26210 Federal Register / Vol. 80, No. 88 / Thursday, May 7, 2015 / Proposed Rules 

Supply Contracts for a Specified Portion of 

an Entity’s Physical Need for a Commodity 

(e.g., peaking supply contracts) 

As noted above, concerns have also been 

raised about the appropriate treatment of 

peaking supply contracts which are often 

used by companies to manage the risks 

attendant to their need for physical 

commodities that may be used to generate 

electricity, run an operating plant, or 

manufacture or supply other goods and 

services. 

Market participants have raised concerns 

about whether or not these contracts could be 

considered commodity options. In instances 

where these contracts represent a reservation 

of a portion of supplier’s capacity to provide 

a particular commodity and not a transaction 

for the commodity itself, it seems possible 

these contracts may not be commodity 

options. One test that has been proposed to 

determine whether or not such contracts are 

commodity options is whether: 

1. The subject of the agreement, contract or 

transaction is a binding, sole-source, 

obligation of a supplier of a physical 

commodity to stand ready to meet a specified 

portion of a commercial consumer’s physical 

need for a commodity through providing for 

the physical delivery of that commodity to 

the specified commercial consumer or its 

designee in connection with the physical 

obligation, 

2. The payment provided by the 

commercial consumer to the commercial 

supplier for such agreement, contract or 

transaction is in the nature of a reservation 

charge to provide the service of standing 

ready to meet the physical needs of the 

commercial consumer, 

3. Payment for any commodity delivered 

under such agreement, contract or 

transaction is at the market price for that 

commodity at the time of delivery (i.e., the 

agreement, contract, or transaction is not 

used to hedge price risk), and 

4. The agreement, contract or transaction is 

necessary to meet the commercial consumer’s 

projected physical needs or is required by 

regulation. 

I think the Commission would benefit from 

receiving comments on this proposed test 

and peaking supply contracts more generally 

as it appears to be one of the significant 

outstanding issues regarding instruments that 

may or may not be trade options. 

Together, these two additional items may 

help address outstanding concerns that have 

been expressed by commercial market 

participants, and I think the Commission 

would benefit by getting comment upon 

them. 

Appendix 4—Statement of 

Commissioner J. Christopher Giancarlo 

I support the Commission’s proposed 

amendments to the interim final trade 

options rule. These are common sense 

reforms that will alleviate certain 

recordkeeping and reporting burdens that 

§ 32.3 currently imposes on end-users that 

use trade options to manage commercial risk. 

The deletion of the reference in § 32.3(c)(2) 

to part 151 position limits is also appropriate 

in light of the fact that part 151 was vacated 

by the court in Int’l Swaps & Derivatives 

Ass’n v. U.S. Commodity Futures Trading 

Comm’n, 887 F. Supp. 2d 259 (D.D.C. 2012). 

I strongly disagree, however, with the 

Commission’s statement that it preliminarily 

believes that any future application of 

position limits would be best addressed in 

the context of the pending position limits 

rulemaking. Simply put, position limits for 

trade options are not ‘‘necessary to diminish, 

eliminate, or prevent’’ excessive speculation. 

Section 4a(a)(1) of the Commodity Exchange 

Act (CEA). The final trade options rule 

should make clear that trade options are 

exempt from position limits. 

As the Commission recognized in 

promulgating the interim final rule 

establishing the trade options exemption, 

‘‘position limits apply only to speculative 

positions. . . . Trade options, which are 

commonly used as hedging instruments or in 

connection with some commercial function, 

would normally qualify as hedges, exempt 

from the speculative position limit rules.’’ 

Commodity Options, 77 FR 25320, 25328 

n.50 (Apr. 27, 2012). 

By definition, the offeree to a trade option 

‘‘must be a producer, commercial user of, or 

a merchant handling the commodity that is 

the subject of the commodity option 

transaction, or the products or by-products 

thereof,’’ and must restrict the use of trade 

options ‘‘solely for purposes related to its 

business as such.’’ § 32.3(a)(2). Moreover, the 

‘‘option must be intended to be physically 

settled, so that, if exercised, [it] would result 

in the sale of an exempt or agricultural 

commodity for immediate or deferred 

shipment or delivery.’’ § 32.3(a)(3). Given 

these parameters, the risk that trade options 

could be used to engage in speculation, much 

less excessive speculation, is so remote as to 

be virtually non-existent. 

Applying a position limits regime to trade 

options and requiring commercial end-users 

to seek bona fide hedge treatment for those 

transactions, which was floated as a 

possibility in the pending proposed position 

limits rule, would not be an acceptable 

outcome. See Position Limits for Derivatives, 

78 FR 75680, 75711 (Dec. 12, 2013). As 

commenters to the proposed position limits 

rule have pointed out, there is no regulatory 

benefit to imposing position limits on 

instruments that inherently are not 

speculative in nature, and doing so ‘‘will 

distort commodity markets and impede 

economically efficient behavior’’ by 

discouraging the use of trade options. Natural 

Gas Supply Association Comment Letter 

dated Aug. 4, 2014 at 13. A comment letter 

filed by the Edison Electric Institute and the 

Electric Power Supply Association (Joint 

Associations) cites persuasive examples of 

how application of the proposed position 

limits rule would eliminate the ability of 

market participants to enter into multi-month 

and multi-year trade options. See Joint 

Associations Comment Letter dated Feb. 7, 

2014 at 6–7; see also American Gas 

Association Comment Letter dated Feb. 10, 

2014 at 5 (the lack of a contractual upper 

limit in the way that natural gas options are 

structured make position limit reporting 

impossible). 

The Commission has the authority in 

section 4a(a)(7) of the CEA to exempt ‘‘any 

person or class of persons, any swap or class 

of swaps, any contract of sale of a commodity 

for future delivery or class of such contracts, 

any option or class of options, or any 

transaction or class of transactions from any 

requirement it may establish . . . with 

respect to position limits.’’ 

As long as the specter of position limits 

hangs over trade options, market participants 

that have used these instruments for decades 

as a cost effective means of ensuring a 

reliable supply of a physical commodity and 

to hedge commercial risk will be reluctant to 

use them. As I have said before, commercial 

end-users, including commercial end-users of 

everyday trade options, were not the cause of 

the financial crisis and the federal 

government should stop treating them like 

they were. 

I urge my fellow Commissioners to 

eliminate this regulatory uncertainty sooner, 

rather than later, by exercising our section 

4a(a)(7) authority in connection with this 

trade options rulemaking. I encourage further 

public comment on the issue. 

[FR Doc. 2015–11020 Filed 5–6–15; 8:45 am] 

BILLING CODE 6351–01–P 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 52 

[EPA–HQ–OAR–2015–0071; FRL–9926–97– 

OAR] 

RIN 2060–AS57 

Prevention of Significant Deterioration 

Permitting for Greenhouse Gases: 

Providing Option for Rescission of 

EPA-Issued Tailoring Rule Step 2 

Prevention of Significant Deterioration 

Permits 

AGENCY: Environmental Protection 

Agency (EPA). 

ACTION: Proposed rule. 

SUMMARY: The Environmental Protection 

Agency (EPA) is proposing to amend the 

federal Prevention of Significant 

Deterioration (PSD) program regulations 

to allow for rescission of certain PSD 

permits issued by the EPA and 

delegated reviewing authorities under 

Step 2 of the Prevention of Significant 

Deterioration and Title V Greenhouse 

Gas (GHG) Tailoring Rule (Tailoring 

Rule). We are proposing to take this 

action in order to provide a mechanism 

for the EPA and delegated reviewing 

authorities to rescind PSD permits that 

are no longer required in light of the 

United States (U.S.) Supreme Court’s 

decision in Utility Air Regulatory Group 

(UARG) v. EPA and the amended 

appeals court judgment in Coalition for 

Responsible Regulation (Coalition) v. 

EPA, vacating that rule. These decisions 

determined that Step 2 of the Tailoring 

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Federal Register / Vol. 80, No. 88 / Thursday, May 7, 2015 / Proposed Rules 26211 

1Prevention of Significant Deterioration and Title 

V Greenhouse Gas Tailoring Rule (75 FR 31514, 

June 3, 2010); 40 CFR 52.21(b)(49)(v). 

2The terms ‘‘EPA-issued PSD permits that were 

issued under Step 2 of the Tailoring Rule’’ and 

‘‘EPA-issued Step 2 PSD permits’’ both refer to PSD 

permits issued by the EPA as well as by delegated 

reviewing authorities under Step 2 of the Tailoring 

Rule. 

Rule was not required by the Clean Air 

Act (CAA or Act) and vacated the EPA 

regulations implementing Step 2. When 

effective, this action would authorize 

the EPA and delegated reviewing 

authorities to rescind Step 2 GHG PSD 

permits in response to requests from 

applicants who can demonstrate that 

they are eligible for permit rescission. In 

the ‘‘Rules and Regulations’’ section of 

this Federal Register, we are amending 

the federal PSD program regulations as 

a direct final rule without a prior 

proposed rule. If we receive no adverse 

comment in response to the direct final 

rule, we will not take further action on 

this proposed rule. 

DATES: Written comments must be 

received by June 8, 2015. 

Public Hearing: If anyone contacts the 

EPA by May 18, 2015, requesting to 

speak at a public hearing on this action, 

the EPA will hold a public hearing on 

May 22, 2015 in Research Triangle Park, 

North Carolina. The EPA will not hold 

a hearing if one is not requested. Please 

check the EPA’s Web page at http://

www.epa.gov/nsr on May 19, 2015 for 

the announcement of whether the 

hearing will be held. 

ADDRESSES: Submit your comments, 

identified by Docket ID No. EPA–HQ– 

OAR–2015–0071, by mail to U.S. 

Environmental Protection Agency, EPA 

Docket Center, Mail Code 28221T, 1200 

Pennsylvania Avenue NW., Washington, 

DC 20460. Comments may also be 

submitted electronically or through 

hand delivery/courier by following the 

detailed instructions in the ADDRESSES

section of the direct final rule located in 

the rules section of this Federal 

Register. 

FOR FURTHER INFORMATION CONTACT: Mrs. 

Jessica Montan ̃ ez, U.S. Environmental 

Protection Agency, Office of Air Quality 

Planning and Standards, Air Quality 

Planning Division, (C504–03), Research 

Triangle Park, NC 27711, telephone 

number (919) 541–3407, email at 

montanez.jessica@epa.gov. 

SUPPLEMENTARY INFORMATION: 

I. What are the details for the potential 

public hearing? 

If there is a public hearing, it will be 

held at the EPA, Building C, 109 T.W. 

Alexander Drive, Research Triangle 

Park, North Carolina, 27709; the room 

number will be announced on the NSR 

Web site at http://www.epa.gov/nsr. If 

requested, the hearing will provide 

interested parties the opportunity to 

present data, views or arguments 

concerning this action. The EPA will 

make every effort to accommodate all 

speakers who arrive and register. 

Because this hearing will be held at U.S. 

government facilities, individuals 

planning to attend the hearing should be 

prepared to show valid picture 

identification to the security staff in 

order to gain access to the meeting 

room. Please note that the REAL ID Act, 

passed by Congress in 2005, established 

new requirements for entering federal 

facilities. These requirements took effect 

July 21, 2014. If your driver’s license is 

issued by American Samoa, Arizona, 

Idaho, Louisiana, Maine, Minnesota, 

New Hampshire or New York, you must 

present an additional form of 

identification to enter the federal 

buildings where the public hearings will 

be held. Acceptable alternative forms of 

identification include: federal employee 

badges, passports, enhanced driver’s 

licenses and military identification 

cards. For additional information for the 

status of your state regarding REAL ID, 

go to http://www.dhs.gov/real-idenforcement-brief. In addition, you will 

need to obtain a property pass for any 

personal belongings you bring with you. 

Upon leaving the building, you will be 

required to return this property pass to 

the security desk. No large signs will be 

allowed in the building, cameras may 

only be used outside of the building and 

demonstrations will not be allowed on 

federal property for security reasons. If 

held, the public hearing will begin at 

10:00 a.m. and continue until 5:00 p.m., 

if necessary, depending on the number 

of speakers. The EPA may end the 

hearing early if all registered speakers 

have had an opportunity to speak, but 

no earlier than 2:00 p.m. Persons 

wishing to present oral testimony that 

have not made arrangements in advance 

should register by 2:00 p.m. the day of 

the hearing. Oral testimony will be 

limited to 5 minutes per commenter. 

The EPA encourages commenters to 

provide written versions of their oral 

testimonies either electronically (on 

computer disk or CD–ROM) or in paper 

copy. Verbatim transcripts and written 

statements will be included in the 

rulemaking docket. 

If you want to request a hearing and 

present oral testimony at the hearing, 

you should notify, on or before May 18, 

2015, Ms. Pamela Long, U.S. 

Environmental Protection Agency, 

Office of Air Quality Planning and 

Standards, Air Quality Policy Division, 

C504–01, Research Triangle Park, NC 

27711, telephone (919) 541–0641, email 

long.pam@epa.gov. The hearing will be 

strictly limited to the subject matter of 

the proposal, the scope of which is 

discussed below. Any member of the 

public may file a written comment by 

the close of the comment period. 

Written comments should be submitted 

to Docket ID No. EPA–HQ–OAR–2015– 

0071 at the addresses given above for 

submittal of comments. If a hearing is 

held, the hearing schedule, including 

the list of speakers, will be posted on 

the EPA’s Web page at http://

www.epa.gov/nsr. A verbatim transcript 

of the hearing, if held, and written 

comments will be made available for 

copying during normal working hours at 

the EPA Docket Center address given 

above for inspection of documents. 

II. Why is the EPA issuing this 

proposed rule? 

The EPA is proposing to take action 

to amend the federal PSD program 

regulation at 40 CFR 52.21 to allow 

existing PSD permits that were issued 

under Step 2 of the Tailoring Rule 1 for 

GHGs to be rescinded. This proposed 

action narrowly amends the permit 

rescission provisions in the federal PSD 

regulations found in 40 CFR 52.21(w) to 

allow for the rescission of EPA-issued 

PSD permits 2 that were issued under 

Step 2 of the Tailoring Rule permitting 

regulations. 

The U.S. Supreme Court determined 

the permitting requirements under Step 

2 of the Tailoring Rule to be invalid in 

UARG v. EPA, 134 S. Ct. 2427 (2014). 

The Supreme Court affirmed in part and 

reversed in part an earlier decision of 

the United States Court of Appeals for 

the District of Columbia Circuit (D.C. 

Circuit) in Coalition for Responsible 

Regulation v. EPA, 684 F.3d 102 (D.C. 

Cir. 2012). In further proceedings upon 

consideration of the Supreme Court 

decision, the D.C. Circuit amended its 

judgment in the Coalition case. The 

Amended Judgment vacated particular 

provisions of the EPA’s regulations 

implementing Step 2 of the Tailoring 

Rule. 

This proposed action does not itself 

rescind any permits; it only proposes 

the regulatory mechanism through 

which the EPA could then rescind, 

upon request of a source, an EPA-issued 

Step 2 PSD permit consistent with the 

U.S. Supreme Court decision and the 

amended judgment of the D.C. Circuit. 

Furthermore, we have published a 

direct final rule amending these federal 

PSD program regulations in the ‘‘Rules 

and Regulations’’ section of this Federal 

Register because we view this as a noncontroversial amendment and anticipate 

mstockstill on DSK4VPTVN1PROD with PROPOSALS

26212 Federal Register / Vol. 80, No. 88 / Thursday, May 7, 2015 / Proposed Rules 

no adverse comment. We have 

explained our reasons for this action in 

the preamble to the direct final rule. 

If we receive no adverse comment, we 

will not take further action on this 

proposed rule. If the EPA receives 

adverse comment in response to the 

direct final rule, we will publish a 

timely withdrawal in the Federal 

Register informing the public that the 

direct final rule will not take effect. In 

that case, we would address all public 

comments in any subsequent final rule 

based on this proposed rule. 

We do not intend to institute a second 

comment period on this action. Any 

parties interested in commenting must 

do so at this time. For further 

information about commenting on this 

rule, please see the information 

provided in the ADDRESSES section of 

this document. 

The regulatory text for the proposal is 

identical to that for the direct final rule 

published in the ‘‘Rules and 

Regulations’’ section of this Federal 

Register. For further supplementary 

information, the detailed rationale for 

the proposal and the regulatory 

revisions, see the direct final rule 

published in a separate part of this 

Federal Register. 

Neither this rule or direct final rule 

address any issues concerning the 

federal PSD permit rescission 

regulations at 40 CFR 52.21(w) that are 

not related to the Supreme Court 

decision in UARG v. EPA and the 

amended judgment of the D.C. Circuit. 

The EPA is developing a separate 

rulemaking action that will provide an 

opportunity for the public to comment 

on others circumstances where 40 CFR 

52.21(w) may limit the ability to rescind 

PSD permits that are no longer 

necessary. 

III. Does this action apply to me? 

The entities potentially affected by 

this rule include new and modified 

stationary sources that were required to 

obtain an EPA-issued Step 2 PSD permit 

under the federal PSD regulations found 

at 40 CFR 52.21 solely because the 

source or a modification of the source 

was expected to emit or increase GHG 

emissions over the applicable 

thresholds. This includes (1) sources 

classified as major for PSD purposes 

solely on the basis of their potential 

GHG emissions; and (2) sources emitting 

major amounts of other pollutants that 

experienced a modification resulting in 

an increase of only greenhouse gas 

emission above the applicable levels in 

the EPA regulations. Entities affected by 

this rule may also include state or local 

reviewing authorities that have been 

delegated federal authority to 

implement the federal PSD regulations 

under 40 CFR 52.21(u) and that have 

issued Step 2 PSD permits to sources 

within their jurisdiction. This rule does 

not address the requirements for 

approval of a PSD program into a state 

implementation plan (40 CFR 51.166) or 

the rescission of PSD permits issued by 

states and local programs with such 

approved programs. Stationary sources 

with questions on the PSD permitting 

obligations arising from Step 2 PSD 

permits issued by state or local 

reviewing authorities under the 

permitting programs approved into state 

implementation plans should review the 

governing statutory provisions and 

provisions in the applicable approved 

state or local permitting program to 

determine how to address any Step 2 

PSD permitting issues and consult with 

the EPA as necessary. 

List of Subjects in 40 CFR Part 52 

Environmental protection, Air 

pollution control, Carbon monoxide, 

Greenhouse gases, Incorporation by 

reference, Intergovernmental relations, 

Lead, National ambient air quality 

standards, New source review, Nitrogen 

dioxide, Ozone, Particulate matter, 

Permit rescissions, Preconstruction 

permitting, Sulfur oxides, Tailoring 

rule, Volatile organic compounds. 

Dated: April 30, 2015. 

Gina McCarthy, 

Administrator. 

[FR Doc. 2015–10629 Filed 5–6–15; 8:45 am] 

BILLING CODE 6560–50–P 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 80 

[EPA–HQ–OAR–2014–0905; FRL 9927–15– 

OAR] 

RIN 2060–AS58 

Relaxation of the Federal Reid Vapor 

Pressure Gasoline Volatility Standard 

for Birmingham, Alabama 

AGENCY: Environmental Protection 

Agency. 

ACTION: Proposed rule. 

SUMMARY: The Environmental Protection 

Agency (EPA) is proposing to approve a 

request from the state of Alabama for the 

EPA to relax the Reid Vapor Pressure 

(RVP) standard applicable to gasoline 

introduced into commerce from June 1 

to September 15 of each year for 

Jefferson and Shelby counties (‘‘the 

Birmingham area’’). Specifically, the 

EPA is proposing to amend the 

regulations to change the RVP standard 

for the Birmingham area from 7.8 

pounds per square inch (psi) to 9.0 psi 

for gasoline. The EPA has preliminarily 

determined that this change to the 

federal RVP regulation is consistent 

with the applicable provisions of the 

Clean Air Act (CAA). 

DATES: Written comments must be 

received on or before June 8, 2015 

unless a public hearing is requested by 

May 22, 2015. If the EPA receives such 

a request, we will publish information 

related to the timing and location of the 

hearing and a new deadline for public 

comment. 

ADDRESSES: Submit your comments, 

identified by Docket ID No. EPA–HQ– 

OAR–2014–0905, by one of the 

following methods: 

• www.regulations.gov: Follow the 

on-line instructions for submitting 

comments. 

• Email: a-and-r-Docket@epa.gov. 

• Mail: Air Docket, Environmental 

Protection Agency, Mailcode: 6102T, 

1200 Pennsylvania Ave. NW., 

Washington, DC 20460, Attention 

Docket ID No. EPA–HQ–OAR–2014– 

0905. Please include a total of two 

copies. 

• Hand Delivery: Air and Radiation 

Docket, EPA Docket Center, WJC West 

Building, Room 3334, 1301 Constitution 

Avenue NW., Washington, DC 20004. 

Attention Docket ID No. EPA–HQ– 

OAR–2014–0905. Please include two 

copies. Such deliveries are accepted 

only during the Docket’s normal hours 

of operation, and special arrangements 

should be made for deliveries of boxed 

information. 

Instructions: Direct your comments to 

Docket ID No. EPA–HQ–OAR–2014– 

0905. The EPA’s policy is that all 

comments received will be included in 

the public docket without change and 

may be made available online at 

www.regulations.gov, including any 

personal information provided, unless 

the comment includes information 

claimed to be Confidential Business 

Information (CBI) or other information 

whose disclosure is restricted by statute. 

Do not submit information that you 

consider to be CBI or otherwise 

protected through www.regulations.gov 

or email. The www.regulations.gov Web 

site is an ‘‘anonymous access’’ system, 

which means that the EPA will not 

know your identity or contact 

information unless you provide it in the 

body of your comment. If you send an 

email comment directly to the EPA 

without going through 

www.regulations.gov your email address 

will be automatically captured and 

included as part of the comment that is 

placed in the public docket and made 

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