```

[Federal Register Volume 81, Number 115 (Wednesday, June 15, 2016)]
[Proposed Rules]
[Pages 38999-39001]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-14100]

-----------------------------------------------------------------------

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R01-OAR-2015-0238, FRL-9947-68-Region 1]

Air Plan Approval; CT; NOX Emission Trading Orders as 
Single Source SIP Revisions

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: The Environmental Protection Agency (EPA) is proposing to 
approve a State Implementation Plan (SIP) revision submitted by the 
State of Connecticut. This revision continues to allow facilities to 
create and/or use emission credits using NOX Emission 
Trading and Agreement Orders (TAOs) to comply with the NOX 
emission limits required by Regulations of Connecticut State Agencies 
(RCSA) section 22a-174-22 (Control of Nitrogen Oxides). The intended 
effect of this action is to propose approval of the individual trading 
orders to allow facilities to determine the most cost-effective way to 
comply with the state regulation. This action is being taken in 
accordance with the Clean Air Act (CAA).

DATES: Written comments must be received on or before July 15, 2016.

ADDRESSES: Submit your comments, identified by Docket ID Number EPA-
R01-OAR-2015-0238 at http://www.regulations.gov, or via email to 
Dahl.Donald@epa.gov. For comments submitted at Regulations.gov, follow 
the online instructions for submitting comments. Once submitted, 
comments cannot be edited or removed from Regulations.gov. For either 
manner of submission, the EPA may publish any comment received to its 
public docket. Do not submit electronically any information you 
consider to be Confidential Business Information (CBI) or other 
information whose disclosure is restricted by statute. Multimedia 
submissions (audio, video, etc.) must be accompanied by a written 
comment. The written comment is considered the official comment and 
should include discussion of all points you wish to make. The EPA will 
generally not consider comments or comment contents located outside of 
the primary submission (i.e. on the web, cloud, or other file sharing 
system). For additional submission methods, please contact the person 
identified in the For Further Information Contact section. For the full 
EPA public comment policy, information about CBI or multimedia 
submissions, and general guidance on making effective comments, please 
visit http://www2.epa.gov/dockets/commenting-epa-dockets.

FOR FURTHER INFORMATION CONTACT: Donald Dahl, Air Permits, Toxics, and 
Indoor Programs Unit, Office of Ecosystem Protection, U.S. 
Environmental Protection Agency, EPA New England Regional Office, 5 
Post Office Square, Suite 100, (OEP05-2), Boston, MA 02109-3912, phone 
number (617) 918-1657, fax number (617) 918-0657, email 
Dahl.Donald@epa.gov.

SUPPLEMENTARY INFORMATION: Throughout this document whenever ``we,'' 
``us,'' or ``our'' is used, we mean EPA.

Table of Contents

I. Background and Purpose.
II. Analysis of State Submission
III. Proposed Action
IV. Statutory and Executive Order Reviews

I. Background and Purpose

    On November 15, 2011, the Connecticut Department of Energy and 
Environmental Protection (CT DEEP) submitted a formal revision to its 
State Implementation Plan (SIP). This SIP revision consists of eighty-
nine source-specific Trading Agreement and Orders (TAOs) that allow 
twenty-four individual stationary sources of nitrogen oxide 
(NOX) emissions to create and/or trade NOX 
emission credits in order to ensure more effective compliance with EPA 
SIP-approved state regulations for reducing NOX emissions. 
We previously approved source-specific TAOs of the same kind issued by 
CT DEEP under this program for these same sources on September 28, 1999 
(64 FR 52233), March 23, 2001 (66 FR 16135), and September 9, 2013 (78 
FR 54962). The SIP submittal also includes Consent Order 8029A issued 
to Hamilton Sundstrand which addresses Volatile Organic Compound (VOC) 
emissions.
    In our September 9, 2013 approval, EPA acted on most of the TAOs 
contained in CT DEEP's July 1, 2004 SIP revision submission to EPA. At 
that time, EPA did not act on (1) TAO 8021 issued to Pfizer; (2) TAO 
8246 issued to Sikorsky Aircraft; (3) TAO 8110A issued to Yale 
University; and (4) Consent Order 7019A issued to Hamilton Sundstrand 
Corporation. On May 29, 2015, CT DEEP revised its July 1, 2004 SIP 
revision submittal to EPA by modifying TAO 8110A. Today we are acting 
on the modified version of TAO 8110A. EPA will take action on TAOs 8246 
and 8021 at a future date. Lastly, on April 22, 2014 the CT DEEP 
withdrew Consent Order 7019A from the 2004 SIP submittal.
    The CAA requires states to develop Reasonably Available Control 
Technology (RACT) regulations for all major stationary sources of 
NOX in areas which have been classified as ``moderate,'' 
``serious,'' ``severe,'' and ``extreme'' as well as in all areas of the 
Ozone Transport Region (OTR). EPA has defined RACT as the lowest 
emission limitation that a particular source is capable of meeting by 
the application of control technology that is reasonably available 
considering technological and economic feasibility (44 FR 53762; 
September 17, 1979). This requirement is established by sections 
182(b)(2), 182(f), and 184(b) of the CAA.
    Connecticut, as part of the OTR as well as being designated 
nonattainment for ozone, established NOX emission limits for 
existing major sources in order to meet the RACT requirement. The 
NOX emission limits are codified in Regulations of 
Connecticut State Agencies (RCSA) section 22a-174-22 (Control of 
Nitrogen Oxides). These state regulations were last approved by EPA 
into the Connecticut SIP on October 6, 1997. (See 62 FR 52016).
    As stated above, when determining what constitutes RACT for a 
source, a state and EPA need to consider both technology and economic 
feasibility. For example, it is technically possible for a source to 
install pollution control devices in series to further reduce 
emissions. However, if a state and EPA

[[Page 39000]]

determined that such an installation would be economically infeasible 
in relation to the additional emissions reductions achieved, then the 
RACT emission limit under Connecticut's regulations could legitimately 
be established at a higher rate than would be achieved by installing 
control devices in series.
    RCSA 22a-174-22 establishes NOX emission limits for 
several types of fossil-fuel firing emission units. RCSA 22a-174-38 
establishes NOX emission limits for municipal waste 
combustors. Since RACT is determined on a source-by-source basis, a 
fossil-fuel firing source may under Connecticut's regulations request a 
higher emission limit by making a demonstration to the CT DEEP that it 
is either technologically or economically infeasible, or both, to meet 
the NOX RACT limit in RCSA 22a-174-22. CT DEEP's use of the 
NOX TAOs has rendered the need for higher source-specific 
emission rates, based on demonstrations of technological and/or 
economic feasibility, less frequent, thus having the effect of reducing 
overall NOX emissions to a greater degree than would be the 
case without the TAO trading mechanism. For example, in its RACT 
Analysis for the 2008 ozone national ambient air quality standard 
(NAAQS) submitted to EPA on July 18, 2014 (2014 RACT Analysis), CT DEEP 
stated that ``[t]he traditional cost effectiveness ($/ton of 
NOX emitted) evaluation of controlling NOX 
emissions from the load-following boilers and uncontrolled turbines 
will not address high electric demand day (HEDD) emissions because the 
addition of controls on existing units that operate infrequently will 
nearly always result in a cost of control that is not reasonable.''
    Accordingly, as an alternative to these potential single source SIP 
determinations, which can lead to higher levels of NOX 
emissions, Connecticut established an emission trading program in RCSA 
22a-174-22(j) for fossil-fuel firing emission units and RSCA 22a-174-
38(d) for municipal waste combustors. These two SIP-approved 
regulations allow a source to participate in Connecticut's 
NOX emission trading program using two different mechanisms. 
RSCA 22a-174-22(j) requires a source that wants to participate in the 
program to enter into a TAO with the CT DEEP. RSCA 22a-174-38(d) does 
not require a municipal waste combustor (MWC) to enter into a TAO and 
instead contains specific requirements that an MWC must meet in order 
to create a NOX emission reduction credit that can be used 
in Connecticut's trading program. These emission trading programs 
provide incentives for some facilities subject to the NOX 
emission limits in either RSCA 22a-174-22 or RSCA 22a-174-38 to reduce 
their NOX emissions beyond what is required to meet RACT by 
allowing them to create discrete emission reduction credits (DERCs).\1\ 
The DERCs may then be purchased by other sources which otherwise may 
have needed a higher source-specific NOX emission limit due 
to technological and/or economic infeasibility. DERCs are created when 
a facility installs and operates a control device which reduces 
emissions beyond what is required to meet the NOX emission 
limitations in RSCA 22a-174-22 or in RSCA 22a-174-38(d). Once a DERC is 
created, it can then be sold to another source that is unable to meet 
the NOX limit in RSCA 22a-174-22 .\2\ The incentive to over 
control leads to a greater NOX emission reduction than the 
reduction that would have occurred if Connecticut had to establish a 
higher NOX emission limit for those sources which 
demonstrated that they would be unable to meet the NOX 
limits in RSCA 22a-174-22 due to cost or technological infeasibility, 
or both.
---------------------------------------------------------------------------

    \1\ The NOX emission credits created pursuant to RSCA 
22a-174-38(d) are referred to as emission reduction credits.
    \2\ RSCA 22a-174-38(d)(1) also allows a municipal waste 
combustor that commenced construction prior to December 20, 1989 to 
use emission credits created under RSCA 22a-174-38 to comply with 
the NOX emission limits contained in RSCA 22a-174-
38(c)(8).
---------------------------------------------------------------------------

    At the time Connecticut instituted the NOX emission 
trading program in 1995, the sources generating NOX emission 
credits in Connecticut were reducing their emissions to levels below 
those required by Connecticut's RACT regulations. Since that time, in 
more recent years, other states have established NOX RACT 
emission limits for emission units similar to those in Connecticut, at 
levels lower than the emission limits in RSCA 22a-174-22 which are 
currently approved in the Connecticut SIP as meeting RACT for the 1997 
ozone standard. CT DEEP is now required by the CAA to recertify that 
its regulations meet RACT for the 2008 ozone standard. During this 
recertification process, CT DEEP recognized the fact the NOX 
emission limits contained in RSCA 22a-174-22 may not be stringent 
enough for the 2008 ozone standard by stating in its 2014 RACT Analysis 
that ``[w]hile the combination of emissions limits and trading 
initially led (sic) to significant system-wide emission reductions 
throughout Connecticut in 1995, the efforts to ``over-control'' to 
generate credits are now merely RACT in many other states. DEEP must 
therefore consider elimination of the single source emissions trading 
program, as well as more stringent emission limits, to meet current 
RACT levels and realize additional reductions in Connecticut 
emissions.'' In other words, CT DEEP's NOX emission trading 
program, as presently structured in RSCA 22a-174-22, may no longer be 
viable in the future to meet today's standards for RACT, as emission 
limits in RSCA 22a-174-22 may need to be revised in order for CT DEEP 
to demonstrate attainment with the 2008 ozone standard. In fact, CT 
DEEP's July 1, 2014 RACT submittal states, ``DEEP commits to perform 
further evaluation of Connecticut's municipal waste combustor and fuel-
burning source NOX requirements and to seek any regulatory 
revisions necessary to revise the control requirements to a RACT level 
for the 2008 ozone NAAQS,'' and also states, ``DEEP commits to begin a 
review of NOX emissions and emissions controls for the 
sources now subject to RCSA section 22a-174-22 with the goal of 
developing changes to RCSA section 22a-174-22 sufficient to satisfy 
RACT under the 2008 ozone NAAQS.'' \3\ Therefore, EPA is not deciding 
if the NOX trading program allowed by RSCA 22a-174-22 is 
sufficient to meet RACT for the 2008 ozone standard and is not taking 
any action on Connecticut's July 1, 2014 RACT SIP revision in this 
action. Rather, EPA will address those issues in a future rulemaking.
---------------------------------------------------------------------------

    \3\ Furthermore, CT DEEP is currently working with a RACT 
stakeholder workgroup on draft regulations. See www.ct.gov/deep/cwp/view.asp?a=2684&q=546804&deepNav_GID=1619.
---------------------------------------------------------------------------

    Banked emission reduction credits must be correctly accounted for 
in attainment plans in order to prevent unplanned future emissions. On 
February 1, 2008, Connecticut submitted its 2002 to 2008 reasonable 
further progress (RFP) plan and 2002 base year inventory to EPA as part 
of its attainment demonstration SIP submittal for the 1997 8-hr ozone 
standard. On October 14, 2009, Connecticut submitted a revision to the 
RFP plan. EPA approved Connecticut's RFP plan, as revised, on August 
22, 2012 (77 FR 50595). In the October 14, 2009 revision, Connecticut 
explained that any DERCs that existed in the base year 2002 will have 
expired by the end of the RFP period in 2008. This is based on the fact 
that under Connecticut's NOX emission trading program, DERCs 
expire within five years of creation. Since any DERCs existing in 2002 
would not be available for use in 2008, banked DERCs need not be 
accounted for in a state's RFP

[[Page 39001]]

analysis, and Connecticut has properly done that. Therefore, EPA is 
concluding the TAO's that we are proposing to approve into the SIP 
today have been properly accounted for in Connecticut's attainment 
plan.
    With respect to the 2008 ozone standard, both Connecticut 
nonattainment areas were initially designated ``marginal'' 
nonattainment for this standard on May 21, 2012. (See 77 FR 30088). 
However, on May 4, 2016, EPA re-classified or ``bumped-up'' these areas 
to moderate nonattainment. (See 81 FR 26697). Connecticut will need to 
account for DERCs in its new RFP and attainment plans for this standard 
which must be submitted as expeditiously as practicable, but no later 
than January 1, 2017.

II. Analysis of State Submission

    EPA issued a guidance document ``Improving Air Quality with 
Economic Incentive Programs'' (EIP Guidance) .\4\ This guidance applies 
to discretionary economic incentive programs (EIPs). EPA's final action 
on these discretionary economic incentive programs occurs when EPA acts 
on a state's request to revise the SIP. EPA reviewed the source-
specific TAOs with respect to the expectations of the EIP Guidance. EPA 
has concluded, after review and analysis of the source-specific TAOs, 
that they are consistent with the EIP Guidance. See the Technical 
Support Document in the docket for this action for EPA's analysis of 
why the TAO's are consistent with the EIP.
---------------------------------------------------------------------------

    \4\ See EPA-452/R-01-001, January 2001 at https://www3.epa.gov/ttn/caaa/t1/memoranda/eipfin.pdf.
---------------------------------------------------------------------------

    When EPA designated areas for the 2008 ozone standard, Connecticut 
was divided into two separate areas, the Greater Connecticut Area and 
the New York-N. New Jersey-Long Island NY-NJ-CT area. CT DEEP and EPA 
analyzed emission trading data for the period of time the TAOs were in 
effect to determine if more emission reduction credits were being used 
for compliance than were generated or created in any of Connecticut's 
two nonattainment areas. EPA has determined the TAOs have resulted in 
RACT equivalent emission reductions in each of the two nonattainment 
areas. See the Technical Support Document in the docket for this action 
for an explicit accounting of the emissions from each facility in each 
nonattainment area.
    The TAOs being approved into Connecticut's SIP today are limited to 
facilities which have already been authorized in the past by the State 
to operate under a TAO and those TAOs continue to authorize the sources 
until May 31, 2014 to create and/or use NOX emission credits 
and allow for unused NOX allowances to be converted into 
NOX emission credits. The TAOs previously issued by 
Connecticut to these facilities were approved by EPA into the 
Connecticut SIP on September 28, 1999 (64 FR 52233), March 23, 2001 (66 
FR 16135), and September 9, 2013 (78 FR 54962). The reason the TAOs 
must be approved at this time for these same facilities is that the 
TAOs previously approved had all expired by May 1, 2007.

III. Proposed Action

    EPA is proposing to approve Connecticut's submitted SIP revision 
for the NOX TAOs submitted on November 15, 2011. EPA is not 
taking action on Consent Order 8029A issued to Hamilton Sundstrand 
Corporation. EPA will take action on this Consent Order at a later 
date. EPA is also proposing to approve TAO 8110A, submitted on July 1, 
2004 and amended on May 29, 2015. EPA is soliciting public comments on 
the issues discussed in this document or on other relevant matters. 
These comments will be considered before taking final action. 
Interested parties may participate in the Federal rulemaking procedure 
by submitting written comments to the EPA New England Regional Office 
listed in the ADDRESSES section of this Federal Register.

IV. Statutory and Executive Order Reviews

    Under the Clean Air Act, the Administrator is required to approve a 
SIP submission that complies with the provisions of the Act and 
applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). 
Thus, in reviewing SIP submissions, EPA's role is to approve state 
choices, provided that they meet the criteria of the Clean Air Act. 
Accordingly, this proposed action merely approves state law as meeting 
Federal requirements and does not impose additional requirements beyond 
those imposed by state law. For that reason, this proposed action:
     Is not a significant regulatory action subject to review 
by the Office of Management and Budget under Executive Orders 12866 (58 
FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21, 2011);
     Does not impose an information collection burden under the 
provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);
     Is certified as not having a significant economic impact 
on a substantial number of small entities under the Regulatory 
Flexibility Act (5 U.S.C. 601 et seq.);
     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);
     Does not have Federalism implications as specified in 
Executive Order 13132 (64 FR 43255, August 10, 1999);
     Is not an economically significant regulatory action based 
on health or safety risks subject to Executive Order 13045 (62 FR 
19885, April 23, 1997);
     Is not a significant regulatory action subject to 
Executive Order 13211 (66 FR 28355, May 22, 2001);
     Is not subject to requirements of Section 12(d) of the 
National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 
note) because application of those requirements would be inconsistent 
with the Clean Air Act; and
     Does not provide EPA with the discretionary authority to 
address, as appropriate, disproportionate human health or environmental 
effects, using practicable and legally permissible methods, under 
Executive Order 12898 (59 FR 7629, February 16, 1994).
    In addition, the SIP is not approved to apply on any Indian 
reservation land or in any other area where EPA or an Indian tribe has 
demonstrated that a tribe has jurisdiction. In those areas of Indian 
country, the rule does not have tribal implications and will not impose 
substantial direct costs on tribal governments or preempt tribal law as 
specified by Executive Order 13175 (65 FR 67249, November 9, 2000).

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Incorporation by 
reference, Intergovernmental relations, Nitrogen dioxide, Reporting and 
recordkeeping requirements.

    Dated: May 31, 2016.
H. Curtis Spalding,
Regional Administrator, EPA New England.
[FR Doc. 2016-14100 Filed 6-14-16; 8:45 am]
 BILLING CODE 6560-50-P
```