EPA's financial management guidelines for committing, obligating, reprogramming, and reconciling appropriated funds. Agency officials have a system of controls and accountability, based on GAO and other principles, to ensure that improper payments are not made. At each step in the process, the propriety of the payment is reviewed. EPA trains individuals to ensure that they understand their roles and responsibilities for invoice review and for carrying out the financial aspects of program objectives. EPA received an unqualified audit opinion on its FY 02 financial statements and had no material weaknesses associated with the audit. The Acid Rain Program has no material weaknesses as reported by the Office of the Inspector General (OIG) and has procedures in place to minimize erroneous payments.

Evidence: Budget Automation System (BAS) reports. Acid Rain obligation and budget reports. Unqualified audit opinion on EPA FY 02 financial statements. 2002 Advice of Allowance Letter and Integrity Act Report. Agency resource management policies (posted on agency intranet).

Has the program taken meaningful steps to address its management deficiencies?

Explanation: Traditional management issues are addressed through weekly meetings, with input from staff. The overall Office of Atmospheric Programs (the Acid Rain program is within this Office) management team meets twice per year to identify and address higher level management issues of concern. Management retreats are held to review and evaluate program management efforts. Retreats involve various levels of management participation. Knowledge transfer and succession planning are addressed primarily by replacing most attrition with junior staff. Program provides training/mentoring opportunities to ensure that staff are available to compete whenever promotions become available. The program participates in agency-wide human capital and financial management PMA efforts and is working to fully convert to an e-Gov operating approach for program transactions.

Evidence: OIG Audit, The Effectiveness and Efficiency of EPA's Air Program (February 27, 1998). OAP implemented recommendations from this report. Program expanded involvement in agency Capital Planning and Investment Control (CPIC) process in FY03 to address IT improvements necessary to deal with increasing transaction volume and emissions reporting. Division recently completed a 360 review of its management team which involves surveying each managers' subordinates, peers, and supervisors to assess effectiveness. Third-party assistance was used to develop survey.

Did the program seek and take into account the views of all affected parties (e.g., consumers; large and small businesses; State, local and tribal governments; beneficiaries; and the general public) when developing significant regulations?

Explanation: Program has pursued partnerships, dialogue, and new ways of doing business with industry and the environmental community. Acid Rain Advisory Committee (ARAC) helped facilitate implementation. After publication of rules, dialogue continued. Permitting: pre-application meetings served as a primary vehicle for EPA-industry dialogue - provided opportunities for utilities to ask questions and receive written responses from EPA headquarters and regional personnel. For monitoring and data system development activities, EPA hosted numerous training sessions, attended industry sponsored meetings, provided policy guidance in these areas, developed and distributed software to assist industry.

Evidence: Immediately following enactment, the program initiated an intensive dialogue with the affected stakeholders through the ARAC. The ARAC was composed of 44 individuals representing a variety of different organizations and interests, including large and small utilities, coal and gas interests, state air agencies and public utility commissions, environmental organizations, and academia. For six months, the members of the Advisory Committee were actively involved in devising solutions to problems and offering critiques of various regulatory options for implementing Title IV. Outreach activities have included participation in EPA and industry sponsored training and conferences, discussing rate making issues with rate regulators, holding the annual allowance auctions through the Chicago Board of Trade, and disseminating information on the auction process, energy conservation, renewable energy, and the allowance and emissions tracking systems.

Did the program prepare adequate regulatory impact analyses if required by Executive Order 12866, regulatory flexibility analyses if required by the Regulatory Flexibility Act and SBREFA, and cost-benefit analyses if required under the Unfunded Mandates Reform Act; and did those analyses comply with OMB guidelines?

Explanation: Requirements in existence at the time implementing regulations were issued were met. The Regulatory Impact Analysis (RIA) of the Final Acid Rain Implementation Regulations, October 19, 1992, was developed in compliance with Executive Order 12291. Elements of the RIA met Regulatory Flexibility Act requirements.

Evidence: Chapter 4 of the RIA presented the costs of the program with and without an allowance trading system and included an analysis of the administrative burden to states. Chapter 5 of the RIA estimated changes in electricity costs and the impacts of the regulation on utilities and independent power producers. Complying with the Regulatory Flexibility Act, Chapter 5 of the RIA estimated the impact of the Acid Rain Program on small utilities, small municipalities, and small businesses in general. Chapter 6 of the RIA described the expected environmental benefits and referred to the 1990 National Acid Precipitation Assessment Program's (NAPAP's) Integrated Assessment. This Assessment summarized the findings of the NAPAP State of Science study which documented the damage caused by acid rain and dry deposition, and enumerated the expected benefits of a program to reduce acid rain and acidic deposition. See also 61 FR 1453-1455, January 19, 1996; 61 FR 67114-67116, December 19, 1996; Air Docket A-95-28.

Does the program systematically review its current regulations to ensure consistency among all regulations in accomplishing program goals?

Explanation: In the decade following promulgation of final core rules, the program has proposed and finalized over a dozen rules that streamline or otherwise improve upon the original regulations. The process of systematically reviewing the current rules and making improvements, generally through rule revisions, spanned all parts of the program: applicability, permitting, continuous emissions monitoring, allowance accounting, and excess emissions/penalties. Virtually all of the rule revisions have lowered the program's administrative costs and/or the regulatory burden to industry while, at the same time, reinforcing program goals. Program in continuing such progress through harmonization of Acid Rain and NOx Budget Program monitoring, emissions reporting, and account representative requirements and to maximize the use of efficient e-Gov practices.

Evidence: 40 CFR Parts 72, 73, 75, 77, and 78; 58 FR 3590-3766, January 11, 1993. Regulations promulgated to improve the program include: five revisions to Part 75 (Continuous Emissions Monitoring) issued 60 FR 26510 (May 17, 1995), 61 FR 59142 (Nov 20, 1996), 63 FR 57356, 573581 and 57499 (Oct 27, 1998), 64 FR 28564 (May 26, 1999), and 67 FR 40394 (June 12, 2002); and three revisions to Part 72 (Permits), Part 77 (Excess Emissions) and Part 78 issued 62 FR 55461 (Oct 24, 1997), 63FR 68400 (Dec 11, 1998), and 64 FR 6840 (Dec 11, 1998). To make it easier for owners/operators of regulated sources, stakeholders, and others to follow successive rule changes, the program has published two unofficial consolidated versions of Part 72 and Part 75 between CFR Publications: one in January 2000 and the second in August 2002 (see www.epa.gov/airmakets/monitoring/consolidated).

Are the regulations designed to achieve program goals, to the extent practicable, by maximizing the net benefits of its regulatory activity?

Explanation: The program reduces emissions through a least-cost program of trading and banking. Program costs have been less then the originally estimated.

Evidence: A. Denny Ellerman, et al. 2000. Markets for Clean Air: The U.S. Acid Rain Program. Cambridge Univ. Press and OMB, 'Draft 2003 Report to Congress on the Costs and Benefits of Federal Regulations,' Federal Register, Feb. 3, 2003, especially pages 5507; 5500.

Has the program demonstrated adequate progress in achieving its long-term outcome performance goals?

Explanation: According to PART guidance, nothing higher than a "small extent" can be given for this question because the program received a "Yes" for question 2.1 and a "No" for question 2.2. Program has made consistent progress on its existing long term goals and is on track to meet the 2010 SO2 emission reduction target.

Evidence: EPA Acid Rain Program 2001 Progress Report (EPA-430-R-02-009, pages 14, 23-27, and 29-33).

Does the program (including program partners) achieve its annual performance goals?

Explanation: Program has met all SO2 and NOx emission reduction annual targets to date. In 2001, annual SO2 emissions from utility sources were reduced by 6.9 million tons below the 1980 baseline, which represented an additional reduction of 570,000 tons over the previous year. In 2001, annual NOx emissions from coal-fired utility sources were 4.1 million tons, which represented a reduction greater than the program's 2 million ton target.

Evidence: Program reduced annual SO2 emissions by utilities from 17.4 million tons in 1980 to 11.2 million tons in 2000 and to 10.6 million tons in 2001 and annual NOx emissions from coal-fired utilities by more than the program's 2 million ton target to 4.1 million tons in 2001. Agency's Fiscal Year 2002 Annual Report (EPA-190-R-03-001, page II-12). EPA Acid Rain Program 2001 Progress Report (EPA-430-R-02-009, pages 5-18). In 2001: all but two of the 2,792 units that underwent annual reconciliation for SO2 had sufficient allowances in their accounts to cover emissions and only one of the 1,045 units affected by the NOx program component failed to meet its emission limit.

Does the program demonstrate improved efficiencies or cost effectiveness in achieving program performance goals each year?

Explanation: Though program itself does not employ efficiency/cost-effectiveness measures or track internal or external efficiency on a regular basis external reviews have indicated the cost-effectiveness of the program. Program has maintained near 100% compliance since the start of the program with an average annual program budget of approx. $13 million. Program has achieved 40% of the reductions expected through the 1990 Clean Air Act Amendments (CAAA) with less than 5% of the overall EPA Office of Air and Radiation resources (Agency's Fiscal Year 2002 Operating Plan). Evaluation of benefit-cost ratios of the CAAA concluded that was good investment.

Evidence: Agency's FY 2002 Operating Plan, Fiscal Year 2003 Annual Performance Plan, and Congressional Justification. Charles River Associates, Benefit-Cost Ratios of the CAAA by CAAA Title , No. D02050-00, 1999. Examples of external evaluations that examined and supported the Acid Rain Program's cost-effectiveness: GAO-Air Pollution - Allowance Trading Offers an Opportunity to Reduce Emissions at Less Cost, 1994; GAO-Acid Rain - Emissions Trends and Effects in the Eastern United States, March 2000; Ellerman, et al. at the Massachusetts Institute of Technology Center for Energy and Environmental Policy Research (MIT/CEEPR) - Emissions Trading under the U.S. Acid Rain Program: Evaluation of Compliance Costs and Allowance Market Performance (1997) and Markets for Clean Air: The U.S. Acid Rain Program (2000)

Does the performance of this program compare favorably to other programs, including government, private, etc., that have similar purpose and goals?

Explanation: Several programs exist with similar structures but have different scopes. The Acid Rain program is the model for these other market-based programs that include a specific emissions cap as well as emissions trading and banking. State Agencies have elected to follow this model in their Ozone Transport Commission (OTC) and NOx Budget Programs to reduce ozone nonattainment. Furthermore, they have selected the Acid Rain Program staff to operate their program. Success of program in terms of flexibility and cost effectiveness is also cited by private industry as a preferable regulatory model.

Evidence: Testimony by Daniel Chartier, Former Emissions Trading Manager, Wisconsin Electric, for the Congressional Joint Economic Committee, July 1997. Statement by Gary Hart, Manager, Clean Air/SO2 Allowances, Southern Company Services, in Emissions Trading: Environmental Policy's New Instrument, edited by Richard Kosobud. New York: John Wiley & Sons, Inc., 2000

Do independent and quality evaluations of this program indicate that the program is effective and achieving results?

Explanation: Many relevant independent evalutions have indicated that the program is effective. Program is effective in achieving least-cost emission reductions, which result in significant benefits to human health and environment.

Evidence: GAO. Dec. 1994. AIR POLLUTION: Allowance Trading Offers an Opportunity to Reduce Emissions at Less Cost, p.58. Carlson, et al. 2000. Sulfur Dioxide Control by Electric Utilities: What Are the Gains from Trade?, p. 1292. Burtraw, et al. 1997. The Costs and Benefits of Reducing Acid Rain, pp. 22, 26. Stoddard, et al. 2003. Response of Surface Water Chemistry to the Clean Air Act Amendments of 1990. Chestnut, et al. 1997. Economic Benefits of Improvements in Visibility: Acid Rain Provisions of the 1990 Clean Air Act Amendments. Lynch, et al. 2000. Changes in Sulfate Deposition in Eastern USA following Implementation of Phase I of Title IV of the Clean Air Act Amendments of 1990;

Were programmatic goals (and benefits) achieved at the least incremental societal cost and did the program maximize net benefits?

Explanation: Independent evaluations of the Acid Rain program's achievements indicate that benefits are being achieved at the least cost.

Evidence: Cost savings from Command and Control alternatives. Ellerman, et al. 2002. Markets for Clean Air: The U.S. Acid Rain Program, p. 296, and A. Denny Ellerman, et al. 2000. Markets for Clean Air: The U.S. Acid Rain Program. Cambridge Univ. Press, 282. Early cost estimates for full implementation of Title IV ranged from $2.3 billion to $6.0 billion. Current estimates are significantly lower, ranging from $1.0 billion to $1.4 billion (1995$). (A. Denny Ellerman. 2003. Ex Poste Evaluations of Tradeable Permits: The U.S. SO2 Cap and Trade Program.). Human health benefits of program's SO2 reductions estimated at $46 billion and may be as high as $80 billion. (2001$) (Bart D. Ostro, et al. 1999. 'Estimating the Effects of Air Pollutants on the Population: Human Health Benefits of Sulfate Aerosol Reductions under Title IV of the 1990 Clean Air Act Amendments' Air Pollution and Health, edited by Stephen T. Holgate, et al. Academic Press, 911.)