EPA
ACID RAIN
PROGRAM
                   2001
               PROGRESS
                 REPORT
         November 2002

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       This Progress Report replaces the Compliance Report and the Emissions Scorecard used in pre-
       vious years to report on the results of the Acid Rain Program. All data and results from the Acid
       Rain Program are now compiled in a single document that reports information on:

                     4  emission levels
                     4  compliance with the SO2 and NOx components of the program
                     4  SO2 allowance prices
                     4  emissions monitoring
                     4  air quality and deposition monitoring
                     4  environmental and  human health effects and benefits

       This Progress Report will be published annually by EPA to update the public on the status of
       implementation of the Acid Rain Program and our progress towards achieving our  environmental
       goals. Detailed unit-level emissions data are available on our website at http://www.epa.gov/air-
       markets/emissions/index. Our new query tool that provides access to a variety of EPA emissions
       data is available at http://cfpub.epa.gov/gdm. For more information  on  the Acid Rain  Program,
       including information on SO2and NOX emissions, acid deposition monitoring, and the environ-
       mental effects of acid deposition, you can visit our website at http://www.epa.gov/airmarkets.
                                      EPA Acid Rain Program
                                       2001  Progress Report
                                         EPA-430-R-02-009

                                    Clean Air Markets Program
                                    Office of Air and Radiation
                              U.S.  Environmental Protection Agency

                                          November, 2002
                                     \NAIR
                            MARKET  PROGRAMS
                                                                ppcrtf
Photo credits (clockwise, from upper left): USDA; SoftKey International; VTweb.com; Rick Webb; SoftKey International; SoftKey Internation-
al; Photodisc.com (center)

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                       Table  of Contents
Introduction	1
      An Innovative Cap and Trade Program for 862                 2
      The NOX Program	2
      Why Worry about Acid Rain?	3

The S02 Program	5
      Emissions	5
      Compliance	7
      Geographic Trends in S02 Emissions	9
      S02 Allowance Market	12

The NOX Program	14
      Emissions	14
      Emission Limits	16
      Compliance	18
      Geographic Trends in NOX Emissions	18

Monitoring Results	22
      Emission Monitoring	 22
      Air Quality and Deposition in 2001	23
      Clean Air Mapping and Analysis Program (C-MAP)	27
      Freshwater Monitoring	27

Environmental Improvement and Trends	 29
      Improved Air Quality and Reduced Acid Deposition	29
      Visibility	34
      Human Health Benefits	35
      Ecological Effects of Reduced Acid Deposition	35
            Freshwater	35
            Forests	 37
            Coastal Waters	37
      Materials and Structures	38

Summary	39

For Further Information	41

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      ntroduction
     The Acid Rain Program was established under Title IV of the 1990 Clean Air
     Act Amendments. The program requires major reductions of sulfur dioxide
     (SO2) and nitrogen oxides (NOx) emissions, the pollutants that cause acid
rain. Using  an innovative market-based or "cap and trade" approach to environ-
mental protection, the program sets a permanent cap on the total amount of SO2
that may be emitted by electric power plants nationwide. The cap is set at about
one half of the amount of SO2 emitted in 1980, and the trading component allows
flexibility for individual fossil fuel-fired combustion units to select their own meth-
ods of compliance. The program also sets NOx emission limitations (in pounds
per million British thermal  units  or Ib/mmBtu) for certain coal-fired electric utility
boilers, representing about a 27% reduction from 1990 levels. The Acid  Rain Pro-
gram was implemented in two phases. Phase I applied  primarily to the largest
coal-fired sources from 1995 through 1999 for SO2 and from 1996 through 1999
for NOX.  Phase II for both pollutants began in 2000 and applies to thousands of
combustion units (see Figure  1). In 2001, there were 2,792 units affected by the
SO2 provisions of the Acid Rain  Program. Additionally, 1,046 of these units were
required to meet a NOX emissions limit in 2001 under the Acid Rain Program pro-
visions1.  The Acid Rain Program has significantly reduced emissions of SO2 and
   • Phase I
   • Phase II
  Source: EPA
Figure 1. Sources
Affected by the
SO2 Require-
ments of Title IV
(the Acid Rain
Program) of the
1990 Clean Air
Act, 2001

Most Phase I
sources (the
largest, highest-
emitting sources)
were in the Mid-
west; in Phase II
sources nation-
wide are affected
by the Acid Rain
Program.
1 Sources affected by the Acid Rain Program are tracked for compliance purposes at the unit level. A single source (power plant) may have
 many units (combustion devices).
                                                                                      page 1

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Acid Rain Program Annual Progress Report, 2001
                             NOX from  electric power plants and  resulted in substantial  environmental and
                             human health benefits.
                             An Innovative Cap and Trade Program for SO2
                             The SO2 component of the Acid Rain Program represents a dramatic departure
                             from traditional command and  control regulatory approaches  that  establish
                             source-specific emissions  limitations. Instead, the program uses an overall emis-
                             sions cap for SO2 that ensures emissions reductions are achieved and main-
                             tained and a trading system that facilitates lowest-cost emissions reductions. The
                             program features tradeable SO2 emissions allowances, where one allowance is a
                             limited authorization to emit one ton of SO2. A fixed number of allowances are
                             issued by the government,  and they may be bought, sold, or banked for future use
                             by utilities, brokers, or anyone else interested in holding them. Existing units are
                             allocated allowances for each year; new units do not receive allowances and must
                             buy them. At the end of the year all participants in the program are  obliged to sur-
                             render to EPA the number of allowances that correspond  to their annual  SO2
                             emissions.

                             Affected sources must demonstrate compliance with the  SO2 provisions of the
                             Acid Rain Program at the end of each year. Sources are granted a 60-day grace
                             period during which additional SO2 allowances may be purchased, if necessary,
                             to cover each unit's emissions for the year. At the end of the grace period (the
                             Allowance Transfer Deadline), the  allowances a unit holds  in  its Allowance Track-
                             ing System (ATS) account  must equal or exceed the unit's  annual SO2 emissions
                             for the previous year. The  Acid Rain Program requires affected sources to moni-
                             tor emissions continuously and to report their emissions regularly.  Failure to sur-
                             render sufficient allowances results in significant automatic penalties that include
                             fines as well as a reduction in the number of allowances allocated in the following
                             year. Any remaining SO2 allowances may be sold and/or banked for future use.

                             The NOX Program
                             The NOX component of the Acid Rain Program, using a more traditional regulato-
                             ry approach, establishes an emission rate limit for certain types of coal-fired  boil-
                             ers. However, sources are  provided a degree of flexibility through emissions aver-
                             aging provisions, whereby  a company can meet the standard emission limitations
                             by averaging the emissions rates  of two or more boilers.  This allows sources to
                             over-control at units where it is technically easier to control emissions, thereby
                             achieving emissions reductions at a lower cost. Additionally, certain Phase II units
                             elected to become subject to Phase I limits beginning in 1997. These early elec-
                             tion units are not subject to the more stringent Phase II limits until 2008.
                             Sources affected by the NOx portion of the Acid Rain Program must also demon-
                             strate that they  have complied with the NOx provisions at the  end of the year.
                             Sources demonstrate compliance with the NOX program by achieving an annual
                             emission rate at or below mandated levels.
page 2

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                                                             Acid Rain Program Annual Progress Report, 2001
Why Worry about Acid Rain?
Acid deposition, more commonly known as acid rain, occurs when emissions of
SO2 and NOX react in the atmosphere (with water, oxygen, and oxidants) to form
various  acidic compounds. These acidic compounds then fall to earth in either a
wet form (rain, snow, and fog)  or a dry form (gases and particles). Prevailing
winds transport the acidic compounds hundreds of miles, often across state and
national borders. The acidic compounds (including small particles such as sul-
fates and nitrates) cause many negative environmental effects. These pollutants
impair air quality and damage public health, acidify lakes and streams, harm sen-
sitive forest and coastal ecosystems, degrade visibility, and accelerate the  decay
of building materials, paints, and cultural artifacts such as buildings, statues, and
sculptures nationwide.

Some places and people are more susceptible or sensitive to these impacts than
others. Areas where acid deposition damages ecosystems or gases and  particles
impair visibility are  called "sensitive receptors." Sensitive ecological receptors
include  lakes and streams throughout the Appalachian Mountains; forests  in the
Appalachian Mountains, the Colorado Front  Range,  and West Coast coastal
mountain ranges; and many East and Gulf coast estuaries and coastal waters.
Many national parks and wilderness areas, including Great Smoky National Park,
Acadia National Park, and Grand Canyon National Park have impaired visibility
due in part to emissions of SO2  and NOX from power generation sources. Many
people (especially children, the elderly and those with existing respiratory or car-
diovascular conditions) are also adversely impacted by fine particles formed from
   Cas
    San Bernardino ana
    San Gabriel Mountain
      Nitrogen-Saturated Forests
      Class 1 areas such as national parks and wilderness areas
      Acidic surface waters in surveyed regions
                                                                                    Figure 2. Sensi-
                                                                                    tive Ecological
                                                                                    Receptors
Areas sensitive
to acid deposi-
tion, nitrogen-
overenrichment,
and visibility
impairment
occur nation-
                                                                                                page 3

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Acid Rain Program Annual Progress Report, 2001
                             SO2 and NOX emissions and ozone formed from NOx emissions from power gen-
                             eration sources.

                             The pollutants that cause acid rain often cause human health and environmental
                             impacts hundreds of miles from where they are emitted. This long-range transport
                             makes it critical to reduce all emissions that cause acid rain, even those that occur
                             far from sensitive receptors or population centers. The Acid Rain Program's ulti-
                             mate objective is to protect the environment and improve human health by reduc-
                             ing  SO2 and NOX emissions from power generation sources. These emission
                             reductions benefit the nation by:

                             4   Improving air quality and protecting public  health
                             4   Restoring acidified lakes and streams so they can once again support
                                 fish and other aquatic life
                             4   Improving visibility, especially at scenic vistas in national parks
                             4   Reducing the damage to sensitive forests, such as those along the
                                 Appalachian Mountains and in the Colorado  Front Range
                             4   Reducing the damage to nitrogen-sensitive coastal waters along the East
                                 and Gulf Coasts
                             4   Protecting our historic buildings and monuments from degradation
page 4

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           he    SO2    Program
      There were 2,792 units2 used to produce electric power that were subject to
      the SO2 provisions of the Acid Rain Program in 2001 (that is, they operat-
      ed, submitted emissions data for SO2, and were subject to annual recon-
ciliation of allowable emissions with actual emissions in 2001). Acid Rain Program
sources reduced their combined SO2 emissions in 2001 by 39% from 1980 levels
(33% from 1990 levels). All but two of the 2,792 units complied with the require-
ment to hold sufficient allowances. There were no significant geographic shifts in
emissions. The price of an SO2 allowance ranged from $135 to $210/ton in 2001,
a price range that is comparable to allowance prices in previous years.

Emissions
In 2001, the second year of Phase II, Acid Rain Program sources achieved a total
reduction in SO2 emissions of about 39% compared to 1980 levels (33% com-
pared to 1990 levels). Compared to 2000 levels, these sources reduced their SO2
emissions by 5% or 569,000 tons.  Figure 3 shows the trend in SO2 emissions
     18

     16

     14
   J 10 -
17.30
      1&
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Acid Rain Program Annual Progress Report, 2001
                             since 1980 for all affected sources.

                             The electric utility industry  is by far the largest single source of sulfur dioxide
                             emissions, accounting for approximately 65% of total SO2 emissions nationwide.
                             In addition to the significant reductions from the electric power generation sector,
                             reductions in SO2 emissions from other sources, including smelters and sulfuric
                             acid manufacturing plants, and use of cleaner fuels in residential and commercial
                             burners, have also contributed to the  50% decline  of SO2 emissions from all
                             sources since  1980 (National Air Quality and Emissions Trends Report, 1999).

                             There were 2,792 units that underwent annual reconciliation for SO2 in 2001.
                             (These  units, as well as an additional 273 units which were retired or not yet oper-
                             ating, are listed in Appendix A of this Report. Appendix A is available on our web-
                             site at www.epa.gov/airmarkets/cmprpt/arp01/index.htmr).

                             The allowances (i.e., authorizations to emit SO2) allocated in a particular year to
                             each source are determined by several provisions of the Clean Air Act. For the
                             year 2001, a total of 9.55  million allowances were granted. Adding these 9.55 mil-
                             lion allowances to the unused  allowances carried over (or banked) from prior
                             years, a total of 19.93 million allowances were available for use in 2001. Sources
                             emitted 10.63  million tons in 2001, 1.08 million tons more than the allowances
                             granted in 2001 but far less  than the allowable level. For the second year in a row
                             the number of allowances in the bank declined. As shown in Figure 4, the bank
                             shrank by 1.08 million allowances in 2001. Over time the bank is expected to con-
                             tinue to be depleted as sources use these banked allowances to comply with the
  Figure 4. Allocat-
  ed, Used,and
  Banked SO2
  Allowances
   The bank was
   built up during
   Phase I with
   early reductions
   and is now
   being drawn
   down under
   Phase II.
25
                           20
      D Allowances allocated that year
      • Unused allowances from previous years (bank)
      ^^ Emissions from affected sources
                                1995
               1996     1997     1998      1999     2000     2001
                      Source: EPA
page 6

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                                                               Acid Rain Program Annual Progress Report, 2001


Type of Allowance
Allocation
Initial Allocation
Allowances for
Substitution Units
Allowance Auctions
Opt-in Allowances
TOTAL 2001
ALLOCATION
Banked Allowances
Conservation and
Renewable Energy
Allowances
TOTAL 2001
ALLOWABLE
Number of
Allowances
9,190,9223
13,547
250,000
99,188
9,553,657
10,376,426
3,528
19,933,611
Explanation of Allowance Allocation
Type
Initial Allocation is the number of
allowances granted to units based on the
product of their historic utilization and
emissions rates (performance standards)
specified in the Clean Air Act.
A lawsuit settlement allowed for a small
amount of allowances to be allocated for
Substitution Units in 2001 instead of an
earlier year during Phase I.
Allowance Auctions provide allowances to
the market that were set aside in a Special
Allowance Reserve when the initial
allowance allocation was made.
Opt-in Allowances are provided to units
entering the program voluntarily. There
were 1 1 opt-in units in 2001 .

Banked Allowances are those held over
from 1995 through 2000 which can be used
for compliance in 2001 or any future year.
These allowances come from a special
reserve set aside when the initial allowance
allocation was made. They are awarded to
utilities that undertake efficiency and
renewable energy measures. These are
year 1999 allowances that were allocated in
year 2001 .

   3 The total year 2001 initial allocation was 9,191,897. Fifty-four allowances were deducted as offsets dur-
    ing year 2000 reconciliation, and 921 allowances were surrendered as part of an enforcement action
    prior to the 2001 reconciliation.

   Source: EPA
                                                                                     Figure 5. Origin
                                                                                     of 2001 Allow-
                                                                                     able Emissions
                                                                                     Level

                                                                                      There were
                                                                                      9.55 million
                                                                                      allowances allo-
                                                                                      cated in 2001;
                                                                                      an additional
                                                                                      10.38 million
                                                                                      allowances had
                                                                                      been banked in
                                                                                     previous years
                                                                                      and were avail-
                                                                                      able for use.
stringent Phase II requirements. Figure 5 explains in more detail the origin of the
allowances available for use in 2001.

Compliance
A total of 10.6 million allowances were deducted from sources' accounts in 2001.
Two units were short a total of 11  allowances to cover their emissions for the 2001
compliance year. Eleven year 2002 allowances were taken from these units as
                                                                                                   page 7

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Acid Rain Program Annual Progress Report, 2001
                               "offsets" and are included  in the total number of used allowances for 2001. In
                               addition to the offsets, the operators of these units were assessed an automatic
                               monetary penalty totaling $30,514.4 Figure 6 displays these allowance deduc-
                               tions, as well as the remaining bank of 1995 through 2001 allowances.

                               During the compliance process, the number of allowances surrendered at an indi-
                               vidual unit is equal to the number of tons emitted at the unit, except where the unit
                               shared a  common  stack with other units.  For  the purposes of surrendering
                               allowances for emissions at a common stack, the source was allowed to choose
                               the proportion of allowances deducted from each unit sharing the stack, as long
                               as enough allowances were surrendered to cover the total number of tons emit-
                               ted. If  no such  apportionment was made,  EPA  deducted  allowances equally
                               among the units sharing the stack to cover total emissions reported by the stack.
                               The deductions for emissions at each unit after the common stack apportionment
                               was made can be found in Appendix A of this Report. Appendix A is available on
                               our website at www.epa.gov/airmarkets/cmprpt/arp01/index.html. Units sharing a
                               common stack are listed directly under the entry for their common stack.
Total Allowances Held in Accounts as of 3/1/2002
(1995 through 2001 Vintages)5
Unit Accounts
General Accounts6
Allowances Deducted for Emissions (1995 through
2001)
2002 Penalty Allowances Deducted
Banked Allowances
Unit Accounts
General Accounts6
19,933,611
14,749,028
5,184,583
10,633,035
11
9,300,576
4,115,993
5,184,583
                       5 The number of allowances held in the Allowance Tracking System (ATS) accounts equals the number of
                        2001 allowances allocated (see Figure 5) plus the number of banked allowances. March 1, 2002 repre-
                        sents the Allowance Transfer Deadline, the point in time at which unit accounts are frozen and after
                        which no transfers of 1995 through 2001 allowances will be recorded. The freeze on these accounts is
                        removed when annual reconciliation is complete.
                       6 General accounts can be established in the ATS by any utility, individual or other entity.
                       Source: EPA
                              4 A source that does not hold enough allowances in its unit account to cover its annual SO2 emis-
                               sions has "excess emissions" and must pay a $2,000 per ton automatic penalty in 1990$. The
                               $2,000 penalty is adjusted annually for inflation, so the year 2001 penalty was $2,774.
page 8

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                                                            Acid Rain Program Annual Progress Report, 2001
Geographic Trends in SO2 Emissions
Total sulfur dioxide emissions from power generation have decreased significant-
ly since the Acid Rain Program was authorized by Congress in 1990, and they
continued to decline in 2001, the second year of Phase II. The geographic distri-
bution of SO2 emissions did not change significantly between 1990 and 2001. Fig -
ure 7 displays bar graphs comparing state SO2 emission trends from power gen-
eration before the Acid Rain Program (1990), during Phase I  (1995-1999 aver-
age), and in  Phase II to date (2000-2001 average).

Several geographic trends are evident:

4   The bar graphs on the map in Figure 7 illustrate that the area with the
    highest emissions-the Midwest-also had the largest reductions;
4   SO2 emission reductions during  Phase I  occurred  predominantly in
    approximately a dozen states in the Eastern U.S. (Phase I  affected the
    larger, higher emitting utilities in the Eastern half of the country);
4   The 24  shaded states represent states where SO2 emissions in Phase
    II  (2000-2001) were lower than  both  1990 levels  and the 1995-1999
    Phase I average.  Unlike  the SO2 emission reductions achieved during
    Phase  I, these Phase  II reductions  are geographically  more wide-
    spread, occurring  in a larger number of Southeastern and some West-
    ern states.

In several states, average SO2 emissions during Phase 1 were higher than they
had been in  1990. This is due to the large number of Phase II  sources in these
states that were not required to control for SO2 until 2000. In the 2000-2001 peri-
od (Phase II) these emissions declined to levels below what was emitted in 1990.
In general, because  SO2 emissions are capped, there will be pressure to contin-
ue to reduce SO2 emissions by installing add-on controls.

Figure  8 illustrates the geographic distribution by state of SO2 emissions from
power generation before implementation of the Acid Rain Program (1990), during
Phase  I (1995-1999  average), and in Phase II (2000-2001 average).

In 2001, Title IV sources achieved a 33% reduction from 1990 SO2  levels nation-
wide. SO2 emissions in Texas did increase in Phase I; however, SO2 emissions in
the state decreased in Phase II when the Acid Rain Program requirements took
effect for Texas sources. Although most SO2 emissions still occur in the Midwest-
ern U.S., it is important to note that, over time, this same region has also seen the
most significant decrease in SO2 emissions in the country. The highest SO2 emit-
ting states in 1990 (Ohio, Indiana, and Pennsylvania), reduced emissions 40% in
2001 (49%, 47%, and 22%, respectively) compared  to 1990 levels. Other states
in the region show similar trends since  1990. SO2 emissions decreased 59% in
Illinois, 41%  in Kentucky, 70% in Missouri, 55% in Tennessee, and 49% in West
Virginia.
                                                                                              page 9

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Acid Rain Program Annual Progress Report, 2001
page •

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                                    Acid Rain Program Annual Progress Report, 2001
                                 Power Plant SO2 Emissions
                                     (thousand tons)
                                    I| 0-150
                                         150-650
                                         650-1150
                                         1150-1650
                                         >1650
Phase I Average
Figure 8. Geo-
graphic Distribu-
tion of Average
SO2 Emissions
from Acid Rain
Sources by
State, 1990-2001

Since 1990 the
most significant
emissions
reductions have
taken place in
the highest
emitting states.
There have been
no significant
geographic
shifts in emis-
sions since
   Phase 11 Average
                                           Source: EPA
                                                                     page 11

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Acid Rain Program Annual Progress Report, 2001
                             SO2 Allowance Market
                             The flexibility provided by the Acid Rain Program enabled the 2,792 units subject
                             to the SO2  requirements in 2001 to  pursue  a  variety of compliance  options.
                             Sources met their SO2 reduction obligations  by installing scrubbers, switching
                             fuels, changing practices or procedures to improve energy efficiency, and buying
                             allowances.  The presence of the allowance market has given some sources the
                             incentive to reduce their SO2 emissions below the level of their allowance alloca-
                             tion in order to bank their allowances for use in future years. Other sources have
                             been able  to  postpone  or reduce  expenditures for  control by purchasing
                             allowances from sources that controlled below their allowance allocation level.
                             The flexibility in compliance options is possible because strict monitoring require-
                             ments for all affected units ensure one allowance is surrendered for every ton of
                             SO2 emitted. The program's flexibility significantly  reduces the cost of achieving
                             these emissions reductions as compared to the cost of a technological mandate
                             or fixed emission rate.

                             The marginal cost of compliance—the cost of reducing the next ton  of SO2 emit-
                             ted from the utility sector-is reflected in the price of an allowance.  Emission
                             reductions continue to cost less than anticipated when the Clean Air Act Amend-
                             ments were  enacted  and  this is  reflected in the price of allowances. The cost of
                             an  allowance was initially estimated at $400-1,000/ton in 1990 dollars ($500-
                             1,200/ton in  2001 dollars). As shown in Figure 9, actual prices have been signifi-
                             cantly lower than predicted. During 2001, SO2 allowances ranged  in price from
                             $135-$210/ton. At the time of the annual  allowance auction in April  2001,
                             allowances were approximately  $170/ton. The price  rose through the  summer,
                             peaking at $210/ton  in late August/early September. During the last quarter of
                             2001, prices dropped back to around $170/ton and then stabilized. Some market
                             observers believe lower-than-expected allowance prices during the first several
  Figure 9. SO2
  Allowance Price
  Index

  The cost of
  allowances in
  2001 did not
  change substan-
  tially from the
  previous few
  years and
  remains far lower
  than estimated in
                           S250
S200
S150
S100
 S50
  SO  r
1/95    186
                             1/98    1/99   1/00    1/01
                                                                                         1«3
                      Source: Monthly price reports from Cantor Fitzgerald Environmental Brokerage Services
page 12

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                                                             Acid Rain Program Annual Progress Report, 2001
 Source: EPA
               1994   1995   1995   1997   1998   1999   2000   2001

                      Between economically related organizations
                      Between economically unrelated organizations
Figure 10. SO2
Allowances
Transferred
under the Acid
Rain Program

The number of
official transfers
between eco-
nomically unre-
lated organiza-
tions has
increased since
years of the program were due primarily to lower than expected compliance costs
and larger than expected emissions reductions, which increased the supply of
allowances and put downward pressure on prices. Additionally, the more stringent
limits in Phase II most likely resulted in higher average prices in 2001 than in 2000
as sources realized they would have to continue to withdraw from the bank and
employ further controls to comply in future years.

The level of activity in the allowance market created under the Acid Rain Program
increased fairly steadily through 2000 and then dropped off somewhat in 2001,
the second year of Phase II. However, the number of official transfers in 2001 was
still higher than in any year of Phase I.

In 2001,  4,900 allowance transfers that affected over 22 million allowances (of
past, current, and future vintages) were recorded in the Allowance Transfer Sys-
tem, the  accounting system developed to track  holdings of allowances.  Of the
allowances transferred, 12.6 million, or 55%, were transferred in economically
significant transactions (i.e., between economically unrelated parties). Figure 10
shows the volume of SO2 allowances transferred under the Acid Rain Program
since official recording of transfers began in 1994. The  majority of the allowances
transferred  in  economically  significant transactions were acquired  by utilities.
Trades between  unrelated  organizations accounted  for approximately 12 million
allowances in 2001. In December 2001, trading parties began to use the On-line
Allowance Tracking System  (OATS). By  the end of 2001, OATS recorded 211
transfers electronically over the internet.

All official allowance transactions, as well as data on account balances and own-
ership, are posted and updated daily on the Clean Air Markets Division's website
(www.epa.gov/airmarkets) in order to better inform trading participants of the sta-
tus of the market. Cumulative market statistics and analysis are also available.
                                                                                               page 13

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                      NOX   Program
                               All sources affected by the Acid Rain Program NOX requirements reduced
                               their combined NOX emissions by 25% from 1990 levels in 2001. All but
                               one of the 1,046 NOX program affected units complied with their NOx
                          emission rate limitation. There were no significant shifts in the geographic distri-
                          bution of emissions due to use of the emissions averaging compliance option.

                          Emissions
                          Title IV of the 1990 Clean Air Act requires the Acid Rain Program NOx program
                          to achieve a 2 million ton reduction from projected NOx emissions levels in 2000.
                          Total NOX emissions from all Acid Rain Program affected units surpassed that
                          goal by 1 million tons in 2000 (see Figure 11). Emissions from those sources in
                          2001 were even less - 3.4 million tons (over 40%) below projected 2000 emis-
                          sions without the Acid Rain Program. For all 2,792 Title IV affected units, total
 Figure 11. NOX
 Emissions from
 Acid Rain
 Sources, 1990-
 2001
 NOX emissions
 have decreased
 since 1990, par-
 ticularly in
 preparation for
 and during
 Phase II of the
 Acid Rain Pro-
 gram. Reduc-
 tions since 1999
 are also due in
 part to imple-
 mentation  of the
 Ore NOX Bud-
 get Trading Pro-
 gram and the
 NO, SIP call.
                                 5.97
  1990   1995    1996    1997    1998   1999    2000    2001
| NOx Program affected sources
[] Title IV sources not affected for NOx
• • Projected emissions without Title IV
                                                      Source: EPA
page 14

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                          Acid Rain Program Annual Progress Report, 2001
-  I-    ]~      ^t
L p,     i            *.•	*<
                                                              page 15

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Acid Rain Program Annual Progress Report, 2001
                             NOX mass emissions in 2001 were 2 million tons lower than emissions in 1990.
                             Emissions from the 1,046 NOX program affected sources in 2001 were 1.4 million
                             tons lower than in 1990 and 8% lower than in 2000.

                             These reductions have been achieved while the amount of fuel burned to produce
                             electricity, as measured by heat input, increased 28% since 1990. As  illustrated
                             in  Figure 12, many states with  increasing  electricity  production  have also
                             decreased total NOX emissions in 2001, as compared to 1990 levels. Without fur-
                             ther reductions in emissions rates or institution of a cap on NOX emissions, how-
                             ever, NOx emissions from power  plants would have been expected to rise with
                             increased use of fossil fuels in most areas of the country.

                             NOX emissions come from a wide variety of sources including those affected by
                             the Acid Rain Program. NOX emissions from electric utilities account for approxi-
                             mately 20% of NOx emissions from all sources. NOX emissions from transporta-
                             tion sources are 55% of NOx emissions from all sources. Nationally, NC^ emis-
                             sions have increased 5%  between 1990 and  1999.  This is primarily due to an
                             increase of 17% in NOX emissions from transportation sources,  particularly heavy
                             duty vehicles, since 1990. That increase has been offset to some extent by the
                             emissions decreases from electric utilities and other fuel combustion sources due
                             to  a variety of federal and  state emission reduction programs (including the Acid
                             Rain Program, the Ozone Trading Commission NOX Budget Trading Program,
                             and anticipation of the NOx SIP call) and federal enforcement actions (National
                             Air Quality and Emissions Trends  Report, 1999).
                             Emission  Limits
                             Instead of using allowance trading to facilitate NOX emissions reductions, the Acid
                             Rain Program establishes NOx emission limitations (Ib/mmBtu NOx) for coal-fired
                             electric generation units.

                             The Acid Rain  Program NOX regulation (40 CFR part 76), establishes NC^ limits
                             for Group 1 boilers (dry bottom wall-fired and tangentially fired  boilers), as well as
                             Group 2  boilers (cell burner, cyclone,  vertically-fired, and  wet bottom boilers).
                             Figure 13 shows the number of NOx affected units by boiler type and the emis-
                             sions limit for each boiler type.

                             There were 1,046 units subject to NC^ emissions limitations in 2001. The owners
                             and operators  of a NOx affected unit must choose at least one NOX compliance
                             plan  (described below) to indicate how the unit will comply with its NOx 'in*

                             4    Standard Limitation. A unit with a standard limit simply meets the appli-
                                  cable individual NOX limit  prescribed for its  boiler type under 40 CFR
                                  76.5, 76.6, or 76.7.

                             4    Early Election. Under this compliance option, a Phase II Group 1
page 16

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                                                           Acid Rain Program Annual Progress Report, 2001
   affected unit met a less stringent Phase I NOX limit beginning in  1997,
   three years before it would normally be subject to an Acid Rain NOx limit.
   In return for accepting a NOX limit three years earlier than would normally
   be required, an early election unit does not become subject to the more
   stringent Phase II  NOx limit until ^OS-
   Emissions Averaging. A company can meet its NOx emissions reduc-
   tion requirements by choosing to make a group of NOx affected boilers
   subject to a group NOx 'imit rather than meeting individual NOx limits for
   each unit. The group limit is established at the end of each calendar
   year, and the group rate for the  units must be less than or equal to the
   Btu-weighted rate at which the units would have been limited had each
   been subject to an individual NOX limit.

   Alternative Emission Limitation (AEL). A utility can petition for a less
   stringent AEL if  it  properly installs and operates the  NOX emissions
   reduction technology  prescribed for that boiler but is unable to  meet its
   standard limit. EPA determines whether an AEL is warranted based on
   analyses of emissions data and information about the NOx control equip-
   ment.
Coal-Fired Boiler Type7
Phase I Group"! Tangentially-fired
Phase I Groupl Dry Bottom Wall-fired
Phase II Group 1 Tangentially-fired
Phase II Group 1 Dry Bottom Wall-fired
Cell Burners
Cyclones > 155 MW
Wet Bottom > 65 MW
Vertically-fired
Standard
Emission
Limit
(Ib/mmBtu)
0.45
0.50
0.40
0.46
0.68
0.86
0.84
0.80
Total
Number of
Units
135
130
304
312
37
56
31
41
1,046
 7 All coverage for boilers > 25 MW unless otherwise noted.
Source: EPA
                                                                                              page 17

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Acid Rain Program Annual Progress Report, 2001
  Figure 14. Com-
  pliance Actions
  in the NOX Pro-
  gram, 2001

  The primary
  method of com-
  pliance with the
  NOX program
  was emissions
  averaging.


Compliance Option
Standard Emission Limitation
Early Election
Emissions Averaging
Alternative Emission Limitation
TOTAL
Number of Units
140
274
638
27
1,0798

                       8 The total does not equal 1,046 because 28 units have both early election and emissions averaging
                        compliance plans, and 5 units have both AELs and emissions averaging plans.

                      Source: EPA
                             Compliance
                             In 2001, 1,045 NOX units met their NOX emissions limits through compliance with
                             their respective NOX compliance plans. Only one unit failed to meet its NOX emis-
                             sions limit in 2001. That  unit had excess NOX emissions of 60 tons and  was
                             assessed a monetary penalty of  $166,440 (60 tons  x $2,774 per ton penalty).
                             Detailed compliance information by unit can be found in Appendices B1 and B2.
                             These appendices are available  on our website at www.epa.gov/airmarkets/
                             cmprpt/arpOI/index. Figure  14 summarizes the compliance  options  chosen for
                             NOX affected units in 2001.  Averaging was the most widely chosen compliance
                             option; 54 averaging plans involving 638 units were in place in 2001.
                            Geographic Trends in NOX Emissions
                            Total nitrogen oxide emissions from all NOx affected Acid Rain Program sources
                            have decreased 25% since 1990. Figure 15 displays bar graphs illustrating rela-
                            tive  state NOX emission trends from  power generation sources affected by the
                            NOX program before the Acid Rain Program (1990), during Phase I (1996-1999
                            average), and in Phase II (2000-2001 average). NOX emissions reductions since
                            1999 are due in part to implementation of the OTC NOx Budget Trading Program,
                            the NOX SIP call, and several state reduction  programs as well as the Acid Rain
                            Program.

                            Several geographic trends are evident:
                                 The bar graphs illustrate that NOx emissions were lower in 35 states in
                                 2001 compared to 1990  levels, with the greatest reduction occurring in
                                 the Eastern United States;
                                 The shaded states had lower NOX emissions in 2001 compared to both
                                 1990 levels and the  1996-1999  Phase I  average.  NOX  reductions
page 18

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Acid Rain Program Annual Progress Report, 2001
                                    page 19

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Acid Rain Program Annual Progress Report, 2001
                                                                            Power Plant NOX Emissions
                                                                                (thousand tons)
                                                                                 |    |  0-50
                                                                                     J  50-150
                                                                                       150 - 250
                                                                                       250 - 350
                                                                                       350 - 450
                                                                                       >450
                                            Phase I Average
                                              Phase II Average
page 20

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                                                            Acid Rain Program Annual Progress Report, 2001
    occurred predominantly in the Northeastern  U.S. during Phase I;  in
    Phase II, NOx reductions are geographically more extensive and occur
    in a larger number of Southern and Midwestern states.

In several states, average NOX emissions during Phase I were higher than they
had been in 1990.  This is due to the large number of Phase II sources in these
states that were not required to control NOX emissions until 2000.  In the 2000-
2001 period (Phase II) emissions in these states have declined to  levels below
what was emitted in 1990. There are also several states where average Phase II
NOX emissions were higher than emissions in 1990 and/or the Phase I average.
This is because while the Acid Rain Program limits the rate at which coal-fired
power plants may emit NOx, it does not limit total emissions of NOX the way total
emissions of SO2 are limited. Since heat input (or fuel use) increased in those
states, overall NOX emissions also increased.
As illustrated in Figure 16, in 1990, the highest NOx emissions occurred in the
Midwestern and Southern regions of the U.S. By 2001, emissions in many of
these states had been significantly reduced from 1990 levels. The states with the
highest emissions in 1990 (Ohio, Texas, and Pennsylvania), achieved an average
reduction of 40% (38%, 31%, and  52%, respectively) in 2001. Other states in the
region are showing similar trends  since 1990. NOX emissions decreased 27% in
Indiana, 33% in Kentucky, 34% in  Tennessee, and 39% in West Virginia.
                                                                                              page 21

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              onitoring    Results
                               The Acid Rain Program relies on several types of monitoring to implement
                               and assess the effectiveness of Title IV. Each affected source is required
                               to install and maintain Continuous Emissions Monitoring Systems (GEMS)
                          or approved compatible alternatives to accurately measure the amount of SO2
                          and NOX emitted. The Acid Rain Program also assesses the results of the emis-
                          sions reductions by collaborating with other organizations to measure acid depo-
                          sition nationwide. Wet acid deposition is monitored by the National Atmospheric
                          Deposition Program (NADP). Dry deposition is monitored by the Clean Air Status
                          and Trends Network (CASTNet). The impacts of acid deposition on lakes and
                          streams are monitored by the Long-Term Monitoring (LTM) and Temporally-Inte-
                          grated Monitoring of Ecosystems (TIME) ecological monitoring programs.

                          Emissions Monitoring
                          Emissions monitoring is necessary in order to verify the reductions  of SO2 and
                          NOX emissions mandated  under the Act and to support the SO2 allowance trad-
                          ing program. A fundamental objective of the Acid Rain Program is to ensure con-
                          sistent and accurate accounting of emissions from all affected boilers and tur-
                          bines. To implement this  objective, concentrations and mass emissions of SO2
                          and NOX from each affected unit are  measured and recorded using Continuous
                          Emissions Monitoring Systems (CEMS) or  an approved alternate measurement
                          method and  reported to EPA on a quarterly basis. Daily, quarterly,  and annual
                          quality assurance (QA) tests must be performed by each source to ensure that its
                          monitors continuously meet the high  accuracy standards of the Acid Rain Pro-
                          gram.

                          SO2 mass emissions are determined using CEMS to measure SO2 concentration
                          and stack gas flow rate.  NOx mass emissions are determined by coupling NOx
                          concentration data with flow, diluent (i.e., CO2 or O2) concentrations, or fuel feed
                          rates. Whatever method is selected, all monitors are required to meet strict initial
                          and on-going performance standards to demonstrate the accuracy, precision, and
                          timeliness of their measurement capabilities. The monitors used in the Acid Rain
                          Program have achieved an unparalleled level of performance with respect to all
                          of these criteria.

                          One  measure of the accuracy of a  CEMS is  the relative accuracy test audit
                          (RATA), which is required for initial certification of a CEMS  and on at least an
                          annual basis thereafter. The RATA ensures that the installed monitor measures
                          the "true" value of a pollutant by comparing the monitor to a reference method
                          which simultaneously measures the stack gas pollutant. All monitoring systems
page 22

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                                                            Acid Rain Program Annual Progress Report, 2001
must meet a relative accuracy standard allowing no more than ten percent devi-
ation from the true value in order to continue to be used for emissions reporting.
Further, if the CEMS is biased low compared to the true value, a bias adjustment
factor must be applied to all future data from that monitoring system to ensure
there  is no underreporting. This "self correcting" provision, coupled with daily
quality assurance testing requirements, creates a strong disincentive to  allowing
any deterioration in monitor performance.

In 2001, data submitted on monitoring systems indicate that over 96% of the SO2
concentration monitors  and 99% of all flow monitors  met this relative accuracy
standard. In fact, most sources achieved much better results as the median rel-
ative accuracies for all of these monitors were 3% and 2.5%, respectively.
Air Quality and Deposition in 2001
The Acid Rain Program also works with many partners to monitor the effects of
emissions changes on air quality, deposition of pollutants, and water quality. The
National Atmospheric Deposition Program (NADP) is a nationwide network of pre-
cipitation monitoring sites designed to measure regional  levels of atmospheric
deposition. The network is a consortium of many different groups, including uni-
versities, state, local and federal government agencies, and other interested part-
ners. The NADP National Trends Network (NADP-NTN) measures wet acid dep-
osition (deposition that occurs in rain, snow, or sleet) weekly at about 250 moni-
toring stations throughout the U.S. The data are subject to strict quality assurance
     isi
Figure 19. Loca-
tion of NADP/NTN
and CASTNet
Deposition Moni-
toring Sites, 2001

NADP/NTN has
monitoring sites
throughout the
country; CASTNet
is concentrated in
the East and has
not yet completed
its expansion into
the Great Plains
and Western
states.
  Source: NADP and CASTNet
                                                                                              page 23

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Acid Rain Program Annual Progress Report, 2001
                              and completeness screening in the field, in the laboratory, and during analysis. All
                              NADP  data   can  be   accessed   online   from  the  NADP  website  at
                              http://nadp.sws.uiuc.edu/. The Clean Air Status and Trends Network (CASTNet)
                              is a nationwide network of over 70 sites that measures ambient air concentrations
                              of pollutants,  including  ozone.  CASTNet  also  measures  dry  deposition  (the
                              process through which particles and gases  are deposited in the  absence of pre-
                              cipitation) of acidic compounds.  CASTNet data are also subject to strict quality
                              assurance and completeness criteria. Figure 19 displays a map of the NADP-NTN
                              and CASTNet deposition monitoring sites (the dots on the maps in Figures 20, 21,
                              and 22 also indicate the location of monitoring sites). All CASTNet data can be
                              accessed online from the CASTNet website at http://www.epa.gov/castnet.

                              Figure 20 shows the sulfate (SO42-) concentrations (a primary component of fine
                              particles in the Eastern U.S.) in the atmosphere. Concentrations are highest in the
                              Midwest,  mid-Atlantic,  and parts of the South. Figure 21 shows the wet sulfate
                              and total  (wet and dry) sulfur deposition in the continental U.S. during 2001. Wet
                              sulfate  deposition is highest in the Midwest. Total sulfur deposition is highest in
                              the Eastern U.S. Most  sites in the Eastern U.S. have a dry/wet ratio of about 1:1,
                              meaning that wet and dry deposition make up roughly equal portions of the total
                              deposition amount. In general, dry deposition is a larger percentage of total dep-
                              osition  in those areas nearest to  SO2 emission sources.
  Figure 20. East-
  ern Regional Air
  Quality, 2001:
  Sulfate Concen-
  trations

  The highest
  regional concen-
  trations of sul-
  fate (SO42-) in the
  atmosphere are
  in or downwind
  of the areas
  where SO2 emis-
  sions are high-
                      Source: CASTNet
Notes:
1) Data are presented for
the Eastern U.S. only
because there are not
enough. CASTNet monitor-
ing sites in the West to
support this type of analy-
sis.
2) The dots on the map
represent the locations of
monitoring sites.
3) Map colors represent
relative concentrations and
do not imply ecological or
human health status.
page 24

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                                                            Acid Rain Program Annual Progress Report, 2001
                              Wet Sulfate Deposition
                                                ^ • 	—	«  J'    w   l-fr
                                                C   <3c'^r
Notes:
1) The dots on the map represent
the locations of monitoring sites.
2) Map colors represent relative
concentrations and do not imply
ecological or human health status.
Source: NADP
Figure 21. Sulfur
Deposition,
2001: Wet Sul-
fate and Total
Sulfur Deposi-
tion

The highest lev-
els of wet sul-
fate (SO42-) dep-
osition are in
the areas where
emissions are
highest and in
areas down-
                             Total Sulfur Deposition
                                                                       e  '
                                                                       -
                                                                          i
                                                                    Total 5 (kg/ha)
                                                                        20
                                                                        •0
                                                                        2.5
Source: CASTNet
                                        Note: The size of the "pies" indicates the total magni-
                                        tude of deposition; the colors indicate the percentage
                                        of wet and dry deposition.
Wet and dry sul-
fur (S) deposi-
tion make up
roughly the
same percent-
age of total sul-
fur deposition in
the Midwest; in
most other
areas wet depo-
sition makes up
a greater per-
centage of the
                                                                                              page 25

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Acid Rain Program Annual Progress Report, 2001
  Figure 22. 2001
  Nitrogen Deposi-
  tion: Wet and
  Total Nitrogen
  Deposition

  The highest lev-
  els of wet nitro-
  gen (N) deposi-
  tion are in the
  Midwest and in
  agricultural
  areas in the
  Great Plains.
Wet Nitrogen Deposition
                       Notes:
                       1) The dots on the map represent
                       the locations of monitoring sites.
                       2) Map colors represent relative
                       concentrations and do not imply
                       ecological or human health status

                       Source: NADP
                                                    Total Nitrogen Deposition
  Wet deposition
  makes up most
  of the total depo-
  sition load at
  most of the mon-
  itoring sites in
  the Eastern U.S.;
  in southern Cali-
  fornia dry depo-
  sition makes up
  a greater per-
  centage of the

                                       Total N (kg/ha)
                                            15
                                            10
                                            2.6
                                                                                                  :
                                                                                               DryN
                                                                                               WetN
                       Source: CASTNet
                                                                Note: The size of the "pies" indicates the total magni-
                                                                tude of deposition; the colors indicate the percentage
                                                                of wet and dry deposition.
page 26

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                                                            Acid Rain Program Annual Progress Report, 2001
Figure 22 shows the wet and total (wet plus dry) nitrogen (N) deposition in the
continental  U.S. during 2001. Wet nitrogen deposition is highest in the Midwest
and in heavily agricultural areas of the Plains. Total nitrogen deposition is highest
in the Eastern  U.S., although several monitoring stations in the West also show
relatively high  levels of total nitrogen deposition. As is the case with sulfur, dry
deposition of nitrogen makes up a larger part of the total amount of deposition in
those areas nearest to the sources of NOx emissions. In some areas of southern
California, for example, the ratio of dry to wet deposition is approximately 4:1.

Clean Air Mapping and Analysis Program (C-MAP)
EPA has developed a mapping and analysis tool that can help users conduct
assessments of regional and  national  environmental changes. C-MAP takes
advantage of geographic mapping techniques to assess the environmental ben-
efits of sulfur dioxide and nitrogen oxide emission reduction programs, including
the Acid Rain Program. Using a Geographic Information System (GIS), C-MAP
allows users to view a series of national and regional maps in the "Map Gallery"
section, and then download the data used to generate the maps in the "GIS Data
Download"  section. The maps display  information  showing  how changes in
emissions result in changes in air quality indicators, acid deposition, and sensi-
tive ecosystems. The GIS database provides an extensive inventory of nation-
al/regional level emissions, environmental effects, and demographic data avail-
able for download, including air quality,  surface water quality,  acid deposition,
forest health, and sensitive ecosystem data. The data behind many of the graph-
ics  in this Progress Report, as well as many of the graphics themselves, are
available for download and analysis at http://www.epa.gov/airmarkets/cmap.

Freshwater Monitoring
The Temporally  Integrated  Monitoring  of Ecosystems  (TIME) and Long-Term
Monitoring  (LTM)  projects were initiated  in the early 1990s by EPA's Office of
Research and Development to determine whether emissions reductions have had
the intended  effect of reducing  acidity  in the environment.  Currently all the
TIME/LTM sites are in the Northeast and mid-Atlantic (see Figure 23);  additional
sites in acid sensitive regions of the Southeast and West would make more com-
plete assessments possible. TIME/LTM measures a variety of important chemical
characteristics in a regional population of lakes and streams, including acid neu-
tralizing capacity,  pH, sulfate, nitrate, several cations (e.g., calcium and magne-
sium), and aluminum. Its central objectives are to detect trends of these charac-
teristics in regional populations  of lakes or streams.

TIME/LTM utilizes a hybrid sampling  design.  Lakes or streams in the TIME net-
work are measured annually; the results from these sites are used to infer region-
al  changes in  chronic acidification. The  LTM sites are  a non-random group of
lakes or streams sampled on a frequent schedule (8-16 times per year) in order
to characterize both long-term (over years) and short-term (over weeks) variation
in their acid-base  chemistry. LTM sites have  been chosen to represent the sub-
populations of lakes and  streams most sensitive to acidic deposition  effects.
                                                                                              page 27

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Acid Rain Program Annual Progress Report, 2001
                             Researchers use these data to model the episodic behavior of the sites, so that
                             the models can be applied to TIME data. This approach allows the proportion of
                             lakes and streams that  undergo episodic acidification (short-term highly acidic
                             pulses) to be estimated  as an adjunct to the information on chronic acidification
                             provided by the TIME results. Data collected in this network is used to assess
                             trends in acidification and recovery as shown  in Figure 29.
  Figure 23. Loca-
  tion of TIME/LTM
  Surface Water
  Monitoring Sites
  Long-term moni-
  toring sites for
  acid rain are
  critical to
  assess whether
  lakes and
  streams are
  recovering from
  acidification.
                                                                                          Source: EPA
page 28

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E
nvironmental
     Improvement  and   Trends
     The emission reductions achieved under the Acid Rain Program have led to
     important environmental and public health benefits.  These include
     improvements in air quality with significant benefits  to human health,
reductions in  acid deposition, the beginnings of recovery in surface waters,
improvements in visibility, and less damage to forests, coastal waters, and mate-
rials and structures.

Improved Air Quality and Reduced Acid Deposition
To evaluate the impact of emissions reductions on the environment, scientists and
policymakers  use data collected from long-term national monitoring  networks
such as NADP and CASTNet. Deposition and air quality monitoring data from
these and other air quality monitoring networks, such as the  Interagency Moni-
toring of PROtected Visual Environments (IMPROVE) and the State/Local/Nation-
al Air Monitoring Stations, can be accessed on or through the CASTNet website
at http://www.epa.gov/castnet.

Data collected from these networks show that the decline in SO2 emissions from
the power industry has decreased acidic deposition and improved air quality. The
decline in NOx emissions has not been as large and the environmental  improve-
ments are not as widespread.

Analyses of CASTNet data show that concentrations of SO2  in the atmosphere
have decreased up to 8 micrograms per cubic meter (ug/m3' in the Northeast and
mid-Atlantic from 10-20 ug/m3 in 1990 (see Figure 24). These  reductions are pri-
marily due to the significant decrease in SO2 emissions from power plants under
the Acid Rain Program.

Sulfate concentrations in the atmosphere, a primary component of fine particulate
matter in the  East, have also decreased significantly since 1990 (see Figure 25).
Sulfate concentrations have decreased up to 3 ug/m3 in most of the Eastern
U.S. from levels of 5-8 ug/m3 in 1990. These reductions are also primarily due
to the significant decrease in SO2 emissions from power plants under the Acid
Rain Program.

Wet sulfate deposition has decreased more than 8 kilograms/hectare  (kg/ha; 1
kg/ha is equivalent to 0.89 pounds/acre) from 30-40 kg/ha/year in 1990 in much
                                                                           page 29

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Acid Rain Program Annual Progress Report, 2001
  Figure 24.
  Trends in Sul-
  fur: Average
  Yearly Sulfur
  Dioxide Concen-
  trations, 1989-91
  vs. 1999-2001

  Sulfur dioxide
  (SO2) concentra-
  tions have
  decreased sub-
  stantially in
  most of the Mid-
  west and North-
  east since 1989-
Sulfur Dioxide Concentration
    Average of 1989-1991


                                                Sulfur Dioxide Concentration
                                                    Average of 1999-2001
                                                                              12
                                                                              14
                                                                              It
                                                                              18
                                                                              >20
                       Source: CASTNet
                                     Notes:
                                     1) Data is presented for
                                     the Eastern U.S. only
                                     because there are not
                                     enough CASTNet moni-
                                     toring sites in the West to
                                     support this type of
                                     analysis.
                                     2) Map colors represent
                                     relative concentrations
                                     and do not imply ecologi-
                                     cal or human health sta-
                                     tus.
page 30

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                                                              Acid Rain Program Annual Progress Report, 2001
                              Sulfate Concentration
                              Average of 1989-1991
                              Sulfate Concentration
                              Average of 1999-2001
Source: CASTNet
Notes:
1) Data is presented for
the Eastern U.S. only
because there are not
enough CASTNet moni-
toring sites in the West to
support this type of
analysis.
2) Map colors represent
relative concentrations
and do not imply ecologi-
cal or human health sta-
tus.
                      Figure 25.
                      Trends in Sul-
                      fur: Average
                      Yearly Sulfate
                      Concentrations,
                      1989-91  vs.
                      1999-2001

                      Sulfate (S042-)
                      concentrations
                      in air, a primary
                      component of
                      fine particles in
                      the East, have
                      decreased sub-
                      stantially in
                      most of the East
                      since  1989-1991.
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Acid Rain Program Annual Progress Report, 2001
  Figure 26.
  Trends in Sul-
  fur: Average
  Yearly Wet Sul-
  fate Deposition,
  1989-91 vs.
  1999-2001

  Wet sulfate
  (SO42-) deposi-
  tion has
  decreased sub-
  stantially
  throughout the
  Midwest and
  Northeast since
  1989-1991.
Wet Sulfate Deposition
 Average of 1989-1991
                                     Wet SO42-
                                                 Wet Sulfate Deposition
                                                  Average of 1999-2001
                                                                                   Wet SO4?
                                                                                      -30

                                                                                      M36
                                                                                      L>4Q
                      Source: NADP        Note: Map colors represent relative concentrations and do not imply ecological or
                                        human health status.
page 32

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                                                            Acid Rain Program Annual Progress Report, 2001
                           Wet Nitrogen Deposition
                             Average of 1989-1991
                         Wet Nitrogen Deposition
                          Average of 1999-2001
                                                •
                                                                        -3
                                                                        -4
                                                                        -5
                                                                       -5
Figure 27.
Trends in Nitro-
gen: Average
Yearly Wet
Nitrogen Depo-
sition and Nitric
Acid Concentra-
tions, 1989-91
vs. 1999-2001
Nitrogen (N)
deposition
decreased
slightly in areas
of the Eastern
U.S. since 1990;
increases
occurred in
areas with sig-
nificant agricul-
tural activity
(e.g.,  the Plains
and coastal
North Carolina).
                                                                        -> 10
Source: NADP        Note: Map colors represent relative concentrations and do not imply ecological or
                  human health status.
                                                                                              page 33

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Acid Rain Program Annual Progress Report, 2001
                              of the Ohio River Valley and Northeastern U.S. (see Figure 26). The greatest
                              reductions have occurred in the mid-Appalachian region.  Important reductions
                              have also occurred in the Northeast, portions of the southern Appalachians, and
                              the Midwest.
                              There have been no dramatic regional changes in wet nitrate deposition (see Fig-
                              ure 27). This reflects the fact that total nitrogen emissions from sources other than
                              power plants (e.g., automobiles, trucks, non-road vehicles, and agricultural activ-
                              ities) have increased since 1990. Wet nitrate deposition has in fact increased up
                              to 3 kg/ha in many areas since 1990. These increases occurred in the Plains and
                              eastern North  Carolina, where there  is significant agricultural  activity,  and  in
                              southern California where motor vehicles are  the  predominant source of
                              emissions.
                              Visibility
                              In the atmosphere, SO2 and NOX gases are transformed into fine particles of sul-
                              fates and nitrates. Sulfate and nitrate particles scatter and absorb light, impairing
                              visibility and contributing to haze. In the East, sulfate particles account for more
                              than 50 percent of visibility impairment. The haziest days in the East reduce the
                              visual range to 20-24 km (12-15  miles). The visual range  under naturally-occur-
                              ring conditions is 128-144 km (77-86 miles).

                              The Interagency Monitoring of PROtected Visual Environments (IMPROVE) net-
                              work monitors visibility in the nation's national  parks and wilderness areas. From
                              1992-1999, visibility in the ten  eastern Class I area trend sites  improved 1.5
  Figure 28. Trends
  in Visibility in the
  Eastern U.S.
  Class 1 Areas

  Although visibili-
  ty has only
  improved slightly
  in the Eastern
  U.S. since  the
  early 1990s,
  significant visi-
  bility benefits are
  expected when
  the Acid Rain
  Program is fully
  implemented.
30
25
15
10
5
n
A Worst Visibility
-*• 	 * 	 A A 	 A 	 ,

Mid-Range
Best Visibility




                   92    93   94   95   96    97   98   99
                                      Year

                         Worst visibility range is 20-24 km
                         Mid-range visibility is 44-50 km
                         Best visibility range is 83-94 km

Source: Latest Findings on National Air Quality: 2000 Status and Trends, EPA 2001
page 34

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                                                             Acid Rain Program Annual Progress Report, 2001
deciviews since 1992 on the haziest days (see Figure 28). A deciview is a meas-
ure of human perception of visibility; an improvement of 1  deciview is a percepti-
ble change. On typical days in the East, visibility improved  1 deciview since 1992.
Visibility in the East is still significantly impaired in national parks and wilderness
areas, especially on the haziest days. Further reductions in fine particle concen-
trations will be necessary to restore visibility to natural levels.

Human Health  Benefits
SO2 and  NOx emissions react in the atmosphere to form fine particles and ozone.
These gases and fine particles are associated with a number of significant health
effects in sensitive  populations. High SO2 concentrations can result in temporary
breathing impairments  in sensitive populations, including asthmatics and those
who are active outdoors. A large number of epidemiological studies over the past
10-20 years show  an  association  between ambient fine particle concentrations
and health effects,  such as increased numbers of hospital  admissions and emer-
gency room visits for heart and lung disease, increased incidences of respiratory
disease and symptoms (such as asthma), decreased lung function, and even pre-
mature death. Children, the elderly, and individuals with existing cardiovascular or
lung conditions, such  as asthma, are especially vulnerable to the effects of parti-
cles. The Acid Rain Program has reduced the amount of fine  particles in the air
(see Figure 25) by lowering SO2 and NOX emissions, achieving significant human
health benefits nationwide. It is expected that the Acid Rain Program will achieve
further benefits as SO2 emissions continue to decrease to  the level of the cap.

NOX emissions react with volatile organic compound gases in the atmosphere in
the presence of sunlight to form ozone. The scientific literature shows associa-
tions between ozone and a number of effects on the respiratory system, including
aggravation of asthma, increased susceptibility to respiratory illnesses like pneu-
monia and bronchitis, and permanent lung damage. Children, the elderly, people
with existing  respiratory problems, and those exercising or working outside during
the ozone season are most vulnerable to the health effects of ozone. Additional
health benefits have  been achieved under the Acid Rain Program due  to NOx
reductions that reduce ozone concentrations.

Ecological Effects of Reduced Acid Deposition
Freshwater
Acid deposition causes acidification of surface waters. In the 1980s, acid rain was
found to  be the dominant cause of acidification in 75% of the acidic lakes and
50% of acidic streams. Areas especially sensitive to acidification include portions
of the Northeast  (particularly Maine and the Adirondack and Catskill Mountains)
and Southeastern streams. Some high elevation Western lakes, particularly in the
Rocky Mountains,  have become acidic, especially  during snowmelt. However,
although  many Western lakes and streams are sensitive to acidification, they are
not subject to continuously high levels of acid deposition and so have not become
chronically acidified.
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Acid Rain Program Annual Progress Report, 2001
                              Whether surface waters can resist acidification depends on the ability of the water
                              and watershed soil to neutralize the acid deposition it receives. This quality, called
                              Acid Neutralizing Capacity (ANC), depends largely on the  watershed's physical
                              characteristics such as geology, soils, and size. Waters that are sensitive to acid-
                              ification tend to be located in small watersheds that have  few alkaline minerals
                              and shallow soils. Conversely, watersheds that contain alkaline minerals, such as
                              limestone, tend to have waters with a high ANC.

                              As acidity increases, aluminum leached from the soil flows into lakes and streams
                              and can be toxic to  aquatic species.  The lower pH levels and higher aluminum
                              levels that result from acidification can make it difficult for fish and other aquatic
                              species to grow, reproduce, and survive. In some waters, the number of species
                              of fish able to survive has been directly correlated  to water acidity. Acidification
                              can also decrease fish population density and individual fish size.

                              Figure 29 indicates  that since the beginning  of the Acid Rain Program, sulfate
                              concentrations in lakes and streams have declined significantly  in all monitored
                              regions of the Eastern United States, except Virginia. The type of soils present in
  Figure 29.
  Trends in Acidity
  of Sensitive
  Waters, 1990-
  2000

  In Pennsylvania
  and the Adiron-
  dacks, acid neu-
  tralizing capaci-
  ty (ANC) has
  begun to
  increase, an
  indication of the
  beginning of
  recovery.
                      decreasing
                      concentrations
increasing
concentrations
              sulfate

              nitrate

              ANC

       base cations
                                        -1012
                                      Slope of Trend
                                      * = not significant

                                        Maine lakes (n=11)
                                        Vermont lakes (n=11)
                                        Adirondack lakes (n=50)
                                        Catskill streams (n=4)
                                        Pennsylvania streams (n=5)
                                        Virginia streams (n=74)
Source: Recovery of Surface Water Chemistry in the Northern and Eastern U.S.: Effectiveness of the
Clean Air Act Amendments of 1990, EPA/620/R-02/004
page 36

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                                                              Acid Rain Program Annual Progress Report, 2001
Virginia make decreases in sulfate concentrations there unlikely for some time.
Nitrate concentrations have decreased significantly in the Catskills, Adirondacks,
and Vermont since 1990. Recovery, as shown by  increasing Acid Neutralizing
Capacity (ANC), is occurring, especially in the Adirondacks and Pennsylvania. In
several regions, including the Adirondacks, recovery has  begun in the past few
years (circa 1995). However, levels of base cations, including calcium, magne-
sium, and potassium, are not increasing; in fact, they are decreasing. This reduc-
tion in base cation levels over the same period is believed to slow the onset of
recovery. The sulfate reductions achieved by the Acid Rain Program are project-
ed to  spur the recovery of lakes and streams in the East.

In spite of declining sulfate concentrations, some lakes and streams have been
slow to recover. Their recovery is slowed by continuing acid deposition, the pres-
ence  of nitrate in surface waters, the loss of the soil's ability to neutralize excess
acidity, the contribution of naturally occurring acid sources, and a lengthy lag time
between deposition reduction and ecosystem recovery.

Full recovery of damaged watersheds will be a lengthy process, especially since
acidic deposition is still occurring, albeit to a  lesser extent. Although conditions
would have been worse without the Acid Rain Program, full recovery of some sur-
face waters requires additional reductions in sulfur and nitrogen emissions.

Forests
Acid deposition, especially combined with  other pollutants and natural  stresses,
can also damage forest ecosystems. Sulfates and nitrates from acid deposition
leach nutrients  from forest soils, reducing  the forest's capacity to buffer further
acidification  and removing elements essential for tree growth.  Acidification also
leads to the  mobilization of naturally-occurring aluminum, which may interfere
with the uptake of calcium  by  roots in forest  soils.  In addition, exposure to tro-
pospheric ozone (a product of NOX emissions) has  direct toxic effects on plant
leaves. The combined effects  of depletion  of soil nutrients, mobilization of alu-
minum, and exposure to ozone make trees more susceptible to drought, temper-
ature  extremes, and diseases.

There is currently  less stress on forest ecosystems compared to what it would
have  been without the Acid Rain Program. The timeframe for full recovery,  how-
ever,  is uncertain. Leached  nutrients must first be restored through weathering of
the bedrock and soilwater aluminum concentrations must be reduced. Even after
soil chemistry is restored, full recovery of sensitive  forests is not expected to
occur for decades  because of the extensive recovery time of trees and the time
required to re-establish forest floor ecosystems (soil biota, microbes, and roots).

Coastal Waters
The nitrogen  component  of acid deposition is a significant source of nitrogen to
many estuaries and coastal waters in the Eastern U.S. Excessive nitrogen  loads
from  a variety  of  sources, including atmospheric deposition,  causes many of
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Acid Rain Program Annual Progress Report, 2001
                             those estuaries and coastal waters to periodically become eutrophic. Eutrophic
                             conditions include algal blooms (some of which may be harmful) and low levels of
                             dissolved oxygen in the water (hypoxia or anoxia) which can stress or kill fish and
                             shellfish.

                             The Acid Rain Program has reduced  nitrogen deposition in  some  places com-
                             pared to what it would  have been without Title IV (see Figure 27).  However, in
                             many sensitive coastal waters there has been little or no reduction in nitrogen
                             deposition since 1990. Additional reductions from the power generation sector, as
                             well as reductions from other atmospheric sources of nitrogen, such as automo-
                             biles and trucks, and other land-based sources such as septic systems and urban
                             runoff, may be needed before  coastal waters can recover from eutrophication.

                             Materials and Structures
                             SO2, NOX, and many of the pollutants they form can also corrode materials, par-
                             ticularly those made  of limestone or marble.  Monuments and historic buildings,
                             outdoor structures such as bridges and buildings, and automotive paints and fin-
                             ishes are all susceptible to damage by  acidic pollutants. Studies have shown that
                             air pollution has been responsible for  more deterioration of carbonate  buildings
                             and statues than other weathering processes. Structures made of limestone and
                             marble are particularly  sensitive to acidic deposition.  Most damage appears to
                             come from dry deposition. However, in rural areas and in areas where  buildings
                             and monuments remain wet for long periods of time, wet deposition can  be a sig-
                             nificant or primary cause of damage.

                             Weathering due to acid deposition may harm cultural assets (e.g.,  statues and
                             monuments) more than  purely  operational resources (e.g., bridges and buildings).
                             This is because the appearance of cultural resources, where  much of their value
                             lies,  is particularly vulnerable to damage. There  are also historic and emotional
                             values attached to cultural assets, which increase the value of their preservation.
                             The Acid Rain Program has reduced the risk of damage to sensitive buildings and
                             materials by reducing the amount of SO2 and NOX emitted into the atmosphere
                             and the  amount of dry sulfur deposition reaching  sensitive structures. Therefore,
                             on-going monetary costs and cultural  losses due  to acid gases, particles, and
                             deposition are also expected to be declining under Title IV.
page 38

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s
ummary
The Acid Rain Program continued to be successful in substantially reducing emis-
sions of SO2 and NOX from electric power plants during the second year of Phase
II. Sources continue to close in on the goal of reducing power plant SO2 emissions
from 1980 levels by 50% (8.5 million tons) in 2010 as required by the 1990 Clean
Air Act. Sources have also exceeded the goal of a two million ton reduction in NOx
emissions from projected 2000 levels as required by the 1990 Clean Air Act.

Sources in  both the more  conventional NOX program and the cap and trade
approach for SO2 have demonstrated a high level of compliance and their efforts
have achieved measurable environmental results. The flexibility for sources inher-
ent in  the cap and trade approach has been successful at reducing compliance
costs and has not resulted in any significant geographic shifts in SO2 emissions.

The Acid  Rain Program has:

Established and maintained a robust infrastructure to  ensure compliance with
the program and expanded our ability to assess its environmental benefits,
including:
    4   A sound compliance tracking system;
    4   A high quality emissions monitoring system at every source;
    4   An expanded national dry deposition monitoring network to com-
         plement the nationwide wet deposition monitoring network.

Reduced  emissions of SO2 and NC^ substantially from the power generation
sector at a significantly lower cost than expected:
    4   In 2001,  SO2 emissions were  10.6 million tons, 33%  lower than
         1990 emissions and 5% lower than 2000 emissions.
    4   In 2001,  NOX emissions were 4.10 million tons, 25%  lower than
         1990 emissions and 8% lower than 2000 emissions.

Contributed to measurable improvements in air quality, reductions in deposi-
tion, and recovery of acid-sensitive waters:
    4   SO2 concentrations in the atmosphere (a precursor to fine particles
         and  acid deposition) have decreased since 1990. In  2001, con-
         centrations in the Northeast and Mid-Atlantic were 8-12 ug/m3, as
         much as 8 ug/m3 lower than in 1990.
    4   Sulfate concentrations in the atmosphere (a major component of
         fine particles, especially in the East) have decreased since 1990.
         In 2001,  concentrations in most  of the  East were 2-3 ug/m3,  as
         much as 3 ug/m3 lower than in 1990.
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Acid Rain Program Annual Progress Report, 2001
                                  4   Wet sulfate deposition, a major component of acid rain, has also
                                      decreased since 1990. In 2001,  deposition  in the Northeast and
                                      Midwest was 20-30 kg/ha/yr, as much as 12 kg/ha/yr lower than it
                                      was in 1990.
                                  4   Wet nitrate deposition has not decreased regionally because of the
                                      relatively small NOx reduction from power plants and the large con-
                                      tribution from other sources of NOX.
                                  4   Visibility has improved in the Eastern U.S.
                                  4   Acid neutralizing capacity, a major indicator of recovery in acidified
                                      lakes and streams, is beginning to rise in streams in the Northeast,
                                      including the Adirondacks. This is an indicator that recovery from
                                      acidification  is beginning in those areas.
                                  4   Reductions in fine  particles due to reductions in emissions of SO2
                                      and  NOX  are expected to continue to benefit human health  by
                                      reducing the incidence of respiratory and cardiovascular illnesses.

                             For  more  information  on the EPA Acid  Rain   Program,  visit  our  website  at
                             http://www.epa.gov/airmarkets. For  additional   detailed  emissions  data see
                             http://www. epa.gov/airmarkets/emissions/index.
page 40

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 F
or    Further   Information
The following publications are suggested as a starting point for those who want
additional information on any of the topics discussed in this Progress Report.
Additional information on emissions, air quality and deposition trends can be
found at http://www.epa.gov/airtrends and http://www.epa.gov/castnet. Additional
published scientific literature on emissions trading, acid rain, and benefits
assessments can be found at http://www.epa.gov/airmarkets/articles/index.

Emissions and Air Quality
A Ten-Year Spatial and Temporal Trend of Sulfate Across the United States,
Malm, Schichtel, Ames and Gebhart, Journal of Geophysical  Research-Atmos-
pheres, in press
Latest Findings on National Air Quality: 2000 Status and Trends, EPA 2001
EPA 454/K-02-001
National Air Quality and Emissions Trends Report, 1999
EPA 454/R-01-004

Environmental Effects of Acid Rain
Acidic Deposition in the Northeastern United States, BioScience 51(3):180-198,
2001
National Acid Precipitation Assessment Program Biennial Report to Congress:
an Integrated Assessment, National Science and Technology Council
Committee on Environment and Natural Resources, 1998
Recovery of Surface Water Chemistry in the Northern and  Eastern U.S.: Effec-
tiveness of the Clean Air Act Amendments of 1990, Stoddard, J. L, J. S. Kahl,
F. A. Deviney, D. R. DeWalle, D. C.T., A. T. Herlihy, J. H. Kellogg, P. S. Mur-
doch, J. R. Webb, and K.  E. Webster, in press

Health Benefits Assessment
Reanalysis of the Harvard Six Cities Study and the American Cancer Society
Study of Particulate Air Pollution and Mortality; Health Effects Institute, 2000
Air Quality Criteria for Particulate  Matter, volumes l-lll, EPA 1996
EPA /600/P-95/001af-cf
Human Health Benefits from Sulfate Reduction Under Title IV of the 1990 Clean
Air Act Amendments, EPA 1995
EPA 430-R-95-010
                                                                                page 41

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Office of Air and Radiation
Clean Air Market Programs
EPA-430-R-02-009
1200 Pennsylvania Ave, NW
(6204N)
Washington, DC 20460
www.epa.gov/airmarkets
November 2002

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