[Federal Register Volume 66, Number 125 (Thursday, June 28, 2001)]
[Proposed Rules]
[Pages 34382-34391]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-16292]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[IL208-1, IL209-1; FRL-7003-8]


Approval and Promulgation of Implementation Plans; Illinois 
NO<INF>X</INF> Regulations

AGENCY: Environmental Protection Agency (USEPA).

ACTION: Proposed rule.

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SUMMARY: On April 9, 2001, and May 1, 2001, Illinois submitted adopted 
rules to reduce emissions of nitrogen oxides (NO<INF>X</INF>) from 
cement kilns and from industrial boilers and turbines, respectively. 
Illinois adopted these rules to help meet the NO<INF>X</INF> emission 
budget as required under USEPA's NO<INF>X</INF> State Implementation 
Plan (SIP) Call as well as to help attain the 1-hour ozone standard in 
the Chicago area.
    USEPA proposes to approve these two sets of rules. These rules are 
similar to and satisfy the requirements of USEPA's sample rules. 
Illinois' rules include language mandated by the Illinois legislature 
making the compliance deadline contingent on Federal enforceability of 
similar rules in other nearby states. However, the legislature has 
recently reversed its prior mandate and established a fixed compliance 
deadline of May 31, 2004.
    On June 18, 2001, Illinois submitted a budget demonstration, 
reflecting the impact of the rules on cement kilns and industrial 
boilers and turbines in conjunction with previously submitted rules on 
electricity generating units. The submittal justifies two minor 
inventory revisions, adding one source and deleting another source from 
the list of regulated industrial sources. Illinois' submittal shows 
that its rules will achieve the revised budget of acceptable 2007 
NO<INF>X</INF> emission levels. USEPA concurs with the inventory 
revisions and proposes to approve Illinois' budget demonstration.
    USEPA has previously proposed to approve Illinois' rules for 
electricity generating units, provided Illinois established a fixed 
compliance deadline. With today's action, USEPA has proposed to approve 
all of the regulations needed to achieve the budgeted 2007 
NO<INF>X</INF> emission levels and to meet USEPA's associated 
requirements. Therefore, USEPA proposes to conclude that Illinois has 
satisfied all requirements of USEPA's NO<INF>X</INF> SIP Call.

DATES: Written comments on this proposed rule must be received on or 
before July 30, 2001.

ADDRESSES: Send comments to: J. Elmer Bortzer, Chief, Regulation 
Development Section (AR-18J), United States Environmental Protection 
Agency, 77 West Jackson Boulevard, Chicago, Illinois 60604. Copies of 
the State's submittal are available for inspection at the following 
address: (We recommend that you telephone John Summerhays at 312-886-
6067, before visiting the Region 5 Office.) U.S. Environmental 
Protection Agency, Region 5, Air and Radiation Division (AR-18J), 77 
West Jackson Boulevard, Chicago, Illinois 60604.

FOR FURTHER INFORMATION CONTACT: John Summerhays, Regulation 
Development Section, Air Programs Branch (AR-18J), U.S. Environmental 
Protection Agency, Region 5, Chicago, Illinois 60604, 
<a href="/cdn-cgi/l/email-protection#8dfef8e0e0e8ffe5ecf4fea3e7e2e5e3cde8fdeca3eae2fb"><span class="__cf_email__" data-cfemail="c8bbbda5a5adbaa0a9b1bbe6a2a7a0a688adb8a9e6afa7be">[email protected]</span></a>, 312-886-6067.

SUPPLEMENTARY INFORMATION: In the following text, the terms ``we,'' 
``us,'' or ``our'' refer to USEPA. This notice is organized according 
to the following table of contents:

I. Background
    A. What is USEPA's `` NO<INF>X</INF> SIP Call''?
    B. What requirements must Illinois meet?
II. Summary of Illinois Submittals
    A. Overview of Pertinent Submittals
    1. What are the elements of Illinois' NO<INF>X</INF> emission 
control program?
    2. What submittals has Illinois made?
    3. What are USEPA's plans for rulemaking on Subpart X?
    B. Cement Kiln Rules (Subpart T)
    1. When was the cement kiln NO<INF>X</INF> emission control rule 
submitted to USEPA?
    2. When must sources reduce emissions?
    3. What are the basic components of the State's rule?
    4. Will affected sources be allowed to participate in the 
NO<INF>X</INF> emissions trading program?
    5. What public review opportunities were provided?
    C. Industrial Boiler Rules (Subpart U)
    1. What do the industrial boiler rules require?
    2. What sources are subject to these rules?
    3. What are the special provisions of these rules?
    4. How much emission reduction do these rules achieve?
    D. Budget Demonstration
III. USEPA Review
    A. Cement Kiln Rules (Subpart T)
    1. What guidance did USEPA use to evaluate the State's rule?
    2. Can USEPA approve Illinois' cement kiln rules?
    B. Industrial Boiler Rules (Subpart U)
    1. Can USEPA approve the general approach?
    2. Can USEPA approve the new source set-aside features?
    3. Can USEPA approve the early reduction credit features?
    4. Can USEPA approve the low emitter exemption features?
    5. Can USEPA approve the opt-in features?
    6. In summary, can USEPA approve Illinois' industrial boiler 
rules?
    C. Budget Demonstration
    1. Does USEPA accept Illinois' recommended budget revisions?
    2. Do Illinois' rules satisfy USEPA's budget?
IV. Proposed Action
V. Administrative Requirements

I. Background

A. What Is USEPA's ``NO<INF>X</INF> SIP Call''?

    On October 27, 1998, the USEPA promulgated a regulation known as 
the NO<INF>X</INF> SIP Call for numerous States, including the State of 
Illinois. The NO<INF>X</INF> SIP Call requires the subject States to 
develop NO<INF>X</INF> emission control regulations sufficient to 
provide for a prescribed NO<INF>X</INF> emission budget in 2007.
    Preceding the promulgation of USEPA's NO<INF>X</INF> SIP Call was 
extensive discussions of transport of ozone in the Eastern United 
States. The Environmental Council of States (ECOS) recommended the 
formation of a national workgroup to assess the problem and to develop 
a consensus approach to addressing the transport problem. As a result 
of ECOS' recommendation and in response to a March 2, 1995 USEPA 
memorandum, the Ozone Transport Assessment Group (OTAG) was formed to 
conduct regional ozone transport analyses and to develop a recommended 
ozone transport control strategy. OTAG was a partnership among USEPA, 
the 37 eastern States and the District of Columbia, and industrial, 
academic, and environmental groups. OTAG was given the responsibility 
of conducting the two years of analyses envisioned in the March 2, 1995 
USEPA memorandum.
    OTAG conducted a number of regional ozone data analyses and

[[Page 34383]]

regional ozone modeling analyses using photochemical grid modeling. In 
July 1997, OTAG completed its work and made recommendations to the 
USEPA concerning the regional emissions reductions needed to reduce 
transported ozone as an obstacle to attainment in downwind areas. OTAG 
recommended a possible range of regional NO<INF>X</INF> emission 
reductions to support the control of transported ozone. Based on OTAG's 
recommendations and other information, USEPA issued the NO<INF>X</INF> 
SIP Call rule on October 27, 1998. 63 FR 57356.
    In the NO<INF>X</INF> SIP Call, USEPA determined that sources and 
emitting activities in 23 jurisdictions\1\ emit NO<INF>X</INF> in 
amounts that ``significantly contribute'' to ozone nonattainment or 
interfere with maintenance of the 1-hour ozone national ambient air 
quality standards (NAAQS) in one or more downwind areas in violation of 
Clean Air Act (CAA) section 110(a)(2)(D)(i)(I). USEPA identified 
NO<INF>X</INF> emission reductions by source sector that could be 
achieved using cost-effective measures and set state-wide 
NO<INF>X</INF> emission budgets for each affected jurisdiction for 2007 
based on the possible cost-effective NO<INF>X</INF> emission 
reductions.
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    \1\ Alabama, Connecticut, Delaware, District of Colmbia, 
Georgia, Illinois, Indiana, Kentucky, Maryland, Massachusetts, 
Michigan, Missouri, New Jersey, New York, North Carolina, Ohio, 
Pennsylvania, Rhode Island, South Carolina, Tennessee, Virginia, 
West Virginia, and Wisconsin.
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    The source sectors include nonroad mobile, highway mobile, area, 
electricity generating units (EGUs), and major non-EGU stationary point 
sources. EGUs include stationary boilers and turbines that generate at 
least some electricity, even if they also generate steam for industrial 
processes. Non-EGUs include other large stationary boilers and 
turbines, typically for the purpose of generating steam for industrial 
processes.
    USEPA established recommended NO<INF>X</INF> emissions caps for 
large EGUs (potentially generating more than 25 megawatts) and for 
large non-EGUs (minimum design heat input of 250 mmBTU per hour). USEPA 
determined that significant NO<INF>X</INF> reductions using cost-
effective measures could be obtained as follows: application of a 0.15 
pounds NO<INF>X</INF>/mmBtu heat input emission rate limit for large 
EGUs; a 60 percent reduction of NO<INF>X</INF> emissions from large 
non-EGUs; a 30 percent reduction of NO<INF>X</INF> emissions from large 
cement kilns; and a 90 percent reduction of NO<INF>X</INF> emissions 
from large stationary internal combustion engines. The 2007 state-wide 
NO<INF>X</INF> emission budgets established by jurisdiction were based, 
in part, by assuming these levels of NO<INF>X</INF> emission controls 
coupled with NO<INF>X</INF> emissions projected by source sector to 
2007.
    Although the state-wide NO<INF>X</INF> emission budgets were based 
on the levels of reduction achievable through cost-effective emission 
control measures, the NO<INF>X</INF> SIP Call allows each State to 
determine what measures it will choose to meet the state-wide 
NO<INF>X</INF> emission budgets. It does not require the States to 
adopt the specific NO<INF>X</INF> emission rates assumed by the USEPA 
in establishing the NO<INF>X</INF> emission budgets. The NO<INF>X</INF> 
SIP Call merely requires States to submit SIPs, which, when 
implemented, will require controls that meet the NO<INF>X</INF> state-
wide emission budget. The NO<INF>X</INF> SIP Call encourages the States 
to adopt a NO<INF>X</INF> cap and trade program for large EGUs and 
large non-EGUs as a cost-effective strategy and provides an interstate 
NO<INF>X</INF> trading program that the USEPA will administer for the 
States. If States choose to participate in the national trading 
program, the States must submit SIPs that conform to the trading 
program requirements in the NO<INF>X</INF> SIP Call.

B. What Requirements Must Illinois Meet?

    The State of Illinois has the primary responsibility under the 
Clean Air Act for ensuring that Illinois meets the ozone air quality 
standards and is required to submit a SIP that specifies emission 
limitations, control measures, and other measures necessary for meeting 
the NO<INF>X</INF> emissions budget. The SIP for ozone must meet the 
ozone transport SIP Call requirements, must be adopted pursuant to 
notice and comment rulemaking, and must be submitted to the USEPA for 
approval.
    These NO<INF>X</INF> emission reductions will address ozone 
transport in the area of the country primarily east of the Mississippi 
River. USEPA promulgated the NO<INF>X</INF> SIP Call pursuant to the 
requirements of CAA section 110(a)(2)(D) and our authority under CAA 
section 110(k). Section 110(a)(2)(D) applies to all SIPs for each 
pollutant covered by a NAAQS and for all areas regardless of their 
attainment designation. It requires a SIP to contain adequate 
provisions that prohibit any source or type of source or other types of 
emissions within a State from emitting any air pollutants in amounts 
which will contribute significantly to nonattainment in, or interfere 
with maintenance of attainment of a standard by any other State with 
respect to any NAAQS.
    Pursuant to its authority under section 110(k)(5), USEPA concluded 
that the SIPs for Illinois and other states are substantially 
inadequate to prohibit NO<INF>X</INF> emissions that significantly 
contribute to ozone nonattainment in downwind states. Therefore, 
Illinois must submit SIP revisions that address this inadequacy.
    USEPA has published a model rule for control of NO<INF>X</INF> 
emissions from boilers and turbines. This model rule, codified at Title 
40 of the Code of Federal Regulations Part 96 (40 CFR part 96), 
reflects USEPA's recommendations for the general design of the 
necessary NO<INF>X</INF> emission control programs as well as detailed 
recommendations for specific program features. Similarly, at 63 FR 
56393 (October 21, 1998), USEPA has published a proposed Federal 
implementation plan including rules regulating cement kilns, which 
serve as sample rules for this source type. USEPA recommends the cost-
effective levels of control noted above. The budget that USEPA 
established for states reflects these control levels. USEPA further 
recommends that states take the necessary steps to allow their sources 
to participate in a multi-state NO<INF>X</INF> emissions trading 
program that USEPA will run. While USEPA offers flexibility to states 
on various elements of program design, particularly in the distribution 
of projected emission reductions, USEPA can offer more streamlined 
approval of programs that more closely follow USEPA's model rule.

II. Summary of Illinois Submittals

A. Overview of Pertinent Submittals

1. What Are the Elements of Illinois' NO<INF>X</INF> Emission Control 
Program?
    Illinois has adopted a control strategy that closely matches the 
control strategy that USEPA assumed in determining NO<INF>X</INF> 
emission budgets. Like USEPA's assumed strategy, Illinois is regulating 
emissions from large utility sources, from large cement kilns, and from 
large industrial boilers and turbines. Illinois requires cement kilns 
to meet an emission factor limitation or other equivalent limitation 
corresponding to 30 percent emission control. Illinois requires utility 
sources on average to meet a limitation of 0.15 pounds of 
NO<INF>X</INF> emissions per mmBTU and requires industrial boilers on 
average to achieve 60 percent emissions control.
    Illinois provides for the utility and industrial boiler sources to 
participate in the trading program that USEPA is running. Thus, these 
sources are not subject to specific emission limitations. Instead, 
USEPA would issue allowances to these sources in amounts equivalent

[[Page 34384]]

to the budgeted emissions level, and USEPA and Illinois would require 
each source to emit no more tons than the number of allowances it 
holds. One option a source would have is to emit at or below the 
budgeted level and accommodate these emissions with the issued 
allowances. Another option is to emit more than the budgeted amount and 
accommodate these emissions by purchasing allowances from a second 
source that has excess allowances due to a corresponding degree of 
control below its budgeted level. Under either option, and under any of 
the variants of these options permissible in Illinois' rules, the net 
effect is designed to be achievement of the targeted emissions 
reductions by some combination of sources in the program.
2. What Submittals Has Illinois Made?
    Illinois divided its NO<INF>X</INF> emission control program into 
several components, each submitted separately. On July 18, 2000, 
Illinois submitted a draft version of subpart W of part 217 of the 
Illinois Administrative Code, regulating electricity generating units. 
Illinois submitted a fully adopted version of this rule on February 23, 
2001. On April 9, 2001, Illinois submitted an adopted subpart T of part 
217, regulating cement kilns. On May 1, 2001, Illinois submitted 
adopted subpart U, regulating industrial boilers and turbines.
    USEPA proposed rulemaking on the submittal for electricity 
generating units on August 31, 2000, at 65 FR 52467. Today's notice 
proposes rulemaking on the submittals for cement kilns and industrial 
boilers.
    These submittals constitute the full set of rules that Illinois has 
adopted to satisfy the requirements of USEPA's NO<INF>X</INF> SIP Call. 
USEPA additionally requires each state to submit a demonstration that 
its regulations are adequate to attain the state NO<INF>X</INF> 
emissions budget mandated by USEPA. Illinois submitted its budget 
demonstration on June 18, 2001. USEPA is proposing rulemaking on this 
budget demonstration as part of this notice. More generally, USEPA is 
proposing action on whether Illinois has fully satisfied USEPA's 
NO<INF>X</INF> SIP Call.
3. What are USEPA's Plans for Rulemaking on Subpart X?
    The submittal of May 1, 2001, also includes adopted rules of 
subpart X of part 217, entitled Voluntary NO<INF>X</INF> Emissions 
Reduction Program. These rules authorize issuance of allowances for 
NO<INF>X</INF> emission reductions at sources not required to reduce 
these emissions. Sources seeking such allowances must operate 
continuous emission monitors in accordance with USEPA's regulations at 
40 CFR part 60. Subpart X is intended to provide flexibility for 
sources not part of the core group of sources to be subject to 
Illinois' NO<INF>X</INF> emission control regulations to achieve 
reductions which can in effect substitute for reductions at facilities 
that must be subject to Illinois' regulations.
    USEPA views subpart X as a supplement to Illinois' NO<INF>X</INF> 
emissions regulations and not a direct set of emission reduction 
requirements needed to achieve the emissions control mandated by USEPA. 
Subpart X allows a redistribution of the targeted emission reductions 
but is intended to have no effect on the net emission reductions 
achieved.
    USEPA is under court order to complete rulemaking on the ozone 
attainment demonstration for the Chicago area by October 15, 2001. The 
NO<INF>X</INF> emission reductions required by subparts T, U, and W are 
an important part of the Chicago area attainment demonstration that 
Illinois has submitted. Therefore, USEPA must also complete rulemaking 
on these NO<INF>X</INF> emission reduction regulations by October 15, 
2001. Because these same three subparts are also designed to be 
sufficient to satisfy USEPA's NO<INF>X</INF> emission budget 
requirements, USEPA intends to complete rulemaking on Illinois' budget 
demonstration in the same timeframe.
    USEPA views subpart X as not being an element of Illinois' 
attainment demonstration, such that rulemaking on this subpart need not 
occur by October 15, 2001. USEPA believes the best approach for 
satisfying this deadline is to conduct separate rulemaking on subpart 
X. Also, because the features of subpart X are not included in USEPA's 
model rule, USEPA cannot conduct streamlined rulemaking on subpart X. 
Therefore, USEPA wishes to conduct streamlined rulemaking on the 
Illinois rules needed to satisfy USEPA's NO<INF>X</INF> SIP Call 
without delaying the rulemaking to address subpart X.
    USEPA provides flexibility for states to adopt different mixes of 
control strategies, to address different mixes of sources and to impose 
differing levels of control stringency. Most cases of applying this 
flexibility are to issue a different distribution of allowances 
(reflecting different distribution of control levels or growth rates) 
or to impose specific control requirements on a specific alternative 
source type. Conceptually, subpart X is a reasonable extension of this 
flexibility, to allow the reductions dictated in subparts T, U, and W 
to be replaced with reductions from other, as yet unidentified sources. 
Furthermore, subpart X is in many respects similar to the opt-in 
provisions that USEPA suggests in its model rule. USEPA anticipates 
proposing rulemaking on subpart X in the near future.

B. Cement Kiln Rules (Subpart T)

1. When Was the Cement Kiln NO<INF>X</INF> Emission Control Rule 
Submitted to the USEPA?
    Illinois EPA submitted to USEPA, additional portions of the State's 
NO<INF>X</INF> emission control plan in a letter dated April 9, 2001. 
The letter contained rules adopted by the Illinois Pollution Control 
Board (IPCB) as requested amendments to the SIP. The submittal 
included: Subpart A: General Provisions, Subpart B: Definitions and 
Subpart T: Cement Kiln. The final State rule was published in the 
Illinois Register, Volume 25, Issue 13, pages 4582-4608, dated March 
30, 2001. This version in the Illinois Register differs from that 
submitted with the SIP revision request only in that the numbering 
scheme in subpart T was changed from 217.6xx in the final package of 
rules sent to the IPCB (and in the submittal to USEPA) to 217.4xx in 
the official Illinois Register publication. This is not a significant 
issue but, highlighted only for clarity.
2. When Must Sources Reduce Emissions?
    An important element of Illinois' rules is the date by which 
sources must comply with the applicable requirements. Section 
217.402(b) of subpart T as submitted by Illinois states that sources 
are subject to the requirements of subpart T only after other nearby 
states become subject to comparable, federally enforceable 
NO<INF>X</INF> emission limits. Similar language is in Illinois' rules 
for utility sources (subpart W), and USEPA proposed to approve those 
rules only if Illinois made the allowance holding/emission reduction 
requirements effective in May 2004 without respect to the status of 
requirements in nearby States. (Cf. 65 FR 52975, dated August 31, 
2000.)
    The Illinois legislature has passed legislation overriding the 
contingency clause in these rules and requiring compliance by May 31, 
2004. This is the necessary compliance deadline pursuant to the 
resolution of a lawsuit regarding USEPA's NO<INF>X</INF> SIP Call. 
USEPA expects the governor to sign this legislation soon. Once the 
governor signs this legislation, Illinois will have addressed the 
concern identified in USEPA's prior rulemaking and

[[Page 34385]]

established an appropriate compliance deadline for these rules.
3. What Are the Basic Components of the State's Rule?
    Basic components of the rule are included in Table 1.

    Table 1.--40 CFR Parts and Sections Incorporated By Reference in
                     Illinois' Cement Kiln NO<INF>X</INF> Rule
------------------------------------------------------------------------
     State subpart            State section               Comment
------------------------------------------------------------------------
A......................  217.104(a).............  Incorporation by
                                                   reference (IBR) of 40
                                                   CFR 60, Appendix A,
                                                   Method 7.
                         217.104(b).............  IBR of Alternative
                                                   Control Techniques
                                                   Document, NO<INF>X</INF>
                                                   Emissions from Cement
                                                   Manufacturing.
                         217.104(c).............  IBR of AP-42,
                                                   Compilation of Air
                                                   Emission Factors,
                                                   Volume 1, Section
                                                   11.6, Portland Cement
                                                   Manufacturing.
                         217.104(d).............  IBR of 40 CFR 60.13
                         217.104(e).............  IBR of 40 CFR 60,
                                                   Appendix A, Methods
                                                   7, 7A, 7C, 7D, and
                                                   7E.
T......................  217.400................  Applicability, lists
                                                   the types and sizes
                                                   of kilns which are
                                                   covered in the rule.
                         217.402................  Control Requirements.
                                                   Lists dates, type of
                                                   kiln, and NO<INF>X</INF>
                                                   emission limits.
                                                   Includes language
                                                   linking effective
                                                   dates to NO<INF>X</INF> SIPs in
                                                   other states.
                         217.404................  Testing Requirements.
                                                   References 40 CFR 60,
                                                   Appendix A, Methods
                                                   7, 7A, 7C, 7D, or 7E.
                         217.406................  Monitoring
                                                   Requirements.
                         217.408................  Reporting
                                                   Requirements.
                         217.410................  Recordkeeping
                                                   Requirements.
------------------------------------------------------------------------

    Subpart T applies to all Cement Kilns of the sizes noted in Table 
2.

      Table 2.--Equipment Subject to the Illinois Cement Kiln Rule
------------------------------------------------------------------------
          Item                 Process name            Process rate
------------------------------------------------------------------------
1......................  Long dry kilns.........  12 tons/hour.
2......................  Long wet kilns.........  10 tons/hour.
3......................  Pre-heater kilns.......  16 tons/hour.
4......................  Pre-heater/pre-calciner  22 tons/hour.
                          kilns.
------------------------------------------------------------------------

    The rule applies to all noted sources in the State of Illinois. 
Equipment with process rates equal to or greater than the rates listed 
in Table 2, are subject to the requirements of the State's subpart T. 
There are three sources totaling four units potentially impacted by the 
cement kiln rule. Using information available to the State, the 
Illinois EPA applied regulatory control efficiency of 30 percent to the 
projected 2007 seasonal NO<INF>X</INF> emissions to obtain the 2007 
seasonal NO<INF>X</INF> budget for the kilns. The required control on 
these kilns will reduce the 2007 base emissions to a control level 
2,851 tons per control period as a result of emission controls 
beginning May 31, 2004.
    Control requirements are listed in section 217.402 of the State's 
rule. Section 217.402 identifies a number of emission rates and 
technologies by which standards can be met. The rule specifies an 
emission rate limit based on type of kiln (see Table 2) or the use of 
emission factors based on a specified method. The rule also allows the 
use of an alternate emission standard for the kiln based on a 
demonstration that the alternative standard is justifiable. Illinois 
EPA established the following NO<INF>X</INF> emission rate limits for 
the process kilns listed in Table 3.

  Table 3.--Cement Kiln Emission Limits for Kilns which Began Operation
                        Prior to January 1, 1996.
------------------------------------------------------------------------
                                                 Emission limit  #/ton
         Item                 Process                   clinker
------------------------------------------------------------------------
1....................  Long dry kilns.......  5.1 # of NO<INF>X</INF>/ ton of
                                               clinker.
2....................  Long wet kilns.......  6.0 # of NO<INF>X</INF>/ ton of
                                               clinker.
3....................  Pre-heater kilns.....  3.8 # of NO<INF>X</INF>/ ton of
                                               clinker.
4....................  Pre-heater/pre-        2.8 # of NO<INF>X</INF>/ ton of
                        calciner.              clinker.
------------------------------------------------------------------------

    The State allows other options to control emissions from kilns. As 
one option, after May 30, 2004, the kiln shall not operate during the 
control period unless the kiln is operated with a low- NO<INF>X</INF> 
burner or a mid-kiln firing system for kilns which began operation 
before January 1, 1996. There is also an option under which the kilns 
would be required to achieve a 30 percent or greater reduction from its 
uncontrolled baseline.
    USEPA evaluated whether two provisions posed ``director's 
discretion'' concerns, i.e. whether these provisions authorized only 
the state to make significant judgments without USEPA having 
independent review authority. First, section 217.402 (a)(5) authorizes 
the state to grant alternative emission standards. The state may issue 
such standards if the source demonstrates that 30 percent control would 
impose an ``unreasonable cost of control'' or installation of such 
control is a ``physical impossibility.'' These terms are undefined.

[[Page 34386]]

    However, section 217.402(a)(5) also states that alternative 
standards ``shall be effective only when included as a federally 
enforceable condition in a permit approved by USEPA or approved as a 
SIP revision.'' Furthermore, the rule states that alternative standards 
or alternative compliance deadlines ``shall be granted by the Board to 
the extent consistent with federal law.'' These provisions clearly 
require independent USEPA review and approval. Therefore, USEPA does 
not find this provision to inappropriately remove USEPA from 
involvement in judging whether to grant alternative emission standards.
    The second feature involving state judgment relates to methods for 
determining emissions. Section 217.402(a)(3)(B) requires sources to 
determine emissions using (i) appropriate emission factors, (ii) Method 
7, or (iii) alternative methods approved by the State. The third option 
requires the alternative to be established in a federally enforceable 
permit. Because state issuance of federally enforceable permits require 
USEPA review and typically allow USEPA to veto any permit to which it 
objects, USEPA believes it has adequate authority to assure that 
appropriate emissions determining methods are used.
    Sources must submit a compliance plan which must:
    1. Identify the specific operating conditions to be monitored and 
the correlation between the operating conditions and NO<INF>X</INF> 
emission rates;
    2. Include the data and information that the owner or operator used 
to identify the correlation between NO<INF>X</INF> emission rates and 
these operating conditions;
    3. Identify how the owner or operator will monitor these operating 
conditions on an hourly or other basis, and identify the quality 
assurance procedures or practices that will be employed to ensure that 
the data generated by monitoring these operating conditions will be 
representative and accurate.
    4. If operating a low-NO<INF>X</INF> burner or mid-kiln firing 
system, the plan must include only monitoring parameters indicated in 
the manufacturer's specifications and recommendations for the low-
NO<INF>X</INF> burner or mid-kiln firing system as approved by the 
IEPA.
    5. If the owner or operator elects to monitor NO<INF>X</INF> 
emissions using a continuous emissions monitoring system, the owner or 
operator must submit a monitoring plan subject to the approval by the 
IEPA.
4. Will Affected Sources Be Allowed to Participate in a NO<INF>X</INF> 
Emissions Trading Program?
    This rule allows the owner or operator to obtain approval from the 
Illinois EPA and the USEPA to participate in the NO<INF>X</INF> Trading 
Program. Participation will be effective upon issuance of a permit 
containing all necessary federally enforceable permit conditions 
addressing the kiln's participation in the Federal NO<INF>X</INF> 
Trading Program following the requirements of 40 CFR part 96. A source 
which participates in the trading program is not subject to subpart T 
of the State's rule except for the requirement to submit an initial 
compliance report.
5. What Public Review Opportunities Were Provided?
    The IEPA filed the subpart T Cement Kiln rule with the IPCB on 
August 21, 2000. The first notice of the rule was published in the 
Illinois Register on September 8, 2000. Hearings were held on October 
3, 2000, in Chicago, and November 3, 2000 in Springfield, Illinois. A 
second notice was issued on December 21, 2000. Illinois issued a 
certification of no objections and second notice changes on February 
21, 2001. On March 1, 2001, the IPCB issued its opinion and final order 
and adopted the rule. The final rule was published in the Illinois 
Register on March 30, 2001.

C. Industrial Boiler Rules (Subpart U)

    Subpart U is quite similar to USEPA's model rule as given in 40 CFR 
part 96. The central feature is issuance of allowances to subject 
sources in an amount equivalent to significantly reduced emissions and 
a requirement to hold allowances equivalent to actual emissions levels. 
Subpart U also has several special provisions similar to USEPA's model 
rule, including provisions for a new source set-aside, for early 
reduction credits, for sources obtaining low emitter status, and for 
sources to opt into the program. The following summary of Illinois' 
industrial boiler rules describes the program's general features, 
discusses the sources subject to the rule, discusses the program's 
special features, and discusses the emission reductions anticipated 
from this program.
1. What Do the Industrial Boiler Rules Require?
    Starting in 2004, industrial boilers and turbines must hold 
allowances equal to their emissions during the ozone season, defined 
here as May 1 to September 30. (As part of the resolution of a lawsuit 
challenging USEPA's rule, the applicable period for 2004, unlike the 
applicable period for subsequent years, excludes May 1 to May 30.) Each 
year, sources are issued a number of allowances as specified in 
appendix E to part 217. These sources receive allowances equivalent to 
60 percent control. Sources have the option to avoid trading and reduce 
emissions to their allowance level. Alternatively, sources may alter 
their required emissions level by buying or selling allowances, 
presumably with other sources that reduced their own emissions to below 
or above their own allowance issuance levels, respectively.
    As with the cement kiln and utility boiler programs, many elements 
of Illinois' industrial boiler program directly apply provisions 
promulgated by USEPA. Illinois applies the same applicability criteria 
as USEPA applied in assessing its emissions budget. Subject sources 
must satisfy the continuous emissions monitoring requirements set in 40 
CFR part 96 and specified in 40 CFR part 75. Sources that emit in 
excess of their allowance holdings are subject to the enforcement 
provisions of 40 CFR 96.54, including a deduction of three allowances 
per ton of excess emissions and other potential enforcement actions. 
The process for tracking allowances and recording allowance transfers 
is the process given in 40 CFR part 96, subparts F and G, respectively. 
Sources must establish an allowance account representative pursuant to 
40 CFR part 96, subpart B. Provisions on permits and emissions 
reporting closely match the corresponding provisions of 40 CFR part 96.
    Subpart U applies the same level of stringency of control as is 
assumed for these sources in USEPA's emissions budget. The number of 
allowances issued to individual sources differs from the corresponding 
numbers in USEPA's emissions budget, principally due to redistribution 
of allowances of a source that has shut down, but the total number of 
allowances for source covered by subpart U is identical to the number 
of tons of NO<INF>X</INF> emissions for these sources in USEPA's budget 
calculations.
2. What Sources Are Subject to These Rules?
    Subpart U focuses on boilers and turbines with heat input capacity 
greater than 250 million British Thermal Units (mmBTU) that do not 
produce significant electricity. This rule affects a variety of 
companies, including refineries, food processors, and steelmakers. The 
rule includes an appendix that identifies sources that are subject to 
the regulation and specifies

[[Page 34387]]

the number of allowances issued to each of these sources.
    Illinois requested two minor revisions to the emissions inventory 
of sources to be subject to the industrial boiler rules. The first 
revision applies to LTV Steel. Illinois explains that a boiler of this 
company was mistakenly identified as a small source. Illinois 
identifies this boiler as needing an allocation from USEPA; Illinois 
recommends an allocation of 60 tons per ozone season. The second 
revision applies to a boiler at the University of Illinois at Urbana-
Champaign. Illinois submitted evidence that this boiler has a design 
capacity below the 250 mmBTU/hour cutoff given in Illinois' rule and 
assumed in USEPA's budget calculations. This revision would remove an 
allocation of 86 tons of allowances. The net effect of recognizing 
LTV's larger size and voiding the University of Illinois control 
requirement would be to increase the emissions budget for industrial 
boilers and turbines by 188 tons per ozone season. Considering existing 
controls at the LTV boiler, the addition of the LTV boiler and removal 
of the University of Illinois boiler from the list of sources subject 
to control would decrease the actual emission reductions expected from 
the rule by 124 tons per ozone season, to about 4100 tons per ozone 
season.
3. What Are the Special Provisions of These Rules?
    Various special provisions supplement these general features. 
Appendix E allocates three percent of the industrial boiler allowances 
as a new source set-aside. Illinois issues these allowances to new 
sources to accommodate generally three years of well controlled 
operation, and redistributes any remaining ``new source set-aside'' 
allowances back to the existing sources listed in appendix E. Illinois 
rules allow special issuance of allowances to sources that achieve 
early reductions, i.e. reductions in 2001, 2002, or 2003, provided the 
source has reduced its emission rate by at least 30 percent. Illinois 
allows sources that burn natural gas or fuel oil to achieve ``low 
emitter status,'' in which the source must limit its fuel usage to 
remain below 25 tons of NO<INF>X</INF> emissions per ozone season in 
exchange for being exempted from monitoring and allowance holding 
requirements. Illinois' rule differs slightly from USEPA's model rule 
(cf. 63 FR 57491, October 27, 1998) by giving sources the option to use 
continuous emissions monitoring rather than conservative default 
emission factors to show compliance with the 25 tons per ozone season 
qualifying level. Finally, Illinois allows smaller sources that are not 
required to participate in the program to opt into the program.
4. How Much Emission Reduction Do These Rules Achieve?
    With the inventory adjustments recommended by Illinois, the sources 
identified in subpart U have a total allocation of 4856 tons per ozone 
season. Each individual allocation generally reflects 60 percent 
control, i.e. 40 percent of uncontrolled emissions. Thus, subpart U 
requires emission reductions to about 7300 tons below uncontrolled 
levels. Because many sources already have some emission controls, the 
reduction of actual emissions from these sources is projected to be 
about 4100 tons.

D. Budget Demonstration

    On June 18, 2001, Illinois submitted its demonstration that its 
rules were adequate to achieve the 2007 level of NO<INF>X</INF> 
emissions that USEPA budgeted for Illinois. As requested by USEPA, 
Illinois used USEPA's baseline inventory as the basis for this 
demonstration. Illinois provided the following table of NO<INF>X</INF> 
emissions from the various types of sources that emit NO<INF>X</INF> in 
significant quantities.

----------------------------------------------------------------------------------------------------------------
                                     2007 Base      2007 Budget      Emission                      Contribution
             Sector                ozone season    ozone season      reduction       Category     to NO<INF>X</INF> trading
                                   total  (tons)   total  (tons)      (tons)      reduction  (%)  budget  (tons)
----------------------------------------------------------------------------------------------------------------
Electrical Generating Units              119,311          32,372          86,939              73          30,701
 (EGUs).........................
Non-Electrical Generation Units           71,011          59,765          11,246              16           4,856
 (Non-EGUs).....................
Area............................           9,369           9,369               0               0               0
On-Road Mobile..................         112,518         112,518               0               0               0
Non-Road Mobile.................          56,724          56,724               0               0               0
                                 -------------------------------------------------------------------------------
    Total.......................         368,933         270,748          98,185          \1\ 27         35,557
----------------------------------------------------------------------------------------------------------------
\1\ Total Reduction.

    This table relies on USEPA budget information as of March 2, 2000. 
On this date, at 65 FR 11222, USEPA published revised budgets for each 
of the states subject to the NO<INF>X</INF> SIP Call and provided a 
detailed inventory of baseline and controlled emissions, available on 
the internet at ftp.epa.gov/EmisInventory/ 
NO<INF>X</INF>SIPCall_Mar2_2000/.
    Subsequent to March 2, 2000, the Court of Appeals for the District 
of Columbia Circuit remanded to USEPA the portion of the NO<INF>X</INF> 
SIP Call requiring control of stationary internal combustion engines. 
Thus, pending further rulemaking, USEPA does not currently require 
control of these sources. In Illinois, control of these sources is 
projected to reduce NO<INF>X</INF> emissions by 5954 tons per ozone 
season. Illinois has not adopted regulations for control of these 
sources and intends instead to adopt these regulations after USEPA 
completes rulemaking pursuant to the remand. Nevertheless, Illinois 
includes the prospective control of these sources, to simplify the 
comparison of projected Illinois emissions with USEPA's budget 
requirements. This approach is of course equivalent to making a 
comparison in which both the Illinois inventory and USEPA's budget 
exclude these controls.
    Also subsequent to March 2, 2000, Illinois identified the issues 
described earlier in this notice concerning the size of the boilers of 
LTV Steel and the University of Illinois. Illinois' budget 
demonstration reflects the state's recommended budget revisions for 
these sources. These revisions increase the baseline emissions by 64 
tons per ozone season and increase the budget level emissions by 188 
tons per ozone season.
    Because Illinois has adopted rules which reflect the same control 
strategy as USEPA assumed in formulating its budget, Illinois' 
projected, controlled emission inventory closely resembles USEPA's 
budget for Illinois. Illinois obtains emission reductions from 
electricity generating units and from non-electricity generating point 
sources. The inventory for non-electricity generating units reflects 
controls on

[[Page 34388]]

both cement kilns and industrial boilers and turbines. Because Illinois 
is pursuing the same mix of controls as was assumed in USEPA's budget, 
the projected 2007 emissions for these two categories are identical to 
the emissions for these categories in USEPA's budget except for the 
adjustments to the inventory for the two industrial boilers as 
described above. Illinois obtains no emission reductions from area 
sources, highway mobile sources, or nonroad mobile sources beyond the 
baseline inventory. (The baseline inventory reflects reductions from 
federal measures, notably highway vehicle controls.) USEPA's budget 
also assumes no emission reductions below the baseline inventory, so 
for all three categories Illinois' inventory and USEPA's budget equal 
the same USEPA baseline inventory total. Consequently, with adjustment 
for the alterations described above, Illinois' budget demonstration 
shows that total 2007 NO<INF>X</INF> emissions are identical to the 
2007 total NO<INF>X</INF> emissions budget that USEPA has required 
Illinois to achieve.

III. USEPA Review

A. Cement Kiln Rules (Subpart T)

1. What Guidance Did USEPA Use To Evaluate the State's Rule?
    The proposed Federal implementation plan, proposed at 63 FR 56393 
(October 21, 1998), including regulations covering cement kilns, 
reflects USEPA's recommendations for the design of State regulations of 
such sources. Also relevant are USEPA's regulations on emissions 
monitoring in 40 CFR part 60, a significant portion of which are 
incorporated by reference into the State rules. The portions 
incorporated by reference are listed elsewhere in this proposal.
2. Can USEPA Approve Illinois' Cement Kiln Rules?
    A key deficiency in subpart T is language which affords sources in 
Illinois a delay of one year or more in complying with the requirements 
of the rule. However, on May 31, 2001, the Illinois legislature passed 
a bill to establish a fixed compliance deadline of May 31, 2004. We 
anticipate that the Governor will sign this legislation soon, which 
would remove this deficiency. This legislation must be signed before we 
can approve subpart T.
    The earlier section describing the rule discusses two issues 
relating to ``director's discretion'', i.e., questions as to whether 
the rules authorize only the state to make significant judgments 
without USEPA having independent review authority. As previously 
discussed, USEPA concludes that the alternative standard provisions at 
section 217.402(a)(5) sufficiently protect the viability of the 
NO<INF>X</INF> budget plan. The intent is to ensure the source controls 
emissions to at least 30 percent below the baseline. The rule does not 
give the state sole discretion to broadly interpret terms such as 
``unreasonable cost'' and ``physical impossibility''. The rule allows 
an ``adjusted standard or alternate emission standard * * * consistent 
with federal law. Such alternate shall be effective only when included 
as a federally enforceable condition in a permit approved by USEPA or 
approved as a SIP revision.'' USEPA believes this provision gives USEPA 
adequate authority to reject unacceptable requests for emission 
standards that require less than 30 percent emission reduction.
    USEPA has conducted an extensive evaluation of controls feasible at 
cement kilns. Based on these efforts, USEPA does not expect any source 
to find 30 percent control to impose unreasonable costs or to be 
physically impossible. USEPA further expects to find that any request 
for lesser controls to be contrary to federal law, in particular the 
provisions of Clean Air Act section 110(a)(2)(D) requiring the state to 
prohibit emissions that contribute significantly to downwind 
nonattainment. Cement kilns which find control to be expensive or 
difficult can, in any case, opt into the trading program and purchase 
allowances as an alternative compliance strategy. Therefore, USEPA 
plans to use its discretion to reject requests for alternative emission 
standards.
    The State rule addressed in this proposal applies to equipment of a 
size comparable to that used by USEPA in the development of the budget 
for the State of Illinois. For purposes of calculating the State's 
budget, USEPA assumed a 30 percent reduction in emissions from 
uncontrolled levels. The State's rule calls for a minimum reduction of 
NO<INF>X</INF> of 30 percent as part of the approved federally 
enforceable permit conditions for a kiln participating in the 
NO<INF>X</INF> trading program.
    Illinois EPA identifies four large kilns as potentially impacted by 
the State's rule at three sources in the State. Each of these sources 
emitted more than 1 ton per day of NO<INF>X</INF> during 1995. The 
total base year 2007 seasonal emissions of NO<INF>X</INF> from these 
four kilns is calculated to be 4,073 tons during the control period. 
The required 30 percent control on these kilns will reduce the 2007 
base to a controlled level of 2,851 tons during the control period.
    We believe the State rule is approvable as an element of the 
State's NO<INF>X</INF> plan.

B. Industrial Boiler Rules (Subpart U)

    Illinois' rules for industrial boilers and turbines are similar to 
USEPA's model rule, both in their general design and in their inclusion 
of several special features. These features include provisions for a 
new source set-aside, for early reduction credits, for some sources to 
obtain low emitter status, and for sources not required to participate 
in the program to opt into the program.
    This review of Illinois' industrial boiler rules focuses on the 
slight differences between Illinois' rules and USEPA's model rule. The 
review begins with a review of the general features of the program and 
continues with a review of each of the above special features.
1. Can USEPA Approve the General Approach?
    Illinois' rules for industrial boilers and turbines are similar to 
USEPA's model rule for these sources. Therefore, USEPA finds acceptable 
the general design of Illinois' program for these sources, including 
the allocation of allowances, the requirement to hold allowances 
equivalent to emissions during a properly defined ozone season, and the 
supplemental features including the provisions for a new source set-
aside, for early reduction credits, for sources obtaining low emitter 
status, and for sources to opt into the program. Thus, the principal 
question for this review is whether the details of Illinois' rules 
properly implement these general features. This review focuses on 
modest differences between particular elements of Illinois' rules and 
the corresponding elements of USEPA's model rule.
    Illinois used the emissions inventory developed by USEPA, given at 
ftp.epa.gov/EmisInventory/ NO<INF>X</INF>SIPCall_Mar2_2000, reflecting 
60 percent emissions control, as the basis for determining allowances 
for each source. While the total number of allowances is identical to 
the number of tons per ozone season assumed for these sources in 
USEPA's budget, Illinois redistributes the allowances associated with a 
source that has shut down to the currently operating sources. USEPA 
guidance clearly accepts such redistributions of control burden. A 
subsequent section of this notice reviews whether the emission 
reductions mandated by these rules in conjunction with reductions 
mandated by other Illinois rules are adequate to achieve the 
NO<INF>X</INF> emissions budget required by USEPA.

[[Page 34389]]

    USEPA's model rule has provision for periodic reassessment of the 
number of allowances to be issued to each source. In USEPA's model 
rule, the state makes an annual determination of heat input, which the 
state uses to determine the source's allocation of allowances for four 
years thereafter.
    In contrast, Illinois does not change its distribution of 
allowances to industrial boiler sources from year to year. In fact, 
aside from adjustments from overall budget changes that may in time be 
imposed by USEPA, and aside from source-specific changes such as opt-
ins and low emitter status changes, Illinois' allocations of allowances 
to industrial boilers and turbines are permanent. Illinois has the 
flexibility to distribute allowances in a fixed manner, and this 
approach clearly gives sources the advance notice of allotments that 
USEPA requires.
    USEPA objects to language in the rule making the compliance 
deadline contingent on action in other nearby states. However, 
legislation passed by the state legislature would remedy this problem, 
establishing a fixed, noncontingent compliance deadline of May 31, 
2004. If the governor signs this legislation, the state will have an 
approvable compliance deadline.
    The remaining general features of Illinois' program for industrial 
boilers and turbines either apply the provisions that USEPA has 
promulgated (such as for monitoring emissions, imposing penalties for 
noncompliance, and tracking and transferring allowances) or establish 
provisions closely matching USEPA's recommendations (such as for 
applicability and requirements for permitting and emissions reporting). 
These elements of Illinois' program are clearly acceptable.
2. Can USEPA Approve the New Source Set-aside Features?
    USEPA's model rule reserves allowances to be granted to new 
sources. The model rule reserves five percent of the budget for this 
purpose for the first three years of the program and two percent 
thereafter. The model rule grants allowances to new industrial boilers 
and turbines in an amount equal to the maximum design heat input times 
0.17 pounds of allowances per mmBTU. Illinois' industrial boiler rule 
also reserves allowances for new sources, but Illinois reserves three 
percent of the large industrial boiler source budget in all years and 
issues a smaller number of allowances to new sources. Illinois' rules 
determine the number of allowances available to a new source based on a 
heat input rate that reflects actual usage once actual usage data 
become available times an emission factor equal to the lesser of 0.15 
pounds NO<INF>X</INF> per mmBTU or the new source's permit limit. 
Illinois also requires the new source to purchase these allowances, the 
funds of which are returned to existing sources. USEPA expressly states 
that states have flexibility on these issues, and these aspects of 
Illinois' rules are well within the range of acceptable options.
3. Can USEPA Approve the Early Reduction Credit Features?
    USEPA's model rule provides for early reduction credits. The model 
rule defines a process for requesting early reduction credits. In the 
model rule, sources that reduce their emission rate (pounds per mmBTU) 
by at least 20 percent and to below 0.25 pounds of NO<INF>X</INF> 
emissions per mmBTU in 2001 or 2002 may request early reduction 
credits. USEPA's model rule issues allowances to the extent the source 
reduces emissions below 0.25 pounds per mmBTU, up to a specified 
maximum total issuance. Illinois' rule applies the same basic process 
as the model rule. However, Illinois issues allowances to any timely 
reduction that reduces the emission rate by at least 30 percent, 
irrespective of whether the resulting emission rate is above or below 
0.25 pounds per mmBTU. (Although section 217.470(c) is somewhat 
confusing, USEPA interprets the language according to Illinois' intent, 
that credits may be requested only if the emission rate is at least 30 
percent below the prior actual emission rate.) Since Illinois requires 
suitable monitoring before and after the reduction to assure that 
credits reflect valid reductions, USEPA accepts issuing credits for 
reductions above the 0.25 pounds per mmBTU level.
    Two issues relating to early reduction credits arise from the one 
year delay in program startup mandated by the District of Columbia 
Circuit Court in its ruling on USEPA's NO<INF>X</INF> SIP Call 
regulations. Since emission controls are no longer required in 2003, 
the first issue is whether sources that reduce emission rates in 2003 
may receive early reduction credits. Illinois' rules provide that 
sources may request early reduction credits for adequate reductions 
``in the 2001 or 2002 control period, or if approved by USEPA the 2003 
control period.'' The second issue is when these credits may be used. 
USEPA's model rule provides that early reduction credits may only be 
used in 2003 and 2004. Illinois' rules provide that early reduction 
credits are ``for use in [the] 2004 control period, or later control 
periods authorized by USEPA.''
    Because reductions are not required in 2003, USEPA considers 
reductions in 2003 to be early reductions. That is, USEPA approves 
issuing early reduction credits for qualifying reductions in 2003. 
USEPA intended for these early reduction credits to be used in the 
first two control years of the program. Therefore, USEPA authorizes use 
of these credits in 2005 as well as 2004. All early reduction credits 
not used by 2005 must be retired at the end of 2005 and may no longer 
be used.
4. Can USEPA Approve the Low Emitter Exemption Features?
    Section 217.472 of Illinois' rules provides an exemption very 
similar to an exemption in USEPA's model rule for sources that only 
burn natural gas and/or fuel oil and emit under 25 tons per ozone 
season. Such sources do not receive allowances and need not hold 
allowances for these emissions but must comply with permit limitations 
sufficiently restricting fuel usage to comply with this emission level.
    The only significant difference in Illinois' rule from USEPA's 
model rule is that sources may rely on continuous emissions monitoring 
(rather than fuel usage multiplied by default emission factors) to 
assess compliance with the 25 ton limit. USEPA discussed the 
interpretation of section 217.472 with the state. Illinois clarified 
this section in its letter of June 18, 2001. First, Illinois stated 
that section 217.472(a)(4) in effect defines ``potential NO<INF>X</INF> 
mass emissions'' as the emissions determined either by emissions 
monitoring or by multiplying hours of operation times maximum potential 
hourly emissions. Second, Illinois clarified that, for sources relying 
on mass emissions monitoring, the restriction on operating hours should 
be interpreted as allowing only the number of hours of operation 
associated with the permissible number of tons of emissions (usually 25 
tons per ozone season). Operation for any additional hours, during 
which the source would be emitting tons in excess of its permissible 
level (e.g. above 25 tons), would constitute a violation of the 
operating hours restriction and would cause the source to lose the low-
emitter exemption (cf. section 217.472(c)). Third, as indicated in 
section 217.472(d) and reaffirmed by Illinois, whenever a source 
obtains low emitter status, Illinois will reduce the budget 
accordingly, so that sufficient allowances are set aside to account for 
the potential emissions of the low emitting source.
    Similar provisions are in subpart W of part 217, applying to EGU's. 
The same interpretations of ``potential NO<INF>X</INF> mass

[[Page 34390]]

emissions'' and operating hours restrictions apply to subpart W, for 
similar reasons. Illinois also reaffirmed that its rules provide a 
similar budget adjustment for low emitting sources under subpart W as 
under subpart U. USEPA concurs with these interpretations and finds 
these features of Illinois' rules approvable.
    USEPA finds one paragraph of Illinois' rule pertaining to the low 
emitting source exemption to be confusing. Illinois has clarified that 
section 217.472(a)(5) was intended to use the language of USEPA's model 
at 40 CFR 96.4(b)(1)(v) but inadvertently omitted several words. USEPA 
therefore interprets section 217.472(a)(5) to require that the permit 
for the exempted source must ``require that the owner or operator of 
the unit shall retain for 5 years at the source that includes the unit, 
[records demonstrating compliance].'' (Underlined words added.)
5. Can USEPA Approve the Opt-in Features?
    Finally, the Illinois rules include provisions similar to 
provisions in the USEPA model rule for sources not required to 
participate in the program to opt into the program. As with the model 
rule, Illinois requires these sources to monitor emissions using 
continuous emissions monitors meeting the same criteria as mandatory 
program participants. Illinois' criteria and process for opting in, the 
requirements and process for withdrawing after opting in, and the 
method of calculating the number of allowances to be allocated to opt-
in sources, are all essentially identical to the corresponding 
provisions in USEPA's model rule. USEPA finds this aspect of Illinois' 
program acceptable.
6. In Summary, Can USEPA Approve Illinois' Industrial Boiler Rules?
    Illinois' rules for industrial boiler NO<INF>X</INF> emissions 
closely resemble USEPA's model rule. USEPA believes that the modest 
differences between Illinois' rules and the model rule are well within 
the range of flexibility that USEPA has offered to states. The recent 
legislation overriding the rules' contingent compliance date and 
establishing a compliance requirement starting May 31, 2004, will 
provide a timely deadline for compliance. Once this legislation is 
signed by the Governor, USEPA believes that Illinois' rules for 
industrial boilers and turbines will satisfy USEPA's requirements for 
program design and provide a creditable contribution toward achieving 
the NO<INF>X</INF> emissions budget that USEPA requires Illinois to 
achieve and a creditable NO<INF>X</INF> emission reduction for 
attainment planning purposes.

C. Budget Demonstration

1. Does USEPA Accept Illinois' Recommended Budget Revisions?
    Illinois submitted evidence that the LTV Steel boiler is in fact a 
large boiler that should have been inventoried as having much greater 
emissions and should have been assumed to be subject to control. 
Illinois also submitted evidence that the maximum design heat input for 
the University of Illinois boiler is below 250 mmBTU/hour, so that this 
source should have been assumed to remain uncontrolled. These revisions 
would have minimal impact on the overall impact of the program. Also, 
these revisions are similar to revisions recommended by other states 
during early 2000 and incorporated into USEPA's budget in its March 2, 
2000, rulemaking. While USEPA would have preferred to address these 
revisions then, USEPA can nevertheless address Illinois' 
recommendations now. USEPA concludes that Illinois has adequately 
justified these modest revisions to the inventory of data on these 
sources.
    The special interaction between states and USEPA in implementing 
the NO<INF>X</INF> emission trading program requires special procedures 
for addressing the revisions requested by Illinois. USEPA has 
established a budget of total 2007 NO<INF>X</INF> emissions to be 
achieved by Illinois. Illinois cannot unilaterally change this budget; 
Illinois must instead request that USEPA change this budget.
    Illinois has made its recommended allotment revisions contingent on 
USEPA concurrence with the requested budget revisions. Subpart U 
provides allotments without these revisions. Section 217.460(e) within 
subpart U specifies that Illinois will adjust the allocations for 
single units if USEPA makes unit-specific adjustments to the budget. 
USEPA hereby proposes to adjust the budget to reflect the revisions 
requested by Illinois. If finalized, this will have the result pursuant 
to section 217.460(e) that LTV Steel will receive an allocation of 60 
allowances and the University of Illinois will receive no allowances 
and may be exempt from the requirements of subpart U.
2. Do Illinois' Rules Satisfy USEPA's Budget?
    Illinois has adopted regulations governing NO<INF>X</INF> emissions 
from EGUs, from cement kilns, and from large industrial boilers and 
turbines. On August 31, 2000, at 65 FR 52967, USEPA proposed to approve 
Illinois' EGU rules provided Illinois removed language making the 
compliance date contingent on similar rules taking effect in nearby 
states. The Illinois legislature has passed a bill to override that 
contingency and establish a fixed compliance deadline of May 31, 2004. 
Today's rulemaking proposes to approve the regulations for cement kilns 
and for large industrial boilers and turbines, provided the legislation 
is signed. Thus, USEPA believes that these regulations will be fully 
creditable for satisfying USEPA's NO<INF>X</INF> emission budget 
requirements and attainment planning requirements once the Governor 
signs the legislation setting a fixed compliance date.
    Illinois adopted rules reflecting the same control strategy as 
USEPA assumed in formulating its budget. Therefore, Illinois' budget 
demonstration is straightforward. Illinois used USEPA's baseline 
inventory as a basis for this demonstration, using the same five 
categories of sources as USEPA. For four of the five categories, namely 
electricity generating units, stationary area sources, highway vehicle 
sources, and nonroad vehicles, the inventory in Illinois' budget 
demonstration is identical to USEPA's budget inventory for both the 
base case and the controlled emissions case.
    Illinois' subinventory for non-EGU point sources differs slightly 
from USEPA's subinventory for these sources. The differences are 
attributable to adjustments that Illinois recommends for LTV Steel and 
for the University of Illinois at Urbana-Champaign. As discussed above, 
USEPA proposes to make these revisions to the baseline and budget 
inventories.
    USEPA concludes that Illinois has demonstrated that its 
NO<INF>X</INF> regulations are adequate to achieve the adjusted 2007 
NO<INF>X</INF> emissions budget required by USEPA. Therefore, USEPA 
proposes to conclude further that Illinois has satisfied the 
requirements of USEPA's NO<INF>X</INF> SIP Call.

IV. Proposed Action

    USEPA proposes to approve Illinois' cement kiln rule and its 
industrial boiler rule (subparts T and U of part 217, respectively) as 
elements of the State's plan to meet the requirements of the 
NO<INF>X</INF> SIP Call and the requirements of the 1-hour ozone 
demonstration for the Chicago area, provided the governor signs 
legislation setting a fixed compliance deadline. USEPA proposes to 
adjust the budget to reflect the revisions requested by Illinois, 
adding 188 tons to the nonEGU point source portion of the budget due to

[[Page 34391]]

reassessments of the size of boilers at LTV and the University of 
Illinois. USEPA proposes to approve Illinois' budget demonstration, 
demonstrating that Illinois' cement kiln and industrial boiler rules, 
in conjunction with the state's rules for electricity generating units, 
are adequate to achieve the NO<INF>X</INF> emissions level that USEPA 
has budgeted for the state. Therefore, USEPA proposes to conclude more 
generally that Illinois has satisfied the requirements of USEPA's 
NO<INF>X</INF> SIP Call, again provided the governor signs legislation 
setting a fixed compliance deadline.
    USEPA is not proposing action today on subpart X, entitled 
``Voluntary NO<INF>X</INF> Emissions Reduction Program.'' USEPA is 
continuing to review this portion of Illinois' submittal and plans to 
propose rulemaking on these rules in the near future.

V. 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 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 (Pub. L. 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, USEPA'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), USEPA has no 
authority to disapprove a SIP submission for failure to use VCS. It 
would thus be inconsistent with applicable law for USEPA, 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, USEPA has taken the necessary steps to 
eliminate drafting errors and ambiguity, minimize potential litigation, 
and provide a clear legal standard for affected conduct. USEPA 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 proposed 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.).

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Reporting and 
recordkeeping requirements, Volatile organic compounds.

    Dated: June 20, 2001.
David A. Ullrich,
Acting Regional Administrator, Region 5.
[FR Doc. 01-16292 Filed 6-27-01; 8:45 am]
BILLING CODE 6560-50-P


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