Document Headings

                    Document headings vary by document type but may contain                    the following:                  
                -                       the agency or agencies that issued and signed a document                    
                -                       the number of the CFR title and the number of each part                      the document amends, proposes to amend, or is directly                      related to                    
                -                       the agency docket number / agency internal file number                    
                -                       the RIN which identifies each regulatory action listed in                      the Unified Agenda of Federal Regulatory and Deregulatory                      Actions                    

                    See the                                          Document Drafting Handbook                                        for more details.                  

###### Environmental Protection Agency

          - 40 CFR Part 52 
          - [EPA-R07-OAR-2007-0347; FRL-8309-6] 

# AGENCY:

Environmental Protection Agency (EPA). 

# ACTION:

Proposed rule.

# SUMMARY:

                        EPA is proposing to approve a revision to the Iowa State Implementation Plan (SIP) submitted on August 15, 2006. This revision addresses the requirements of EPA's Clean Air Interstate Rule (CAIR) promulgated on May 12, 2005, and subsequently revised on April 28, 2006, and December 13, 2006. EPA is proposing to determine that the SIP revision fully implements the CAIR requirements for Iowa. Therefore, as a consequence of the SIP approval, EPA will also withdraw the CAIR Federal Implementation Plans (FIPs) concerning SO2, NOX                         annual, NOX                         ozone season emissions for Iowa. The CAIR FIPs for all States in the CAIR region were promulgated on April 28, 2006, and subsequently revised on December 13, 2006.                     

                        CAIR requires States to reduce emissions of sulfur dioxide (SO2) and nitrogen oxides (NOX) that significantly contribute to, and interfere with maintenance of, the national ambient air quality standards for fine particulates and/or ozone in any downwind state. CAIR establishes State budgets for SO2                         and NOX                         and requires States to submit SIP revisions that implement these budgets in States that EPA concluded did contribute to nonattainment in downwind states. States have the flexibility to choose which control measures to adopt to achieve the budgets, including participating in the EPA-administered cap-and-trade programs. In the SIP revision that EPA is proposing to approve, Iowa would meet CAIR requirements by participating in the EPA-administered cap-and-trade programs addressing SO2, NOX                         annual, and NOX                         ozone season emissions.                     

# DATES:

Comments must be received on or before June 7, 2007. 

# ADDRESSES:

Submit your comments, identified by Docket ID No. EPA-R07-OAR-2007-0347, by one of the following methods: 

                        1.                         *http://www.regulations.gov:*                         Follow the on-line instructions for submitting comments.                     

                        2.                         *E-mail: jay.michael@epa.gov.*

                        3.                         *Mail:*                         Michael Jay, Environmental Protection Agency, Air Planning and Development Branch, 901 North 5th Street, Kansas City, Kansas 66101.                     

                        4.                         *Hand Delivery or Courier:*                         Deliver your comments to: Michael Jay, Environmental Protection Agency, Air Planning and Development Branch, 901 North 5th Street, Kansas City, Kansas 66101. Such deliveries are only accepted during the Regional Office's normal hours of operation. The Regional Office's official hours of business are Monday through Friday, 8 a.m. to 4:30 p.m., excluding Federal holidays.                     

*Instructions:*                         Direct your comments to Docket ID No. EPA-R07-OAR-2007-0347. EPA's policy is that all comments received will be included in the public docket without change and may be made available online at                         *http://www.regulations.gov*, including any personal information provided, unless the comment includes information claimed to be Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. Do not submit through                         *http://www.regulations.gov*                         or e-mail,                               ( print page 26041)                            information that you consider to be CBI or otherwise protected. The                         *http://www.regulations.gov*                         Web site is an “anonymous access” system, which means EPA will not know your identity or contact information unless you provide it in the body of your comment. If you send an e-mail comment directly to EPA without going through                         *http://www.regulations.gov*, your e-mail address will be automatically captured and included as part of the comment that is placed in the public docket and made available on the Internet. If you submit an electronic comment, EPA recommends that you include your name and other contact information in the body of your comment and with any disk or CD-ROM you submit. If EPA cannot read your comment due to technical difficulties and cannot contact you for clarification, EPA may not be able to consider your comment. Electronic files should avoid the use of special characters and any form of encryption and should be free of any defects or viruses.                     

*Docket:*                         All documents in the electronic docket are listed in the                         *http://www.regulations.gov*                         index. Although listed in the index, some information is not publicly available, i.e., CBI or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, is not placed on the Internet and will be publicly available only in hard copy form. Publicly available docket materials are available either electronically in                         *http://www.regulations.gov*                         or in hard copy at the Environmental Protection Agency, Air Planning and Development Branch, 901 North 5th Street, Kansas City, Kansas 66101. EPA requests that you contact the person listed in the                         **FOR FURTHER INFORMATION CONTACT**                         section to schedule your inspection. The interested persons wanting to examine these documents should make an appointment with the office at least 24 hours in advance.                     

# FOR FURTHER INFORMATION CONTACT:

                        If you have questions concerning this proposal, please contact Michael Jay at (913) 551-7460 or by e-mail at                         *jay.michael@epa.gov.*

# SUPPLEMENTARY INFORMATION:

Throughout this document whenever “we,” “us,” or “our” is used, we mean EPA. 

## Table of Contents 

I. What Action Is EPA Proposing to Take? 

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

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

IV. What Are the Types of CAIR SIP Submittals? 

V. Analysis of Iowa's CAIR SIP Submittal 

A. State Budgets for Allowance Allocations 

B. CAIR Cap-and-Trade Programs 

                        C. NOX                         Allowance Allocations                     

                        D. Allocation of NOX                         Allowances from Compliance Supplement Pool                     

E. Individual Opt-in Units 

VI. Proposed Actions 

VII. Statutory and Executive Order Reviews

## I. What Action Is EPA Proposing to Take? 

                    EPA is proposing to approve a revision to Iowa's SIP submitted on August 15, 2006. In its SIP revision, Iowa would meet CAIR requirements by requiring certain electric generating units (EGUs) to participate in the EPA-administered State CAIR cap-and-trade programs addressing SO2, NOX                     annual, and NOX                     ozone season emissions, as finalized in the Iowa Administrative Bulletin on June 7, 2006 (567-20.1(455B,17A), 21.1(4), and Chapter 34). Iowa's regulations adopt by reference most of the provisions of EPA's SO2, NOX                     annual, and NOX                     ozone season model trading rules, with certain changes discussed below. EPA is proposing to determine that the SIP as revised will meet the applicable requirements of CAIR. Any final action approving the SIP will be taken by the Regional Administrator for Region 7. If EPA approves this revision, the Administrator of EPA will also issue a final rule to withdraw the FIPs concerning SO2, NOX                     annual, and NOX                     ozone season emissions for Iowa. This action would delete and reserve 40 CFR 52.840 and 40 CFR 52.841, relating to the CAIR FIP obligations for Iowa. The withdrawal of the CAIR FIPs for Iowa is a conforming amendment that must be made once the SIP is approved because EPA's authority to issue the FIPs was premised on a deficiency in the SIP for Iowa. Once a SIP is fully approved, EPA no longer has authority for the FIPs. Thus, EPA will not have the option of maintaining the FIPs following full SIP approval. Accordingly, EPA does not intend to offer an opportunity for a public hearing or an additional opportunity for written public comment on the withdrawal of the FIPs.                 

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

                    The Clean Air Interstate Rule (CAIR) was published by EPA on May 12, 2005 (70 FR 25162). In this rule, EPA determined that 28 States and the District of Columbia contribute significantly to nonattainment and interfere with maintenance of the national ambient air quality standards (NAAQS) for fine particles (PM2.5) and/or 8-hour ozone in downwind States in the eastern part of the country. As a result, EPA required those upwind States to revise their SIPs to include control measures that reduce emissions of SO2, which is a precursor to PM2.5                     formation, and/or NOX, which is a precursor to both ozone and PM2.5                     formation. For jurisdictions that contribute significantly to downwind PM2.5                     nonattainment, CAIR sets annual State-wide emission reduction requirements (i.e., budgets) for SO2                     and annual State-wide emission reduction requirements for NOX                    . Similarly, for jurisdictions that contribute significantly to 8-hour ozone nonattainment, CAIR sets State-wide emission reduction requirements for NOX                     for the ozone season (May 1 to September 30). Under CAIR, States may implement these reduction requirements by participating in the EPA-administered cap-and-trade programs or by adopting any other control measures.                 

                    CAIR explains to subject States what must be included in SIPs to address the requirements of section 110(a)(2)(D) of the Clean Air Act (CAA) with regard to interstate transport with respect to the 8-hour ozone and PM2.5                     NAAQS. EPA made national findings, effective on May 25, 2005, that the States had failed to submit SIPs meeting the requirements of section 110(a)(2)(D). The SIPs were due in July 2000, 3 years after the promulgation of the 8-hour ozone and PM2.5                     NAAQS. These findings started a 2-year clock for EPA to promulgate a Federal Implementation Plan (FIP) to address the requirements of section 110(a)(2)(D). Under CAA section 110(c)(1), EPA may issue a FIP anytime after such findings are made and must do so within two years unless a SIP revision correcting the deficiency is approved by EPA before the FIP is promulgated.                 

Iowa submitted its SIP in response to EPA's section 110(a)(2)(D) finding, which EPA approved in a rule published March 8, 2007 (72 FR 10380). In that rule, EPA stated that Iowa had met its obligation with regard to interstate transport by adoption of the CAIR model rule. EPA also stated that it would review and act on Iowa's CAIR rule in a separate rulemaking. This document proposes action on Iowa's CAIR rule as explained below. 

                    On April 28, 2006, EPA promulgated FIPs for all States covered by CAIR in order to ensure the emissions reductions required by CAIR are achieved on schedule. Each CAIR State is subject to the FIPs until the State fully adopts, and EPA approves, a SIP revision meeting the requirements of CAIR. The CAIR                           ( print page 26042)                        FIPs require EGUs to participate in the EPA-administered CAIR SO2, NOX                     annual, and NOX                     ozone season trading programs, as appropriate. The CAIR FIP SO2, NOX                     annual, and NOX                     ozone season trading programs impose essentially the same requirements as, and are integrated with, the respective CAIR SIP trading programs. The integration of the FIP and SIP trading programs means that these trading programs will work together to effectively create a single trading program for each regulated pollutant (SO2, NOX                     annual, and NOX                     ozone season) in all States covered by the CAIR FIP or SIP trading program for that pollutant. The CAIR FIPs also allow States to submit abbreviated SIP revisions that, if approved by EPA, will automatically replace or supplement certain CAIR FIP provisions (e.g., the methodology for allocating NOX                     allowances to sources in the State), while the CAIR FIP remains in place for all other provisions.                 

                    On April 28, 2006, EPA published two additional CAIR-related final rules that added the States of Delaware and New Jersey to the list of States subject to CAIR for PM2.5                     and announced EPA's final decisions on reconsideration of five issues, without making any substantive changes to the CAIR requirements.                 

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

                    CAIR establishes State-wide emission budgets for SO2                     and NOX                     and is to be implemented in two phases. The first phase of NOX                     reductions starts in 2009 and continues through 2014, while the first phase of SO2                     reductions starts in 2010 and continues through 2014. The second phase of reductions for both NOX                     and SO2                     starts in 2015 and continues thereafter. CAIR requires States to implement the budgets by either: (1) Requiring EGUs to participate in the EPA-administered cap-and-trade programs; or (2) adopting other control measures of the State's choosing and demonstrating that such control measures will result in compliance with the applicable State SO2                     and NOX                     budgets.                 

The May 12, 2005, and April 28, 2006, CAIR rules provide model rules that States must adopt (with certain limited changes, if desired) if they want to participate in the EPA-administered trading programs. 

                    With two exceptions, only States that choose to meet the requirements of CAIR through methods that exclusively regulate EGUs are allowed to participate in the EPA-administered trading programs. One exception is for States that adopt the opt-in provisions of the model rules to allow non-EGUs individually to opt into the EPA-administered trading programs. The other exception is for States that include all non-EGUs from their NOX                     SIP Call trading programs in their CAIR NOX                     ozone season trading programs.                 

## IV. What Are the Types of CAIR SIP Submittals? 

                    States have the flexibility to choose the type of control measures they will use to meet the requirements of CAIR. EPA anticipates that most States will choose to meet the CAIR requirements by selecting an option that requires EGUs to participate in the EPA-administered CAIR cap-and-trade programs. For such States, EPA has provided two approaches for submitting and obtaining approval for CAIR SIP revisions. States may submit full SIP revisions that adopt the model CAIR cap-and-trade rules. If approved, these SIP revisions will fully replace the CAIR FIPs. Alternatively, States may submit abbreviated SIP revisions. These SIP revisions will not replace the CAIR FIPs; however, the CAIR FIPs provide that, when approved, the provisions in these abbreviated SIP revisions will be used instead of or in conjunction with, as appropriate, the corresponding provisions of the CAIR FIPs (e.g., the NOX                     allowance allocation methodology).                 

                    A State submitting a full SIP revision may either adopt regulations that are substantively identical to the model rules or incorporate by reference the model rules. CAIR provides that States may only make limited changes to the model rules if the States want to participate in the EPA-administered trading programs. A full SIP revision may change the model rules only by altering their applicability and allowance allocation provisions to: (1) Include NOX                     SIP Call trading sources that are not EGUs under CAIR in the CAIR NOX                     ozone season trading program; (2) provide for State allocation of NOX                     annual or ozone season allowances using a methodology chosen by the State; (3) provide for State allocation of NOX                     annual allowances from the compliance supplement pool (CSP) using the State's choice of allowed, alternative methodologies; or (4) allow units that are not otherwise CAIR units to opt individually into the CAIR SO2, NOX                     annual, or NOX                     ozone season trading programs under the opt-in provisions in the model rules.                 

                    An approved CAIR full SIP revision addressing EGUs' SO2, NOX                     annual, or NOX                     ozone season emissions will replace the CAIR FIP for that State for the respective EGU emissions.                 

## V. Analysis of Iowa's CAIR SIP Submittal 

### A. State Budgets for Allowance Allocations 

                    The CAIR NOX                     annual and ozone season budgets were developed from historical heat input data for EGUs. Using these data, EPA calculated annual and ozone season regional heat input values, which were multiplied by 0.15 lb/mmBtu, for phase 1, and 0.125 lb/mmBtu, for phase 2, to obtain regional NOX                     budgets for 2009-2014 and for 2015 and thereafter, respectively. EPA derived the State NOX                     annual and ozone season budgets from the regional budgets using State heat input data adjusted by fuel factors.                 

                    The CAIR State SO2                     budgets were derived by discounting the tonnage of emissions authorized by annual allowance allocations under the Acid Rain Program under title IV of the CAA. Under CAIR, each allowance allocated in the Acid Rain Program for the years in phase 1 of CAIR (2010 through 2014) authorizes 0.5 ton of SO2                     emissions in the CAIR trading program, and each Acid Rain Program allowance allocated for the years in phase 2 of CAIR (2015 and thereafter) authorizes 0.35 ton of SO2                     emissions in the CAIR trading program.                 

                    In this action, EPA is proposing approval of Iowa's SIP revision that adopts the budgets established for the State in CAIR, i.e., 32,692 (2009-2014) and 27,243 (2015-thereafter) tons for NOX                     annual emissions, 14,263 (2009-2014) and 11,886 (2015-thereafter) tons for NOX                     ozone season emissions, and 64,095 (2010-2014) and 44,866 (2015-thereafter) tons for SO2                     emissions. Iowa's SIP revision sets these budgets as the total amounts of allowances available for allocation for each year under the EPA-administered cap-and-trade programs.                 

Iowa has committed to revising a definition in all three CAIR rules in order to fully ensure allowances can be traded among all sources participating in the EPA-administered cap-and-trade programs as intended. EPA discovered after review of other States' rules, but after Iowa had adopted its CAIR rules, that there was an issue related to the definition of “permitting authority” when it is revised to refer to a specific State's permitting authority. 

                    In each of Iowa's rules for CAIR, the EPA model trading rules were revised to limit all references to “permitting authority” to refer to the Iowa Department of Natural Resources. This                           ( print page 26043)                        change is acceptable in most, but not all, instances under the current model rules. In certain definitions in the model rules incorporated by Iowa (i.e., “allocate” or “allocation,” “CAIR NOX                     allowance,” “CAIR SO2                     allowance,” and “CAIR NOX                     Ozone Season allowance”), it is important that the term “permitting authority” cover permitting authorities in all States that choose to participate in the respective EPA-administered trading programs. This is necessary to ensure that all allowances issued in each EPA-administered trading program are fungible and can be traded and used for compliance with the allowance-holding requirement in any State in the program.                 

On February 17, 2007, EPA provided a letter to Iowa that requested and outlined necessary definition revisions. EPA received a letter from Iowa on February 28, 2007, that provided a commitment to make the EPA suggested rule revisions as soon as is practicable upon publication of the final rule concerning the proposed Clean Air Mercury Rule (CAMR) Federal plan. On April 11, 2007, EPA received an electronic correspondence from Iowa stating that Iowa will, in any event, complete these rule revisions before January 1, 2008. The State will be able to simultaneously revise the “permitting authority” definition in all cap-and-trade rules for both CAIR and CAMR, and properly update the State's rule as necessary to meet the requirements of the EPA-administered cap-and-trade-program for mercury. 

                    The final rule concerning the CAMR Federal plan is expected to be published before the earliest, major deadline for compliance with requirements for source owners and operators under the CAIR trading programs, i.e., the January 1, 2008, deadline for emissions monitoring requirements under the CAIR Annual Trading Program. EPA expects that, by timing adoption of the EPA requested rule revisions to be soon after the publication of the final rule concerning the CAMR Federal plan, the State will ensure the revisions to the definition of “permitting authority” will be completed prior to any of the major compliance deadlines for source owners and operators under the CAIR trading programs. In the event the final rule concerning the CAMR Federal plan is not published in the expected timeframe, the State will need to ensure the necessary State rule revisions are completed and submitted to EPA in advance of the January 1, 2008, monitoring deadline for the CAIR NOX                     Annual Trading Program.                 

To be clear, EPA notes that it is not proposing to approve the State's rule to comply with CAMR as part of this rulemaking. EPA will propose a separate rulemaking for the Iowa rule relating to CAMR. 

### B. CAIR Cap-and-Trade Programs 

                    The CAIR NOX                     annual and ozone season model trading rules both largely mirror the structure of the NOX                     SIP Call model trading rule in 40 CFR part 96, subparts A through I. While the provisions of the NOX                     annual and ozone season model rules are similar, there are some differences. For example, the NOX                     annual model rule (but not the NOX                     ozone season model rule) provides for a compliance supplement pool (CSP), which is discussed below and under which allowances may be awarded for early reductions of NOX                     annual emissions. As a further example, the NOX                     ozone season model rule reflects the fact that the CAIR NOX                     ozone season trading program replaces the NOX                     SIP Call trading program after the 2008 ozone season and is coordinated with the NOX                     SIP Call program. The NOX                     ozone season model rule provides incentives for early emissions reductions by allowing banked, pre-2009 NOX                     SIP Call allowances to be used for compliance in the CAIR NOX                     ozone season trading program. In addition, States have the option of continuing to meet their NOX                     SIP Call requirement by participating in the CAIR NOX                     ozone season trading program and including all their NOX                     SIP Call trading sources in that program.                 

                    The provisions of the CAIR SO2                     model rule are also similar to the provisions of the NOX                     annual and ozone season model rules. However, the SO2                     model rule is coordinated with the ongoing Acid Rain SO2                     cap-and-trade program under CAA title IV. The SO2                     model rule uses the title IV allowances for compliance, with each allowance allocated for 2010-2014 authorizing only 0.50 ton of emissions and each allowance allocated for 2015 and thereafter authorizing only 0.36 ton of emissions. Banked title IV allowances allocated for years before 2010 can be used at any time in the CAIR SO2                     cap-and-trade program, with each such allowance authorizing 1 ton of emissions. Title IV allowances are to be freely transferable among sources covered by the Acid Rain Program and sources covered by the CAIR SO2                     cap-and-trade program.                 

                    EPA also used the CAIR model trading rules as the basis for the trading programs in the CAIR FIPs. The CAIR FIP trading rules are virtually identical to the CAIR model trading rules, with changes made to account for Federal rather than State implementation. The CAIR model SO2, NOX                     annual, and NOX                     ozone season trading rules and the respective CAIR FIP trading rules are designed to work together as integrated SO2, NOX                     annual, and NOX                     ozone season trading programs.                 

                    In the SIP revision, Iowa has chosen to implement its CAIR budgets by requiring EGUs to participate in EPA-administered cap-and-trade programs for SO2, NOX                     annual, and NOX                     ozone season emissions. Iowa has adopted a full SIP revision that adopts, with the changes discussed above and with certain allowed changes discussed below, the CAIR model cap-and-trade rules for SO2, NOX                     annual, and NOX                     ozone season emissions.                 

###                     C. NOX                     Allowance Allocations                 

                    Under the NOX                     allowance allocation methodology in the CAIR model trading rules and in the CAIR FIP, NOX                     annual and ozone season allowances are allocated to units that have operated for five years, based on heat input data from a three-year period that are adjusted for fuel type by using fuel factors of 1.0 for coal, 0.6 for oil, and 0.4 for other fuels. The CAIR model trading rules and the CAIR FIP also provide a new unit set-aside from which units without five years of operation are allocated allowances based on the units' prior year emissions.                 

                    States may establish in their SIP submissions a different NOX                     allowance allocation methodology that will be used to allocate allowances to sources in the States if certain requirements are met concerning the timing of submission of units' allocations to the Administrator for recordation and the total amount of allowances allocated for each control period. In adopting alternative NOX                     allowance allocation methodologies, States have flexibility with regard to: (1) The cost to recipients of the allowances, which may be distributed for free or auctioned; (2) the frequency of allocations; (3) the basis for allocating allowances, which may be distributed, for example, based on historical heat input or electric and thermal output; and (4) the use of allowance set-asides and, if used, their size.                 

                    Iowa has chosen to adopt the essential components of the CAIR NOX                     annual and CAIR NOX                     ozone season model trading rules concerning the allocation of allowances with two notable exceptions. Language is provided in Iowa's rules that attempts to clarify that allowances will be allocated in future years only “to meet the minimum timing requirements” specified in the Federal regulations. EPA understands that the language is intended to mean that allocations will be determined by                           ( print page 26044)                        the dates and only for the years identified or described in 40 CFR 96.141 and 40 CFR 96.341. Additionally, Iowa's CAIR NOX                     Annual and CAIR NOX                     ozone rules establish permanent allocations for specified units designated as “existing units” or “new units” and do not include provisions of the EPA's model rules that call for adjusting the allocations for existing units to provide allocations for future, new units. EPA is proposing to approve these changes to the model rule provisions because the changes are consistent with the flexibility that CAIR provides States with regard to allocation methodologies.                 

###                     D. Allocation of NOX                     Allowances From Compliance Supplement Pool                 

                    The CAIR establishes a compliance supplement pool to provide an incentive for early reductions in NOX                     annual emissions. The CSP consists of 200,000 CAIR NOX                     annual allowances of vintage 2009 for the entire CAIR region, and a State's share of the CSP is based upon the projected magnitude of the emission reductions required by CAIR in that State. States may distribute CSP allowances, one allowance for each ton of early reduction, to sources that make NOX                     reductions during 2007 or 2008 beyond what is required by any applicable State or Federal emission limitation. States also may distribute CSP allowances based upon a demonstration of need for an extension of the 2009 deadline for implementing emission controls.                 

                    The CAIR annual NOX                     model trading rule establishes specific methodologies for allocations of CSP allowances. States may choose an allowed, alternative CSP allocation methodology to be used to allocate CSP allowances to sources in the States.                 

                    Iowa has not chosen to modify the provisions of the CAIR NOX                     annual model trading rule concerning the allocation of allowances from the CSP. Iowa has chosen to distribute CSP allowances using the allocation methodology provided in 40 CFR 96.143 and has adopted this section by reference.                 

### E. Individual Opt-in Units 

The opt-in provisions of the CAIR SIP model trading rules allow certain non-EGUs (i.e., boilers, combustion turbines, and other stationary fossil-fuel-fired devices) that do not meet the applicability criteria for a CAIR trading program to participate voluntarily in (i.e., opt into) the CAIR trading program. A non-EGU may opt into one or more of the CAIR trading programs. In order to qualify to opt into a CAIR trading program, a unit must vent all emissions through a stack and be able to meet monitoring, recordkeeping, and recording requirements of 40 CFR part 75. The owners and operators seeking to opt a unit into a CAIR trading program must apply for a CAIR opt-in permit. If the unit is issued a CAIR opt-in permit, the unit becomes a CAIR unit, is allocated allowances, and must meet the same allowance-holding and emissions monitoring and reporting requirements as other units subject to the CAIR trading program. The opt-in provisions provide for two methodologies for allocating allowances for opt-in units, one methodology that applies to opt-in units in general and a second methodology that allocates allowances only to opt-in units that the owners and operators intend to repower before January 1, 2015. 

States have several options concerning the opt-in provisions. States may adopt the CAIR opt-in provisions entirely or may adopt them but exclude one of the methodologies for allocating allowances. States may also decline to adopt the opt-in provisions at all. 

                    Iowa has chosen to allow non-EGUs meeting certain requirements to opt into the CAIR trading programs by adopting by reference the entirety of EPA's model rule provisions for opt-in units in the CAIR SO2, CAIR NOX                     annual, and CAIR NOX                     ozone season trading programs.                 

## VI. Proposed Actions 

                    EPA is proposing to approve Iowa's full CAIR SIP revision submitted on August 15, 2006. Under this SIP revision, Iowa is choosing to participate in the EPA-administered cap-and-trade programs for SO2, NOX                     annual, and NOX                     ozone season emissions. EPA believes that the SIP revision meets the applicable requirements in 40 CFR 51.123(o) and (aa), with regard to NOX                     annual and NOX                     ozone season emissions, and 40 CFR 51.124(o), with regard to SO2                     emissions. EPA is proposing to determine that the SIP as revised will meet the requirements of CAIR. If EPA finalizes this action as proposed, the Administrator of EPA will also issue, without providing an opportunity for a public hearing or an additional opportunity for written public comment, a final rule to withdraw the CAIR FIPs concerning SO2, NOX                     annual, and NOX                     ozone season emissions for Iowa. The Administrator's action would delete and reserve 40 CFR 52.840 and 40 CFR 52.841.                 

## VII. Statutory and Executive Order Reviews 

                    Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” and therefore is not subject to review by the Office of Management and Budget. For this reason, this action is also not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001). This action merely proposes to approve State law as meeting Federal requirements and would impose no additional requirements beyond those imposed by State law. Accordingly, the Administrator certifies that this proposed rule would not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601*et seq.*). Because this action proposes to approve pre-existing requirements under State law and would not impose any additional enforceable duty beyond that required by State law, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4).                 

This proposal also does not have tribal implications because it would not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes, as specified by Executive Order 13175 (65 FR 67249, November 9, 2000). This proposed action also does not have Federalism implications because it would 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 (64 FR 43255, August 10, 1999). This action merely proposes to approve a State rule implementing a Federal standard and will result, as a consequence of that approval, in the Administrator's withdrawal of the CAIR FIP. It does not alter the relationship or the distribution of power and responsibilities established in the Clean Air Act. This proposed rule also is not subject to Executive Order 13045 “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), because it would approve a State rule implementing a Federal Standard. 

                    In reviewing SIP submissions, EPA's role is to approve State choices, provided that they meet the criteria of the Clean Air Act. In this context, in the absence of a prior existing requirement for the State to use voluntary consensus                           ( print page 26045)                        standards (VCS), EPA has no authority to disapprove a SIP submission for failure to use VCS. It would thus be inconsistent with applicable law for EPA, when it reviews a SIP submission, to use VCS in place of a SIP submission that otherwise satisfies the provisions of the Clean Air Act. Thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. This proposed rule would not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501*et seq.*).                 

# List of Subjects in 40 CFR Part 52

      - Environmental protection
      - Air pollution control
      - Electric utilities
      - Intergovernmental relations
      - Nitrogen oxides
      - Ozone
      - Particulate matter
      - Reporting and recordkeeping requirements
      - Sulfur dioxide

Dated: April 30, 2007. 

John B. Askew, 

Regional Administrator, Region 7. 

[FR Doc. E7-8665 Filed 5-7-07; 8:45 am] 

BILLING CODE 6560-50-P