[Federal Register Volume 63, Number 98 (Thursday, May 21, 1998)]
[Proposed Rules]
[Pages 27897-27901]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-13610]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[Region II Docket No. NY27-1-178, FRL-6101-5]


Approval and Promulgation of Implementation Plans; Emission Trade 
to Meet Reasonably Available Control Technology for the State of New 
York

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: The EPA is proposing approval of a revision to the New York 
State Implementation Plan for ozone. This revision proposes to 
establish and require an emission trade between Niagara Mohawk Power 
Corporation and Champion International Paper Corporation which will 
result in both sources meeting the requirements of Reasonably Available 
Control Technology for oxides of nitrogen. The intended effect of this 
proposed action is to approve source-specific permit conditions, 
requiring the sources to trade emissions in accordance with 
requirements of the Clean Air Act, and resulting in emission reductions 
which will help toward attaining the national ambient air quality 
standards for ozone.

DATES: Comments must be received on or before June 22, 1998.

ADDRESSES: All comments should be addressed to: Ronald Borsellino, 
Chief, Air Programs Branch, U.S. EPA, Region II Office, 290 Broadway, 
25th Floor, New York, New York 10007-1866. Copies of the state 
submittal and other information are available for public inspection 
during normal business hours, by appointment, at the Air Programs 
Branch, U.S. EPA, Region II Office, 290 Broadway, 25th Floor, New York, 
New York; as well as the New York State Department of Environmental 
Conservation, Division of Air Resources, 50 Wolf Road, Albany, New York 
12233.

FOR FURTHER INFORMATION CONTACT: Richard Ruvo, Environmental Engineer, 
Air Programs Branch, U.S. EPA, Region II Office, 290 Broadway, 25th 
Floor, New York, New York 10007-1866; (212) 637-4014.
SUPPLEMENTARY INFORMATION:

I. Background

    The Clean Air Act (the Act) requires that States develop Reasonably 
Available Control Technology (RACT) regulations for all major 
stationary sources of oxides of nitrogen (NO<INF>X</INF>) in areas 
which have been classified as ``moderate,'' ``serious,'' ``severe,'' 
and ``extreme,'' ozone nonattainment areas, and in all areas of the 
Ozone Transport Region (OTR). The 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, Sept. 
17, 1979). This requirement is established by sections 182(b)(2), 
182(f), and 184(b) of the Act. The Act's NO<INF>X</INF> requirements 
are further described in more detail in ``The General Preamble for 
Implementation of Title I of the Clean Air Act Amendments,'' (57 FR 
13498, April 16, 1992) and ``The NO<INF>X</INF> Supplement to the 
General Preamble'' (57 FR 55620, November 25, 1992).
    The entire State of New York is included in the OTR, therefore RACT 
must be applied to all major stationary sources of NO<INF>X</INF> 
emissions. New York State has defined a major stationary source for 
NO<INF>X</INF> as a source in the New York City metropolitan area and 
the lower Orange County metropolitan area which has the potential to 
emit 25 tons per year (TPY) and as a source in the rest of the State 
which has the potential to emit 100 TPY.
    New York State adopted its NO<INF>X</INF> RACT regulation, part 
227-2, on January 19, 1994. Part 227-2, section 2.5(b) allows for 
system-wide emissions averaging as a compliance strategy. The average 
must be weighted so the mass emission rate of the units in operation is 
equivalent to the mass emission rate that would be achieved if each 
operating unit individually met the applicable RACT emission limit. 
Averaging may include units owned and operated by the same person.

II. State Submittal

    On November 8, 1995, New York proposed for comment special permit 
conditions for the Niagara Mohawk Power Corporation and the Champion 
International Paper Corporation for an emission trade to meet the 
NO<INF>X</INF> RACT requirements of part 227-2. New York approved the 
special permit conditions on December 14, 1995, having received no 
public comments. On April 9, 1996, New York State submitted the special 
permit conditions to EPA as a source-specific revision to the State 
Implementation Plan (SIP) for ozone. New York submitted additional 
technical information on April 30, 1996, October 17, 1996 and December 
5, 1996. The SIP revision was reviewed by EPA in accordance with the 
completeness criteria found at Title 40, part 51, appendix V of the 
Code of Federal Regulations. EPA determined the SIP revision to be 
administratively and technically complete in a June 4, 1996 letter to 
New York.
    In the process of its review of the April 9, 1996 SIP revision, EPA 
noted deficiencies in the special permit conditions. In a February 6, 
1997 letter, EPA requested New York to correct these deficiencies, 
delaying review of the SIP revision. New York re-proposed for comment 
the special permit conditions for the emission trade on September 24, 
1997. New York approved the special permit conditions on December 2, 
1997, having received no public comments. On February 2, 1998, New York 
submitted to EPA the December 2, 1997 special permit conditions. The 
February 2, 1998 submittal supplemented the original April 9, 1996 SIP 
revision.
    For a more detailed discussion of New York's SIP submittal and 
EPA's proposed action, the reader is referred to the Technical Support 
Document (TSD) which was developed as part of this action. Copies of 
the TSD are found at the previously mentioned addresses.

III. Analysis of State Submittal

A. Facility Descriptions

    Niagara Mohawk Power Corporation (NMPC) operates four fossil fuel-
fired utility plants in New York State; the

[[Page 27898]]

Oswego, Albany, C.R. Huntley, and Dunkirk Steam Stations. There are two 
Titles of the Act which impose NO<INF>X</INF> emission limits on NMPC's 
fossil fuel-fired generating plants. All of NMPC's fossil units became 
subject to the Title I NO<INF>X</INF> RACT requirements as of May 31, 
1995. NMPC's coal-fired units are also subject to the Title IV Acid 
Rain requirements for NO<INF>X</INF>. However, the Title I 
NO<INF>X</INF> RACT requirements established by New York in part 227-2 
are currently more restrictive on NMPC's units than the emission limits 
established by the Title IV rules. NMPC has developed a plan to comply 
with the NO<INF>X</INF> RACT emission limits through the installation 
of air pollution control technology. In addition to these controls, 
NMPC uses a system-wide averaging scheme as a fallback to meeting the 
NO<INF>X</INF> RACT requirements.
    Champion International Paper Corporation (Champion) owns and 
operates two coal-fired boilers at its paper mill in Deferiet, 
Jefferson County. Under part 227-2, the two boilers are subject to the 
NO<INF>X</INF> RACT emission limit of 0.5 lbs/MMBtu (pounds per million 
British Thermal Units). Stack tests completed in October 1995 and May 
1997 indicated average NO<INF>X</INF> emissions ranging from 0.665 lbs/
MMBtu to 0.893 lbs/MMBtu.
    Champion determined it would be technically infeasible for the two 
boilers to meet the NO<INF>X</INF> RACT emission limit with 
conventional NO<INF>X</INF> control technologies. Champion initially 
planned to meet the NO<INF>X</INF> RACT requirements through the 
compliance option of repowering. However, after discussions with NMPC 
and New York, Champion decided to achieve compliance with RACT, as 
prescribed by part 227-2, by utilizing beyond-RACT emission reductions 
from the NMPC system-wide averaging plan.

B. Special Permit Conditions for the Emission Trade

    New York has modified the permits for both NMPC and Champion in 
order to allow the implementation of the emission trade. For NMPC, 
which is creating the emission reductions, the special permit 
conditions require emissions of NO<INF>X</INF> to be reduced below 
RACT-allowable emissions by the amount to be traded. For Champion, 
which will be using NMPC's emission reductions, the special permit 
conditions allow emissions of NO<INF>X</INF> to be emitted in excess of 
the RACT-allowable emissions, but only by 90% of the amount to be 
traded.
    The special permit conditions for NMPC, allow compliance to be 
demonstrated on either a unit-by-unit basis or on a system-wide 
average. Surplus NO<INF>X</INF> reductions, in pounds, are calculated 
as the difference between the amount of NO<INF>X</INF> allowed to be 
emitted by a given unit (lbs/MMBtu) and the actual amount of 
NO<INF>X</INF> emitted by the unit (lbs/MMBtu), multiplied by the 
actual heat input, in MMBtu. Surplus NO<INF>X</INF> reductions are 
calculated each hour for each unit. Compliance on a daily basis is 
determined by summing the surplus NO<INF>X</INF> reductions created by 
each unit for each 24-hour period. From September 16 of each year to 
April 30 of the following year, compliance is based on a 30-day rolling 
average (Btu-weighted). The special permit conditions include example 
spreadsheets and tables to be used in tracking the surplus 
NO<INF>X</INF> reductions for each unit and for the entire system and 
demonstrating compliance. The TSD includes a step-by-step example of an 
emission averaging calculation.
    The source of the data used to calculate NMPC's NO<INF>X</INF> 
emissions (lbs/MMBtu and heat input) will be the Continuous Emissions 
Monitors that have been installed pursuant to 40 CFR part 75. All of 
NMPC's fossil fired units are subject to the monitoring requirements of 
40 CFR part 75. NMPC will submit quarterly compliance reports to New 
York to meet the NO<INF>X</INF> RACT reporting requirements, showing 
the amount of NO<INF>X</INF> generated each hour for each unit, and a 
summary of exceedances, should they occur.
    In order for NMPC to demonstrate RACT compliance and to apply 
additional surplus NO<INF>X</INF> reductions toward RACT compliance at 
the Champion Deferiet facility, NMPC will calculate the net amount of 
surplus NO<INF>X</INF> reductions that were created by the NMPC system. 
The special permit conditions also require NMPC to hold at least 1.4 
tons (2,800 pounds) of surplus NO<INF>X</INF> reductions at the end of 
each 30-day rolling period, from September 16 to April 30, inclusive. 
From May 1 to September 15, NMPC must hold at least 1.3 tons (2,600 
pounds) of surplus NO<INF>X</INF> reductions at the end of each 24-hour 
period. In the event that less than 1.3 tons are held from May 1 to 
September 15, NMPC must notify New York and within five days must hold 
surplus NO<INF>X</INF> reductions equal to the shortfall, multiplied by 
1.10. Failure to hold the appropriate amount of surplus NO<INF>X</INF> 
reductions, based on the time of the year, is considered a violation of 
the permit.
    Champion's special permit conditions determine compliance using two 
formulas, depending on the time of year. Both formulas ensure 
Champion's boilers will not exceed 0.50 lbs/MMBtu, by subtracting the 
surplus NO<INF>X</INF> reductions received from NMPC, in pounds, from 
Champion's daily NO<INF>X</INF> emissions, in pounds, then dividing 
that by the daily heat input in MMBtu. Compliance with the 30-day 
rolling average will be determined by adding the amount of 
NO<INF>X</INF>, in pounds, emitted during the previous 29 days (minus 
the amount of surplus NO<INF>X</INF> reductions available for 
compliance) to the NO<INF>X</INF> emitted during the most recently 
completed day (minus the amount of surplus NO<INF>X</INF> reductions 
available for compliance that day), and dividing that sum by the sum of 
the daily heat inputs for the most recently completed 30 days.
    The actual NO<INF>X</INF> emissions rate for Champion's boilers 
will be determined through annual emissions testing as the average of 
three runs at maximum load. Such testing will be conducted using EPA 
Test Method 7E, with State oversite. Emission results will be used to 
calculate NO<INF>X</INF> mass emissions for the period following 
testing, not to be applied for the previous year. Champion must 
maintain records for a period of at least five years of the (1) 
quantity of coal burned each day, (2) stack test reports, (3) daily 
total steam flow for each boiler, (4) daily prorated NO<INF>X</INF> 
rate for the combined boilers, and (5) records of surplus 
NO<INF>X</INF> reductions, creditable surplus NO<INF>X</INF> reductions 
and the 10% set-aside.
    For Champion, the amount of surplus NO<INF>X</INF> reductions 
available from NMPC for compliance is 1.3 tons or 1.4 tons per day, 
depending on the time of year, therefore the amount of surplus 
NO<INF>X</INF> reductions needed for compliance will not exceed 1.3 or 
1.4 tons per day. From May 1 to September 15, creditable surplus 
NO<INF>X</INF> reductions will be generated daily and defined as the 
daily difference between the surplus NO<INF>X</INF> reductions 
generated by NMPC and those needed by Champion. In the event NMPC is 
unable, on a daily basis, to generate surplus NO<INF>X</INF> reductions 
sufficient to satisfy Champion's need, the difference will be deducted 
from the creditable surplus NO<INF>X</INF> reductions accumulated 
during the previous 30-day period. In the event NMPC notifies Champion 
that surplus NO<INF>X</INF> reductions will be unavailable for a period 
of 30 consecutive days or more, Champion must submit an alternative 
NO<INF>X</INF> RACT Compliance Plan to New York within 60 days. The 
Compliance Plan shall include the use of any or all creditable surplus 
NO<INF>X</INF> reductions to remain in compliance with part 227-2 until 
implementation of the alternative NO<INF>X</INF> RACT Compliance Plan. 
The Compliance Plan will include a plan to comply with the provisions 
of part 227-

[[Page 27899]]

2, a schedule for implementing RACT, and the use of creditable surplus 
NO<INF>X</INF> reductions to offset emissions during the interim period 
of submittal and implementation of the RACT plan.
    The special permit conditions also require Champion to set aside 
10% of the 497.2 TPY received from NMPC for use by Champion as a 
benefit to the environment. Therefore only 447.48 TPY will be used by 
Champion for compliance purposes, while 49.72 TPY will be retired to 
benefit the environment.
    The special permit conditions will terminate if the Champion 
Deferiet facility permanently shuts down or if NMPC and Champion 
terminate their agreement. The special permit conditions will also 
terminate if New York approves an alternate means for Champion to 
comply with RACT, such as, some other emission trade subject to EPA 
approval, or direct compliance with part 227-2 through the 
implementation of NO<INF>X</INF> control technologies and strategies.

C. Consistency of the Emission Trade With Part 227-2 and EPA's Emission 
Trading Guidance Documents

    The special permit conditions for NMPC and Champion include 
formulas to provide that the emission trade is on a Btu-weighted basis. 
These formulas ensure that the generation and calculation of surplus 
NO<INF>X</INF> reductions are based on the units in operation during 
the compliance period. The formulas also ensure the mass emission rate 
of the units in operation is equivalent to the mass emission rate that 
would be achieved if each operating unit individually met the 
applicable RACT emission limit. The NMPC and Champion compliance plans 
clearly indicate which units at which facility will be included with 
the emission trade. Since the emission trade includes units owned and 
operated by two different persons, New York submitted this emission 
average as a source-specific SIP revision. Lastly, the affected 
facilities are located in Upstate New York, outside of the New York 
City severe nonattainment area. Therefore, it is not necessary to 
include any geographical constraints in the special permit conditions 
with respect to trades outside severe nonattainment areas, pursuant to 
part 227-2, section 2.5(b).
    The April 9, 1996 submittal letter provides the evidence that New 
York has the legal authority under State law to approve and implement 
the compliance plan. The special permit conditions were processed in 
accordance with part 621.14 for inclusion in the Certificate to 
Operate. New York proposed approval of the SIP revision pursuant to 
part 227-2. Any violation of the special conditions of each source's 
permit will be enforced as prescribed by Chapter 19 of the New York 
State Environmental Conservation Law. The emission trade is enforceable 
through appropriate averaging times, test methods, compliance 
schedules, and reporting and recordkeeping requirements and is 
acceptable to the Agency. To verify compliance, NMPC and Champion are 
required to calculate daily averaged NO<INF>X</INF> emissions records 
and submit these records in quarterly reports as prescribed by the 
special permit conditions. These conditions ensure compliance on a 
daily basis and include data obtained exclusively during operating 
hours to establish the average daily NO<INF>X</INF> emissions.
    Overall, part 227-2 provides a compliance option for owners of 
multiple affected units to choose cost-effective control options to 
meet an overall equivalent emission limit, in order to comply with part 
227-2. Should a source not comply with this provision it would 
constitute a violation of part 227-2 and would subject the source owner 
or operator to civil and applicable criminal penalties. EPA believes 
this is sufficient to ensure that sources comply and should EPA have to 
take enforcement action, it could use the same provision to obtain 
compliance.
    Since the 1970's, EPA has developed several emission trading 
programs and guidance documents to allow industry and States more 
flexibility in meeting statutory requirements of the Act. Overall, New 
York's emission trade between NMPC and Champion to meet the 
NO<INF>X</INF> RACT requirements is consistent with EPA's emission 
trading guidance.
    EPA's ``Emissions Trading Policy Statement'' (51 FR 43814, December 
4, 1986) provides the Agency's historical guidance on emission trading 
programs (bubbles, netting, offsets and banking) to allow more 
flexibility in meeting Act requirements. The 1986 Policy discusses how 
only emission reductions which are surplus, quantifiable, enforceable 
and permanent may be used in an emission trade.
    NMPC's NO<INF>X</INF> emission reductions are surplus because the 
formulas in the special permit conditions are based on the difference 
between the amount of NO<INF>X</INF> allowed to be emitted by RACT and 
the actual amount of NO<INF>X</INF> emitted. Therefore, only those 
NO<INF>X</INF> emission reductions below the RACT-allowable limits are 
considered surplus and available for use by Champion.
    NMPC's NO<INF>X</INF> emissions (lbs/MMBtu and heat input) are 
quantifiable through the Continuous Emissions Monitors that have been 
installed pursuant to 40 CFR part 75.
    The legally-enforceable vehicles for the emission trade are the 
special permit conditions for NMPC and Champion, approved by New York 
on December 2, 1997.
    NMPC's emission reductions used by Champion are considered 
permanent because NMPC's special permit conditions require NMPC to hold 
at least 1.3 or 1.4 tons of surplus NO<INF>X</INF> reductions depending 
on the time of year. NMPC's NO<INF>X</INF> emission reductions are also 
considered permanent because they are based on the implementation of 
various control strategies.
    ``The NO<INF>X</INF> Supplement to the General Preamble'' (57 FR 
55620, November 25, 1992) specifies that in cases where States adopt an 
areawide averaging rule for a group of sources, the emission limits, 
emission quantification methods, and monitoring and recordkeeping 
requirements applicable to each owner/operator in the group must be 
clearly specified. In addition, the rule must specify appropriate 
penalties for violation of the various requirements. Also, SIP measures 
must be converted into legally-enforceable vehicles such as a 
regulation or permit. EPA's current thinking is to also allow trading 
for other NO<INF>X</INF> source categories, either within one facility, 
among several facilities or among several emission units at a facility.
    While New York's averaging provision and this source-specific SIP 
revision are not intended to be a generic areawide trading rule, the 
Region believes this emission trade between NMPC and Champion is a 
logical extension of the NO<INF>X</INF> Supplement. New York's emission 
trade between NMPC and Champion is consistent with EPA's general 
guidance (NO<INF>X</INF> Supplement) on trading to meet the 
NO<INF>X</INF> RACT requirements. The legally-enforceable vehicles for 
the emission trade are the special permit conditions for NMPC and 
Champion, approved by the New York on December 2, 1997. The permits 
clearly specify the emission limits, emission quantification methods, 
testing, monitoring and recordkeeping requirements applicable to each 
owner/operator in the trade. Civil and criminal sanctions associated 
with a violation of the special permit conditions are found within 
Article 71 of the State regulation.
    EPA's Economic Incentive Program (EIP) Rules (40 CFR part 51, 
subpart U) contain the rules and guidance for EIP's that a State may 
choose to adopt for any criteria pollutant, as explicitly allowed for 
in the Act. The EIP rules provide an opportunity to encourage the

[[Page 27900]]

development and early implementation of appropriate EIP's. Since the 
EIP rules and guidance are broadly applicable to any kind of EIP, the 
guidance generally covers the same type of emission trading programs 
that have historically been addressed by the Emissions Trading Policy 
Statement. Therefore, trades which fall under the Emissions Trading 
Policy Statement represent one particular model for how States could 
choose to design such a program that would be approvable under the EIP 
rules.
    Since the NMPC and Champion emission trade is consistent with the 
provisions of the Emissions Trading Policy Statement, it is also 
consistent with the EIP guidance. In addition to meeting the criteria 
in the Emissions Trading Policy Statement, the NMPC/Champion emission 
trade provides for additional emission reductions which meet the 
``benefit-sharing'' goal of the EIP rules and guidance.

D. Summary

    Major sources of NO<INF>X</INF> are numerous and varied. As a 
result, New York has tried to allow for some flexibility in part 227-2. 
Part 227-2 allows owners and operators of multiple units to average 
emissions over all the units operated, with some appropriate 
restrictions. The use of post combustion control is not precluded for 
any source category. The owner or operator of a facility may choose to 
use post combustion control as a cost-effective control strategy for a 
particular application, as a means of ``over control'' for an averaging 
scheme or for use in an emission offset plan.
    The source-specific SIP revision provides an innovative way for an 
affected source to achieve emission reductions (at less cost) equal to 
or beyond the reductions required by NO<INF>X</INF> RACT. As a result 
of the emission trade, NMPC is required to create emission reductions 
of at least 1.3 or 1.4 tons of NO<INF>X</INF> per day. As mentioned in 
its Fourth Quarter 1995 Compliance report, NMPC holds surplus 
NO<INF>X</INF> reductions for Champion of 42 tons per 30-day rolling 
period (1.4 tons/day x 30 days). The report shows NMPC's 30-day 
compliance margin ranges from 323 to 543 tons, which is well beyond the 
amount to hold for Champion. For Champion, the emission trade allows 
the facility to exceed its NO<INF>X</INF> allowable emissions, but only 
by the amount traded. For example, in a worst case scenario, emission 
increases by Champion will be contemporaneously offset by equivalent 
emission decreases at NMPC. Also, without the emission trade, Champion 
would have requested a waiver from New York, which if granted would 
have resulted in emission increases greater than 1.3 or 1.4 tons per 
day. In addition, Champion is required to retire 10% of the surplus 
NO<INF>X</INF> reductions it receives from NMPC as a benefit to the 
environment.
    EPA has reviewed NMPC's and Champion's applications and New York's 
source-specific SIP revision for completeness and approvability. EPA 
agrees with New York's determination that the emission trade between 
NMPC and Champion provides an innovative way for an affected source to 
achieve emission reductions equal to or beyond the reductions required 
by NO<INF>X</INF> RACT, at less cost to industry. While this emission 
trade does not constitute traditional RACT, it does provide a 
compliance option for owners of multiple affected units to choose cost-
effective control options to meet an overall emission reduction 
equivalent to RACT. The permit conditions for the emission trade serve 
as approved SIP emission limits for these facilities. Finally, EPA 
believes these permit conditions address the criteria of surplus, 
quantifiable, enforceable and permanent and therefore, proposes 
approval.
    It should be noted that New York, the other OTR States and EPA, are 
developing future NO<INF>X</INF> trading rules which will have broader 
applicability than this source-specific SIP revision. New York's 
adoption of the OTR's NO<INF>X</INF> Budget Program and finalization of 
EPA's ``Ozone Transport SIP Call'' may replace the emission trade 
discussed in this proposed action, as well as establish an overall, 
generic emission trading program.

Conclusion: EPA is proposing full approval of the source-specific 
permit conditions requiring NMPC and Champion to trade emissions to 
meet the requirements of NO<INF>X</INF> RACT. EPA is proposing approval 
of these special permit conditions, as submitted by the State of New 
York on April 9, 1996 and supplemented on February 2, 1998, as part of 
the SIP.

    Nothing in this action should be construed as permitting or 
allowing or establishing a precedent for any future request for 
revision to any state implementation plan. Each request for revision to 
the state implementation plan shall be considered separately in light 
of specific technical, economic, and environmental factors and in 
relation to relevant statutory and regulatory requirements.

IV. Administrative Requirements

A. Executive Order 12866

    The Office of Management and Budget (OMB) has exempted this 
regulatory action from review under Executive Order 12866.

B. Regulatory Flexibility Act

    Under the Regulatory Flexibility Act, 5 U.S.C. 600 et seq., EPA 
must prepare a regulatory flexibility analysis assessing the impact of 
any proposed or final rule on small entities. 5 U.S.C. 603 and 604. 
Alternatively, EPA may certify that the rule will not have a 
significant impact on a substantial number of small entities. Small 
entities include small businesses, small not-for-profit enterprises, 
and government entities with jurisdiction over populations of less than 
50,000.
    SIP approvals under section 110 and subchapter I, part D of the 
Clean Air Act do not create any new requirements but simply approve 
requirements that the State is already imposing. Therefore, because the 
federal SIP approval does not impose any new requirements, I certify 
that it does not have a significant impact on any small entities 
affected. Moreover, due to the nature of the Federal-State relationship 
under the CAA, preparation of a flexibility analysis would constitute 
federal inquiry into the economic reasonableness of state action. The 
Clean Air Act forbids EPA to base its actions concerning SIPs on such 
grounds. Union Electric Co. v. U.S. EPA, 427 U.S. 246, 255-66 (1976); 
42 U.S.C. 7410(a)(2).

C. Unfunded Mandates

    Under section 202 of the Unfunded Mandates Reform Act of 1995 
(``Unfunded Mandates Act''), signed into law on March 22, 1995, EPA 
must prepare a budgetary impact statement to accompany any proposed or 
final rule that includes a federal mandate that may result in estimated 
annual costs to State, local, or tribal governments in the aggregate; 
or to private sector, of $100 million or more. Under section 205, EPA 
must select the most cost-effective and least burdensome alternative 
that achieves the objectives of the rule and is consistent with 
statutory requirements. Section 203 requires EPA to establish a plan 
for informing and advising any small governments that may be 
significantly or uniquely impacted by the rule.
    EPA has determined that the approval action proposed does not 
include a federal mandate that may result in estimated annual costs of 
$100 million or more to either State, local, or tribal

[[Page 27901]]

governments in the aggregate, or to the private sector. This federal 
action approves pre-existing requirements under State or local law, and 
imposes no new requirements. Accordingly, no additional costs to State, 
local, or tribal governments, or to the private sector, result from 
this action.
    The Regional Administrator's decision to approve or disapprove the 
SIP revision will be based on whether it meets the requirements of 
section 110(a)(2)(A)-(K) and part D of the Clean Air Act, as amended, 
and EPA regulations in 40 CFR part 51.

List of Subjects in 40 CFR Part 52

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

    Authority: 42 U.S.C. 7401-7671q.

    Dated: May 13, 1998
Herbert Barrack,
Acting Regional Administrator for Policy and Management.
[FR Doc. 98-13610 Filed 5-20-98; 8:45 am]
BILLING CODE 6560-50-P