[Federal Register Volume 72, Number 79 (Wednesday, April 25, 2007)]
[Proposed Rules]
[Pages 20465-20480]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-7536]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 51, 60, 62, 63, 72, 78, 96, and 97

[EPA-HQ-OAR-2007-0012; FRL-8302-4]
RIN 2060-A033


Revisions to Definition of Cogeneration Unit in Clean Air 
Interstate Rule (CAIR), CAIR Federal Implementation Plan, Clean Air 
Mercury Rule (CAMR), and CAMR Proposed Federal Plan; Revision to 
National Emission Standards for Hazardous Air Pollutants for 
Industrial, Commercial, and Institutional Boilers and Process Heaters; 
and Technical Corrections to CAIR and Acid Rain Program Rules

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: In 2005, EPA finalized the Clean Air Interstate Rule (CAIR) to 
address emissions of nitrogen oxides (NO<INF>X</INF>) and sulfur 
dioxide (SO<INF>2</INF>) and the Clean Air Mercury Rule (CAMR) to 
establish standards of performance for mercury (Hg) for coal-fired 
electric utility steam generating units. Both CAIR and CAMR include 
model cap-and-trade rules that states may adopt to meet the applicable 
requirements. In 2006, EPA finalized the Federal Implementation Plan 
(FIP) for CAIR and also proposed a Federal Plan for CAMR. All four 
rules include an exemption for certain cogeneration units. To qualify 
for this exemption, a unit must, among other things, meet an efficiency 
standard included in the cogeneration unit definition. Today, in light 
of information concerning existing biomass-fired cogeneration units 
that may not qualify for the exemption, EPA is proposing a change in 
the cogeneration unit definition in CAIR, the CAIR model cap-and-trade 
rules, the CAIR FIP, CAMR, and the CAMR model cap-and-trade rule, and 
the proposed CAMR Federal Plan. Specifically, EPA is proposing to 
revise the efficiency standard in the cogeneration unit definition so 
that the standard would apply, with regard to certain units, only to 
the fossil fuel portion of a unit's energy input. This change to the 
CAIR model cap-and-trade rules, CAIR FIP, CAMR, and proposed CAMR 
Federal Plan would likely make it possible for some additional units to 
qualify for the cogeneration unit exemption in these rules. Because it 
would only affect a small number of relatively low emitting units, this 
would have little effect on the projected emissions reductions and the 
environmental benefits of these rules. EPA is also considering 
revisions to the definition of ``total energy input,'' a term used in 
the efficiency standard. This action also proposes minor technical 
corrections to CAIR and the Acid Rain Program rules. Finally, this 
action proposes minor revisions to National Emission Standards for 
Hazardous Air Pollutants for Industrial, Commercial, and Institutional 
Boilers and Process Heaters (``boiler MACT'').

DATES: Comments. Comments must be received on or before June 11, 2007. 
If requested by May 7, 2007, a public hearing will be held on May 10, 
2007 in Washington, DC. For additional information on a public hearing, 
see the SUPPLEMENTARY INFORMATION section of this preamble.

ADDRESSES: Submit your comments, identified by Docket ID Number EPA-HQ-
OAR-2007-0012, by one of the following methods:
    A. Federal Rulemaking Portal: http://www.regulations.gov. Follow 
the on-line instructions for submitting comments.
    B. E-mail: <a href="/cdn-cgi/l/email-protection#652448242b21483748210a060e0011250015044b020a13"><span class="__cf_email__" data-cfemail="91d0bcd0dfd5bcc3bcd5fef2faf4e5d1f4e1f0bff6fee7">[email protected]</span></a>
    C. Mail: Air Docket, ATTN: Docket Number EPA-HQ-OAR-2007-0012, 
Environmental Protection Agency, Mail Code: 6102T, 1200 Pennsylvania 
Ave., NW., Washington, DC 20460.
    D. Hand Delivery: EPA Docket Center, 1301 Constitution Avenue, NW., 
Room 3334, Washington, DC. Such deliveries are only accepted 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-
2007-0012. 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 information that you 
consider to be CBI or otherwise protected through http://www.regulations.gov or e-mail. The http://www.regulations.gov website 
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, and any form of encryption, and should 
be free of any defects or viruses.
    Docket: All documents in the docket are listed in the http://www.regulations.gov index. Although listed in the index, some 
information is not publicly available, e.g., 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 EPA Docket Center, EPA West, 
Room 3334, 1301 Constitution Avenue, NW., Washington, DC. The Public 
Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through 
Friday, excluding legal holidays. The telephone number for the Public 
Reading Room is (202) 566-1744, and the telephone number for the Air 
Docket is (202) 566-1742.

FOR FURTHER INFORMATION CONTACT: For information concerning the 
proposed changes, contact Elyse Steiner, Program Development Branch, 
Clean Air Markets Division (MC 6204J), EPA, Washington, DC 20460; 
telephone number (202) 343-9141; fax number (202) 343-2359; electronic 
mail address: <a href="/cdn-cgi/l/email-protection#10436475797e75623e757c696375507560713e777f66"><span class="__cf_email__" data-cfemail="441730212d2a21366a21283d3721042134256a232b32">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: Regulated Entities. Categories and entities 
potentially regulated by this action include the following:

[[Page 20466]]



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                                 NAICS        Examples of potentially
           Category             code \1\        regulated entities
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Industry.....................     221112  Fossil fuel-fired electric
                                           utility steam generating
                                           units.
Federal government...........        \2\  Fossil fuel-fired electric
                                  221122   utility steam generating
                                           units owned by the Federal
                                           government.
State/local/Tribal government        \2\  Fossil fuel-fired electric
                                  221122   utility steam generating
                                           units owned by
                                           municipalities.
                                  921150  Fossil fuel-fired electric
                                           utility steam generating
                                           units in Indian country.
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\1\ North American Industry Classification System.
\2\ Federal, State, or local government-owned and operated
  establishments are classified according to the activity in which they
  are engaged.

    This table is not intended to be exhaustive, but rather provides a 
guide for readers regarding entities likely to be regulated by this 
action. This table lists examples of the types of entities EPA is now 
aware could potentially be regulated by this action. Other types of 
entities not listed could also be affected. To determine whether a 
facility is regulated, carefully examine the applicability provisions 
and definitions in CAIR, the CAIR FIP, CAMR, and the proposed CAMR 
Federal Plan.\1\ All references related to applicability and 
definitions for these rules have been provided in a single list only 
once and will not be referenced again in this proposal to avoid 
unnecessary repetition.
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    \1\ All applicability provisions and definitions can be found in 
the CFR or FR in the following locations: for CAIR and the CAIR 
model cap-and-trade rules, 40 CFR 51.123, 51.124, 96.102, 96.104, 
96.202, 96.204, 96.302, and 96.304; for the CAIR FIP, 40 CFR 97.102, 
97.104, 97.202, 97.204, 97.302, and 97.304; for CAMR and the CAMR 
model cap-and-trade rule, 40 CFR 60.24(h)(8), 60.4102, and 60.4104; 
and for the proposed CAMR Federal Plan, Proposed Sec.  62.15902 and 
Sec.  62.15904.
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    As discussed below, the pulp and paper industry raised concerns 
regarding whether biomass-fired cogeneration units could meet the 
definition of ``cogeneration unit''. The following table identifies 
NAICS codes for entities in the pulp and paper industry. This table is 
not intended to be exhaustive, but rather the table may help identify 
entities potentially affected by today's action, although today's 
action may affect entities in other industries in addition to pulp and 
paper.

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                   Category                     NAICS code \1\     Examples of potentially regulated entities
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Industry......................................              22  Utilities.
                                                           322  Paper Manufacturing Facilities.
                                                         32213  Paperboard Mills.
                                                        322122  Newsprint Mills.
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\1\ North American Industry Classification System.

    If you have questions regarding the applicability of this action to 
a particular entity, consult your EPA Regional Office or EPA's Clean 
Air Markets Division.
    Worldwide Web. In addition to being available in the docket, an 
electronic copy of this action will also be available on the Worldwide 
Web through EPA's Office of Air and Radiation. Following signature by 
the Administrator, a copy of this action will be posted on the CAIR and 
CAMR pages at http://www.epa.gov/cair or http://www.epa.gov/camr.
    Public Hearing. If requested, EPA will hold a public hearing on 
today's proposed rule. EPA will hold a hearing only if a party notifies 
EPA by May 7, 2007, expressing its interest in presenting oral 
testimony on issues addressed in today's proposed rule. Any person may 
request a hearing by calling Elyse Steiner at (202) 343-9141 before 5 
p.m. on May 7, 2007. If a public hearing is held on today's notice, it 
will be held on May 10, 2007. Any person who plans to attend the 
hearing should visit the EPA's Web site at http://www.epa.gov/cair or 
http://www.epa.gov/camr or contact Elyse Steiner at (202) 343-9141 to 
learn if a hearing will be held, the location, and time that the 
hearing is scheduled to take place. Because the hearing will be held at 
a U.S. Government facility, everyone planning to attend should be 
prepared to show valid picture identification to the security staff in 
order to gain access to the meeting room.
    The hearing, if held, will be limited to the subject matter of this 
document. Each commenter's oral testimony will be limited to 5 minutes. 
EPA encourages commenters to provide written versions of their oral 
testimonies either electronically (on computer disk or CD ROM) or in 
paper copy. The public hearing schedule, including the list of 
speakers, will be posted on EPA's Web site at http://www.epa.gov/cair 
or http://www.epa.gov/camr. Verbatim transcripts and written statements 
will be included in the rulemaking docket.
    A public hearing would provide interested parties the opportunity 
to present data, views, or arguments concerning issues addressed in 
today's notice. EPA may ask clarifying questions during the oral 
presentations, but would not respond to the presentations or comments 
at that time.
    Written statements and supporting information submitted during the 
comment period will be considered with the same weight as any oral 
comments and supporting information presented at a public hearing.
    Outline. The information presented in this preamble is organized as 
follows:

I. Background
    A. Summary of This Proposed Action
    B. Background on CAIR, the CAIR FIP, CAMR, and the Proposed CAMR 
Federal Plan
    C. Applicability to Cogeneration Units
    D. Reason for Proposing a Change for Cogeneration Units
II. EPA's Proposed Action and Its Impacts
    A. Proposed Change for Cogeneration Units
    B. Emissions Impact of Proposed Action
    C. State Emissions Budgets
    D. Impact of Proposed Action on CAIR and CAMR Implementation
III. Minor Corrections to CAIR and the Acid Rain Program Regulations 
and Minor Revisions to the Boiler MACT
    A. CAIR and the Acid Rain Program Regulations
    B. Boiler MACT
IV. Statutory and Executive Order Reviews
    A. Executive Order 12866: Regulatory Planning and Review
    B. Paperwork Reduction Act
    C. Regulatory Flexibility Act
    D. Unfunded Mandates Reform Act
    E. Executive Order 13132: Federalism
    F. Executive Order 13175: Consultation and Coordination With 
Indian Tribal Governments

[[Page 20467]]

    G. Executive Order 13045: Protection of Children From 
Environmental Health and Safety Risks
    H. Executive Order 13211: Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use
    I. National Technology Transfer and Advancement Act
    J. Executive Order 12898: Federal Actions To Address 
Environmental Justice in Minority Populations and Low-Income 
Populations

I. Background

A. Summary of This Proposed Action

    In this rule, EPA is proposing to revise the definition of the term 
``cogeneration unit'' in CAIR, the CAIR model cap-and-trade rules, the 
CAIR FIP, CAMR and CAMR Hg model cap-and-trade rule, and the proposed 
CAMR Federal Plan. The CAIR model cap-and-trade rules and the CAIR FIP 
apply to large fossil-fuel fired electric generating units with certain 
exceptions.\2\ The CAMR, CAMR Hg model cap-and-trade rule, and proposed 
CAMR Federal Plan address large coal-fired electric generating units 
with certain exceptions.\3\ The CAIR model cap-and-trade rules, CAIR 
FIP, CAMR and CAMR Hg model cap-and-trade rule, and proposed CAMR 
Federal Plan all provide an exemption for cogeneration units meeting 
certain requirements concerning their level of electricity sales. All 
four rules provide that in order to qualify for this exemption, a unit 
must, among other things, meet the definition of cogeneration unit in 
the rule. In all four rules, a unit cannot meet the definition unless 
it meets a specified efficiency standard, i.e., the useful power plus 
one-half of useful thermal energy output of the unit must equal no less 
than a certain percentage of the total energy input or, in some cases, 
useful power must be no less than a certain percentage of total energy 
input. If a unit meets the definition of cogeneration unit including 
the efficiency standard, then the unit may qualify for the exemption in 
these rules depending on whether it meets additional criteria 
concerning the amount of electricity sales from the unit. The 
efficiency standard is applied to all energy input to the unit 
regardless of fuel type. The criteria for qualifying as a cogeneration 
unit are discussed in more detail below.
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    \2\ CAIR provides States flexibility in choosing a mechanism for 
achieving the required NO<INF>X</INF> and SO<INF>2</INF> emission 
reductions, including flexibility to choose which sources to 
control. CAIR includes model trading rules for regionwide, EPA-
administered NO<INF>X</INF> and SO<INF>2</INF> emissions cap-and-
trade programs, covering certain fossil-fuel-fired electric 
generating units, which States may choose to adopt in order to 
achieve the required reductions. If a State chooses to adopt the 
EPA-administered trading programs then it must control electric 
generating units, as defined in CAIR, and use the same applicability 
criteria as provided in the model cap-and-trade rules. The 
applicability criteria in the CAIR FIP are the same as in the model 
cap-and-trade rules.
    \3\ CAMR provides States flexibility in choosing a mechanism for 
ensuring that mercury emissions do not exceed the State's allocated 
mercury emissions budget. All necessary reductions must, however, be 
from coal-fired electric generating units as defined in CAMR. CAMR 
includes a nationwide, EPA-administered Hg emissions cap-and-trade 
program, covering coal-fired electric generating units, which States 
may choose to adopt in order to achieve the required reductions. 
States may also choose an alternative approach so long as it ensures 
that the State mercury emissions budget is not exceeded. EPA 
proposes the same applicability requirements for the CAMR Federal 
Plan as set forth in CAMR.
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    On August 4, 2006 EPA published a Notice of Data Availability for 
EGU NO<INF>X</INF> Annual and NO<INF>X</INF> Ozone Season Allocations 
for the Clean Air Interstate Rule Federal Implementation Plan Trading 
Programs (CAIR FIP NODA) (71 FR 44283). During the period for 
submitting objections concerning the CAIR FIP NODA, EPA received 
information concerning the application of the efficiency standard in 
the cogeneration unit definition (as defined in the CAIR FIP) to 
biomass-fired cogeneration units and a request to extend the period for 
objections. Subsequently, EPA extended the period for objections--only 
for objections related to biomass cogeneration units--to February 20, 
2007 (72 FR 965). The period had previously been extended to October 5, 
2006 for all objections and further extended to January 3, 2007 for 
objections concerning biomass cogeneration units. Certain biomass 
cogeneration unit owners and operators requested additional time to 
submit objections because of difficulties collecting information 
relating to the application of efficiency standards for cogeneration 
units (as defined in the CAIR FIP) to biomass cogeneration units.
    EPA is treating the information that the Agency received concerning 
the application of the efficiency standard in the cogeneration unit 
definition to biomass-fired cogeneration units as a request for 
rulemaking to change the efficiency standard in the cogeneration unit 
definition and, in light of that information, is proposing today to 
revise the efficiency standard in the cogeneration unit definition in 
the CAIR model cap-and-trade rules, the CAIR FIP, CAMR, and the CAMR 
model cap-and-trade rule, and the proposed CAMR Federal Plan, so that, 
in some cases, energy input from only fossil fuel would be included in 
the efficiency calculation. The proposed revised cogeneration unit 
definition is discussed in more detail in section II of today's 
preamble, below.
    The category of units addressed by today's proposal (existing 
biomass cogeneration units, as discussed further below) was brought to 
our attention by the pulp and paper industry. EPA requests comment on 
whether existing biomass cogeneration units in other identifiable 
industries, or cogeneration units burning other identifiable types of 
non-fossil fuels besides biomass, may have characteristics similar to 
those of existing biomass cogeneration units in the pulp and paper 
industry and would also be impacted by the proposed rule change.
    As discussed below, in today's action, EPA is requesting comment 
only on the efficiency standard in the cogeneration unit definition as 
applied to biomass cogeneration units and related definitions, on the 
definition of ``total energy input'' related to the efficiency standard 
as applied to all cogeneration units, on the minor technical 
corrections to CAIR and the Acid Rain Program Regulations, and on the 
minor revisions to the boiler MACT. We are not requesting or accepting 
comments on other parts of CAIR, the CAIR model trading rules, the CAIR 
FIP, CAMR, the CAMR model trading rule, or the CAMR Federal Plan 
proposal or reopening any issues decided in those actions for 
reconsideration or comment.
    As discussed further in section II of today's preamble, EPA 
estimated the total amount of NO<INF>X</INF>, SO<INF>2</INF>, and Hg 
emitted from units that might be affected by the proposed change to the 
cogeneration unit definition (i.e., units that may not be able to meet 
the efficiency standard as written and that are likely to be able to 
meet the standard if changed as proposed) and found the estimated 
emissions for this group of units to be very small compared to the size 
of the overall emission caps in CAIR and CAMR.
    This action also proposes minor technical corrections to CAIR and 
the Acid Rain Program rules. Finally, this action proposes minor 
revisions to National Emission Standards for Hazardous Air Pollutants 
for Industrial, Commercial, and Institutional Boilers and Process 
Heaters (``boiler MACT'').

B. Background on CAIR, the CAIR FIP, CAMR, and the Proposed CAMR 
Federal Plan

CAIR and the CAIR FIP
    On May 12, 2005, EPA published CAIR as a final rule entitled, 
``Rule to Reduce Interstate Transport of Fine Particulate Matter and 
Ozone (Clean Air Interstate Rule); Revisions to Acid Rain

[[Page 20468]]

Program; Revisions to NO<INF>X</INF> SIP Call'' (70 FR 25162). CAIR 
requires reductions of NO<INF>X</INF> and/or SO<INF>2</INF> emissions 
that contribute significantly to nonattainment and maintenance problems 
in downwind States with respect to the national ambient air quality 
standards for fine particulate matter (PM<INF>2.5</INF>) and 8-hour 
ozone to be made across 28 eastern States and the District of Columbia. 
The reductions are required in two phases. The first phase of 
NO<INF>X</INF> reductions starts in 2009 (covering 2009-2014) and the 
first phase of SO<INF>2</INF> reductions starts in 2010 (covering 2010-
2014); the second phase of reductions for both NO<INF>X</INF> and 
SO<INF>2</INF> starts in 2015 (covering 2015 and thereafter).
    States must develop State Implementation Plans (SIPs) to achieve 
the emission reductions required by CAIR and have flexibility to 
determine what measures to adopt to achieve the necessary reductions 
and which sources to control. One option is to control certain electric 
generating units. In CAIR, EPA provided model SO<INF>2</INF> and 
NO<INF>X</INF> cap-and-trade programs, covering fossil-fuel-fired 
electric generating units that States can choose to adopt to meet the 
emission reduction requirements in a flexible and highly cost-effective 
manner.
    On April 28, 2006, EPA published the FIP for CAIR as part of a 
final rule entitled, ``Rulemaking on Section 126 Petition From North 
Carolina to Reduce Interstate Transport of Fine Particulate Matter and 
Ozone; Federal Implementation Plans To Reduce Interstate Transport of 
Fine Particulate Matter and Ozone; Revisions to the Clean Air 
Interstate Rule; Revisions to the Acid Rain Program'' (71 FR 25328). 
The CAIR FIP was promulgated for all 28 States and the District of 
Columbia covered by CAIR and will ensure that the required emission 
reductions are achieved on schedule. As the control strategy for the 
FIP, EPA adopted the model SO<INF>2</INF> and NO<INF>X</INF> cap-and-
trade programs for electric generating units that EPA provided in CAIR 
as a control option for States, with minor changes to account for 
Federal, rather than State, implementation. EPA intends to withdraw the 
FIP for any State in coordination with approval of that State's SIP 
that meets the CAIR requirements.
CAMR and the Proposed CAMR Federal Plan
    On May 18, 2005, EPA published the CAMR as a final rule entitled 
``Standards of Performance for New and Existing Stationary Sources: 
Electric Utility Steam Generating Units; Final Rule'' (70 FR 28606). 
CAMR established standards of performance for mercury for new and 
existing coal-fired electric generating units and requires mercury 
reductions nationwide. The reductions are required in two phases. The 
first phase starts in 2010 (covering 2010-2017); the second phase 
starts in 2018 (covering 2018 and thereafter).
    States must develop State Plans to achieve the mercury emission 
reductions required by CAMR and have flexibility to determine what 
measures to adopt to achieve the necessary reductions. Unlike CAIR, 
under which States may choose which sources to control, CAMR requires 
that States control mercury emissions from coal-fired electric 
generating units. In CAMR, EPA provided a model Hg cap-and-trade 
program covering coal-fired electric generating units that States can 
choose to adopt to meet the emission reduction requirements.
    On December 22, 2006, EPA published a proposed Federal Plan for 
CAMR in a proposed rule entitled, ``Revisions of Standards of 
Performance for New and Existing Stationary Sources; Electric Utility 
Steam Generating Units; Federal Plan Requirements for Clean Air Mercury 
Rule; and Revisions of Acid Rain Program Rules'' (71 FR 77100). The 
CAMR Federal Plan was proposed to implement the standards of 
performance for coal-fired electric generating units located in all 
States, the District of Columbia, and Indian Country covered by CAMR 
(see 40 CFR 60.24(h)(1) listing the jurisdictions covered by CAMR) to 
ensure that the required emission reductions are achieved on schedule. 
As the control strategy for the Federal Plan, EPA proposed to adopt the 
model Hg cap-and-trade program for coal-fired electric generating units 
that EPA provided in CAMR as a control option for States, with minor 
changes to account for Federal, rather than State, implementation. EPA 
will not adopt the Federal Plan for any State with a timely submitted 
and approved State Plan that meets the CAMR requirements. EPA will 
withdraw the Federal Plan for any State after the Agency approves a 
State Plan that meets the CAMR requirements for that State. EPA will 
similarly withdraw the Federal Plan upon its approval of a Tribal Plan.

C. Applicability to Cogeneration Units

    Applicability determinations under the CAIR model cap-and-trade 
rules, the CAIR FIP, CAMR and the proposed CAMR Federal Plan all turn, 
in part, on whether a unit meets the definition of ``electric 
generating unit'' in the rule. The CAIR model cap-and-trade rules and 
the CAIR FIP use a definition of ``electric generating unit'' that 
covers certain fossil-fuel-fired units while CAMR and the proposed CAMR 
Federal Plan use a similar definition that covers certain coal-fired 
units.
    The CAIR model cap-and-trade rules and the CAIR FIP apply to large 
fossil-fuel fired electric generating units with certain exceptions. 
The CAMR and the proposed CAMR Federal Plan apply to large coal-fired 
electric generating units with certain exceptions. The CAIR model cap-
and-trade rules, CAIR FIP, CAMR and proposed CAMR Federal Plan all 
provide that certain units meeting the definition of a ``cogeneration 
unit'' may be excluded from the definition of ``electric generating 
unit'' and therefore exempt from the requirements of the rule (These 
rule provisions are commonly referred to as the cogeneration unit 
exemption). The cogeneration unit exemption is effectively the same 
under all of these rules. In order to fall within the definition of 
cogeneration unit under these rules, a unit must meet a specified 
efficiency standard, i.e., the useful power plus one-half of useful 
thermal energy output of the unit must equal no less than a certain 
percentage of the total energy input or, in some cases, useful power 
must be no less than a certain percentage of total energy input. If a 
unit meets the definition of cogeneration unit including the efficiency 
standard, then it may qualify for the cogeneration unit exemption in 
these rules depending on whether it meets additional criteria 
concerning the amount of electricity sales from the unit. The 
efficiency standard in the cogeneration unit definition is applied to 
all energy input to the unit regardless of fuel type.
    In order to qualify for the cogeneration unit exemption in these 
rules, the cogeneration unit must meet the following electricity sales 
criteria: A cogeneration unit qualifies for the exemption if the unit 
supplies in any calendar year no more than \1/3\ of its potential 
electric output capacity or 219,000 MWh, whichever is greater, to any 
utility power distribution system for sale.
CAIR and the CAIR FIP
    With certain exceptions, the CAIR model cap-and-trade rules and the 
CAIR FIP cover 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 MWe 
producing electricity for sale.

[[Page 20469]]

Similarly, CAIR refers to such units as electric generating units.
    CAIR, the CAIR model cap-and-trade rules, and the CAIR FIP define 
``cogeneration unit'' as a stationary, fossil-fuel-fired boiler or 
stationary, fossil-fuel-fired combustion turbine:
    (1) Having equipment used to produce electricity and useful thermal 
energy for industrial, commercial, heating, or cooling purposes through 
the sequential use of energy; and
    (2) Producing during the 12-month period starting on the date the 
unit first produces electricity and during any calendar year after the 
calendar year in which the unit first produces electricity--
    (i) For a topping-cycle cogeneration unit,\4\
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    \4\ Topping-cycle cogeneration unit means a cogeneration unit in 
which the energy input to the unit is first used to produce useful 
power, including electricity, and at least some of the reject heat 
from the electricity production is then used to provide useful 
thermal energy.
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    (A) Useful thermal energy not less than 5 percent of total energy 
output; and
    (B) Useful power that, when added to one-half of useful thermal 
energy produced, is not less then 42.5 percent of total energy input, 
if useful thermal energy produced is 15 percent or more of total energy 
output, or not less than 45 percent of total energy input, if useful 
thermal energy produced is less than 15 percent of total energy output.
    (ii) For a bottoming-cycle cogeneration unit,\5\ useful power not 
less than 45 percent of total energy input.
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    \5\ Bottoming-cycle cogeneration unit means a cogeneration unit 
in which the energy input to the unit is first used to produce 
useful thermal energy and at least some of the reject heat from the 
useful thermal energy application or process is then used for 
electricity production.
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CAMR and the Proposed CAMR Federal Plan
    With certain exceptions, CAMR defines electric generating unit 
(EGU) as a stationary, coal-fired boiler or stationary, coal-fired 
combustion turbine in the State serving at any time, since the later of 
November 15, 1990 or the start-up of a unit's combustion chamber, a 
generator with nameplate capacity of more than 25 MWe producing 
electricity for sale. An Hg Budget unit is an EGU that is subject to 
the requirements of the CAMR Hg Budget Trading Program under a State 
Plan approved by the Administrator as consistent with EPA's model Hg 
trading rule or under the proposed CAMR Federal Plan.
    The definition of ``cogeneration unit'' in CAMR, the CAMR model 
cap-and-trade rule, and the proposed CAMR Federal Plan is identical to 
the cogeneration unit definition in CAIR, the CAIR model cap-and-trade 
rules, and the CAIR FIP, except that the definition in the CAMR and 
related rules refers to stationary, coal-fired boilers or stationary, 
coal-fired combustion turbines where the definition in the CAIR-related 
rules refers to stationary, fossil-fuel-fired boilers or stationary, 
fossil-fuel-fired combustion turbines.
    If a unit meets the criteria concerning service of a generator (and 
so would otherwise be an electric generating unit) but qualifies as a 
cogeneration unit, then the unit may be excluded from the definition of 
electric generating unit in CAIR, or excluded from that definition and 
the regulatory requirements of the CAIR model cap-and-trade rules, the 
CAIR FIP, CAMR and the CAMR model cap-and-trade rule, and the proposed 
CAMR Federal Plan. In order to qualify for this exemption under these 
rules, the cogeneration unit must meet certain criteria concerning 
electricity sales from the unit. Specifically, as discussed above, a 
cogeneration unit qualifies for the exemption if the unit supplies in 
any calendar year no more than \1/3\ of its potential electric output 
capacity or 219,000 MWh, whichever is greater, to any utility power 
distribution system for sale.

D. Reason for Proposing a Change for Cogeneration Units

    The purpose of the efficiency standard in the cogeneration unit 
definition is to prevent a potential loophole where a unit might send 
only a nominal or insignificant amount of thermal energy to a process 
and not achieve significant efficiency gains through cogeneration, but 
still qualify as a cogeneration unit and potentially be excluded from 
the EGU definition, or from the applicability provisions, under the 
CAIR and CAMR and related rules.
    During the period for submitting objections concerning the CAIR FIP 
NODA, EPA received information that suggested to EPA that the 
efficiency standard in the definition of cogeneration unit should be 
revised. The information concerns the application of the efficiency 
standard to biomass-fired cogeneration units and says that the existing 
rule ``unfairly penalizes co-generation units that burn significant 
amounts of biomass.'' The information indicates that many biomass 
cogeneration units may be unable to meet the efficiency standard 
because ``biomass, when burned as a fuel, has a lower thermal 
efficiency for conversion to steam than fossil fuels, such as coal, oil 
and natural gas.''
    Previously, in developing CAIR, EPA indicated that it expected 
``most back pressure units burning * * * biomass to meet the efficiency 
standard'' (see Technical Support Document (TSD) for CAIR on 
Cogeneration Unit Efficiency Calculations). The Agency believed at the 
time that most existing biomass cogeneration units would meet the 
efficiency standard, and thus would be potentially exempt cogeneration 
units. EPA now is re-examining whether the efficiency standard is 
appropriate for all biomass-fired cogeneration units.
    EPA believes that the vast majority of existing biomass 
cogeneration units are operated by the pulp and paper industry.\6\ The 
biomass fuels typically fired by pulp and paper units are wood-based 
biomass and black liquor.\7\ Both biomass fuels have relatively high 
moisture content that prevents them from burning as efficiently as coal 
and other fossil fuels. The moisture content of these biomass fuels can 
range from approximately 40 to over 60 percent. In comparison, the 
moisture content of bituminous coal is relatively low, less than 10 
percent. Higher moisture content requires that more of the heating 
value of the fuel goes into evaporating that moisture during 
combustion. The evaporated moisture (and the heat used to evaporate it) 
escapes up the stack--subtracting from the efficiency of the unit. 
Therefore, the higher the moisture content in the biomass and the 
higher the proportion of biomass fuel used, the more difficult it will 
be for a unit to meet the efficiency standard in the cogeneration unit 
definition. Conversely, the greater the amount of heat input from 
fossil fuels, the easier it is for a unit to meet the efficiency 
standard because of the reduced need for energy to heat and vaporize 
the moisture in the fuel.
---------------------------------------------------------------------------

    \6\ The pulp and paper industry raised concerns regarding 
biomass cogeneration units during the period for objections to the 
CAIR FIP NODA.
    \7\ Black liquor is spent pulping liquor, a byproduct of a 
pulping process used to separate the wood fibers used in papermaking 
from lignin and other wood solids.
---------------------------------------------------------------------------

    Certain additional factors may also contribute to lower 
efficiencies for existing biomass cogeneration units in the pulp and 
paper industry. EPA believes that, as compared to large electric power 
plants that are optimized for power generation, many of the existing 
process-optimized units in the pulp and paper industry use 
significantly lower design steam pressure and temperature conditions at 
the steam turbine inlet. For example, a large power plant turbine might 
be

[[Page 20470]]

designed to use steam at 2,400 psig and 1,000 [deg]F, whereas a 
turbine-generator in a pulp and paper plant might be using steam at 
conditions below 900 psig and 800 [deg]F. These lower steam conditions 
reduce the efficiency of the overall cogeneration cycle, which was 
optimized for process needs, not for electric power generation. 
Moreover, many steam-turbine generators in the pulp and paper industry 
may have been installed by retrofit--a circumstance that may have 
exacerbated the problem because the boiler was designed before 
cogeneration by the unit was contemplated and thus before the impact of 
the design on thermal efficiency became a consideration.
    In addition, existing biomass cogeneration units (boilers and steam 
turbines) in the pulp and paper industry generally are relatively 
small, and smaller units are typically less efficient than larger 
units. The existing smaller units generally do not incorporate high-
efficiency design practices and their energy losses (such as radiation 
loss for a boiler and mechanical loss for a turbine-generator set) per 
unit of energy input are inherently higher. The combination of 
relatively high fuel moisture content and small boiler size results in 
efficiencies as low as 60 percent for the biomass boiler itself, 
compared to typical large fossil fuel-fired boiler efficiencies ranging 
to above 85 percent.
    In summary, EPA believes that existing biomass cogeneration units 
as a group have a particular set of characteristics that together may 
make it difficult for many units to meet the efficiency standard in the 
cogeneration unit definition unless the units co-fire significant 
amounts of fossil fuel, such as coal. These characteristics are: Fuels 
with relatively high moisture content, units designed for relatively 
low pressure and temperature conditions for industrial processes, and 
relatively small boilers and steam turbines that are inherently less 
efficient due to their size. EPA recognizes that there are some 
existing biomass cogeneration units (e.g., those that co-fire coal, 
natural gas, or oil for a large portion of their heat input) that might 
be able to meet the efficiency standard, as discussed in the following 
section.
    The cogeneration unit definition finalized in the CAIR model cap-
and-trade rules, the CAIR FIP, CAMR, and in the proposed CAMR Federal 
Plan, includes all energy input in the efficiency calculation. EPA 
believes that the inclusion of energy input from all fuels--rather than 
from fossil fuels only--has the unanticipated and unintended 
consequence of making it very difficult for existing biomass 
cogeneration units to qualify as cogeneration units unless they co-fire 
significant amounts of fossil fuel, such as coal. Preventing these 
existing units from qualifying as cogeneration units is not consistent 
with the purposes of the efficiency standard. These units were 
originally designed to and still do produce significant amounts of 
useful thermal energy (relative to their total energy output) and 
achieve efficiency gains over non-cogeneration units. Under these 
circumstances, application of the currently written efficiency standard 
to existing biomass cogeneration units does not seem to promote the 
purposes of the standard. In addition, application of this standard as 
written has the paradoxical result that existing biomass cogeneration 
units burning greater amounts of coal (therefore likely having greater 
emissions) are much more likely to meet the efficiency requirement and 
thus qualify as cogeneration units exempt from emission limits under 
the CAIR model cap-and-trade programs and CAMR model cap-and-trade 
rule, while existing biomass cogeneration units burning less coal 
(therefore likely having lower emissions) are less likely to meet the 
requirement and qualify for the exemption.
    For these reasons, EPA is proposing to revise the efficiency 
standard in the cogeneration unit definition such that energy input 
from only the fossil fuel portion of the input would be included in the 
efficiency calculation for existing units. The proposed change is 
discussed in more detail below.

II. EPA's Proposed Action and Its Impacts

A. Proposed Change for Cogeneration Units

    EPA is proposing today to revise the efficiency standard in the 
cogeneration unit definition in CAIR, the CAIR model cap-and-trade 
rules, the CAIR FIP, CAMR and the CAMR model cap-and-trade rule, and 
the proposed CAMR Federal Plan, to permit existing boilers to include 
only energy input from fossil fuel in the efficiency calculation rather 
than energy input from all fuels. This change would make it more likely 
that existing units burning biomass and cogenerating electricity and 
useful thermal energy could meet the efficiency standard and qualify as 
exempt cogeneration units under these rules. EPA proposes to change the 
cogeneration unit efficiency standard for boilers but not for 
combustion turbines because combustion turbines generally do not fire 
biomass. The proposed methodology for determining thermal efficiency of 
a cogeneration unit under a revised efficiency standard is set forth in 
detail in the Technical Support Document (TSD) that accompanies this 
notice.
    Further, EPA requests comment on whether the efficiency standard in 
the cogeneration unit definition should be revised to include language 
explaining how to calculate a unit's ``total energy input'' or 
alternatively, whether the definition of ``total energy input'' itself 
should be revised. As discussed in the TSD, EPA recognizes that there 
may be alternative formulas for calculating a unit's total energy 
input, which is a critical value in determining its efficiency under 
either the existing or any revised efficiency standard. EPA requests 
comment on the TSD, including the methodology for determining 
efficiency and the formula for calculating total energy input. EPA also 
asks for comments on whether to revise the efficiency standard or 
revise the definition of ``total energy input'' currently in CAIR, the 
CAIR model cap-and-trade rules, the CAIR FIP, CAMR and CAMR Hg model 
cap-and-trade rule, and the proposed CAMR Federal Plan in order to 
specify the formula that should be used to calculate a unit's total 
energy input.
    EPA proposes to change the efficiency standard only for existing 
units because the Agency believes that units built in the future to 
cogenerate electricity and useful thermal energy (regardless of the 
percentage of heat input from biomass) can be designed to meet the 
efficiency standard as currently written. EPA proposes to change the 
efficiency standard only for units whose construction commenced on or 
before April 25, 2007 and units with equipment used in cogenerating 
where construction of such equipment commenced on or before April 25, 
2007. If a unit that commenced construction on or before April 25, 2007 
was not designed for cogeneration but is retrofitted for and commences 
cogeneration after that date, EPA proposes that such a unit be treated 
the same as a new cogeneration unit and so would be covered by the 
existing efficiency standard. EPA believes that with the proper 
planning and design decisions, these units are capable of operating 
more efficiently than those built before the efficiency standard became 
a consideration (i.e., on or before April 25, 2007). Retrofits can make 
use of available technology such as back pressure turbines that allow 
the unit to operate at higher efficiency, install equipment upgrades, 
and select adequate steam and temperature

[[Page 20471]]

conditions. Further, these units are likely to have higher utilization 
after they commence cogeneration because they will get higher returns 
on investments by running the units more to make electricity for use on 
site, purchasing less electricity and/or selling some electricity to 
the grid. The increased utilization likely will result in greater 
emissions. Therefore, they should either be covered by the requirements 
of the cap-and-trade programs or operate efficiently enough to qualify 
for the cogeneration unit exemption.
    The Agency proposes a new definition for the term ``construction 
commenced'' (see proposed regulatory text at end of preamble). The 
proposed definition is based on, and essentially combines, the 
definitions of ``commenced'' and ``construction'' in 40 CFR 60.2 
(Standards of Performance for New Stationary Sources). As an 
alternative, EPA requests comment on using, as a basis for the new 
definition, the definition of ``commence'' in 40 CFR 52.21(b)(9) 
(Prevention of Significant Deterioration of Air Quality) and the 
definition of ``construction'' in 40 CFR 60.2. While the definition of 
``commenced'' in 40 CFR 60.2 requires that the owner or operator start 
or be contractually obligated to start and complete within a reasonable 
time a continuous program of construction, the definition of 
``commence'' in 40 CFR 52.21 is narrower and, for example, requires 
either the start of on-site (e.g., not just off-site construction of 
equipment) or a contractual obligation that cannot be cancelled or 
modified without substantial loss to the owner or operator.
    The proposed revision to the cogeneration unit definition would 
apply only to boilers where construction of the unit and of its 
cogeneration equipment commenced on or before the above-referenced cut-
off date and would have the effect of applying the following definition 
to such boilers (see also proposed regulatory text):
    Cogeneration unit means a stationary, fossil-fuel-fired boiler (for 
the CAIR model rules and the CAIR FIP) or stationary, coal-fired boiler 
(for CAMR and the proposed CAMR Federal Plan):
    (1) Having equipment used to produce electricity and useful thermal 
energy for industrial, commercial, heating, or cooling purposes through 
the sequential use of energy; and
    (2) Producing during the 12-month period starting on the date the 
unit first produces electricity and during any calendar year after the 
calendar year in which the unit first produces electricity--
    (i) For a topping-cycle cogeneration unit,
    (A) Useful thermal energy not less than 5 percent of total energy 
output; and
    (B) Useful power that, when added to one-half of useful thermal 
energy produced, is not less then 42.5 percent of total energy input 
from fossil fuel, if useful thermal energy produced is 15 percent or 
more of total energy output, or not less than 45 percent of total 
energy input from fossil fuel, if useful thermal energy produced is 
less than 15 percent of total energy output.
    (ii) For a bottoming-cycle cogeneration unit, useful power not less 
than 45 percent of total energy input from fossil fuel.
    This revised definition would not apply to boilers failing to meet 
the commence construction requirements. For such units the cogeneration 
unit definition--and the efficiency standard in particular--would 
remain as finalized in the CAIR model rules, the CAIR FIP and CAMR, and 
in the proposed CAMR Federal Plan.
    Nor would the revised definition apply to combustion turbines. For 
combustion turbines (regardless of their commence construction dates) 
the cogeneration unit definition--and the efficiency standard in 
particular--would remain as finalized in the CAIR model rules, the CAIR 
FIP and CAMR, and in the proposed CAMR Federal Plan.
    However, as discussed above, EPA is also requesting comment on 
revising the efficiency standard, or the definition of ``total energy 
input,'' to specify the formula for calculating a unit's total energy 
input. Any such revision would be applicable in determining the 
efficiency of all units under the cogeneration unit definition whether 
or not the units are biomass cogeneration units that would be covered 
by a limitation on the categories of fuel included in determining 
energy input.
    Although EPA proposes to revise the cogeneration unit definition 
only for boilers where construction of the units and their cogeneration 
equipment commenced on or before April 25, 2007, the Agency requests 
comment on the choice of the cut-off date for the revised cogeneration 
unit definition, whether any specific, different cut-off date should be 
used, and whether the cogeneration unit definition should be revised 
for all units regardless of their commence construction dates. 
Additionally, EPA requests comment on not changing the cogeneration 
unit definition at all.
    EPA also requests comment on an alternative proposal that would 
revise the efficiency standard in the cogeneration unit definition to 
specifically exclude heat input from biomass fuel, rather than revising 
the standard to include heat input from fossil fuel only. This 
alternative proposal would narrowly limit the exclusion of heat input 
to the non-fossil fuel (i.e., biomass) whose high moisture content, 
combined with the other factors discussed above (e.g., relatively low 
pressure and temperature unit design conditions and relatively small 
boilers and steam turbines), would be the basis for EPA's proposed 
exemption. The heat input from other non-fossil fuels (e.g., non-
fossil-fuel process gases) that lack the same level of moisture and 
that may not be predominantly used in these types of units would not be 
excluded from the efficiency calculation. This would avoid expanding 
the cogeneration unit exemption to units that cogenerate but lack the 
unique combination of characteristics on which EPA proposes to base the 
exemption.
    The efficiency calculation would be based on total energy input 
excluding input from biomass fuel. EPA requests comment on using the 
following definition of the term ``biomass'' in 26 U.S.C. 48B(c)(4), 
which was added to the Internal Revenue Code by Section 1307 of the 
Energy Policy Act of 2005 (Pub. L. 109-58), for purposes of the 
alternative proposed revision to the efficiency standard:
    Biomass means:
    (1) Any agricultural or plant waste;
    (2) Any byproduct of wood or paper mill operations, including 
lignin in spent pulping liquors; and
    (3) Any other products of forestry maintenance;
    (4) Provided that the term `Biomass' does not include paper that is 
commonly recycled.
    The Agency also requests comment on whether a different definition 
of biomass should be used for this alternative proposal.

B. Emissions Impact of Proposed Action

    EPA analyzed the emissions impact of this proposed action using the 
methodology explained below. For this analysis, EPA used Energy 
Information Administration (EIA) data because detailed EPA data was not 
available. Most units potentially affected by today's proposed rule 
change have not been required to report to EPA in the past under 
existing programs such as the Acid Rain Program or the NO<INF>X</INF> 
SIP Call. While EPA has data about many of these sources as part of the 
National Emission Inventory (NEI), the NEI does not provide information 
at the unit level necessary to determine if units are

[[Page 20472]]

cogenerating or selling electricity to the grid. Therefore, NEI data is 
not sufficient to make estimates regarding which units might be 
affected by today's proposed rule change. We used EIA data to determine 
which units would potentially be affected and to estimate the potential 
impacts of the proposed change.
    For the CAIR model rules and the CAIR FIP, we generated a list of 
biomass cogeneration units that serve generators with nameplate 
capacity greater than 25 MW in CAIR states. We assumed that all of 
these units could potentially be included in the CAIR and CAIR FIP 
trading programs because any biomass unit might use fossil fuel for 
start-up, combustion stabilization, or enhancement of electricity and 
steam production. From this list we removed units that reported to EIA 
that they do not have the ability to sell power to the grid; we assumed 
that these units would not be affected by the proposed revision to the 
cogeneration unit definition because they are not producing electricity 
for sale and would not be potentially included in the CAIR and CAIR FIP 
trading programs. We also removed from the list some units that 
reported having the ability to sell power to the grid; because their 
historical electricity sales data reported to EIA indicated sales above 
the threshold in the cogeneration unit definition \8\ (i.e., more than 
\1/3\ potential electric output capacity or 219,000 MWh supplied to a 
utility power generation system for sale), we assumed these units would 
not qualify for the cogeneration unit exemption even with the proposed 
revision of the cogeneration unit definition. For the remaining units 
on the list, based on fuel use data from EIA and assumed performance of 
the units with various fuels, we analyzed whether these units are 
likely to meet the efficiency standard in the cogeneration unit 
definition as currently written. We removed from the list any units 
that our analysis indicated are likely to meet the efficiency standard 
as written because their status under the CAIR model cap-and-trade 
rules or the CAIR FIP would not be affected by the proposed change.
---------------------------------------------------------------------------

    \8\ Analysis of electricity sales data was based on two years of 
data, 1999 and 2000.
---------------------------------------------------------------------------

    After taking the above steps, the remaining units on the list are 
ones that may be affected by the proposed rule change, i.e., units that 
we assumed would not be exempt from state rules incorporating the CAIR 
model trading rules or the CAIR FIP trading programs as written, but 
that could become exempt if the proposed rule change is finalized as 
proposed. We estimated annual NO<INF>X</INF> and SO<INF>2</INF> 
emissions from this remaining group of units. See Table II-1.
    For CAMR and the proposed CAMR Federal Plan, using EIA data we 
generated a list of cogeneration units burning both coal and biomass 
that serve a generator with nameplate capacity greater than 25 MW in 
CAMR states, i.e., nationwide. Then we took the same steps as described 
above for the CAIR analysis, with the remaining units being ones that 
may be affected by the proposed rule change, i.e., units that we 
assumed would not be exempt from CAMR or the CAMR Federal Plan as 
written but may become exempt with the proposed rule change. We 
estimated annual Hg emissions from this remaining group of units. See 
Table II-1.
    As shown in the table, emissions from units whose status under the 
CAIR model rules or the CAIR FIP may be affected by the proposed rule 
change are estimated to be on the order of 25,000 tons per year for 
both NO<INF>X</INF> and SO<INF>2</INF>. These emissions are quite small 
compared to the size of the regionwide emission caps under CAIR, which 
are 1.5 and 1.3 million tons of NO<INF>X</INF> for the first and second 
phases of the annual NO<INF>X</INF> program, respectively, and 3.7 and 
2.6 million tons of SO<INF>2</INF> for the first and second phases of 
the SO<INF>2</INF>, program, respectively (i.e., for NO<INF>X</INF>, 
about 1.6 percent of the phase I cap and 1.9 percent of the phase II 
cap, and for SO<INF>2</INF> about 0.6 percent of the phase I cap and 
0.9 percent of the phase II cap).\9\
---------------------------------------------------------------------------

    \9\ Arkansas is included in CAIR for the ozone-season 
NO<INF>X</INF> program only, not for the annual NO<INF>X</INF> and 
SO<INF>2</INF> programs. Because these NO<INF>X</INF> emission 
estimates include annual NO<INF>X</INF> emissions for units in 
Arkansas, the estimates slightly overstate the potential impact of 
the proposed rule change for units in Arkansas.
---------------------------------------------------------------------------

    Emissions from units whose status under CAMR or the proposed CAMR 
Federal Plan may be affected by the proposed rule change are estimated 
to be on the order of 0.02 tons of Hg per year. These emissions are 
very small compared to the size of the nationwide emission caps under 
CAMR which are 38 and 15 tons of Hg for the first and second phases, 
respectively (i.e., less than 0.1 percent of the phase I cap and about 
0.1 percent of the phase II cap).
    Another way to look at the magnitude of emissions represented by 
units that may be affected by the proposed rule change is to compare 
emissions from this group of units to emissions from biomass 
cogeneration units that we assumed are already exempt because they can 
meet the efficiency standard as currently written. Table II-2 shows 
estimated annual NO<INF>X</INF>, SO<INF>2</INF>, and Hg emissions for 
this group of units. (Note that this group excludes units that reported 
to EIA that they do not have the ability to sell power to the grid and 
units that reported the ability to sell power and whose historic sales 
exceed the electricity sales threshold for the exemption.) As shown in 
the table, the emissions from the group of units whose regulatory 
status we assumed would change under this proposed rule change are less 
than emissions from the group of biomass cogeneration units who we 
assumed are already exempt from these rules because they can meet the 
efficiency standard as currently written.
    EPA's analysis also suggests that, on average, the estimated 
emissions per unit are lower from the group whose regulatory status we 
assumed would change compared to the group we assumed are already 
exempt from these rules because they can meet the efficiency standard. 
It is expected that emission rates at units burning proportionally more 
biomass--which is the group whose regulatory status we assumed would 
change--will generally be lower than emission rates at units burning 
less biomass.
    It is important to note that EPA emissions estimates in Tables II-1 
and II-2 are based on a rough estimate of the universe of units that 
might be affected by the proposed rule change. More detailed 
information for each unit is necessary in order to make a definitive 
determination as to whether the particular unit would be able to meet 
the efficiency standard as written or as proposed to be modified.

[[Page 20473]]



Table II-1.--Estimate of Biomass Cogeneration Units Potentially Excluded
    From CAIR and CAMR by Proposed Rule Change and Estimate of Their
                                Emissions
------------------------------------------------------------------------
                                  CAIR NOX   CAIR SO2       CAMR Hg
------------------------------------------------------------------------
Estimated number of units               55         46                  6
 potentially affected by
 proposed rule change..........
Estimated annual emissions from     24,200     23,800      0.02 (40 lbs)
 units potentially affected by
 proposed rule change (tons)...
------------------------------------------------------------------------


  Table II-2.--Estimate of Biomass Cogeneration Units Assumed Excluded
           From CAIR and CAMR and Estimate of Their Emissions
------------------------------------------------------------------------
                                  CAIR NOX   CAIR SO2       CAMR Hg
------------------------------------------------------------------------
Estimated number of units               31         28                 30
 assumed to meet efficiency
 standard as written...........
Estimated annual emissions from     22,000     59,200     0.24 (480 lbs)
 units assumed to meet the
 efficiency standard as written
 (tons)........................
------------------------------------------------------------------------

    Finally, units that might become exempt cogeneration units if 
today's proposed rule changes are finalized may be required to make 
emission reductions under programs other than CAIR or CAMR. Federal 
requirements exist to protect areas of most concern, including Best 
Available Retrofit Technology (BART) requirements for sources in 
proximity to specially protected Class 1 areas. A review of available 
information indicates that the majority (about two-thirds) of the 
cogeneration units that may be affected by the proposed rule change may 
be required to install NO<INF>X</INF> and SO<INF>2</INF> controls in 
response to BART requirements. It is also likely that biomass 
cogeneration units that co-fire coal that may become exempt units under 
today's proposed rule change will be required to comply with the boiler 
MACT requirements, which include mercury emission limits.

C. State Emissions Budgets

    EPA does not propose to change the NO<INF>X</INF>, SO<INF>2</INF>, 
or Hg State emission budgets under CAIR and CAMR. As discussed above, 
the estimated amount of emissions from units potentially affected by 
today's proposed action is minimal compared to the size of the 
applicable regionwide (CAIR) and nationwide (CAMR) caps.
    In addition, States have made significant progress toward the 
implementation of CAIR and CAMR based on the emission budgets that were 
established in those rules. Proposing and finalizing revised State 
emission budgets would take substantial effort by many States and EPA 
and considerably delay CAIR and CAMR implementation in order to make 
slight reductions in emissions caps. The CAIR emission budgets are in 
40 CFR 51.123(e)(2) and (q)(2) and 51.124(e)(2) and CAMR emission 
budgets are in 40 CFR 60.24(h)(3). Discussion of development of the 
CAIR and CAMR State emission budgets are in 70 FR 25162 and 70 FR 
28606, respectively.
    The Agency also seeks comment on changing the budgets to reflect 
this change in the definition of cogeneration unit.

D. Impact of Proposed Action on CAIR and CAMR Implementation

    The Agency recognizes that States have made significant progress 
toward the implementation of CAIR and CAMR and that finalizing this 
proposed change in the cogeneration unit definition and in the 
applicability provisions of the CAIR model rules and CAMR would require 
States to change CAIR SIPs and CAMR State Plans. If EPA finalizes 
today's proposed rule change, we will carefully consider the timing of 
the regulatory action in relation to the implementation timeline. The 
Agency understands that there may be implementation concerns regarding 
today's proposal and seeks comments on what those implementation 
concerns are. The Agency is particularly interested in comments 
regarding timing of this action in relation to implementation 
activities.
    EPA realizes that some States may allocate allowances to 
cogeneration units that might be affected by today's proposal before 
the proposal is finalized. If the proposal is finalized, some such 
units may no longer be required to hold allowances. The Agency believes 
that this could be addressed by the State's SIP revision or State Plan. 
For example, the SIP revision or State Plan adopting revisions making 
some units exempt from the allowance-holding requirement could require 
the affected units to surrender their allocations for inclusion in the 
State's new unit set-aside. If the State would require the unit to 
surrender their allocations, the SIP revision or State Plan should 
indicate how allowances would be handled. Note that a State could also 
choose not to require the units to surrender allowances even though the 
units were no longer covered by the rule. A State has flexibility to 
choose how it allocates allowances, although the allocations must be 
consistent with the State's approved allocation methodology. EPA seeks 
comment on the potential impact of the revision of the cogeneration 
unit definition and the applicability provisions on the allowance 
allocation process.
    EPA is also seeking comment on an alternative proposal whereby the 
Agency would modify the CAIR to allow States intending to join the EPA-
administered CAIR trading programs to choose which cogeneration unit 
definition to use. The CAIR currently allows States to join the EPA-
administered trading programs only if they adopt the model rules with 
limited modifications. Under this alternative proposal, EPA would 
change the cogeneration unit definition in the model trading rules, but 
allow States to join the EPA-administered trading programs even if they 
continued to use the existing cogeneration unit definition in the model 
trading rules. Thus, States could participate in the EPA-administered 
trading programs regardless of whether they choose to use the 
definition as currently written or any revised definition that may be 
finalized in this rulemaking. In the CAIR FIP, EPA would change the 
cogeneration unit definition as proposed today.
    Under this alternative, a State that chose to use the cogeneration 
unit definition as currently written would not need to revise the 
definition in the State's CAIR SIP. This could lead to slightly 
different applicability provisions among the States. EPA recognizes 
that some States may have laws that prohibit the State from having

[[Page 20474]]

more stringent requirements than the requirements mandated by EPA (as 
discussed above, EPA believes that the proposed change would have only 
a slight impact on emissions). EPA seeks comment on whether this 
alternative would ease any implementation concerns. Although this 
alternative would provide an additional area of flexibility for States 
in the CAIR model cap-and-trade rules, EPA does not contemplate adding 
this flexibility to the abbreviated SIP revision option that was 
finalized in the CAIR FIP. If EPA changes the cogeneration unit 
definition in the CAIR FIP as proposed, States that chose to use an 
abbreviated SIP revision to allocate allowances under a FIP could 
modify their allocation method to accommodate the revised FIP 
cogeneration unit definition if they chose to do so.
    EPA does not propose under this alternative that States could 
decide which definition of cogeneration unit to use for State Plans 
under CAMR, however, because CAMR specifies the category of units from 
which States must obtain emission reductions (coal-fired electric 
generating units as defined in the rule) in contrast to CAIR where 
States have flexibility in the choice of sources to control. The Agency 
seeks comment on whether this flexibility could or should be an 
alternative for CAMR State Plans. (In any case, EPA does not 
contemplate this alternative as an added flexibility for States to 
implement under the proposed CAMR Federal Plan.) Similar to States 
under the CAIR FIP, States may choose their allocation method for 
allowances under the CAMR proposed Federal Plan using a State 
allocation methodology.

III. Minor Corrections to CAIR and the Acid Rain Program Regulations 
and Minor Revisions to the Boiler MACT

A. CAIR and the Acid Rain Program Regulations

    In addition to the above-described rule revisions, EPA is proposing 
certain minor corrections to CAIR, the CAIR model cap-and-trade rules, 
and the Acid Rain Program regulations. On April 28, 2006, EPA 
promulgated a final rule revising several definitions used in both the 
CAIR and in the CAIR model cap-and-trade rules. While the rule text in 
the April 28, 2006 final rule incorporated the revisions to the 
definitions in the CAIR model cap-and-trade rules, the final rule 
mistakenly did not also include rule text reflecting conforming changes 
to the definitions of the same terms in the CAIR, i.e., to the 
definitions for ``Allocation or allocation'', ``Combustion turbine'', 
``Nameplate capacity'', and ``Maximum design heat input''. EPA proposes 
in today's action to implement these conforming changes in the 
definitions for these terms in Sec.  51.123(cc) and (q) and Sec.  
51.124(q) for the reasons explained in that final action.
    With regard to the CAIR model cap-and-trade rules, EPA is proposing 
a minor correction of the definition of ``Permitting authority''. For 
all States subject to CAIR, this term is intended to include the 
agencies authorized to issue CAIR permits under the regulations 
approved by the Administrator for the EPA-administered CAIR cap-and-
trade programs. Some States have incorporated by reference, or intend 
to incorporate by reference, the permitting provisions of the CAIR 
model cap-and-trade rules. However, many other States have promulgated, 
or intend to promulgate, their own permitting provisions concerning the 
processing and issuing of CAIR permits under the EPA-administered cap-
and-trade programs. The existing definition refers only to permitting 
authorities issuing CAIR permits under the permitting provisions of the 
CAIR model cap-and-trade rules and not to permitting authorities 
governed by States' own permitting provisions that may be approved into 
SIPs by the Administrator under CAIR. Today's proposed correction--
i.e., the elimination of the references, in the current ``Permitting 
authority'' definition, to subparts CC, CCC, and CCCC of the CAIR model 
cap-and-trade rules--would correct this technical problem.
    With regard to the Acid Rain Program regulations, EPA is today 
proposing minor corrections to two parts of the regulations. In Part 
72, EPA is proposing a non-substantive correction in wording in the 
Certificate of Representation requirements so that the provision would 
have the same wording as comparable provisions in the CAIR model cap-
and-trade rules. This would facilitate using a single Certificate of 
Representation form for all of these trading programs. In Part 78, EPA 
is proposing corrections that would make it clear that the 
administrative appeals procedures apply to all final actions of the 
Administrator under the EPA-administered cap-and-trade programs whether 
the programs are governed by the CAIR model cap-and-trade rule 
provisions that many States are incorporating by reference or whether 
the programs are governed by the State's own cap-and-trade rules 
approved by the Administrator.

B. Boiler MACT

    EPA is also proposing in today's action a change to clarify the 
provision in the boiler MACT that explicitly excludes from that rule 
``mercury budget units covered by 40 CFR part 60, subpart HHHH'' (40 
CFR 63.7491(c)). EPA intended to exclude from the boiler MACT all units 
subject to CAMR (i.e., all electric generating units (EGU's) as defined 
in CAMR) and not just those units (i.e., Hg Budget units) that become 
subject to the EPA-administered Hg Budget Trading Program under 40 CFR 
part 60, subpart HHHH (see 71 FR 77109 explaining that EPA had amended 
the boiler MACT to exclude ``units subject to CAMR''). All EGUs under 
CAMR, whether covered by a State Plan that adopts the Hg Budget Trading 
Program or that adopts other controls that meet CAMR requirements, are 
subject to the State EGU Hg budgets established by CAMR. In excluding 
EGUs from the boiler MACT, EPA did not intend to distinguish among EGUs 
based on whether the State in which an EGU is located is participating 
in the Hg Budget Trading Program.
    Under today's proposal, EGUs (i.e., Hg Budget units) in States 
participating in that program would continue to be excluded from the 
boiler MACT, and the regulatory language would be revised to include, 
in the exclusion, all EGUs covered by CAMR. In order to properly 
characterize all of the units that EPA originally intended to exclude, 
EPA proposes essentially to replace, in 40 CFR 63.7491(c), the term 
``Mercury Budget Unit'' by the broader term ``Electric Generating 
Unit''.

IV. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review

    Under Executive Order (EO) 12866 (58 FR 51735, October 4, 1993), 
this action is not a ``significant regulatory action'' and is therefore 
not subject to review under the EO.
    This action proposes relatively minor revisions to the definition 
of ``cogeneration unit'' in the CAIR model cap-and-trade rules, CAIR 
FIP, CAMR, including the CAMR model cap-and-trade rule, and the 
proposed CAMR Federal Plan. It also proposes some other minor, 
technical rule revisions to the CAIR, the Acid Rain Program, and the 
boiler MACT. For today's action, EPA is relying on the economic 
analysis conducted for CAIR, CAMR, and the boiler MACT that are 
presented in the Regulatory Impact Analyses for those actions.

[[Page 20475]]

B. Paperwork Reduction Act

    This action does not impose any new information collection burden. 
This action proposes relatively minor revisions to the definition of 
``cogeneration unit'' in the CAIR model cap-and-trade rules, CAIR FIP, 
CAMR, including the model cap-and-trade rule, and the proposed CAMR 
Federal Plan. It also proposes some other minor, technical rule 
revisions to the CAIR, the Acid Rain Program, and the boiler MACT. The 
paperwork reduction requirements for this action are satisfied through 
the Information Collection Requests (ICRs) submitted to OMB for review 
and approval as part of CAIR, CAMR and the boiler MACT.
    The OMB has previously approved the information collection 
requirements contained in the existing CAIR, CAMR, and boiler MACT 
regulations (70 FR 25313, May 12, 2005, 70 FR 28643, May 18, 2005, and 
70 FR 55248 September 13, 2004, respectively) under the provisions of 
the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. For the CAIR and 
CAMR ICRs, OMB has assigned control numbers 2060-0570 and 2060-0567, 
respectively (EPA No. 2152.02 and 2137.02). OMB also has previously 
approved the information collection requirements contained in the 
existing boiler MACT regulations and has assigned OMB control number 
2060-0551 (EPA No. 2028.02). A copy of the OMB approved ICRs may be 
obtained from Susan Auby, Collection Strategies Division, U.S. 
Environmental Protection Agency (2822T), 1200 Pennsylvania Ave., NW., 
Washington, DC 20460 or by calling (202) 566-1672.
    Burden means the total time, effort, or financial resources 
expended by persons to generate, maintain, retain, disclose or provide 
information to or for a Federal agency. This includes the time needed 
to review instructions; develop, acquire, install, and utilize 
technology and systems for the purposes of collecting, validating, and 
verifying information, processing and maintaining information, and 
disclosing and providing information; adjust the existing ways to 
comply with any previously applicable instructions and requirements; 
train personnel to be able to respond to a collection of information; 
search data sources; complete and review the collection of information; 
and transmit or otherwise disclose the information.
    An agency may not conduct or sponsor, and a person is not required 
to respond to a collection of information unless it displays a 
currently valid OMB control number. The OMB control numbers for EPA's 
regulations in 40 CFR are listed in 40 CFR Part 9.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) generally requires an agency 
to prepare a regulatory flexibility analysis of any rule subject to 
notice and comment rulemaking requirements under the Administrative 
Procedure Act or any other statute unless the agency certifies that the 
rule will not have a significant economic impact on a substantial 
number of small entities. Small entities include small businesses, 
small organizations, and small governmental jurisdictions.
    For purposes of assessing the impacts of today's rule on small 
entities, small entity is defined as: (1) A small business as defined 
by the Small Business Administration's (SBA) regulations at 13 CFR 
121.201; (2) a small governmental jurisdiction that is a government of 
a city, county, town, school district or special district with a 
population of less than 50,000; and (3) a small organization that is 
any not-for-profit enterprise which is independently owned and operated 
and is not dominant in its field.
    After considering the economic impacts of today's proposed rule on 
small entities, EPA has determined that this action will not have a 
significant economic impact on a substantial number of small entities. 
In determining whether a rule has a significant economic impact on a 
substantial number of small entities, the impact of concern is any 
significant adverse economic impact on small entities, since the 
primary purpose of the regulatory flexibility analyses is to identify 
and address regulatory alternatives ``which minimize any significant 
economic impact of the rule on small entities.'' 5 U.S.C. 603 and 604. 
Thus, an agency may certify that a rule will not have a significant 
economic impact on a substantial number of small entities if, among 
other possibilities, the rule relieves regulatory burden, or otherwise 
has a positive economic effect on all of the small entities subject to 
the rule.
    EPA is proposing to revise the thermal efficiency standard in the 
cogeneration unit definition, which exists in the CAIR model trading 
rules, CAIR FIP, CAMR, including the CAMR model trading rule, and 
proposed CAMR Federal Plan. As a result, some additional cogeneration 
units will likely be exempt from the CAIR FIP, CAMR and the proposed 
CAMR Federal Plan. We have therefore concluded that the changes to the 
CAIR FIP, CAMR, including the CAMR model trading rule, and the proposed 
CAMR Federal Plan in today's proposed rule will not have any 
significant adverse impact on small entities and may relieve regulatory 
burden on some small entities that would have been subject to these 
programs in the absence of today's proposed rule change.
    CAIR and the CAIR model trading rules do not establish requirements 
applicable to small entities and thus a regulatory flexibility analysis 
is not required for the revisions to the CAIR model trading rules. CAIR 
requires States to submit SIP revisions to achieve the necessary 
emission reductions and provides model trading rules that the States 
may adopt to achieve these reductions. However, because States have the 
discretion under CAIR to choose the sources to regulate and the 
emissions reductions to be achieved by the regulated sources, EPA 
cannot predict the effect of the change to the definition in the CAIR 
model rules on small entities. In States that choose to adopt the model 
rules with the modified definition of cogeneration unit, the likely 
result would be the exemption of some additional cogeneration units 
from the EPA-administered CAIR cap-and-trade programs.
    With regard to CAMR, the change to the cogeneration definition is 
likely to result in some additional cogeneration units becoming exempt 
from CAMR, as well as from the EPA-administered CAMR cap-and-trade 
program, including potentially some small entities. Because the change 
is likely to relieve regulatory burden, the change will not have a 
significant economic impact on a substantial number of small entities.
    The proposed technical changes to the boiler MACT clarify that any 
EGU subject to CAMR (whether or not the EGU is in a State that is 
participating in the EPA-administered Hg cap-and-trade program) is 
excluded from the boiler MACT. This change will not have any 
significant adverse impact on small entities and may relieve regulatory 
burden on some small entities that would have been subject to the 
boiler MACT in the absence of today's proposed rule change.
    The other proposed rule revisions would not make any substantive 
changes in the requirements of the existing rules and, therefore, would 
not have any potential impacts on small entities. We continue to be 
interested in the potential impacts of the proposed rule on small 
entities and welcome comments on issues related to such impacts.

[[Page 20476]]

D. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-
4) (UMRA), establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and Tribal 
governments and the private sector. Under UMRA section 202, 2 U.S.C. 
1532, EPA generally must prepare a written statement, including a cost-
benefit analysis, for any proposed or final rule that ``includes any 
Federal mandate that may result in the expenditure by State, local, and 
Tribal governments, in the aggregate, or by the private sector, of 
$100,000,000 or more * * * in any one year.'' A ``Federal mandate'' is 
defined under UMRA section 421(6), 2 U.S.C. 658(6), to include a 
``Federal intergovernmental mandate'' and a ``Federal private sector 
mandate.'' A ``Federal intergovernmental mandate,'' in turn, is defined 
to include a regulation that ``would impose an enforceable duty upon 
State, local, or Tribal governments,'' except for, among other things, 
a duty that is ``a condition of Federal assistance'' (UMRA section 
421(5)(A)(i)(I), 2 U.S.C. 658(5)(A)(i)). A ``Federal private sector 
mandate'' includes a regulation that ``would impose an enforceable duty 
upon the private sector,'' with certain exceptions (UMRA section 
421(7)(A), 2 U.S.C. 658(7)(A)).
    Before promulgating an EPA rule for which a written statement is 
needed under UMRA section 202, UMRA section 205, 2 U.S.C. 1535, 
generally requires EPA to identify and consider a reasonable number of 
regulatory alternatives and adopt the least costly, most cost-
effective, or least burdensome alternative that achieves the objectives 
of the rule.
    EPA prepared a written statement meeting the requirements of 
section 202 of UMRA for the final CAIR and CAMR and boiler MACT 
rulemaking processes. Most of the changes proposed in today's action 
relate to the definition of cogeneration unit, which results in a minor 
change in the applicability criteria for the CAIR model trading rules, 
CAIR FIP, CAMR, including the CAMR model trading rule, and the proposed 
CAMR Federal Plan that will not significantly alter the impacts of 
these rules. The technical change proposed for the boiler MACT in 
today's action relates to the exclusion of EGUs and makes that 
exclusion consistent with the intended scope of the boiler MACT. The 
other proposed rule changes would make no substantive changes in the 
requirements of the existing rules. Thus, the analyses already prepared 
for CAIR, CAMR, and the boiler MACT are applicable to today's action.
    In summary, today's rule contains no Federal mandates for State, 
local, or tribal governments or the private sector because this action 
is likely to actually relieve regulatory burden by making more units 
eligible for the cogeneration unit exemption. Furthermore, as EPA 
stated in the final CAIR and CAMR, EPA is not directly establishing any 
regulatory requirements that may significantly or uniquely affect small 
governments, including Tribal governments. Thus, EPA is not obligated 
to develop under UMRA section 203 a small government agency plan. 
Furthermore, in a manner consistent with the intergovernmental 
consultation provisions of UMRA section 204, EPA carried out 
consultations with the governmental entities affected by this rule.

E. Executive Order 13132: Federalism

    Executive Order 13132, entitled ``Federalism'' (64 FR 43255, August 
10, 1999), requires EPA to develop an accountable process to ensure 
``meaningful and timely input by State and local officials in the 
development of regulatory policies that have federalism implications.'' 
``Policies that have federalism implications'' are defined in the EO to 
include regulations that have ``substantial direct effects on the 
States, on the relationship between the national government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government.''
    This proposed rule does not have Federalism implications. It will 
not have substantial direct effects on the States, on the relationship 
between the national government and the States, or on the distribution 
of power and responsibilities among the various levels of government, 
as specified in Executive Order 13132. Thus, EO 13132 does not apply to 
this proposed rule. In the spirit of Executive Order 13132, and 
consistent with EPA policy to promote communications between EPA and 
State and local governments, EPA specifically solicits comment on this 
proposed rule from State and local officials.

F. Executive Order 13175: Consultation and Coordination With Indian 
Tribal Governments

    Executive Order 13175, entitled ``Consultation and Coordination 
with Indian Tribal Governments'' (65 FR 67249, November 9, 2000), 
requires EPA to develop an accountable process to ensure ``meaningful 
and timely input by Tribal officials in the development of regulatory 
policies that have Tribal implications.'' This proposal does not have 
``Tribal implications'' as specified in EO 13175. Thus, Executive Order 
13175 does not apply to this rule.

G. Executive Order 13045: Protection of Children From Environmental 
Health and Safety Risks

    Executive Order 13045, entitled ``Protection of Children from 
Environmental Health and Safety Risks'' (62 FR 19885, April 23, 1997), 
applies to any rule that (1) is determined to be ``economically 
significant'' as defined under EO 12866 and (2) concerns an 
environmental health or safety risk that EPA has reason to believe may 
have a disproportionate effect on children. If the regulatory action 
meets both criteria, Section 5-501 of the EO directs the Agency to 
evaluate the environmental health or safety effects of the planned rule 
on children and explain why the planned regulation is preferable to 
other potentially effective and reasonably feasible alternatives 
considered by the Agency.
    This proposed rule is not subject to the Executive Order because it 
is not economically significant as defined in Executive Order 12866, 
and because the Agency does not have reason to believe the 
environmental health or safety risks addressed by this action present a 
disproportionate risk to children. This proposed rule would result in 
little change in emissions levels and the environmental benefits 
projected in the final CAIR and CAMR because the likely effect of the 
proposed rule would be to exempt a small number of units with a very 
small amount of emissions compared to the overall emissions caps. 
Similarly, the proposed change to the boiler MACT would result in 
little change in emissions levels and projected environmental benefits. 
The health and safety risks are essentially unchanged from those 
analyzed in CAIR, the CAIR FIP, CAMR, the proposed CAMR Federal Plan, 
and the boiler MACT.
    The public is invited to submit or identify peer-reviewed studies 
and data, of which EPA may not be aware, that assessed results of early 
life exposure to SO<INF>2</INF>, NO<INF>X</INF> or Hg.

H. Executive Order 13211: Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use

    This rule is not subject to Executive Order 13211, ``Actions 
Concerning Regulations That Significantly Affect Energy Supply, 
Distribution, or Use'' (66 FR 28355, May 22, 2001), because it is not a 
significant regulatory action under Executive Order 12866.

[[Page 20477]]

I. National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement 
Act (NTTAA) of 1995 (Pub. L. 104-113; 15 U.S.C. 272 note) directs EPA 
to use voluntary consensus standards in their regulatory and 
procurement activities unless to do so would be inconsistent with 
applicable law or otherwise impracticable. Voluntary consensus 
standards are technical standards (e.g., material specifications, test 
methods, sampling procedures, business practices) developed or adopted 
by one or more voluntary consensus bodies. The NTTAA requires EPA to 
provide Congress, through OMB, with explanations when EPA decides not 
to use available and applicable voluntary consensus standards.
    This proposed action does not propose the use of any additional 
technical standards beyond those cited in the final CAIR, CAMR and 
boiler MACT. Therefore, EPA is not considering the use of any 
additional voluntary consensus standards for this action.

J. Executive Order 12898: Federal Actions To Address Environmental 
Justice in Minority Populations and Low-Income Populations

    Executive Order 12898, entitled ``Federal Actions to Address 
Environmental Justice in Minority Populations and Low-Income 
Populations,'' requires Federal agencies to consider the impact of 
programs, policies, and activities on minority populations and low-
income populations. According to EPA guidance,\10\ agencies are to 
assess whether minority or low-income populations face risks or a rate 
of exposure to hazards that are significant and that ``appreciably 
exceed or is likely to appreciably exceed the risk or rate to the 
general population or to the appropriate comparison group.'' (EPA, 
1998)
---------------------------------------------------------------------------

    \10\ U.S. Environmental Protection Agency, 1998. Guidance for 
Incorporating Environmental Justice Concerns in EPA's NEPA 
Compliance Analyses. Office of Federal Activities, Washington, DC, 
April, 1998.
---------------------------------------------------------------------------

    In accordance with Executive Order 12898, EPA expects this proposal 
to have no disproportionate negative impacts on minority or low income 
populations because the emissions reduced by CAIR and CAMR remain 
essentially the same.

List of Subjects

40 CFR Part 51

    Administrative practice and procedure, Air pollution control, 
Intergovernmental relations, Nitrogen oxides, Ozone, Particulate 
matter, Reporting and recordkeeping requirements, Sulfur dioxide.

40 CFR Part 60

    Environmental protection, Administrative practice and procedure, 
Air pollution control, Coal, Electric power plants, Intergovernmental 
relations, Metals, Natural gas, Nitrogen oxides, Particulate matter, 
Reporting and recordkeeping requirements, Sulfur dioxide.

40 CFR Part 62

    Environmental protection, Air pollution control, Hazardous 
Substances, Reporting and recordkeeping requirements.

40 CFR Part 63

    Administrative practice and procedure, Air pollution control, 
Hazardous substances, Intergovernmental relations, Reporting and 
recordkeeping requirements.

40 CFR Part 72

    Acid rain, Air pollution control, Carbon dioxide, Electric 
utilities, Incorporation by reference, Nitrogen oxides, Reporting and 
recordkeeping requirements, Sulfur dioxide.

40 CFR Part 78

    Environmental protection, Acid rain, Administrative practice and 
procedure, Air pollution control, Electric utilities, Nitrogen oxides, 
Reporting and recordkeeping requirements, Sulfur dioxide.

40 CFR Part 96

    Environmental protection, Administrative practice and procedure, 
Intergovernmental relations, Air pollution, control, Nitrogen oxides, 
Reporting and recordkeeping requirements, Sulfur dioxide.

40 CFR Part 97

    Environmental protection, Administrative practice and procedure, 
Air pollution control, Intergovernmental relations, Nitrogen oxides, 
Sulfur dioxide, Reporting and recordkeeping requirements.

    Dated: April 16, 2007.
Stephen L. Johnson,
Administrator.

    For the reasons set forth in the preamble, parts 51, 60, 62, 63, 
72, 78, 96, and 97 of chapter 1 of title 40 of the Code of Federal 
Regulations are proposed to be amended as follows:

PART 51--[AMENDED]

    1. The authority citation for part 51 continues to read as follows:

    Authority: 23 U.S.C. 101; 42 U.S.C. 7401-7671q.

    2. Section 51.123(cc) is amended as follows:
    a. In the definition of ``Allocate or allocation'', by revising the 
word ``source'' to read ``source or other entity'';
    b. In the definition of ``Cogeneration unit'', by revising, in 
paragraph (2), the words ``calendar year after which'' to read 
``calendar year after the calendar year in which'' and by adding a new 
paragraph (3);
    c. In paragraph (2) of the definition of ``Combustion turbine'', by 
revising the words ``any associated heat recovery steam generator'' to 
read ``any associated duct burner, heat recovery steam generator,'';
    d. By revising the definition of ``Maximum design heat input'';
    e. In the definition of ``Nameplate capacity'', by revising the 
words ``other deratings) as specified'' to read ``other deratings as of 
such installation as specified'' and by revising the words ``maximum 
amount as specified'' to read ``maximum amount as of such completion as 
specified''; and
    f. By adding in alphabetical order a new definition of 
``Construction commenced'' to read as follows:


Sec.  51.123  Findings and requirements for submission of State 
implementation plan revisions relating to emissions of oxides of 
nitrogen pursuant to the Clean Air Interstate Rule.

* * * * *
    (cc) * * *
    Cogeneration unit means * * *
    (3) Provided that the total energy input under paragraphs (2)(i)(B) 
and (2)(ii) of this definition shall equal the unit's total energy 
input only from fossil fuel if the unit is a boiler--
    (i) For which construction commenced on or before April 25, 2007; 
and
    (ii) Having equipment used to produce electricity and useful 
thermal energy through sequential use of energy, for which construction 
commenced on or before April 25, 2007.
* * * * *
    Construction commenced means, with regard to a boiler or equipment 
under paragraph (3) of the definition of Cogeneration unit in this 
paragraph, that the owner or operator has undertaken, or entered into a 
contractual obligation

[[Page 20478]]

to undertake and complete within a reasonable time, a continuous 
program of fabrication, erection, or installation of the boiler or 
equipment.
* * * * *
    Maximum design heat input means the maximum amount of fuel per hour 
(in Btu/hr) that a unit is capable of combusting on a steady state 
basis as of the initial installation of the unit as specified by the 
manufacturer of the unit.
* * * * *
    3. Section 51.124(q) is amended as follows:
    a. In the definition of ``Allocate or allocation'', by revising the 
word ``source'' to read ``source or other entity'';
    b. In the definition of ``Cogeneration unit'', by revising, in 
paragraph (2), the words ``calendar year after which'' to read 
``calendar year after the calendar year in which'' and by adding a new 
paragraph (3);
    c. In paragraph (2) of the definition of ``Combustion turbine'', by 
revising the words ``any associated heat recovery steam generator'' to 
read ``any associated duct burner, heat recovery steam generator,'';
    d. By revising the definition of ``Maximum design heat input'';
    e. In the definition of ``Nameplate capacity'', by revising the 
words ``other deratings) as specified'' to read ``other deratings as of 
such installation as specified'' and by revising the words ``maximum 
amount as specified'' to read ``maximum amount as of such completion as 
specified''; and
    f. By adding in alphabetical order a new definition of 
``Construction commenced'' to read as follows:


Sec.  51.124  Findings and requirements for submission of State 
implementation plan revisions relating to emissions of sulfur dioxide 
pursuant to the Clean Air Interstate Rule.

* * * * *
    (q) * * *
    Cogeneration unit means * * *
    (3) Provided that the total energy input under paragraphs (2)(i)(B) 
and (2)(ii) of this definition shall equal the unit's total energy 
input only from fossil fuel if the unit is a boiler--
    (i) For which construction commenced on or before April 25, 2007; 
and
    (ii) Having equipment used to produce electricity and useful 
thermal energy through sequential use of energy, for which construction 
commenced on or before April 25, 2007.
* * * * *
    Construction commenced means, with regard to a boiler or equipment 
under paragraph (3) of the definition of Cogeneration unit in this 
paragraph, that the owner or operator has undertaken, or entered into a 
contractual obligation to undertake and complete within a reasonable 
time, a continuous program of fabrication, erection, or installation of 
the boiler or equipment.
* * * * *
    Maximum design heat input means the maximum amount of fuel per hour 
(in Btu/hr) that a unit is capable of combusting on a steady state 
basis as of the initial installation of the unit as specified by the 
manufacturer of the unit.
* * * * *

PART 60--[AMENDED]

    4. The authority citation for part 60 is revised to read as 
follows:

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

    5. Section 60.24(h)(8) is amended as follows:
    a. In the definition of ``Cogeneration unit'', by adding a new 
paragraph (3); and
    b. By adding in alphabetical order a new definition of 
``Construction commenced'' to read as follows:


Sec.  60.24  Emission standards and compliance schedules.

* * * * *
    (h) * * *
    (8) * * *
    Cogeneration unit means * * *
    (3) Provided that the total energy input under paragraphs (2)(i)(B) 
and (2)(ii) of this definition shall equal the unit's total energy 
input only from fossil fuel if the unit is a boiler--
    (i) For which construction commenced on or before April 25, 2007; 
and
    (ii) Having equipment used to produce electricity and useful 
thermal energy through sequential use of energy, for which construction 
commenced on or before April 25, 2007.
* * * * *
    Construction commenced means, with regard to a boiler or equipment 
under paragraph (3) of the definition of Cogeneration unit in this 
paragraph, that the owner or operator has undertaken, or entered into a 
contractual obligation to undertake and complete within a reasonable 
time, a continuous program of fabrication, erection, or installation of 
the boiler or equipment.
* * * * *
    6. Section 60.4102 is amended as follows:
    a. In the definition of ``Cogeneration unit'', by adding a new 
paragraph (3); and
    b. By adding in alphabetical order a new definition of 
``Construction commenced'' to read as follows:


Sec.  60.4102  Definitions.

* * * * *
    Cogeneration unit means * * *
    (3) Provided that the total energy input under paragraphs (2)(i)(B) 
and (2)(ii) of this definition shall equal the unit's total energy 
input only from fossil fuel if the unit is a boiler--
    (i) For which construction commenced on or before April 25, 2007; 
and
    (ii) Having equipment used to produce electricity and useful 
thermal energy through sequential use of energy, for which construction 
commenced on or before April 25, 2007.
* * * * *
    Construction commenced means, with regard to a boiler or equipment 
under paragraph (3) of the definition of Cogeneration unit in this 
section, that the owner or operator has undertaken, or entered into a 
contractual obligation to undertake and complete within a reasonable 
time, a continuous program of fabrication, erection, or installation of 
the boiler or equipment.
* * * * *

PART 62--[AMENDED]

    7. The authority citation for Part 62 continues to read as follows:

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

    8. Section 62.15902 as proposed on December 22, 2006 (71 FR 77110) 
is amended as follows:
    a. In the definition of ``Cogeneration unit'', by adding a new 
paragraph (3); and
    b. By adding in alphabetical order a new definition of 
``Construction commenced'' to read as follows:


Sec.  62.15902  Definitions.

* * * * *
    Cogeneration unit means * * *
    (3) Provided that the total energy input under paragraphs (2)(i)(B) 
and (2)(ii) of this definition shall equal the unit's total energy 
input only from fossil fuel if the unit is a boiler--
    (i) For which construction commenced on or before April 25, 2007; 
and
    (ii) Having equipment used to produce electricity and useful 
thermal energy through sequential use of energy, for which construction 
commenced on or before April 25, 2007.
* * * * *
    Construction commenced means, with regard to a boiler or equipment 
under paragraph (3) of the definition of

[[Page 20479]]

Cogeneration unit in this section, that the owner or operator has 
undertaken, or entered into a contractual obligation to undertake and 
complete within a reasonable time, a continuous program of fabrication, 
erection, or installation of the boiler or equipment.
* * * * *

PART 63--NATIONAL EMISSION STANDARDS FOR HAZARDOUS AIR POLLUTANTS 
FOR SOURCE CATEGORIES

    9. The authority citation for part 63 continues to read as follows:

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

    10. Section 63.7491 is amended by revising paragraph (c) to read as 
follows:


Sec.  63.7491  Are any boilers or process heaters not subject to this 
subpart?

* * * * *
    (c) An electric utility steam generating unit (including a unit 
covered by 40 CFR part 60, subpart Da) or an electric generating unit 
as defined in 40 CFR 60.24(h)(8) (including a Hg Budget unit covered by 
the provisions of a State Plan approved under 40 CFR 60.24(h)(6)).
* * * * *

PART 72--PERMITS REGULATION

    11. The authority citation for part 72 is revised to read as 
follows:

    Authority: 42 U.S.C. 7601 and 7651 et seq.

    12. Section 72.24 is amended, in paragraph (a)(9) introductory 
text, by revising the words ``life-of-the-unit, firm power contractual 
arrangements'' to read ``a life-of-the-unit, firm power contractual 
arrangement''.

PART 78--APPEAL PROCEDURES

    13. The authority citation for part 78 is revised to read as 
follows:

    Authority: 42 U.S.C. 7401, 7403, 7410, 7411, 7426, 7601, and 
7651, et seq.

    14. Section 78.1 is amended by revising paragraph (a)(1) to read as 
follows:


Sec.  78.1  Purpose and scope.

    (a)(1) This part shall govern appeals of any final decision of the 
Administrator under subpart HHHH of part 60 of this chapter or State 
regulations approved under Sec.  60.24(h)(6)(i) or (ii) of this 
chapter, subpart LLL of part 62 of this chapter, part 72, 73, 74, 75, 
76, or 77 of this chapter, subparts AA through II of part 96 of this 
chapter or State regulations approved under Sec.  51.123(o)(1) or (2) 
of this chapter, subparts AAA through III of part 96 of this chapter or 
State regulations approved under Sec.  51.124(o)(1) or (2) of this 
chapter, subparts AAAA through IIII of part 96 of this chapter or State 
regulations approved under Sec.  51.123(aa)(1) or (2) of this chapter, 
or part 97 of this chapter; provided that matters listed in Sec.  
78.3(d) and preliminary, procedural, or intermediate decisions, such as 
draft Acid Rain permits, may not be appealed. All references in 
paragraph (b) of this section and in Sec.  78.3 subpart HHHH of part 60 
of this chapter, to subparts AA through II of part 96 of this chapter, 
subparts AAA through III of part 96 of this chapter, and subparts AAAA 
through IIII of part 96 of this chapter shall be read to include the 
comparable provisions in State regulations approved under Sec.  
60.24(h)(6)(i) or (ii) of this chapter, Sec.  51.123(o)(1) or (2) of 
this chapter, Sec.  51.124(o)(1) or (2) of this chapter, and Sec.  
51.123(aa)(1) or (2) of this chapter, respectively.
* * * * *

PART 96--[AMENDED]

    15. The authority citation for part 96 continues to read as 
follows:

    Authority: 42 U.S.C. 7401, 7403, 7410, 7601, and 7651, et seq.

    16. Section 96.102 is amended as follows:
    a. In the definition of ``Cogeneration unit'', by adding a new 
paragraph (3);
    b. In the definition of ``Permitting authority'', by removing the 
words ``in accordance with subpart CC of this part''; and
    c. By adding in alphabetical order a new definition of 
``Construction commenced'' to read as follows:


Sec.  96.102  Definitions.

* * * * *
    Cogeneration unit means * * *
    (3) Provided that the total energy input under paragraphs (2)(i)(B) 
and (2)(ii) of this definition shall equal the unit's total energy 
input only from fossil fuel if the unit is a boiler--
    (i) For which construction commenced on or before April 25, 2007; 
and
    (ii) Having equipment used to produce electricity and useful 
thermal energy through sequential use of energy, for which construction 
commenced on or before April 25, 2007.
* * * * *
    Construction commenced means, with regard to a boiler or equipment 
under paragraph (3) of the definition of Cogeneration unit in this 
section, that the owner or operator has undertaken, or entered into a 
contractual obligation to undertake and complete within a reasonable 
time, a continuous program of fabrication, erection, or installation of 
the boiler or equipment.
* * * * *
    17. Section 96.202 is amended as follows:
    a. In the definition of ``Cogeneration unit'', by adding a new 
paragraph (3);
    b. In the definition of ``Permitting authority'', by removing the 
words ``in accordance with subpart CCC of this part''; and
    c. By adding in alphabetical order a new definition of 
``Construction commenced'' to read as follows:


Sec.  96.202  Definitions.

* * * * *
    Cogeneration unit means * * *
    (3) Provided that the total energy input under paragraphs (2)(i)(B) 
and (2)(ii) of this definition shall equal the unit's total energy 
input only from fossil fuel if the unit is a boiler--
    (i) For which construction commenced on or before April 25, 2007 
and
    (ii) Having equipment used to produce electricity and useful 
thermal energy through sequential use of energy, for which construction 
commenced on or before April 25, 2007.
* * * * *
    Construction commenced means, with regard to a boiler or equipment 
under paragraph (3) of the definition of Cogeneration unit in this 
section, that the owner or operator has undertaken, or entered into a 
contractual obligation to undertake and complete within a reasonable 
time, a continuous program of fabrication, erection, or installation of 
the boiler or equipment.
* * * * *
    18. Section 96.302 is amended as follows:
    a. In the definition of ``Cogeneration unit'', a new paragraph (3);
    b. In the definition of ``Permitting authority'', by removing the 
words ``in accordance with subpart CCCC of this part''; and
    c. By adding in alphabetical order a new definition of 
``Construction commenced'' to read as follows:


Sec.  96.302  Definitions.

* * * * *
    Cogeneration unit means * * *
    (3) Provided that the total energy input under paragraphs (2)(i)(B) 
and (2)(ii) of this definition shall equal the unit's total energy 
input only from fossil fuel if the unit is a boiler--
    (i) For which construction commenced on or before April 25, 2007; 
and
    (ii) Having equipment used to produce electricity and useful 
thermal

[[Page 20480]]

energy through sequential use of energy, for which construction 
commenced on or before April 25, 2007.
* * * * *
    Construction commenced means, with regard to a boiler or equipment 
under paragraph (3) of the definition of Cogeneration unit in this 
section, that the owner or operator has undertaken, or entered into a 
contractual obligation to undertake and complete within a reasonable 
time, a continuous program of fabrication, erection, or installation of 
the boiler or equipment.
* * * * *
    19. The authority citation for part 97 continues to read as 
follows:

    Authority: 42 U.S.C. 7401, 7403, 7410, 7426, 7601, and 7651, et 
seq.

    20. Section 97.102 is amended as follows:
    a. In the definition of ``Cogeneration unit'', by adding a new 
paragraph (3);
    b. In the definition of ``Permitting authority'', by removing the 
words ``in accordance with subpart CC of this part''; and
    c. By adding in alphabetical order a new definition of 
``Construction commenced'' to read as follows:


Sec.  97.102  Definitions.

* * * * *
    Cogeneration unit means * * *
    (3) Provided that the total energy input under paragraphs (2)(i)(B) 
and (2)(ii) of this definition shall equal the unit's total energy 
input only from fossil fuel if the unit is a boiler--
    (i) For which construction commenced on or before April 25, 2007; 
and
    (ii) Having equipment used to produce electricity and useful 
thermal energy through sequential use of energy, for which construction 
commenced on or before April 25, 2007.
* * * * *
    Commencing construction means, with regard to a boiler or equipment 
under paragraph (3) of the definition of Cogeneration unit in this 
section, that the owner or operator has undertaken, or entered into a 
contractual obligation to undertake and complete within a reasonable 
time, a continuous program of fabrication, erection, or installation of 
the boiler or equipment.
* * * * *
    21. Section 97.202 is amended as follows:
    a. In the definition of ``Cogeneration unit'', by adding a new 
paragraph (3);
    b. In the definition of ``Permitting authority'', by removing the 
words ``in accordance with subpart CCC of this part''; and
    c. By adding in alphabetical order a new definition of 
``Construction commenced'' to read as follows:


Sec.  97.202  Definitions.

* * * * *
    Cogeneration unit means * * *
    (3) Provided that the total energy input under paragraphs (2)(i)(B) 
and (2)(ii) of this definition shall equal the unit's total energy 
input only from fossil fuel if the unit is a boiler--
    (i) For which construction commenced on or before April 25, 2007; 
and
    (ii) Having equipment used to produce electricity and useful 
thermal energy through sequential use of energy, for which construction 
commenced on or before April 25, 2007.
* * * * *
    Construction commenced means, with regard to a boiler or equipment 
under paragraph (3) of the definition of Cogeneration unit in this 
section, that the owner or operator has undertaken, or entered into a 
contractual obligation to undertake and complete within a reasonable 
time, a continuous program of fabrication, erection, or installation of 
the boiler or equipment.
* * * * *
    22. Section 97.302 is amended as follows:
    a. In the definition of ``Cogeneration unit'', by adding a new 
paragraph (3);
    b. In the definition of ``Permitting authority'', by removing the 
words ``in accordance with subpart CCCC of this part''; and
    c. By adding in alphabetical order a new definition of 
``Construction commenced'' to read as follows:


Sec.  97.302  Definitions.

* * * * *
    Cogeneration unit means * * *
    (3) Provided that the total energy input under paragraphs (2)(i)(B) 
and (2)(ii) of this definition shall equal the unit's total energy 
input only from fossil fuel if the unit is a boiler--
    (i) For which construction commenced on or before April 25, 2007; 
and
    (ii) Having equipment used to produce electricity and useful 
thermal energy through sequential use of energy, for which construction 
commenced on or before April 25, 2007.
* * * * *
    Construction commenced means, with regard to a boiler or equipment 
under paragraph (3) of the definition of Cogeneration unit in this 
section, that the owner or operator has undertaken, or entered into a 
contractual obligation to undertake and complete within a reasonable 
time, a continuous program of fabrication, erection, or installation of 
the boiler or equipment.
* * * * *
 [FR Doc. E7-7536 Filed 4-24-07; 8:45 am]
BILLING CODE 6560-50-P


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