71278 Federal Register / Vol. 65, No. 231 / Thursday, November 30, 2000 / Proposed Rules

Drafting Information

The principal author of these

proposed regulations is Elizabeth Kaye,

Office of Assistant Chief Counsel

(Income Tax and Accounting). However,

other personnel from the IRS and the

Treasury Department participated in the

development of the regulations.

List of Subjects in 26 CFR Part 1

Income taxes, Reporting and

recordkeeping requirements.

Proposed Amendments to the

Regulations

Accordingly, 26 CFR part 1 is

proposed to be amended as follows:

PART 1—INCOME TAXES

Paragraph 1. The authority citation

for part 1 continues to read in part as

follows:

Authority: 26 U.S.C. 7805 * * *

Par. 2. Section 1.152–2 is amended by

revising paragraph (c)(2) to read as

follows:

§ 1.152–2 Rules relating to general

definition of dependent.

* * * * *

(c) * * *

(2) For any taxable year beginning

after December 31, 2000, a child who is

a member of an individual’s household

will be treated as a child of that

individual by blood if the child was

placed with the individual by an

authorized placement agency for legal

adoption pursuant to a formal

application filed by the individual with

the agency. For purposes of this

paragraph (c)(2), an authorized

placement agency is any agency that is

authorized by a State, the District of

Columbia, a possession of the United

States, a foreign country, or a political

subdivision of any of the foregoing to

place children for adoption. An

authorized placement agency also

includes biological parents and other

persons authorized by state law to place

children for legal adoption.

* * * * *

Robert E. Wenzel,

Deputy Commissioner of Internal Revenue.

[FR Doc. 00–30228 Filed 11–29–00; 8:45 am]

BILLING CODE 4830–01–P

ENVIRONMENTAL PROTECTION

AGENCY

40 CFR Part 52

[Region II Docket No. NJ42–1–214, FRL–

6910–1]

Approval and Promulgation of

Implementation Plans; New Jersey;

Nitrogen Oxides Budget and

Allowance Trading Program

AGENCY: Environmental Protection

Agency.

ACTION: Proposed rule.

SUMMARY: The Environmental Protection

Agency (EPA) is proposing to approve a

State Implementation Plan (SIP)

revision submitted by the State of New

Jersey. This SIP revision responds to the

EPA’s regulation entitled, ‘‘Finding of

Significant Contribution and

Rulemaking for Certain States in the

Ozone Transport Assessment Group

Region for Purposes of Reducing

Regional Transport of Ozone,’’

otherwise known as the ‘‘ NOX SIP

Call.’’ The SIP revision includes a

narrative and a regulation that establish

a statewide nitrogen oxides (NOX)

budget and a NOX allowance trading

program that begins in 2003 for large

electricity generating and industrial

sources. The intended effect of this SIP

revision is to reduce emissions of NOX

in order to help attain the national

ambient air quality standard for ozone.

EPA is proposing this action pursuant to

section 110 of the Clean Air Act.

DATES: EPA must receive written

comments on or before January 2, 2001.

ADDRESSES: All comments should be

addressed to: Raymond Werner, Chief,

Air Programs Branch, Environmental

Protection Agency, Region II Office, 290

Broadway, 25th Floor, New York, New

York 10007–1866.

Copies of the State submittal and

other information are available at the

following addresses for inspection

during normal business hours:

Environmental Protection Agency,

Region II Office, Air Programs Branch,

290 Broadway, 25th Floor, New York,

New York 10007–1866.

New Jersey Department of

Environmental Protection, Office of

Air Quality Management, Bureau of

Air Pollution Control, 401 East State

Street, CN027, Trenton, New Jersey

08625.

FOR FURTHER INFORMATION CONTACT: Ted

Gardella at (212) 637–3892 for general

questions, Rick Ruvo at (212) 637–4014

for specific questions on the Trading

Program, or Demian Ellis at (212) 637–

3713 for specific questions on the

Budget Demonstration; Air Programs

Branch, Environmental Protection

Agency, 290 Broadway, 25th Floor, New

York, New York 10007–1866.

SUPPLEMENTARY INFORMATION:

Overview

The Environmental Protection Agency

(EPA) is proposing to approve the New

Jersey State Department of

Environmental Protection’s (New

Jersey’s) NOX SIP Call State

Implementation Plan (SIP) revision. The

following table of contents describes the

format for this SUPPLEMENTARY

INFORMATION section:

I. EPA’s Action

A. What action is EPA proposing today?

B. Why is EPA proposing this action?

C. What are the NOX SIP Call general

requirements?

D. What is the NOX Budget and Allowance

Trading Program?

E. What guidance did EPA use to evaluate

New Jersey’s program?

F. What is the result of EPA’s evaluation

of New Jersey’s program?

II. New Jersey’s NOX Budget Program

A. What is New Jersey’s NOX Budget

Demonstration?

B. What is New Jersey’s NOX Budget

Trading Program?

C. What is the Compliance Supplement

Pool?

D. How does New Jersey’s program protect

the environment?

E. How will New Jersey and EPA enforce

the program?

F. When did New Jersey propose and adopt

the program?

G. When did New Jersey submit the SIP

revision to EPA and what did it include?

H. What other significant items relate to

New Jersey’s program?

I. Impact of D.C. Circuit Court remand on

New Jersey’s NOX SIP Call submittal.

J. What is the relationship of today’s

proposal to EPA’s findings under the

section 126 rule?

III. Proposed Action

IV. Administrative Requirements

I. EPA’s Action

A. What Action Is EPA Proposing

Today?

EPA proposes approval of revisions to

New Jersey’s ground level ozone SIP

which New Jersey submitted on

December 10, 1999 and July 31, 2000.

These SIP revisions include an amended

regulation, N.J.A.C. 7:27–31 (subchapter

31), ‘‘NOX Budget Program,’’ dated July

31, 2000, and a narrative entitled, ‘‘State

Implementation Plan (SIP) Revision for

the Attainment and Maintenance of the

Ozone and Carbon Monoxide National

Ambient Air Quality Standards-Meeting

the Requirements of the Regional NOX

Cap Program and Transportation

Conformity Budgets Related to the

Attainment of the Ozone and Carbon

Federal Register / Vol. 65, No. 231 / Thursday, November 30, 2000 / Proposed Rules 71279

1Alabama, Connecticut, District of Columbia,

Delaware, Georgia, Illinois, Indiana, Kentucky,

Massachusetts, Maryland, Michigan, Missouri,

North Carolina, New Jersey, New York, Ohio,

Pennsylvania, Rhode Island, South Carolina,

Tennessee, Virginia, Wisconsin, and West Virginia.

2On May 25, 1999, the D.C. Circuit issued a

partial stay of the submission of the SIP revisions

required under the NOX SIP Call. The NOX SIP Call

had required submission of the SIP revisions by

September 30, 1999. State Petitioners challenging

the NOX SIP Call moved to stay the submission

schedule until April 27, 2000. The D.C. Circuit

issued a stay of the SIP submission deadline

pending further order of the court, Michigan v.

EPA, No. 98–1497 (D.C. Cir. May 25, 1999) (order

granting stay in part).

On December 10, 1999 and July 31, 2000, New

Jersey voluntarily submitted this revision to EPA for

approval notwithstanding the court’s stay of the SIP

submission deadline. On March 3, 2000, the D.C.

Circuit rule don Michigan v. EPA, affirming many

aspects of the SIP Call and remanding certain other

portions to the Agency. On June 22, 2000, the D.C.

Circuit upheld EPA’s NOX SIP Call. This allows

EPA to move forward on a fixed schedule to reduce

NOX emissions. The court’s previous rulings did

not affect this action because it was submitted and

is being proposed as a SIP-strengthening measure

regardless of the status of the case.

Monoxide National Ambient Air Quality

Standards,’’ dated December 10, 1999

and supplemented on July 31, 2000.

New Jersey submitted the regulation and

narrative, including NOX reducing

measures, in order to strengthen its onehour ozone SIP and to comply with the

NOX SIP Call during each ozone season,

i.e., May 1 through September 30,

beginning in 2003. EPA proposes that

New Jersey’s submittal is fully

approvable as a SIP strengthening

measure for New Jersey’s one-hour

ground level ozone SIP and EPA has

determined it meets the air quality

objectives of EPA’s NOX SIP Call

requirements. On May 31, 2000, EPA

found the mobile source emissions

budgets to be adequate for

transportation conformity purposes.

(See 65 FR 36689, June 9, 2000).

B. Why Is EPA Proposing This Action?

EPA is proposing this action in order

to:

• Approve a control program which

reduces NOX emissions, a precursor of

ozone, and which therefore helps to

achieve the national ambient air quality

standard for ozone,

• Fulfill New Jersey’s and EPA’s

requirements under the Clean Air Act

(the Act),

• Make New Jersey’s NOX allowance

trading regulation federally enforceable

and available for credit in the SIP,

sbull Make New Jersey’s SIP

narrative, including the ozone season

NOX budget, federally enforceable as

part of the New Jersey SIP, and

• Give the public an opportunity to

submit written comments on EPA’s

proposed action, as discussed in the

DATES and ADDRESSES sections.

C. What Are the NOX SIP Call General

Requirements?

On October 27, 1998, EPA published

a final rule entitled, ‘‘Finding of

Significant Contribution and

Rulemaking for Certain States in the

Ozone Transport Assessment Group

Region for Purposes of Reducing

Regional Transport of Ozone,’’

otherwise known as the ‘‘ NOX SIP

Call.’’ (63 FR 57356) At that time, the

NOX SIP Call required 22 states and the

District of Columbia 1 to meet statewide

NOX emission budgets during the five

month period from May 1 through

September 30 in order to reduce the

amount of ground level ozone that is

transported across the eastern United

States. The NOX SIP Call set out a

schedule that required the affected

states to adopt regulations by September

30, 1999, and to implement control

strategies by May 1, 2003.2

The NOX SIP Call allowed states the

flexibility to decide which source

categories to regulate in order to meet

the statewide budgets. However, the SIP

Call notice suggested that imposing

statewide NOX emissions caps on large

fossil-fuel fired industrial boilers and

electricity generators would provide a

highly cost effective means for states to

meet their NOX budgets. In fact, the

state-specific budgets were derived

using an emission rate of 0.15 pound

NOX per million British thermal units

(lb. NOX/mmBtu) at electricity

generating units (EGUs) with a

nameplate capacity greater than 25

megaWatts, multiplied by the projected

heat input (mmBTU) from burning the

quantity of fuel needed to meet the 2007

forecast for electricity demand. (63 FR

57407) The calculation of the 2007 EGU

emissions was based on an emissions

trading program used to achieve part of

an EGU control program. The NOX SIP

Call state budgets also assumed on

average a 30% NOX reduction from

cement kilns, a 60% reduction from

industrial boilers and combustion

turbines, and a 90% reduction from

internal combustion engines. The nonEGU control assumptions were applied

to units where the heat input capacities

were greater than 250 mmBtu per hour,

or in cases where heat input data were

not available or appropriate, to units

with actual emissions greater than one

ton per day.

To assist the states in their efforts to

meet the SIP Call, the NOX SIP Call final

rulemaking notice included a model

NOX allowance trading regulation,

called ‘‘NOX Budget Trading Program

for State Implementation Plans,’’ (40

CFR part 96), that could be used by

states to develop their regulations. The

NOX SIP Call notice explained that if

states developed an allowance trading

regulation consistent with the EPA

model rule, they could participate in a

regional allowance trading program that

would be administered by the EPA. (63

FR 57458–57459)

D. What Is the NOX Budget and

Allowance Trading Program?

EPA’s model NOX budget and

allowance trading rule for SIPs, 40 CFR

part 96, sets forth a NOX emissions

trading program for large EGUs and nonEGUs. A state can voluntarily choose to

adopt EPA’s model rule in order to

allow its sources to participate in

regional allowance trading. The October

27, 1998 Federal Register document

contains a full description of the EPA’s

model NOX budget trading program. (63

FR 57514–57538 and 40 CFR part 96)

In general, air emissions trading uses

market forces to reduce the overall cost

of compliance for pollution sources,

such as power plants, while achieving

emission reductions and environmental

benefits. One type of market-based

program is an emissions budget and

allowance trading program, commonly

referred to as a ‘‘cap and trade’’

program.

In an emissions budget and allowance

trading program, the state or EPA sets a

regulatory limit, or emissions budget, in

mass emissions from a specific group of

sources. The budget limits the total

number of allocated allowances during

a particular control period. When the

budget is set at a level lower than the

current emissions, the effect is to reduce

the total amount of emissions during the

control period. After setting the budget,

the state or EPA then assigns, or

allocates, allowances to the

participating entities up to the level of

the budget. Each allowance permits the

emission of a quantity of pollutant, e.g.,

one ton of airborne NOX.

At the end of the control period, each

source must demonstrate that its actual

emissions during the control period

were less than or equal to the number

of available allowances it holds. Sources

that reduce their emissions below their

allocated allowance level may sell their

extra allowances. Sources that emit

more than the amount of their allocated

allowance level may buy allowances

from the sources with extra reductions.

In this way, the budget is met in the

most cost-effective manner. An example

of a budget and allowance trading

program is EPA’s Acid Rain Program for

reducing sulfur dioxide emissions.

71280 Federal Register / Vol. 65, No. 231 / Thursday, November 30, 2000 / Proposed Rules

E. What Guidance Did EPA Use To

Evaluate New Jersey’s Program?

EPA evaluated New Jersey’s NOX SIP

Call submittal using EPA’s ‘‘NOX SIP

Call Checklist,’’ (the checklist), issued

on April 9, 1999. The checklist

summarizes the requirements of the

NOX SIP Call set forth in 40 CFR 51.121

and 51.122. The checklist, developed

from the basic requirements of the

formal SIP Call Federal Register action

(63 FR 57356), outlines the criteria that

the EPA Regional Office used to

determine the completeness and

approvability of New Jersey’s submittal.

As noted in the checklist, the key

elements of an approvable submittal

under the NOX SIP Call are: a budget

demonstration; enforceable control

measures; legal authority to implement

and enforce the control measures;

adopted control measure compliance

dates and schedules; monitoring,

recordkeeping, and emissions reporting;

as well as elements that apply to states

that choose to adopt an emissions

trading rule in response to the NOX SIP

Call. The checklist is available to the

public on EPA’s website at: http://

www.epa.gov/ttn/otag/sip/related.html.

As described above, the final NOX SIP

Call rule included a model NOX budget

trading regulation. See 40 CFR part 96.

EPA used the model rule to evaluate

New Jersey’s Subchapter 31.

Additionally, EPA used the October

1998 final NOX SIP Call rulemaking, as

well as the subsequent technical

amendments to the NOX SIP Call,

published in May 1999 (64 FR 26298)

and March 2000 (65 FR 11222), in

evaluating the approvability of New

Jersey’s submittal. EPA also used

section 110 of the Act, ‘‘Implementation

Plans,’’ to evaluate the approvability of

New Jersey’s submittal as a revision to

the SIP.

F. What Is the Result of EPA’s

Evaluation of New Jersey’s Program?

EPA has evaluated New Jersey’s NOX

SIP Call submittal and proposes to find

it approvable. The December 10, 1999

and July 31, 2000 submittals will

strengthen New Jersey’s SIP for reducing

ground level ozone by providing NOX

reductions beginning in 2003. EPA

proposes to find that the NOX control

measure, Subchapter 31, as well as the

SIP narrative that includes New Jersey’s

2007 NOX baseline and controlled

budgets approvable. EPA finds that the

submittal contained the information

necessary to demonstrate that New

Jersey has the legal authority to

implement and enforce the control

measures, as well as a description of

how the state intends to use the

compliance supplement pool.

Furthermore, EPA proposes to find that

the submittal demonstrates that the

compliance dates and schedules, and

the monitoring, recordkeeping and

emission reporting requirements will be

met.

Although provisions in New Jersey’s

control regulation, Subchapter 31, differ

slightly from EPA’s NOX Budget Trading

Model Rule, EPA finds that subchapter

31 is consistent with EPA’s guidance

and meets the requirements of the NOX

SIP Call, including those found in 40

CFR part 51, §§ 51.121 and 51.122 and

40 CFR part 96, as well as the general

SIP submittal requirements of the Act,

section 110, 42 U.S.C. 7401 et seq. The

most significant differences between the

EPA’s model rule and New Jersey’s

control regulation are related to the

applicability of subchapter 31 to smaller

electricity generating sources than the

model rule, and the use of a different

method for allocating NOX allowances.

However, subchapter 31 conforms with

the timing requirements for submitting

the allocations to EPA.

While subchapter 31 contains

provisions which differ slightly from the

model rule, these deviations are limited

to the acceptable deviations under

§ 51.121(p)(2). Therefore New Jersey’s

subchapter 31 is automatically

approvable as satisfying the same

portion of New Jersey’s NOX emission

reduction obligations as the State

projects the regulation will satisfy. (63

FR 57495–57496)

Regarding New Jersey’s SIP narrative,

EPA finds that the submittal contains

the required elements, including: The

baseline inventory of NOX mass

emissions from EGUs, non-EGUs, area,

highway and non-road mobile sources

in the year 2007; the 2007 projected

inventory (budget demonstration)

reflecting NOX reductions achieved by

the state control measures contained in

the submittal; and the commitment to

meet the annual, triennial and 2007

state reporting requirements. EPA

further finds that New Jersey’s 2007

projected inventory, reflecting the

control strategies, is approvable,

reflecting the air quality objectives of

the NOX SIP Call.

For additional information regarding

EPA’s evaluation of New Jersey’s SIP

Call submittal, the reader should refer to

the document entitled, ‘‘Technical

Support Document for New Jersey’s

NOX SIP Call Submittal’’ dated August

17, 2000. Copies of the technical

support document can be obtained at

either of the addresses listed in the

ADDRESSES section of this document.

II. New Jersey’s NOX Budget Program

A. What is New Jersey’s NOX Budget

Demonstration?

New Jersey’s December 10, 1999 SIP

submittal, as supplemented on July 31,

2000, includes New Jersey’s SIP

narrative entitled, ‘‘State

Implementation Plan (SIP) Revision for

the Attainment and Maintenance of the

Ozone and Carbon Monoxide National

Ambient Air Quality Standards-Meeting

the Requirements of the Regional NOX

Cap Program and Transportation

Conformity Budgets Related to the

Attainment of the Ozone and Carbon

Monoxide National Ambient Air Quality

Standards,’’ that contains a statewide

NOX emissions budget for the 2007

ozone season. Combined with New

Jersey’s amended regulation, subchapter

31, ‘‘NOX Budget Program,’’ the

narrative demonstrates that the

statewide NOX budget will be met in

2007.

The NOX SIP Call contained EPA

calculations of baseline NOX emissions

for the year 2007 for stationary point

sources that are EGUs, stationary point

sources that are non-EGUs, area sources,

and mobile sources (both nonroad and

highway). New Jersey’s SIP submittal

incorporated EPA’s 2007 baseline

inventory.

To achieve the statewide budget, New

Jersey is relying on the expected NOX

reductions from subchapter 31.

Subchapter 31 applies to all EGUs with

nameplate electricity generating

capacities greater than 15 megaWatts

that sell any amount of electricity as

well as any non-EGU units that have a

heat input capacity greater than 250

mmBtu per hour.

Regarding other non-EGUs, New

Jersey has no cement kilns or internal

combustion engines with emissions

large enough to exceed the applicability

threshold for assumed control

requirements. Therefore, the SIP

submittal does not include any

reductions from those source categories.

Below is a table of the 2007 baseline,

2007 budget, and projected 2007

emission levels that New Jersey has

submitted with its NOX SIP Call

submittals. The 2007 baseline and

budget emissions in the following table

are identical to the emission levels

published by EPA in the March 2000

technical amendment. EPA has

reviewed and agrees with New Jersey’s

procedures for determining the 2007

projected emissions and reductions and

therefore EPA expects that New Jersey’s

2007 statewide budget will be achieved.

Federal Register / Vol. 65, No. 231 / Thursday, November 30, 2000 / Proposed Rules 71281

Source category

EPA’s 2007

baseline

emissions

for NJ

(tons/season)

EPA’s 2007

NOX budget

emissions

for NJ

(tons/season)

NJ’s 2007

projected

emissions

(tons/season)

NJ’s 2007

projected

reductions

(tons/season)

EGUs ............................................................................................................... 18,352 10,250 25,113 9,214

Non-EGU Point ................................................................................................ 15,975 15,464 ........................ ........................

Total ...................................................................................................... 34,327 25,714 ........................ ........................

Area sources .................................................................................................... 12,431 12,431 12,431 0

Non-road mobile .............................................................................................. 23,565 23,565 23,565 0

Highway mobile ............................................................................................... 35,166 35,166 36,166 0

NJ Total ................................................................................................. 105,489 96,876 96,275 9,214

*8,200 cap from trading.

B. What Is New Jersey’s NOX Budget

Trading Program?

In response to the NOX SIP Call, New

Jersey amended subchapter 31, ‘‘NOX

Budget Program.’’ With subchapter 31,

New Jersey established a NOX cap and

allowance trading program for the ozone

seasons of 2003 and beyond. New Jersey

developed the regulation in order to

reduce NOX emissions and allow its

sources to participate in the kind of

interstate NOX allowance trading

program described in § 51.121(b)(2).

Under subchapter 31, New Jersey

allocates NOX allowances to its EGUs

and large industrial units. Each NOX

allowance permits a source to emit one

ton of NOX during the seasonal control

period. NOX allowances may be bought

or sold. Unused allowances may also be

banked for future use, with certain

limitations. For each ton of NOX emitted

in a control period, EPA will remove

one allowance from the source’s NOX

Allowance Tracking System (NATS)

account. Once the allowance has been

retired in this way, no one can ever use

the allowance again.

Source owners will monitor their NOX

emissions by using systems that meet

the requirements of 40 CFR part 75,

subpart H, and report resulting data to

EPA electronically. Each budgeted

source complies with the program by

demonstrating at the end of each control

period that actual emissions do not

exceed the amount of allowances held

for that period. However, regardless of

the number of allowances a source

holds, it cannot emit at levels that

would violate other federal or state

limits, for example, reasonably available

control technology (RACT), new source

performance standards, or Title IV (the

Federal Acid Rain program).

As described above, Subchapter 31

differs from EPA’s NOX model budget

trading rule in two significant ways.

Specifically, subchapter 31 includes

smaller electricity generating sources

than the model rule. Also, subchapter

31 uses a different method for allocating

NOX allowances. However, subchapter

31 results in fewer tons being allocated

to sources than would be allowed by the

model rule. Refer to section I.F. of this

document for more details.

C. What Is the Compliance Supplement

Pool?

To provide additional flexibility for

complying with emission control

requirements associated with the NOX

SIP Call, the final NOX SIP Call

provided each affected state with a

‘‘compliance supplement pool.’’ The

compliance supplement pool is a

quantity of NOX allowances that may be

used to cover excess emissions from

sources that are unable to meet control

requirements during the 2003 and 2004

ozone season. Allowances from the

compliance supplement pool will not be

valid for compliance past the 2004

ozone season. The NOX SIP Call

included these voluntary provisions in

order to address commenters’ concerns

about the possible adverse effect that the

control requirements might have on the

reliability of the electricity supply or on

other industries required to install

controls as the result of a state’s

response to the SIP Call.

A state may issue some or all of the

compliance supplement pool via two

mechanisms. First, a state may issue

some or all of the pool to sources with

credits from implementing NOX

reductions beyond all applicable

requirements after September 30, 1999

but before May 1, 2003 (i.e., early

reductions). In this way, sources that

cannot install controls prior to May 1,

2003, can purchase other sources’ early

reduction credits in order to comply.

Second, a state may issue some or all of

the pool to sources that demonstrate a

need for an extension of the May 1, 2003

compliance deadline due to undue risk

to the electricity supply or other

industrial sectors, and where early

reductions are not available. See 40 CFR

51.121(e)(3).

Subchapter 31 provides for the

distribution of supplementary

allowances by the early reduction credit

and direct distribution methodologies.

The distribution of early reduction

credits are available to sources that

implement NOX reductions beyond

applicable requirements after September

30, 1999 but before May 1, 2003. Under

subchapter 31, New Jersey will only

provide early reduction credits to those

sources holding banked allowances that

were allocated in 2000, 2001, and 2002,

under New Jersey’s Ozone Transport

Commission’s (OTC’s) Memorandum of

Understanding (MOU). Subchapter 31

also contains New Jersey’s SIP approved

OTC’s regional NOX cap and allowance

trading program. (65 FR 53599,

September 5, 2000).

If any NOX allowances remain after

the early reduction allowances are

allocated, subchapter 31 allows for

direct distribution of NOX allowances to

sources that demonstrate a need for the

compliance supplement, provided the

sources demonstrate to New Jersey and

the public that achieving compliance by

May 1, 2003 would create undue risk

either to its own operation or its

associated industry. Subchapter 31

specifies New Jersey’s compliance

supplement pool is 1,550 allowances

pursuant to EPA’s March 2000 technical

amendment. Should EPA subsequently

revise New Jersey’s compliance

supplement pool amount through

rulemaking, New Jersey’s compliance

supplement pool amount will be the

revised amount published by EPA.

D. How Does New Jersey’s Program

Protect the Environment?

New Jersey’s revised NOX SIP Call

submittal is expected to result in about

8.7% reduction in NOX from New

Jersey’s total 2007 baseline ozone season

inventory and about 27% reduction in

NOX from the EGUs and non-EGUs

affected by subchapter 31. After

reviewing air quality modeling

assessments performed for the NOX SIP

71282 Federal Register / Vol. 65, No. 231 / Thursday, November 30, 2000 / Proposed Rules

Call, EPA has determined that the NOX

reductions in New Jersey and other

states subject to the SIP Call will reduce

the transport of ozone starting in 2003.

Besides ozone air quality benefits,

decreases of NOX emissions will also

help improve the environment in

several other important ways. Decreases

in NOX emissions will decrease acid

deposition, nitrates in drinking water,

excessive nitrogen loadings to aquatic

and terrestrial ecosystems, and ambient

concentrations of nitrogen dioxide,

particulate matter and toxics. On a

global scale, decreases in NOX

emissions reduce greenhouse gases and

stratospheric ozone depletion.

E. How Will New Jersey and EPA

Enforce the Program?

Once approved into New Jersey’s SIP,

both New Jersey and EPA will be able

to enforce the requirements of the NOX

budget and allowance trading program

in subchapter 31. All of the sources

subject to the NOX allowance trading

program will have federally-enforceable

operating permits that contain source

specific requirements, such as emission

allowances, emissions monitoring or

pollution control equipment

requirements. New Jersey and EPA will

be able to enforce the source specific

requirements of those permits.

In order to determine compliance

with the emission requirements of the

program, at the end of each ozone

season, New Jersey and EPA will

compare sources’ allowance and actual

emissions. The allowances are tracked

using the NOX Allowance Tracking

System (NATS). To be in compliance,

sources must hold a number of available

allowances that meets or exceeds the

number of tons of NOX actually emitted

by that source and recorded in the NOX

Emissions Tracking System (NETS) for a

particular ozone season. For sources

with excess emissions, penalties include

EPA deducting three times the unit’s

excess emissions from the unit’s

allocation for the next control period.

F. When Did New Jersey Propose and

Adopt the Program?

New Jersey published a public notice

on August 2, 1999 and August 28, 1999

to announce the availability of the

proposed subchapter 31 and the SIP

narrative, that included the statewide

2007 NOX emission budget,

respectively. The public notices opened

30-day public comment periods. New

Jersey held public hearings on the

proposed regulation on September 1,

1999 and on the SIP narrative on

September 28, 1999. After modifying the

proposal in response to public

comment, on July 31, 2000, New Jersey

adopted the final subchapter 31. The

regulation becomes operative on

September 29, 2000.

G. When Did New Jersey Submit the SIP

Revision to EPA and What Did it

Include?

New Jersey submitted the SIP

narrative and subchapter 31 to EPA, on

December 10, 1999 and July 31, 2000

respectively, with a request to revise the

New Jersey SIP. On April 19, 2000 and

August 10, 2000 EPA sent letters to New

Jersey finding the SIP submittals

technically and administratively

complete.

New Jersey’s SIP submittals include

the following:

• Adopted control measures which

require emission reductions beginning

in 2003, i.e., subchapter 31, ‘‘NOX

Budget Program;’’

• A baseline inventory of NOX mass

emissions from EGUs, non-EGUs, area,

highway and non-road mobile sources

in the year 2007, as part of New Jersey’s

SIP narrative;

• A 2007 projected inventory (budget

demonstration) reflecting NOX

reductions achieved by the state control

measures contained in the submittal, as

part of New Jersey’s SIP narrative;

• A description of how the State

intends to use the compliance

supplement pool, as part of New Jersey’s

SIP narrative and in subchapter 31;

• A commitment to meet the annual,

triennial, and 2007 reporting

requirements, as part of the SIP

narrative.

H. What Other Significant Items Relate

to New Jersey’s Program?

In addition to submitting the

December 10, 1999 and July 31, 2000

SIP package in order to fulfill its NOX

SIP Call obligation, New Jersey adopted

subchapter 31 as part of its one-hour

ozone attainment plans for the ozone

nonattainment areas of the State. The

attainment plans rely on the NOX

reductions associated with subchapter

31 in 2003 and beyond. EPA proposed

approval of New Jersey’s attainment

plans for ozone nonattainment areas on

December 16, 1999. (64 FR 70380)

Approval and implementation of

subchapter 31 is relied on in order for

New Jersey to attain the one-hour ozone

standard.

Subchapter 31 is also related to the

Ozone Transport Commission’s (OTC’s)

ozone season NOX budget program. On

September 27, 1994, OTC adopted a

Memorandum of Understanding (MOU)

that committed the signatory states,

including New Jersey, to the

development and proposal of a regionwide reduction in NOX emissions. The

OTC agreement committed the states to

one phase of reductions by 1999 and

another phase of reductions by 2003.

As a signatory state of the MOU, New

Jersey adopted its NOX budget and

allowance trading regulation,

subchapter 31, on July 20, 1998.

Subchapter 31 contained a NOX

emissions budget and allowance trading

system for the ozone seasons of 1999

through 2002, as well as 2003 and

beyond, the periods known as ‘‘OTC

Phase II’’ and ‘‘OTC Phase III.’’ EPA

approved New Jersey’s Phase II and III

OTC NOX budget regulation. Therefore,

although the OTC MOU obligations are

not Federal requirements, subchapter 31

can be viewed as satisfying the OTC

Phase III program requirements as well.

I. Impact of D.C. Circuit Court Remand

on New Jersey’s NOX SIP Call Submittal

On March 3, 2000, the D.C. Circuit

ruled on Michigan v. EPA, affirming

many aspects of the NOX SIP call and

remanding certain other portions to the

Agency (e.g., the definition of an EGU

and the control assumptions for internal

combustion engines). Because of the

litigation, the States’ deadline for

submitting their SIP revisions was

extended, and as a result, by order dated

August 30, 2000, the court also

extended the deadline for

implementation of the required SIP

revisions from May 1, 2003 to May 31,

2004. Due to the court’s remanding of

the EGU definition and IC engine

control assumptions, EPA must now

recalculate the final 2007 baseline, 2007

budget, and compliance supplement

allocation for each state subject to the

NOX SIP Call, including New Jersey.

The Agency expects to publish those

recalculated budgets within the next

few months. However, this means that

although EPA is proposing to approve

New Jersey’s SIP submittal as meeting

the air quality objectives of the NOX SIP

Call published to date, New Jersey may

be required to make minor adjustments

to its NOX SIP Call program due to

potential forthcoming changes to the

NOX SIP Call requirements. At such

time as EPA publishes new emission

budget requirements, EPA will inform

New Jersey and other states subject to

the NOX SIP Call as to what if any

changes are needed.

J. What Is the Relationship of Today’s

Proposal to EPA’s Findings Under the

Section 126 Rule?

In the January 18, 2000 section 126

rule (65 FR 2674), EPA granted, in part,

petitions submitted by Connecticut,

Massachusetts, New York, and

Pennsylvania under the 1-hour ozone

standard. The EPA made findings that

Federal Register / Vol. 65, No. 231 / Thursday, November 30, 2000 / Proposed Rules 71283

3On August 30, 2000, in response to a motion

from industry, the Court extended the NOX SIP call

compliance deadline for sources until May 31,

2004. The court’s decision does not affect any state

that chooses to submit a SIP revision which

includes an earlier compliance deadline.

large EGUs and large non-EGUs located

in the District of Columbia and 12

states, including New Jersey, are

significantly contributing to

nonattainment problems in one or more

of the petitioning states. The January 18,

2000 rule established Federal emissions

limits for the affected sources in the

form of tradable NOX allowances and

required these sources to reduce NOX

emissions by May 1, 2003.

The section 126 rule provides that if

a state submits, and EPA fully approves,

a SIP revision meeting the requirements

of the NOX SIP call, the section 126

findings and associated control

requirements would automatically be

revoked for sources in that state (40 CFR

52.34(i)). As discussed in the preamble

to the section 126 rule (65 FR 2682–

2684), the premise for the automatic

withdrawal provision was that once a

SIP (or Federal Implementation Plan

(FIP)) controls the full amount of

significant contribution from a state, the

section 126 sources in that state could

no longer be significantly contributing

to downwind nonattainment, and hence

the basis for the section 126 findings

would no longer be present. Moreover,

the provision would ensure that the

downwind states receive the emission

reduction benefits they are entitled to

under section 126 by May 1, 2003,

either under the section 126 rule or

under a federally enforceable SIP or FIP.

(65 FR 2684) Thus, EPA’s rationale for

adopting the automatic withdrawal

provision depended upon a May 1, 2003

compliance date for sources under the

SIP that would substitute for the control

remedy under section 126. Accordingly,

EPA interpreted section 52.34(i) to

apply only where EPA approves a SIP

revision (or promulgates a FIP) meeting

the full requirements of the NOX SIP

call and including a May 1, 2003

compliance date for sources.3 (65 FR

2683)

As discussed in section II.I. of this

proposal, the EPA is currently revising

certain portions of the NOX SIP call in

response to a March 3, 2000 decision by

the U.S. Court of Appeals for the D.C.

Circuit. See Michigan v. EPA, 213 F.3d

663 (D.C. Cir. 2000). In this decision, the

court upheld the NOX SIP call on all

major issues, but remanded four narrow

issues to EPA for further rulemaking.

EPA expects to issue soon a proposal to

address the remanded issues, which

will slightly modify the NOX SIP

budgets based on the court’s decision. In

light of the changes necessary to

respond to the court decision, EPA

anticipates that the final NOX SIP

budgets would be no more stringent

than the original SIP budgets as

modified by the March 2, 2000 technical

amendment which modified the NOX

emission budgets for each affected state.

(65 FR 11222) Therefore, a SIP meeting

the March 2, 2000 budgets and

providing for reductions by May 1,

2003, should fully address the

significant NOX transport from that

state, and therefore section 52.34(i)

would apply to automatically withdraw

the section 126 requirements for sources

in that state.

In today’s action, EPA is proposing to

approve the New Jersey NOX SIP

revision as meeting the full NOX SIP

Call, and including a May 1, 2003

compliance date. Therefore, if the SIP

revision is fully approved as proposed,

the section 126 requirements will

automatically be withdrawn for sources

in the State pursuant to 40 CFR 52.34(i).

III. Proposed Action

EPA has reviewed New Jersey’s

December 10, 1999 and July 31, 2000

SIP submittals, including New Jersey’s

July 31, 2000 supplement, using the

NOX SIP Call rulemaking notices and

checklist. EPA has reviewed New

Jersey’s control measures and projected

reductions and finds them approvable.

Therefore, EPA proposes approval of

subchapter 31 and the SIP narrative into

the New Jersey SIP at this time.

EPA is soliciting public comments on

the issues discussed in this proposal or

on other relevant matters. EPA will

consider these comments before it takes

final action. Interested parties may

participate in the Federal rulemaking

procedure by submitting written

comments to the EPA Regional office

listed in the ADDRESSES section of this

action.

IV. Administrative Requirements

Under Executive Order 12866 (58 FR

51735, October 4, 1993), this proposed

action is not a ‘‘significant regulatory

action’’ and therefore is not subject to

review by the Office of Management and

Budget. This proposed action merely

approves state law as meeting Federal

requirements and imposes no additional

requirements beyond those imposed by

state law. Accordingly, the Regional

Administrator certifies that this

proposed rule will 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 rule proposes to

approve pre-existing requirements

under state law and does 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

(Public Law 104–4). For the same

reason, this proposed rule also does not

significantly or uniquely affect the

communities of tribal governments, as

specified by Executive Order 13084 (63

FR 27655, May 10, 1998). This proposed

rule 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 (64

FR 43255, August 10, 1999), because it

merely approves a state rule

implementing a Federal standard, and

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 (62 FR

19885, April 23, 1997), because it is not

economically significant.

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

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. As required by

section 3 of Executive Order 12988 (61

FR 4729, February 7, 1996), in issuing

this proposed rule, EPA has taken the

necessary steps to eliminate drafting

errors and ambiguity, minimize

potential litigation, and provide a clear

legal standard for affected conduct. EPA

has complied with Executive Order

12630 (53 FR 8859, March 15, 1988) by

examining the takings implications of

the rule in accordance with the

‘‘Attorney General’s Supplemental

Guidelines for the Evaluation of Risk

and Avoidance of Unanticipated

Takings’’ issued under the executive

order. This rule does not impose an

information collection burden under the

provisions of the Paperwork Reduction

Act of 1995 (44 U.S.C. 3501 et seq.).

71284 Federal Register / Vol. 65, No. 231 / Thursday, November 30, 2000 / Proposed Rules

List of Subjects in 40 CFR Part 52

Environmental protection, Air

pollution control, Intergovernmental

relations, Nitrogen dioxide, Ozone,

Reporting and recordkeeping

requirements.

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

Dated: November 20, 2000

Jeanne M. Fox,

Regional Administrator, Region 2.

[FR Doc. 00–30543 Filed 11–29–00; 8:45 am]

BILLING CODE 6560–50–U

FEDERAL EMERGENCY

MANAGEMENT AGENCY

44 CFR Part 67

[Docket No. FEMA–D–7504]

Proposed Flood Elevation

Determinations

AGENCY: Federal Emergency

Management Agency, FEMA.

ACTION: Proposed rule.

SUMMARY: Technical information or

comments are requested on the

proposed base (1% annual chance) flood

elevations and proposed base flood

elevation modifications for the

communities listed below. The base

flood elevations are the basis for the

floodplain management measures that

the community is required either to

adopt or to show evidence of being

already in effect in order to qualify or

remain qualified for participation in the

National Flood Insurance Program

(NFIP).

DATES: The comment period is ninety

(90) days following the second

publication of this proposed rule in a

newspaper of local circulation in each

community.

ADDRESSES: The proposed base flood

elevations for each community are

available for inspection at the office of

the Chief Executive Officer of each

community. The respective addresses

are listed in the following table.

FOR FURTHER INFORMATION CONTACT:

Matthew B. Miller, P.E., Chief, Hazards

Study Branch, Mitigation Directorate,

Federal Emergency Management

Agency, 500 C Street SW., Washington,

DC 20472, (202) 646–3461, or (email)

matt.miller@fema.gov.

SUPPLEMENTARY INFORMATION: The

Federal Emergency Management Agency

(FEMA or Agency) proposes to make

determinations of base flood elevations

and modified base flood elevations for

each community listed below, in

accordance with Section 110 of the

Flood Disaster Protection Act of 1973,

42 U.S.C. 4104, and 44 CFR 67.4(a).

These proposed base flood and

modified base flood elevations, together

with the floodplain management criteria

required by 44 CFR 60.3, are the

minimum that are required. They

should not be construed to mean that

the community must change any

existing ordinances that are more

stringent in their floodplain

management requirements. The

community may at any time enact

stricter requirements of its own, or

pursuant to policies established by other

Federal, state or regional entities. These

proposed elevations are used to meet

the floodplain management

requirements of the NFIP and are also

used to calculate the appropriate flood

insurance premium rates for new

buildings built after these elevations are

made final, and for the contents in these

buildings.

National Environmental Policy Act

This proposed rule is categorically

excluded from the requirements of 44

CFR Part 10, Environmental

Consideration. No environmental

impact assessment has been prepared.

Regulatory Flexibility Act

The Associate Director, Mitigation

Directorate, certifies that this proposed

rule is exempt from the requirements of

the Regulatory Flexibility Act because

proposed or modified base flood

elevations are required by the Flood

Disaster Protection Act of 1973, 42

U.S.C. 4104, and are required to

establish and maintain community

eligibility in the NFIP. As a result, a

regulatory flexibility analysis has not

been prepared.

Regulatory Classification

This proposed rule is not a significant

regulatory action under the criteria of

Section 3(f) of Executive Order 12866 of

September 30, 1993, Regulatory

Planning and Review, 58 FR 51735.

Executive Order 12612, Federalism

This proposed rule involves no

policies that have federalism

implications under Executive Order

12612, Federalism, dated October 26,

1987.

Executive Order 12778, Civil Justice

Reform

This proposed rule meets the

applicable standards of Section 2(b)(2)

of Executive Order 12778.

List of Subjects in 44 CFR Part 67

Administrative practice and

procedure, Flood insurance, Reporting

and recordkeeping requirements.

Accordingly, 44 CFR Part 67 is

proposed to be amended as follows:

PART 67—[AMENDED]

1. The authority citation for Part 67

continues to read as follows:

Authority: 42 U.S.C. 4001 et seq.;

Reorganization Plan No. 3 of 1978, 3 CFR,

1978 Comp., p. 329; E.O. 12127, 44 FR 19367,

3 CFR, 1979 Comp., p. 376.

§ 67.4 [Amended]

2. The tables published under the

authority of § 67.4 are proposed to be

amended as follows:

State City/town/county Source of flooding Location

#Depth in feet above

ground.

*Elevation in feet (NGVD)

Existing Modified

Florida .................... Osceola County

(Unincorporated

Areas).

Lake Wilson ...................... Entire shoreline within the community ...... **104 **107

Buck Lake ......................... Entire shoreline within the community ...... **104 **107

Maps available for inspection at the Osceola County Administrative Building, Engineering Department, Room 249, 17 South Vernon Avenue,

Kissimmee, Florida.

Send comments to Mr. Robert Fernandez, Osceola County Manager, 1 Courthouse Square, Suite 4700, Kissimmee, Florida 34741.

Maine ..................... Kingsfield (Town)

Franklin County.

Stanley Stream upstream Approximately 50 feet of the confluence

with Carrabassett River.

None *557

Approximately 720 feet upstream of

Roxbury Street.

None *572