29064 Federal Register / Vol. 66, No. 103 / Tuesday, May 29, 2001 / Proposed Rules

Dated: May 17, 2001.

Margaret M. Dotzel,

Associate Commissioner for Policy.

[FR Doc. 01–13299 Filed 5–25–01; 8:45 am]

BILLING CODE 4160–01–S

ENVIRONMENTAL PROTECTION

AGENCY

40 CFR Part 52

[PA 169—4116; FRL–6986–8]

Approval and Promulgation of Air

Quality Implementation Plans;

Pennsylvania; Nitrogen Oxides Budget

Trading Program

AGENCY: Environmental Protection

Agency (EPA).

ACTION: Proposed rule.

SUMMARY: EPA is proposing to approve

a State Implementation Plan (SIP)

revision submitted by the

Commonwealth of Pennsylvania on

October 30, 2000 and April 4, 2001.

This 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.’’

This revision establishes and requires a

nitrogen oxides (NOX) allowance trading

program for large electric generating and

industrial units, beginning in 2003. The

intended effect of this action is to

propose approval the Pennsylvania NOX

Budget Trading Program because it

addresses the requirements of the NOX

SIP Call Phase I that will significantly

reduce ozone transport in the eastern

United States. EPA is proposing to

approve this revision in accordance

with the requirements of the Clean Air

Act.

DATES: Written comments must be

received on or before June 28, 2001.

ADDRESSES: Written comments should

be mailed to David L. Arnold, Chief, Air

Quality Planning and Information

Services Branch, Mailcode 3AP21, U.S.

Environmental Protection Agency,

Region III, 1650 Arch Street,

Philadelphia, Pennsylvania 19103.

Copies of the documents relevant to this

action are available for public

inspection during normal business

hours at the Air Protection Division,

U.S. Environmental Protection Agency,

Region III, 1650 Arch Street,

Philadelphia, Pennsylvania 19103; and

Pennsylvania Department of

Environmental Protection, Bureau of Air

Quality, P.O. Box 8468, 400 Market

Street, Harrisburg, Pennsylvania 17105.

FOR FURTHER INFORMATION CONTACT:

Cristina Fernandez, (215) 814–2178, or

by e-mail at fernandez.cristina@epa.gov.

SUPPLEMENTARY INFORMATION: On

October 30, 2000 and April 4, 2001, the

Pennsylvania Department of

Environmental Protection (PADEP)

submitted a revision to the

Pennsylvania SIP to address the

requirements of the NOX SIP Call Phase

I. The information in this section is

organized as follows:

I. EPA’s Action

A. What action is EPA proposing today?

B. Why is EPA proposing this action?

C. What are the general NOX SIP Call

requirements?

D. What is EPA’s NOX budget trading

program?

E. What guidance did EPA use to evaluate

Pennsylvania’s submittal?

II. Pennsylvania’s NOX Budget Trading

Program

A. When did Pennsylvania submit the SIP

revision to EPA in response to the NOX

SIP Call?

B. What is the Pennsylvania NOX Budget

Trading Program?

C. What is the result of EPA’s evaluation of

Pennsylvania’s program?

III. Proposed Action

A. NOX SIP Call Requirements

B. One-Hour Attainment Demonstration

Plans

IV. Administrative Requirements

I. EPA’s Action

A. What Action Is EPA Proposing

Today?

EPA is proposing to approve the

Pennsylvania SIP revision concerning

the adoption of its NOX Budget Trading

Program, submitted on October 30, 2000

and April 4, 2001.

B. Why Is EPA Proposing This Action?

EPA is proposing this action for two

purposes. Pennsylvania’s NOX Budget

Trading Program regulations address the

requirements of the NOX SIP Call Phase

I. In addition, Pennsylvania’s NOX

Budget Trading Program regulations are

part of the Pennsylvania one-hour ozone

attainment demonstration plan for the

Philadelphia-Wilmington-Trenton

severe ozone nonattainment area. The

Pennsylvania one-hour attainment

demonstration plan for the

Philadelphia-Wilmington-Trenton

ozone nonattainment area relies on the

NOX reductions associated with the

NOX Budget Trading Program in 2003

and beyond. Therefore, EPA is

proposing to approve Pennsylvania’s

NOX Budget Trading Program for two

reasons. First, because it addresses the

requirements of the NOX SIP Call Phase

I, and secondly as a strengthening

measure for the one-hour ozone

standard attainment for PhiladelphiaWilmington-Trenton ozone

nonattainment area.

C. What Are the General NOX SIP Call

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.’’

See 63 FR 57356. The NOX SIP Call

requires 22 States and the District of

Columbia to meet statewide NOX

emission budgets during the five month

period between May 1 and October 1 in

order to reduce the amount of ground

level ozone that is transported across

the eastern United States.

EPA determined state-wide NOX

emission budgets for each affected

jurisdiction to be met by the year 2007.

EPA identified NOX emission

reductions by source category that could

be achieved by using cost-effective

measures. The source categories

included were electric generating units

(EGUs), non-electric generating units

(non-EGUs), area sources, nonroad

mobile sources and highway sources.

However, the NOX SIP Call allowed

states the flexibility to decide which

source categories to regulate in order to

meet the statewide budgets. In the NOX

SIP Call notice, EPA suggested that

imposing statewide NOX emissions caps

on large fossil-fuel fired industrial

boilers and electricity generating units

would provide a highly cost effective

means for States to meet their NOX

budgets. In fact, the state-specific

budgets were set assuming an emission

rate of 0.15 pounds NOX per million

British thermal units (lb. NOX/mmBtu)

at EGUs, multiplied by the projected

heat input (mmBtu) from burning the

quantity of fuel needed to meet the 2007

forecast for electricity demand. See 63

FR 57407. The calculation of the 2007

EGU emissions assumed that an

emissions trading program would be

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

at units where the heat input capacities

were greater than 250 mmBtu per hour,

or in cases where heat input data were

Federal Register / Vol. 66, No. 103 / Tuesday, May 29, 2001 / Proposed Rules 29065

not available or appropriate, at 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. See

63 FR 57458–57459.

There were several periods during

which EPA received comments on

various aspects of the NOX SIP Call

emissions inventories. On March 2,

2000, EPA published additional

technical amendments to the NOX SIP

Call in the Federal Register (65 FR

11222). The March 2, 2000 final

rulemaking established the inventories

upon which Pennsylvania’s final budget

is based.

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

issued its decision on the NOX SIP Call

ruling in favor of EPA on all the major

issues. Michigan v. EPA, 213 F.3d 663

(D.C. Cir. 2000). The Court denied

petitioners’ requests for rehearing or

rehearing en banc on July 22, 2000.

However, the Court ruled against EPA

on four narrow issues. The Court

remanded certain matters for further

rulemaking by EPA. EPA expects to

publish a proposal that addresses the

remanded portion of the NOX SIP Call

Rule. Any additional emissions

reductions required as a result of a final

rulemaking on that proposal will be

reflected in the second phase portion

(Phase II) of the State’s emissions

budget. Pennsylvania will be required to

submit SIP revisions to address the

Phase II of the NOX SIP Call Rule.

D. What Is EPA’s NOX Budget Trading

Program?

EPA’s model NOX budget and

allowance trading rule, 40 CFR part 96,

sets forth a NOX emissions trading

program for large EGUs and non-EGUs.

A state can voluntarily choose to adopt

EPA’s model rule in order to allow

sources within its borders 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. See 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

maintaining 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 authorizes

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 costeffective manner.

E. What Guidance Did EPA Use To

Evaluate Pennsylvania’s Submittal?

The final NOX SIP Call rule included

a model NOX budget trading program

regulation. See 40 CFR part 96. EPA

used the model rule and 40 CFR 51.121–

51.122 to evaluate Pennsylvania’s NOX

Budget Trading Program.

II. Pennsylvania’s NOX Budget Trading

Program

A. When Did Pennsylvania Submit the

SIP Revision to EPA in Response to the

NOX SIP Call?

On October 30, 2000 and April 4,

2001, PADEP submitted a revision to its

SIP to address the requirements of the

NOX SIP Call Phase I. Pennsylvania’s

SIP revision to address the requirements

of the NOX SIP Call Phase I consists of

the adoption of Chapter 145—Interstate

Pollution Transport Reduction and

amendments to Chapter 123—Standards

for Contaminants.

B. What Is the Pennsylvania NOX

Budget Trading Program?

Pennsylvania’s NOX Budget Trading

Program affects electric generating units

and certain non-electric generating

units. The Sections of 25 PA Code

Chapter 145—Interstate Pollution

Transport Reduction which comprise

Pennsylvania’s SIP revision are as

follows: Section 145.1 through 145.7,

General Provisions; Section 145.10

through 145.14, NOX Account; Section

145.30 through 145.31, Compliance

Certification; Section 145.40 through

145.43, NOX Allowance Allocations;

Section 145.50 through 145.57,

Accounting Process for Deposit Use and

Transfer of Allowances; Section 145.60

through 145.62, NOX Allowance

Transfers; Section 145.70 through

145.76, Recordkeeping and Reporting

Requirements; Section 145.80 through

145.88, Opt-In Process; Section 145.90,

Emission Reduction Credit Provisions.

The Pennsylvania NOX Budget

Trading Program establishes and

requires a NOX allowance trading

program for large electric generating and

industrial units. It establishes a NOX cap

and allowance trading program with a

budget of 50,843 tons of NOX for the

ozone seasons of 2003 and beyond. The

NOX budget for electric generating units

and non-electric generating units is

47,224 and 3,619 tons of NOX per ozone

season, respectively. The

Commonwealth of Pennsylvania

voluntarily chose to follow EPA’s model

NOX budget and allowance trading rule,

40 CFR part 96, that sets forth a NOX

emissions trading program for large

EGUs and non-EGUs. Because the

Pennsylvania NOX Budget Trading

Program is based upon EPA’s model

rule, Pennsylvania sources are allowed

to participate in the interstate NOX

allowance trading program that EPA

will administer for the participating

states. The Commonwealth of

Pennsylvania has adopted regulations

that are substantively identical to 40

CFR part 96. Therefore, pursuant to 40

CFR 51.121(p)(1), Pennsylvania’s SIP

revision is automatically approved as

satisfying the same portion of the State’s

NOX emission reduction obligations

Pennsylvania projects such regulations

will satisfy. Under the NOX Budget

Trading Program, Pennsylvania

allocates NOX allowances to the EGUs

and non-EGUs units that are affected by

these requirements. The NOX trading

program applies to all fossil fuel fired

EGUs with a nameplate capacity greater

than 25 MW or more that sell any

amount of electricity to the grid as well

as any non-EGUs that have a heat input

capacity equal to or greater than 250

mmBtu per hour. 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 NOX allowances may also be

banked for future use, with certain

29066 Federal Register / Vol. 66, No. 103 / Tuesday, May 29, 2001 / Proposed Rules

limitations. 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 budget

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).

Pennsylvania’s SIP revision does not

establish requirements for cement

manufacturing facilities and stationary

internal combustion engines.

Pennsylvania will be required to submit

SIP revisions to address any additional

emission reductions required to meet

the State’s overall emissions budget. In

addition, Pennsylvania’s submittal does

not rely on any additional reductions

beyond the anticipated federal measures

in the mobile and area source categories.

C. What Is the Result of EPA’s

Evaluation of Pennsylvania’s Program?

EPA has evaluated Pennsylvania’s SIP

submittal and finds it approvable. The

Pennsylvania NOX Budget Trading

Program is consistent with EPA’s

guidance and addresses the

requirements of the NOX SIP Call Phase

I. EPA finds the NOX control measures

in the Pennsylvania’s NOX Budget

Trading Program approvable. This

revision will strengthen Pennsylvania’s

SIP for reducing ground level ozone by

providing NOX reductions beginning in

2003. Furthermore, Pennsylvania’s NOX

Budget Trading Program is necessary to

fulfill a requirement of the one-hour

ozone attainment plan for the severe

ozone nonattainment area of

Pennsylvania. The Pennsylvania

attainment demonstration plan for the

Philadelphia-Wilmington-Trenton

ozone nonattainment area relies on the

NOX reductions associated with the

NOX Budget Trading Program in 2003

and beyond. EPA finds that

Pennsylvania’s submittal is fully

approvable because it addresses the

requirements of the NOX SIP Call Phase

I and it is a strengthening measure for

the Pennsylvania one-hour ozone

attainment plan for the PhiladelphiaWilmington-Trenton ozone

nonattainment area.

III. Proposed Actions

A. NOX SIP Call Requirements

EPA is proposing to approve the

Pennsylvania SIP revision consisting of

its NOX Budget Trading Program,

submitted on October 30, 2000 and

April 4, 2001, because it satisfies the

requirements of the NOX SIP Call Phase

I.

B. One-Hour Attainment Demonstration

Plan

EPA is also proposing to approve the

Pennsylvania SIP revision consisting of

its NOX Budget Trading Program,

submitted on October 30, 2000 and

April 4, 2001, as a SIP strengthening

measure necessary for Pennsylvania’s

one-hour ozone attainment plan for the

Philadelphia-Wilmington-Trenton

severe ozone nonattainment area. As

such, approval of this SIP revision is

necessary for full approval of the

attainment demonstration SIP for the

Philadelphia-Wilmington-Trenton

ozone nonattainment area.

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 action merely proposes to

approve state law as meeting federal

requirements and imposes no additional

requirements beyond those imposed by

state law. Accordingly, the

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). This proposed rule

also does not have a substantial direct

effect on one or more Indian tribes, on

the relationship between the Federal

Government and Indian tribes, or on the

distribution of power and

responsibilities between the Federal

Government and Indian tribes, as

specified by Executive Order 13175 (65

FR 67249, November 9, 2000), nor will

it 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

proposes to approve 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 action proposing to approve

the Pennsylvania NOX Budget Trading

Program does not impose an

information collection burden under the

provisions of the Paperwork Reduction

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

List of Subjects in 40 CFR Part 52

Environmental protection, Air

pollution control, Nitrogen dioxide,

Ozone, Reporting and recordkeeping

requirements.

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

Dated: May 17, 2001.

Thomas C. Voltaggio,

Acting Regional Administrator, Region III.

[FR Doc. 01–13414 Filed 5–25–01; 8:45 am]

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