[Federal Register Volume 74, Number 199 (Friday, October 16, 2009)]
[Rules and Regulations]
[Pages 53167-53174]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-25055]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R04-OAR-2009-0455(a); FRL-8969-9]


Approval and Promulgation of Air Quality Implementation Plans; 
South Carolina; Clean Air Interstate Rule

AGENCY: Environmental Protection Agency (EPA).

ACTION: Direct final rule.

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SUMMARY: EPA is taking direct final action to approve a revision to the 
South Carolina State Implementation Plan (SIP) submitted by the State 
of South Carolina through the South Carolina Department of Health and 
Environmental Control on December 4, 2008. This revision addresses the 
requirements of EPA's Clean Air Interstate Rule (CAIR) and the 
transition of the State's Nitrogen Oxides (NO<INF>X</INF>) Budget 
Trading Program to the State's CAIR NO<INF>X</INF> Ozone Season 
Program. Although the District of Columbia Circuit Court (D.C. Circuit 
Court) found CAIR to be flawed, the rule was remanded without vacatur 
and thus remains in place. Thus, EPA is continuing to approve CAIR 
provisions into SIPs as appropriate. CAIR, as promulgated, requires 
states to reduce emissions of sulfur dioxide (SO<INF>2</INF>) and 
NO<INF>X</INF> that significantly contribute to, or interfere with 
maintenance of, the national ambient air quality standards (NAAQS) for 
fine particulates and/or ozone in any downwind state. CAIR establishes 
budgets for SO<INF>2</INF> and NO<INF>X</INF> for states that 
significantly contribute or interfere with maintenance and requires 
such states to submit SIP revisions that implement these budgets. 
States have the flexibility to choose which control measures to adopt 
to achieve the budgets, including participation in EPA-administered 
cap-and-trade programs

[[Page 53168]]

addressing SO<INF>2</INF>, NO<INF>X</INF> annual, and NO<INF>X</INF> 
ozone season emissions. EPA is approving the full SIP revision, as 
interpreted and clarified herein, as fully implementing the CAIR 
requirements for South Carolina through participation in these cap-and-
trade programs. Consequently, this action will also cause the CAIR 
Federal Implementation Plans (CAIR FIPs) concerning SO<INF>2</INF>, 
NO<INF>X</INF> annual, and NO<INF>X</INF> ozone season emissions by 
South Carolina sources to be automatically withdrawn.

DATES: This direct final rule will be effective November 30, 2009, 
unless EPA receives adverse comments by November 16, 2009. If adverse 
comments are received, EPA will publish a timely withdrawal of the 
direct final rule in the Federal Register informing the public that the 
rule will not take effect.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-R04-
OAR-2009-0455, by one of the following methods:
    1. http://www.regulations.gov: Follow the online instructions for 
submitting comments.
    2. E-mail: <a href="/cdn-cgi/l/email-protection#e78582898d868a8e89c98b9e8988958682a7829786c9808891"><span class="__cf_email__" data-cfemail="8ae8efe4e0ebe7e3e4a4e6f3e4e5f8ebefcaeffaeba4ede5fc">[email protected]</span></a>.
    3. Fax: 404-562-9019.
    4. Mail: EPA-R04-OAR-2009-0455, Regulatory Development Section, Air 
Planning Branch, Air, Pesticides and Toxics Management Division, U.S. 
Environmental Protection Agency, Region 4, 61 Forsyth Street, SW., 
Atlanta, Georgia 30303-8960.
    5. Hand Delivery or Courier: Lynorae Benjamin, Chief, Regulatory 
Development Section, Air Planning Branch, Air, Pesticides and Toxics 
Management Division, U.S. Environmental Protection Agency, Region 4, 61 
Forsyth Street, SW., Atlanta, Georgia 30303-8960. Such deliveries are 
only accepted during the Regional Office's normal hours of operation. 
The Regional Office's official hours of business are Monday through 
Friday, 8:30 to 4:30, excluding Federal holidays.
    Instructions: Direct your comments to Docket ID No. EPA-R04-OAR-
2009-0455. EPA's policy is that all comments received will be included 
in the public docket without change and may be made available online at 
http://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 through http://www.regulations.gov or e-mail, information that you consider to be CBI 
or otherwise protected. The http://www.regulations.gov Web site is an 
``anonymous access'' system, which means EPA will not know your 
identity or contact information unless you provide it in the body of 
your comment. If you send an e-mail comment directly to EPA without 
going through http://www.regulations.gov, your e-mail address will be 
automatically captured and included as part of the comment that is 
placed in the public docket and made available on the Internet. If you 
submit an electronic comment, EPA recommends that you include your name 
and other contact information in the body of your comment and with any 
disk or CD-ROM you submit. If EPA cannot read your comment due to 
technical difficulties and cannot contact you for clarification, EPA 
may not be able to consider your comment. Electronic files should avoid 
the use of special characters, any form of encryption, and be free of 
any defects or viruses. For additional information about EPA's public 
docket visit the EPA Docket Center homepage at http://www.epa.gov/epahome/dockets.htm.
    Docket: All documents in the electronic docket are listed in the 
http://www.regulations.gov index. Although listed in the index, some 
information is not publicly available, i.e., CBI or other information 
whose disclosure is restricted by statute. Certain other material, such 
as copyrighted material, is not placed on the Internet and will be 
publicly available only in hard copy form. Publicly available docket 
materials are available either electronically in http://www.regulations.gov or in hard copy at the Regulatory Development 
Section, Air Planning Branch, Air, Pesticides and Toxics Management 
Division, U.S. Environmental Protection Agency, Region 4, 61 Forsyth 
Street, SW., Atlanta, Georgia 30303-8960. EPA requests that if at all 
possible, you contact the person listed in the FOR FURTHER INFORMATION 
CONTACT section to schedule your inspection. The Regional Office's 
official hours of business are Monday through Friday, 8:30 to 4:30, 
excluding Federal holidays.

FOR FURTHER INFORMATION CONTACT: Steven Scofield, Regulatory 
Development Section, Air Planning Branch, Air, Pesticides and Toxics 
Management Division, U.S. Environmental Protection Agency, Region 4, 61 
Forsyth Street, SW., Atlanta, Georgia 30303-8960. The telephone number 
is (404) 562-9034. Mr. Scofield can also be reached via electronic mail 
at <a href="/cdn-cgi/l/email-protection#6e1d0d0108070b020a401d1a0b180b2e0b1e0f40090118"><span class="__cf_email__" data-cfemail="c9baaaa6afa0aca5ade7babdacbfac89acb9a8e7aea6bf">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: 

Table of Contents

I. What Action Is EPA Taking?
II. What Is the Regulatory History of CAIR and the CAIR FIPs?
III. What Are the General Requirements of CAIR and the CAIR FIPs?
IV. What Are the Types of CAIR SIP Submittals?
V. Analysis of South Carolina's CAIR SIP Submittal
    A. Elements of South Carolina's SIP Submittal
    B. State Budgets for Allowance Allocations
    C. CAIR Cap-and-Trade Programs
    D. Applicability Provisions
    E. NO<INF>X</INF> Allowance Allocations
    F. Allocation of NO<INF>X</INF> Allowances From Compliance 
Supplement Pool
    G. Individual Opt-in Units
VI. Final Action
VII. Statutory and Executive Order Reviews

I. What Action Is EPA Taking?

    EPA is taking direct final action to approve the full SIP revision 
submitted by South Carolina on December 4, 2008, as interpreted and 
clarified herein, as meeting the applicable CAIR requirements by 
requiring certain electric generating units (EGUs) to participate in 
the EPA-administered CAIR cap-and-trade programs addressing 
SO<INF>2</INF>, NO<INF>X</INF> annual, and NO<INF>X</INF> ozone season 
emissions. This action also approves the addition of non-EGUs (from the 
State's NO<INF>X</INF> Budget Trading Program) to the CAIR 
NO<INF>X</INF> Ozone Season Trading Program. Since EPA will no longer 
administer the NO<INF>X</INF> Budget Trading Program and the 
requirements of that program are now addressed by the State's CAIR 
NO<INF>X</INF> Ozone Season Program (Regulations 61-62.96, Subparts 
AAAA through IIII), South Carolina chose to terminate the State's 
NO<INF>X</INF> Budget Program (Regulation 61-62.96, Subparts A through 
I), which was established to meet the requirements of the 
NO<INF>X</INF> SIP Call. EPA is, therefore, approving provisions which 
terminate the State's NO<INF>X</INF> Budget Trading Program (Regulation 
61-62.96, Subparts A through I). As a consequence of the SIP approval, 
the CAIR FIPs concerning SO<INF>2</INF>, NO<INF>X</INF> annual, and 
NO<INF>X</INF> ozone season emissions for South Carolina are 
automatically withdrawn. This notice deletes and reserves the 
provisions in Part 52 that establish the CAIR FIPs for South Carolina 
sources.
    On October 9, 2007, EPA approved an ``abbreviated SIP'' for South 
Carolina, primarily consisting of rules governing allocation of 
NO<INF>X</INF> allowances to EGUs for use in the trading programs 
established pursuant to CAIR and rules allowing sources to opt into the 
CAIR programs (72 FR 57209). The abbreviated SIP was implemented in

[[Page 53169]]

conjunction with a FIP for the State that specified requirements for 
emissions monitoring, permit provisions, and other elements of CAIR 
programs. EPA is now approving the addition of non-EGUs to the CAIR 
NO<INF>X</INF> Ozone Season Trading Program and is issuing a ``full 
SIP'' approval under which various CAIR implementation provisions will 
be governed by State rules rather than FIP rules. EPA finds that South 
Carolina's rules meet the applicable CAIR requirements by requiring 
certain EGUs to participate in the EPA-administered CAIR cap-and-trade 
programs addressing SO<INF>2</INF>, NO<INF>X</INF> annual and 
NO<INF>X</INF> ozone season emissions and by requiring the non-EGUs 
from the State's NO<INF>X</INF> Budget Trading Program to participate 
in the CAIR program for NO<INF>X</INF> ozone season emissions.

II. What Is the Regulatory History of the CAIR and the CAIR FIPs?

    EPA published CAIR on May 12, 2005 (70 FR 25162). In this rule, EPA 
determined that 28 states and the District of Columbia contribute 
significantly to nonattainment and interfere with maintenance of the 
NAAQS for fine particles (PM<INF>2.5</INF>) and/or 8-hour ozone in 
downwind states in the eastern part of the country. As a result, EPA 
required those upwind States to revise their SIPs to include control 
measures that reduce emissions of SO<INF>2</INF>, which is a precursor 
to PM<INF>2.5</INF> formation, and/or NO<INF>X</INF>, which is a 
precursor to both ozone and PM<INF>2.5</INF> formation. For 
jurisdictions that contribute significantly to downwind 
PM<INF>2.5</INF> nonattainment, CAIR sets annual State-wide emission 
reduction requirements (i.e., budgets) for SO<INF>2</INF> and annual 
State-wide emission reduction requirements for NO<INF>X</INF>. 
Similarly, for jurisdictions that contribute significantly to 8-hour 
ozone nonattainment, CAIR sets State-wide emission reduction 
requirements or budgets for NO<INF>X</INF> for the ozone season (May 
1st to September 30th). Under CAIR, states may implement these 
reduction requirements by participating in the EPA-administered cap-
and-trade programs or by adopting any other control measures.
    CAIR explains to subject States what must be included in SIPs to 
address the requirements of section 110(a)(2)(D) of the Clean Air Act 
(CAA) with regard to interstate transport with respect to the 8-hour 
ozone and PM<INF>2.5</INF> NAAQS. EPA made national findings, effective 
on May 25, 2005, that the states had failed to submit SIPs meeting the 
requirements of section 110(a)(2)(D). The SIPs were due in July 2000, 3 
years after the promulgation of the 8-hour ozone and PM<INF>2.5</INF> 
NAAQS. These findings started a two-year clock for EPA to promulgate a 
FIP to address the requirements of section 110(a)(2)(D). Under CAA 
section 110(c)(1), EPA may issue a FIP anytime after such findings are 
made and must do so within two years unless a SIP revision correcting 
the deficiency is approved by EPA before the FIP is promulgated.
    On April 28, 2006, EPA promulgated FIPs for all states covered by 
CAIR in order to ensure the emissions reductions required by CAIR are 
achieved on schedule. The CAIR FIPs require EGUs to participate in the 
EPA-administered CAIR SO<INF>2</INF>, NO<INF>X</INF> annual, and 
NO<INF>X</INF> ozone season trading programs, as appropriate. The CAIR 
FIP SO<INF>2</INF>, NO<INF>X</INF> annual, and NO<INF>X</INF> ozone 
season trading programs impose essentially the same requirements as, 
and are integrated with, the respective CAIR SIP trading programs. The 
integration of the FIP and SIP trading programs means that these 
trading programs will work together to effectively create a single 
trading program for each regulated pollutant (SO<INF>2</INF>, 
NO<INF>X</INF> annual, and NO<INF>X</INF> ozone season) in all states 
covered by the CAIR FIP or SIP trading program for that pollutant. 
Further, as provided in a rule published by EPA on November 2, 2007, a 
State's CAIR FIP is automatically withdrawn when EPA approves a SIP 
revision, in its entirety and without any conditions, as fully meeting 
the requirements of CAIR. Where only portions of the SIP revision are 
approved, the corresponding portions of the FIP are automatically 
withdrawn, and the remaining portions of the FIP stay in place. 
Finally, the CAIR FIPs also allow states to submit abbreviated SIP 
revisions that, if approved by EPA, will automatically replace or 
supplement certain CAIR FIP provisions (e.g., the methodology for 
allocating NO<INF>X</INF> allowances to sources in the State), while 
the CAIR FIP remains in place for all other provisions.
    On April 28, 2006, EPA published two additional CAIR-related final 
rules that added the States of Delaware and New Jersey to the list of 
states subject to CAIR for PM<INF>2.5</INF> and announced EPA's final 
decisions on reconsideration of five issues, without making any 
substantive changes to the CAIR requirements. On October 19, 2007, EPA 
amended the CAIR model trading rules and the CAIR FIPs to clarify the 
definition of ``cogeneration unit'' and thus the applicability of the 
CAIR trading programs to cogeneration units.
    EPA was sued by a number of parties on various aspects of CAIR, and 
on July 11, 2008, the U.S. Court of Appeals for the DC Circuit issued 
its decision to vacate and remand both CAIR and the associated CAIR 
FIPs in their entirety. North Carolina v. EPA, 531 F.3d 836 (DC Cir. 
Jul. 11, 2008). However, in response to EPA's petition for rehearing, 
the Court issued an order remanding CAIR to EPA without vacating either 
CAIR or the CAIR FIPs. North Carolina v. EPA, 550 F.3d 1176 (DC Cir. 
Dec. 23, 2008). The Court thereby left CAIR in place in order to 
``temporarily preserve the environmental values covered by CAIR'' until 
EPA replaces it with a rule consistent with the Court's opinion. Id. at 
1178. The Court directed EPA to ``remedy CAIR's flaws'' consistent with 
its July 11, 2008 opinion, but declined to impose a schedule on EPA for 
completing that action. Id. Therefore, CAIR and the CAIR FIP are 
currently in effect in South Carolina.

III. What Are the General Requirements of CAIR and the CAIR FIPs?

    CAIR establishes State-wide emission budgets for SO<INF>2</INF> and 
NO<INF>X</INF> and is to be implemented in two phases. The first phase 
of NO<INF>X</INF> reductions starts in 2009 and continues through 2014, 
while the first phase of SO<INF>2</INF> reductions starts in 2010 and 
continues through 2014. The second phase of reductions for both 
NO<INF>X</INF> and SO<INF>2</INF> starts in 2015 and continues 
thereafter. CAIR requires states to implement the budgets by either: 
(1) Requiring EGUs to participate in the EPA-administered cap-and-trade 
programs; or (2) adopting other control measures of the State's 
choosing and demonstrating that such control measures will result in 
compliance with the applicable State SO<INF>2</INF> and NO<INF>X</INF> 
budgets.
    The May 12, 2005, and April 28, 2006 CAIR rules provide model rules 
that states must adopt (with certain limited changes, if desired) if 
they want to participate in the EPA-administered trading programs. With 
two exceptions, only states that choose to meet the requirements of 
CAIR through methods that exclusively regulate EGUs are allowed to 
participate in the EPA-administered trading programs. One exception is 
for states that adopt the opt-in provisions of the model rules to allow 
non-EGUs individually to opt into the EPA-administered trading 
programs. The other exception is for states that include all non-EGUs 
from their NO<INF>X</INF> SIP Call trading program in their CAIR 
NO<INF>X</INF> ozone season trading program.

IV. What Are the Types of CAIR SIP Submittals?

    States have the flexibility to choose the type of control measures 
they will use to meet the requirements of CAIR. EPA notes that all 
states chose to meet the CAIR requirements by selecting an

[[Page 53170]]

option that requires EGUs to participate in the EPA-administered CAIR 
cap-and-trade programs. EPA provided states two approaches for 
submitting and obtaining approval for CAIR SIP revisions implementing 
that option. States may submit full SIP revisions that adopt the model 
CAIR cap-and-trade rules. If approved, these SIP revisions will fully 
replace the CAIR FIPs. Alternatively, states may submit abbreviated SIP 
revisions. These SIP revisions will not replace the CAIR FIPs; however, 
the CAIR FIPs provide that, when approved, the provisions in these 
abbreviated SIP revisions will be used instead of or in conjunction 
with, as appropriate, the corresponding provisions of the CAIR FIPs 
(e.g., the NO<INF>X</INF> allowance allocation methodology).
    A State submitting a full SIP revision may either adopt regulations 
that are substantively identical to the model rules or incorporate by 
reference the model rules. CAIR provides that states may only make 
limited changes to the model rules if the states want to participate in 
the EPA-administered trading programs. A full SIP revision may change 
the model rules only by altering their applicability and allowance 
allocation provisions to:
    1. Include all NO<INF>X</INF> SIP Call trading sources that are not 
EGUs under CAIR in the CAIR NO<INF>X</INF> ozone season trading 
program;
    2. Provide for State allocation of NO<INF>X</INF> annual or ozone 
season allowances using a methodology chosen by the State;
    3. Provide for State allocation of NO<INF>X</INF> annual allowances 
from the compliance supplement pool (CSP) using the State's choice of 
allowed, alternative methodologies; or
    4. Allow units that are not otherwise CAIR units to opt 
individually into the CAIR SO<INF>2</INF>, NO<INF>X</INF> annual, or 
NO<INF>X</INF> ozone season trading programs under the opt-in 
provisions in the model rules.
    An approved CAIR full SIP revision addressing EGUs' SO<INF>2</INF>, 
NO<INF>X</INF> annual, or NO<INF>X</INF> ozone season emissions will 
replace the CAIR FIP for that State for the respective EGU emissions. 
As discussed above, EPA approval in full, without any conditions, of a 
CAIR full SIP revision causes the CAIR FIPs to be automatically 
withdrawn.

V. Analysis of South Carolina's CAIR SIP Submittal

A. Elements of South Carolina's SIP Submittal

    The rulemaking EPA completed on October 9, 2007 (72 FR 57209), 
granting South Carolina abbreviated SIP approval, addressed annual and 
ozone season NO<INF>X</INF> allocations and opt-in provisions. EPA is 
today acting on South Carolina's full set of rules, submitted on 
December 4, 2008, and constituting a full SIP that will supersede the 
FIPs that are currently in effect in South Carolina. Although some 
rules approved on October 9, 2007, have not changed, and thus arguably 
need not be approved again, EPA is acting again on these rules in 
conjunction with the remainder of South Carolina's rule for the 
purposes of clarity and administrative convenience.

B. State Budgets for Allowance Allocations

    The CAIR NO<INF>X</INF> annual and ozone season budgets were 
developed from historical heat input data for EGUs. Using these data, 
EPA calculated annual and ozone season regional heat input values, 
which were multiplied by 0.15 pounds per million British thermal unit 
(lb/mmBtu) for phase 1, and 0.125 lb/mmBtu, for phase 2, to obtain 
regional NO<INF>X</INF> budgets for 2009-2014 and for 2015 and 
thereafter, respectively. EPA derived the State NO<INF>X</INF> annual 
and ozone season budgets from the regional budgets using State heat 
input data adjusted by fuel factors.
    The CAIR State SO<INF>2</INF> budgets were derived by discounting 
the tonnage of emissions authorized by annual allowance allocations 
under the Acid Rain Program under title IV of the CAA. Under CAIR, each 
allowance allocated in the Acid Rain Program for the years in phase 1 
of CAIR (2010 through 2014) authorizes 0.50 ton of SO<INF>2</INF> 
emissions in the CAIR trading program, and each Acid Rain Program 
allowance allocated for the years in phase 2 of CAIR (2015 and 
thereafter) authorizes 0.35 ton of SO<INF>2</INF> emissions in the CAIR 
trading program.
    In today's action, EPA is approving South Carolina's SIP revision 
that adopts the budgets established for the State in CAIR. These 
budgets are 32,662 tons for NO<INF>X</INF> annual emissions from 2009 
through 2014, and 27,219 tons from 2015 and thereafter; 15,249 tons for 
NO<INF>X</INF> ozone season emissions from 2009 through 2014, and 
12,707 tons from 2015 and thereafter; and 57,271 tons for 
SO<INF>2</INF> annual emissions from 2010 through 2014, and 40,089 tons 
from 2015 and thereafter. Additionally, because South Carolina has 
chosen to include all non-EGUs in the State's NO<INF>X</INF> Budget 
Trading Program, the CAIR NO<INF>X</INF> ozone season budget will be 
increased annually by 3,479 tons to account for such NO<INF>X</INF> SIP 
Call trading sources. This results in a total budget of 18,728 tons for 
NOx ozone season emissions from 2009 through 2014 and 16,186 tons from 
2015 and thereafter. South Carolina's SIP revision sets these budgets 
as the total amounts of allowances available for allocation for each 
year under the EPA-administered cap-and-trade programs.
    EPA notes that, in North Carolina, 531 F.3d at 916-21, the Court 
determined, among other things, that the State SO<INF>2</INF> and 
NO<INF>X</INF> budgets established in CAIR were arbitrary and 
capricious.\1\ However, as discussed above, the Court also decided to 
remand CAIR but to leave the rule in place in order to ``temporarily 
preserve the environmental values covered by CAIR'' pending EPA's 
development and promulgation of a replacement rule that remedies CAIR's 
flaws. North Carolina, 550 F.3d at 1178. EPA had indicated to the Court 
that development and promulgation of a replacement rule would take 
about two years. Reply in Support of Petition for Rehearing or 
Rehearing en Banc at 5 (filed Nov. 17, 2008, in North Carolina v. EPA, 
Case No. 05-1224, D.C. Cir.). The process at EPA of developing a 
proposal that will undergo notice and comment and result in a final 
replacement rule is ongoing. In the meantime, consistent with the 
Court's orders, EPA is implementing CAIR by approving State SIP 
revisions that are consistent with CAIR (such as the provisions setting 
State SO<INF>2</INF> and NO<INF>X</INF> budgets for the CAIR trading 
programs) in order to temporarily preserve the environmental benefits 
achievable under the CAIR trading programs.
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    \1\ The Court also determined that the CAIR trading programs 
were unlawful (Id. at 906-8) and that the treatment of CAA title IV 
allowances in CAIR was unlawful (Id. at 921-23). For the same 
reasons that EPA is approving the provisions of South Carolina's SIP 
revision that use the SO<INF>2</INF> and NO<INF>X</INF> budgets set 
in CAIR, EPA is also approving, as discussed below, South Carolina's 
SIP revision to the extent the SIP revision adopts the CAIR trading 
programs, including the provisions addressing applicability, 
allowance allocations, and use of title IV allowances.
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C. CAIR Cap-and-Trade Programs

    The CAIR NO<INF>X</INF> annual and ozone-season model trading rules 
both largely mirror the structure of the NO<INF>X</INF> SIP Call model 
trading rule in 40 CFR Part 96, subparts A through I. While the 
provisions of the NO<INF>X</INF> annual and ozone-season model rules 
are similar, there are some differences. For example, the 
NO<INF>X</INF> annual model rule (but not the NO<INF>X</INF> ozone 
season model rule) provides for a CSP, which is discussed below and 
under which allowances may be awarded for early reductions of 
NO<INF>X</INF> annual emissions. As a further example, the 
NO<INF>X</INF> ozone season model rule

[[Page 53171]]

reflects the fact that the CAIR NO<INF>X</INF> ozone season trading 
program replaces the NO<INF>X</INF> SIP Call trading program after the 
2008 ozone season and is coordinated with the NO<INF>X</INF> SIP Call 
program. The NO<INF>X</INF> ozone season model rule provides incentives 
for early emissions reductions by allowing banked, pre-2009 
NO<INF>X</INF> SIP Call allowances to be used for compliance in the 
CAIR NO<INF>X</INF> ozone-season trading program. In addition, states 
have the option of continuing to meet their NO<INF>X</INF> SIP Call 
requirement by participating in the CAIR NO<INF>X</INF> ozone season 
trading program and including all their NO<INF>X</INF> SIP Call trading 
sources in that program.
    The provisions of the CAIR SO<INF>2</INF> model rule are also 
similar to the provisions of the NO<INF>X</INF> annual and ozone season 
model rules. However, the SO<INF>2</INF> model rule is coordinated with 
the ongoing Acid Rain SO<INF>2</INF> cap-and-trade program under CAA 
title IV. The SO<INF>2</INF> model rule uses the title IV allowances 
for compliance, with each allowance allocated for 2010-2014 authorizing 
only 0.50 ton of emissions and each allowance allocated for 2015 and 
thereafter authorizing only 0.35 ton of emissions. Banked title IV 
allowances allocated for years before 2010 can be used at any time in 
the CAIR SO<INF>2</INF> cap-and-trade program, with each such allowance 
authorizing 1 ton of emissions. Title IV allowances are to be freely 
transferable among sources covered by the Acid Rain Program and sources 
covered by the CAIR SO<INF>2</INF> cap-and-trade program.
    EPA also used the CAIR model trading rules as the basis for the 
trading programs in the CAIR FIPs. The CAIR FIP trading rules are 
virtually identical to the CAIR model trading rules, with changes made 
to account for federal rather than state implementation. The CAIR model 
SO<INF>2</INF>, NO<INF>X</INF> annual, and NO<INF>X</INF> ozone season 
trading rules and the respective CAIR FIP trading rules are designed to 
work together as integrated SO<INF>2</INF>, NO<INF>X</INF> annual, and 
NO<INF>X</INF> ozone season trading programs.
    In the SIP revision, South Carolina chooses to implement its CAIR 
budgets by requiring EGUs to participate in EPA-administered cap-and-
trade programs for SO<INF>2</INF>, NO<INF>X</INF> annual, and 
NO<INF>X</INF> ozone season emissions. South Carolina adopted a full 
SIP revision that adopts, with certain allowed changes discussed below, 
the CAIR model cap-and-trade rules for SO<INF>2</INF>, NO<INF>X</INF> 
annual, and NO<INF>X</INF> ozone season emissions. Finally, South 
Carolina's rules provide that non-EGUs that were required to 
participate in the NOx Budget Trading Program must participate in the 
CAIR NO<INF>X</INF> Ozone Season Trading Program.

 D. Applicability Provisions

    In general, the CAIR model trading rules apply to any stationary, 
fossil-fuel-fired boiler or stationary, fossil-fuel-fired combustion 
turbine serving at any time, since the later of November 15, 1990, or 
the start-up of the unit's combustion chamber, a generator with 
nameplate capacity of more than 25 megawatt electrical (MWe) producing 
electricity for sale.
    States have the option of bringing in, for the CAIR NO<INF>X</INF> 
ozone season program only, those units in the State's NO<INF>X</INF> 
SIP Call trading program that are not EGUs as defined under CAIR. Under 
this option, the CAIR NO<INF>X</INF> ozone season program must cover 
all large industrial boilers and combustion turbines, as well as any 
small EGUs (i.e. units serving a generator with a nameplate capacity of 
25 MWe or less) that the State currently requires to be in the 
NO<INF>X</INF> SIP Call trading program.
    South Carolina chose to expand the applicability provisions of the 
CAIR NO<INF>X</INF> ozone season trading program to include all non-
EGUs in the State's NO<INF>X</INF> SIP Call trading program. 
Additionally, South Carolina has initiated rulemaking to revise the 
applicability section in its CAIR NO<INF>X</INF> ozone season rule in 
order to clarify that, as intended by the State, all non-EGUs subject 
to its NO<INF>X</INF> Budget Trading Program are brought into its CAIR 
NOx ozone season trading program and are to be treated as CAIR 
NO<INF>X</INF> ozone season units and that certain definitions (such as 
the definition of ``fossil-fuel-fired'') from Regulation 61-62.96, 
Subparts A through I apply to the applicability provisions that bring 
these units into the CAIR program. EPA determined after review of South 
Carolina's CAIR rules, including the amended rules submitted on 
December 4, 2008, that these provisions need clarification. However, 
while the clarifications are needed, EPA interprets South Carolina's 
current rules to provide that all non-EGUs covered by the State's NOx 
Budget Trading Program are subject to the requirements for CAIR 
NO<INF>X</INF> ozone season units and that the NO<INF>X</INF> Budget 
Trading Program definitions are used in applying the applicability 
provisions that bring in those non-EGUs.
    South Carolina has also initiated rulemaking to further revise the 
definitions of ``commence commercial operation'' and ``commence 
operation'' in its CAIR NO<INF>X</INF> ozone season rule in order to 
clarify that, for non-EGUs brought into the CAIR trading program, those 
definitions shall be consistent with the corresponding definitions in 
the NOx SIP Call model trading rule (40 CFR 96.2). EPA determined after 
review of South Carolina's CAIR rules that these provisions needed 
clarification.
    EPA received a letter from South Carolina dated October 8, 2009, 
concurring with EPA's interpretation of the current applicability 
provisions concerning non-EGUs and provides a commitment to make these 
revisions in its CAIR rules. In the October 8, 2009, letter, South 
Carolina commits to make the revisions discussed above to its CAIR 
NO<INF>X</INF> Ozone Season trading rule, Regulation 61-62.96. However, 
while the clarifications are needed, EPA interprets South Carolina's 
current rules to apply to non-EGUs the definitions in 40 CFR 96 of 
these terms.
    Finally, as discussed above, EPA amended the definition of 
``cogeneration unit'' in CAIR on October 19, 2007. South Carolina's SIP 
revision incorporates by reference the definitions in the CAIR model 
trading rules as of October 19, 2007, consistent with the change.

E. NOX Allowance Allocations

    Under the NO<INF>X</INF> allowance allocation methodology in the 
CAIR model trading rules and in the CAIR FIP, NO<INF>X</INF> annual and 
ozone season allowances are allocated to units that have operated for 
five years, based on heat input data from a three-year period that are 
adjusted for fuel type by using fuel factors of 1.0 for coal, 0.6 for 
oil, and 0.4 for other fuels. The CAIR model trading rules and the CAIR 
FIP also provide a new unit set-aside from which units without five 
years of operation are allocated allowances based on the units' prior 
year emissions.
    States may establish in their SIP submissions a different 
NO<INF>X</INF> allowance allocation methodology that will be used to 
allocate allowances to sources in the states if certain requirements 
are met concerning the timing of submission of units' allocations to 
the Administrator for recordation and the total amount of allowances 
allocated for each control period. In adopting alternative 
NO<INF>X</INF> allowance allocation methodologies, states have 
flexibility with regard to:
    1. The cost to recipients of the allowances, which may be 
distributed for free or auctioned;
    2. The frequency of allocations;
    3. The basis for allocating allowances, which may be distributed, 
for example, based on historical heat input or electric and thermal 
output; and
    4. The use of allowance set-asides and, if used, their size.
    South Carolina chose to distribute NO<INF>X</INF> annual and 
NO<INF>X</INF> ozone season allowances with its own methodology. South 
Carolina chose to distribute NO<INF>X</INF>

[[Page 53172]]

allowances by largely adopting, with certain revisions, the CAIR 
NO<INF>X</INF> annual and CAIR NO<INF>X</INF> ozone season trading 
program model rule provisions. The State's NO<INF>X</INF> ozone season 
allocation provisions have been further modified to add requirements 
associated with South Carolina's option to bring its non-EGUs into the 
CAIR NO<INF>X</INF> ozone season trading program. Specifically, the 
State chose to distribute CAIR NO<INF>X</INF> ozone season allowances 
to non-EGU's in accordance with South Carolina's Regulation 61-
62.96.342(e). Additionally, South Carolina chose to allocate in four-
year blocks of time rather than adding one additional year of 
allowances each year. EPA finds these modifications consistent with the 
flexibility given to states in CAIR.
    In South Carolina's Regulation 61-62.96, Subparts FF and FFFF, the 
State largely incorporates by reference the model rule language for 
allowance recordation and adopts a minor modification to Sections 
96.153(c) and 96.353(c). The timing for recordation of allowances by 
EPA in the recordation schedules, as referenced and modified, do not 
exactly match the timing for the State's submission to EPA of allowance 
allocations as set forth in Sections 96.141(b) and 96.341(b) for 
existing units. EPA interprets, and South Carolina confirms in a letter 
dated October 8, 2009, that the allowance recordation should occur in 4 
year blocks every four years to match up with the allocation 
submissions to EPA. In other words, EPA will record allowance 
allocations for existing sources by December 1 of the year in which the 
allocations are determined by the State and submitted to EPA. South 
Carolina commits in its October 8, 2009, letter to revise its CAIR 
rules to make the allowance and recordation dates match.

F. Allocation of NO<INF>X</INF> Allowances From Compliance Supplement 
Pool

    The CAIR establishes a CSP to provide an incentive for early 
reductions in NO<INF>X</INF> annual emissions. The CSP consists of 
200,000 CAIR NO<INF>X</INF> annual allowances of vintage 2009 for the 
entire CAIR region, and a State's share of the CSP is based upon the 
projected magnitude of the emission reductions required by CAIR in that 
State. States may distribute CSP allowances, one allowance for each ton 
of early reduction, to sources that make NO<INF>X</INF> reductions 
during 2007 or 2008 beyond what is required by any applicable State or 
Federal emission limitation. States also may distribute CSP allowances 
based upon a demonstration of need for an extension of the 2009 
deadline for implementing emission controls.
    The CAIR annual NO<INF>X</INF> model trading rule establishes 
specific methodologies for allocations of CSP allowances. States may 
choose an allowed, alternative CSP allocation methodology to be used to 
allocate CSP allowances to sources in the states.
    Consistent with the flexibility given to states in the model 
trading rule, South Carolina has chosen to modify the provisions of the 
CAIR NO<INF>X</INF> annual model trading rule concerning the allocation 
of allowances from the CSP. South Carolina has chosen to distribute CSP 
allowances by essentially adopting the CAIR NO<INF>X</INF> annual CSP 
provisions in the model rule at 40 CFR 96.143.

G. Individual Opt-in Units

    The opt-in provisions of the CAIR SIP model trading rules allow 
certain non-EGUs (i.e., boilers, combustion turbines, and other 
stationary fossil-fuel-fired devices) that do not meet the 
applicability criteria for a CAIR trading program to participate 
voluntarily in (i.e., opt into) the CAIR trading program. A non-EGU may 
opt into one or more of the CAIR trading programs. In order to qualify 
to opt into a CAIR trading program, a unit must vent all emissions 
through a stack and be able to meet monitoring, recordkeeping, and 
recording requirements of 40 CFR part 75. The owners and operators 
seeking to opt a unit into a CAIR trading program must apply for a CAIR 
opt-in permit. If the unit is issued a CAIR opt-in permit, the unit 
becomes a CAIR unit, is allocated allowances, and must meet the same 
allowance-holding and emissions monitoring and reporting requirements 
as other units subject to the CAIR trading program. The opt-in 
provisions provide for two methodologies for allocating allowances for 
opt-in units, one methodology that applies to opt-in units in general 
and a second methodology that allocates allowances only to opt-in units 
that the owners and operators intend to repower before January 1, 2015.
    States have several options concerning the opt-in provisions. 
States may adopt the CAIR opt-in provisions entirely or may adopt them 
but exclude one of the methodologies for allocating allowances. States 
may also decline to adopt the opt-in provisions at all.
    Consistent with the flexibility given to states in the FIPs, South 
Carolina has chosen to allow non-EGUs meeting the requirements in the 
CAIR model trading rule's opt-in provisions to participate in the CAIR 
NO<INF>X</INF> annual, NO<INF>X</INF> ozone season, and SO<INF>2</INF> 
trading programs. The South Carolina rule allows for both of the opt-in 
allocation methods as specified in the CAIR model rules.

VI. Final Action

    EPA is approving, as interpreted and clarified herein, South 
Carolina's full CAIR SIP revision submitted on December 4, 2008. Under 
the approved SIP revision, South Carolina is providing for continued 
participation in the EPA-administered CAIR cap-and-trade programs for 
SO<INF>2</INF>, NO<INF>X</INF> annual, and NO<INF>X</INF> ozone season 
emissions. The SIP revision, as interpreted and clarified herein, meets 
the applicable requirements of CAIR, which are set forth in 40 CFR 
51.123(o) and (aa), with regard to NO<INF>X</INF> annual and 
NO<INF>X</INF> ozone season emissions, and 40 CFR 51.124(o), with 
regard to SO<INF>2</INF> emissions. EPA is also approving provisions 
that terminate the State's NO<INF>X</INF> Budget Trading Program 
(Regulation 61-62.96, Subparts A through I) because those requirements 
are now addressed by the CAIR NO<INF>X</INF> ozone season trading 
program, as clarified herein. In accordance with 40 CFR 52.35 and 
52.36, as an automatic consequence of the approval of South Carolina's 
full SIP revision, EPA is also withdrawing the CAIR FIPs for 
SO<INF>2</INF>, NO<INF>X</INF> annual, and NO<INF>X</INF> ozone season 
emissions for South Carolina sources.
    EPA is publishing this rule without prior proposal because the 
Agency views this as a noncontroversial submittal and anticipates no 
adverse comments. However, in the proposed rules section of this 
Federal Register publication, EPA is publishing a separate document 
that will serve as the proposal to approve South Carolina's SIP 
revision if adverse written comments on this direct final rule are 
filed. This direct final rule will be effective on November 30, 2009 
without further notice unless we receive relevant adverse written 
comments by November 16, 2009. If EPA receives such comments, EPA will 
withdraw this action before the effective date by publishing a 
subsequent document that will withdraw the final action. All public 
comments received will then be addressed in a subsequent final rule 
based on the proposed action. EPA will not institute a second comment 
period. Any parties interested in commenting on this action should do 
so at this time. If we do not receive any comments, this action will be 
effective November 30, 2009. EPA also notes that, if an adverse comment 
is timely received, that may be insufficient time for EPA to respond 
and issue a subsequent final rule before the 2009 compliance deadline 
(November 30, 2009) for the CAIR NO<INF>X</INF> ozone season trading 
program. In that event, EPA may determine that the

[[Page 53173]]

applicability provisions of that trading program cannot be expanded for 
2009 to include non-EGUs and that non-EGUs cannot be allocated CAIR 
NO<INF>X</INF> ozone season allowances for 2009.

VII. Statutory and Executive Order Reviews

    Under the CAA, the Administrator is required to approve a SIP 
submission that complies with the provisions of the Act and applicable 
Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in 
reviewing SIP submissions, EPA's role is to approve state choices, 
provided that they meet the criteria of the CAA. Accordingly, this 
proposed action merely approves state law as meeting Federal 
requirements and does not impose additional requirements beyond those 
imposed by state law. For that reason, this final action:
    <bullet> Is not a ``significant regulatory action'' subject to 
review by the Office of Management and Budget under Executive Order 
12866 (58 FR 51735, October 4, 1993);
    <bullet> Does not impose an information collection burden under the 
provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);
    <bullet> Is certified as not having a significant economic impact 
on a substantial number of small entities under the Regulatory 
Flexibility Act (5 U.S.C. 601 et seq.);
    <bullet> Does not contain any unfunded mandate or significantly or 
uniquely affect small governments, as described in the Unfunded 
Mandates Reform Act of 1995 (Pub. L. 104-4);
    <bullet> Does not have Federalism implications as specified in 
Executive Order 13132 (64 FR 43255, August 10, 1999);
    <bullet> Is not an economically significant regulatory action based 
on health or safety risks subject to Executive Order 13045 (62 FR 
19885, April 23, 1997);
    <bullet> Is not a significant regulatory action subject to 
Executive Order 13211 (66 FR 28355, May 22, 2001);
    <bullet> Is not subject to requirements of Section 12(d) of the 
National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 
note) because application of those requirements would be inconsistent 
with the CAA; and
    <bullet> Does not provide EPA with the discretionary authority to 
address, as appropriate, disproportionate human health or environmental 
effects, using practicable and legally permissible methods, under 
Executive Order 12898 (59 FR 7629, February 16, 1994).
    In addition, this rule does not have tribal implications as 
specified by Executive Order 13175 (65 FR 67249, November 9, 2000), 
because the SIP is not approved to apply in Indian country located in 
the State, and EPA notes that it will not impose substantial direct 
costs on tribal governments or preempt tribal law.
    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the 
Small Business Regulatory Enforcement Fairness Act of 1996, generally 
provides that before a rule may take effect, the agency promulgating 
the rule must submit a rule report, which includes a copy of the rule, 
to each House of the Congress and to the Comptroller General of the 
United States. EPA will submit a report containing this action and 
other required information to the U.S. Senate, the U.S. House of 
Representatives, and the Comptroller General of the United States prior 
to publication of the rule in the Federal Register. A major rule cannot 
take effect until 60 days after it is published in the Federal 
Register. This action is not a ``major rule'' as defined by 5 U.S.C. 
804(2).
    Under section 307(b)(1) of the CAA, petitions for judicial review 
of this action must be filed in the United States Court of Appeals for 
the appropriate circuit by November 30, 2009. Filing a petition for 
reconsideration by the Administrator of this final rule does not affect 
the finality of this action for the purposes of judicial review nor 
does it extend the time within which a petition for judicial review may 
be filed, and shall not postpone the effectiveness of such rule or 
action. Parties with objections to this direct final rule are 
encouraged to file a comment in response to the parallel notice of 
proposed rulemaking for this action published in the proposed rules 
section of today's Federal Register, rather than file an immediate 
petition for judicial review of this direct final rule, so that EPA can 
withdraw this direct final rule and address the comment in the proposed 
rulemaking. This action may not be challenged later in proceedings to 
enforce its requirements. (See section 307(b)(2).)

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Electric 
utilities, Intergovernmental relations, Incorporation by Reference, 
Carbon monoxide, Nitrogen oxides, Ozone, Particulate matter, Reporting 
and recordkeeping requirements, Sulfur dioxide.

    Dated: October 9, 2009.
A. Stanley Meiburg,
Acting Regional Administrator, Region 4.

0
Chapter I, title 40, Code of Federal Regulations, is amended as 
follows:

PART 52--[AMENDED]

0
1. The authority citation for part 52 continues to read as follows:

    Authority:  42 U.S.C. 7401 et seq.

Subpart PP--South Carolina

0
2. Section 52.2120(c) is amended by revising the entry for ``Regulation 
No. 62.96: to read as follows:


Sec.  52.2120  Identification of plan.

* * * * *
    (c) * * *

                                                  Air Pollution Control Regulations for South Carolina
--------------------------------------------------------------------------------------------------------------------------------------------------------
           State citation                        Title/subject                State effective date      EPA approval date       Federal register notice
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
                                                                      * * * * * * *
Regulation No. 62.96...............  Nitrogen Oxides (NOX) and Sulfur       10/24/2009.............  10/16/2009.............  [Insert citation of
                                      Dioxide (SO2) Budget Trading Program                                                     publication]
                                      General Provisions.
 
                                                                      * * * * * * *
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 53174]]

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[FR Doc. E9-25055 Filed 10-15-09; 8:45 am]
BILLING CODE 6560-50-P


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