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###### Environmental Protection Agency

          - 40 CFR Parts 52 and 97
          - [EPA-R05-OAR-2007-0390; FRL-8519-6]

# AGENCY:

Environmental Protection Agency (EPA).

# ACTION:

Final rule.

# SUMMARY:

                        This action approves a revision to the Ohio State Implementation Plan (SIP) submitted on April 17, 2007, and revised on September 26, 2007. This SIP revision incorporates provisions related to the implementation of EPA's Clean Air Interstate Rule (CAIR), promulgated on May 12, 2005, and revised on April 28, 2006, and December 13, 2006, and the CAIR Federal Implementation Plan (CAIR SIP) concerning sulphur dioxide (SO                        2                        ), oxides of nitrogen (NO                        X                        ) annual and NO                        X                         ozone season emissions for the State of Ohio, promulgated on April 28, 2006, and revised on December 13, 2006. EPA is not making any changes to the CAIR FIP but is amending, to the extent EPA approves Ohio's SIP revision, the appropriate appendices in the CAIR FIP trading rules simply to note that approval.                    

                        The Ohio SIP revision that was submitted on April 17, 2007, was a full CAIR SIP revision. In a letter submitted on September 26, 2007, Ohio requested that EPA consider the September 26, 2007, submittal as two separate submittals, i.e., as a full CAIR SIP and as an abbreviated CAIR SIP. Ohio requested that EPA act on specific portions of the September 26, 2007, submittal as an abbreviated CAIR SIP. EPA approves Ohio's abbreviated SIP revision that addresses the methodology used to allocate annual and ozone season NO                        X                         allowances to affected electric generating units (EGUs), and the opt-in provisions, under the CAIR trading programs and the CAIR SIP.                    

This action also contains EPA's response to a comment from the State of Connecticut following publication of the original direct final approval of the Ohio plan on October 16, 2007. We withdrew the original direct final rule on December 5, 2007, because of receipt of this comment. For reasons expressed in the body of this rule, EPA believes the comment from Connecticut is not relevant to this final action and, therefore, we are moving forward to approve the Ohio plan. As such, EPA will populate the compliance accounts of units affected by the State's rule shortly after the effective date of this rule.

# DATES:

This final rule is effective on February 1, 2008.

# ADDRESSES:

                        EPA has established a docket for this action under Docket ID No. EPA-R05-OAR-2007-0390. All documents in the docket are listed on the                         *www.regulations.gov*                         Web site. Although listed in the index, some information is not publicly available,                               ( print page 6035)                            i.e., Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, is not placed on the Internet and will be publicly available only in hard copy form. Publicly available docket materials are available either electronically through                         *www.regulations.gov*                         or in hard copy at the Environmental Protection Agency, Region 5, Air and Radiation Division, 77 West Jackson Boulevard, Chicago, Illinois 60604. This facility is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding Federal holidays. We recommend that you contact the person listed below before visiting the Region 5 office.                    

# FOR FURTHER INFORMATION CONTACT:

                        John Paskevicz, Engineer, Criteria Pollutant Section, Air Programs Branch (AR-18J), Environmental Protection Agency, Region 5, 77 West Jackson Boulevard, Chicago, Illinois 60604, (312) 886-6084. E-mail at                         *paskevicz.john@epa.gov*.                    

# SUPPLEMENTARY INFORMATION:

Throughout this document whenever “we,” “us,” or “our” is used, we mean EPA. This supplementary information section is arranged as follows:

## Table of Contents

I. What Action Is EPA Taking?

II. What Is the Regulatory History of CAIR and the CAIR FIPs?

III. What Are the General Requirements of CAIR and the CAIR FIPs?

IV. What Are the Types of CAIR SIP Submittals?

V. Analysis of Ohio's CAIR SIP Submittal

A. State Budgets for Allowance Allocations

B. CAIR Cap-and-Trade Programs

                        C. Applicability Provisions for non-EGUs NO                        X                         SIP Call Sources                    

                        D. NO                        X                         Allowance Allocations                    

                        E. Allocation of NO                        X                         Allowances From the Compliance Supplement Pool                    

F. Individual Opt-in Units

VI. Public Comment

VII. Final Action

VIII. Statutory and Executive Order Reviews

## I. What Action Is EPA Taking?

### CAIR SIP Approval

                    EPA is approving a revision to Ohio's SIP, submitted on September 26, 2007, that modifies the application of certain provisions of the CAIR FIP concerning SO                    2                    , NO                    X                     annual, and NO                    X                     ozone season emissions. (As discussed below, this less comprehensive CAIR SIP is termed an abbreviated SIP.) Ohio is subject to the CAIR FIPs that implement the CAIR requirements by requiring certain EGUs to participate in the EPA-administered Federal CAIR SO                    2                    , NO                    X                     annual, and NO                    X                     ozone season cap-and-trade programs. The SIP revision provides a methodology for allocating NO                    X                     allowances for the NO                    X                     annual and NO                    X                     ozone season trading programs. The CAIR FIPs provide that this methodology will be used to allocate NO                    X                     allowances to sources in Ohio, instead of the Federal allocation methodology otherwise provided in the FIP. The SIP revision provides a methodology for allocating the compliance supplement pool in the CAIR NO                    X                     annual trading program. The SIP also allows for individual units not otherwise subject to the CAIR trading programs to opt into such trading programs in accordance with opt-in provisions of the CAIR FIP. Consistent with the flexibility provided in the FIPs, these provisions will be used to replace or supplement, as appropriate, the corresponding provisions in the CAIR FIPs for Ohio. EPA is not making any changes to the CAIR FIP, but is amending to the extent EPA approves Ohio's SIP revision, the appropriate appendices in the CAIR FIP trading rules simply to note that approval.                

## II. What Is the Regulatory History of the CAIR and the CAIR FIPs?

                    The CAIR was published by EPA on May 12, 2005 (70 FR 25162). In this rule, EPA determined that 28 States and the District of Columbia contribute significantly to nonattainment and interfere with maintenance of the national ambient air quality standards (NAAQS) for fine particles (PM                    2.5                    ) and/or 8-hour ozone in downwind States in the eastern part of the country. As a result, EPA required those upwind States to revise their SIPs to include control measures that reduce emissions of SO                    2                    , which is a precursor to PM                    2.5                     formation, and/or NO                    X                    , which is a precursor to both ozone and PM                    2.5                     formation. For jurisdictions that contribute significantly to downwind PM                    2.5                     nonattainment, CAIR sets annual State-wide emission reduction requirements (                    *i.e.*, budgets) for SO                    2                     and annual State-wide emission reduction requirements for NO                    X                    . Similarly, for jurisdictions that contribute significantly to 8-hour ozone nonattainment, CAIR sets State-wide emission reduction requirements for NO                    X                     for the ozone season (May 1st to September 30th). Under CAIR, States may implement these emission budgets by participating in the EPA-administered cap-and-trade programs or by adopting any other control measures.                

                    CAIR explains to subject States what must be included in SIPs to address the requirements of section 110(a)(2)(D) of the Clean Air Act (CAA) with regard to interstate transport with respect to the 8-hour ozone and PM                    2.5                     NAAQS. EPA made national findings, effective May 25, 2005, that the States had failed to submit SIPs meeting the requirements of section 110(a)(2)(D). The SIPs were due in July 2000, 3 years after the promulgation of the 8-hour ozone and PM                    2.5                     NAAQS. These findings started a 2-year clock for EPA to promulgate a Federal Implementation Plan (FIP) to address the requirements of section 110(a)(2)(D). Under CAA section 110(c)(1), EPA may issue a FIP anytime after such findings are made and must do so within two years unless a SIP revision correcting the deficiency is approved by EPA before the FIP is promulgated.                

                    On April 28, 2006, EPA promulgated FIPs for all States covered by CAIR in order to ensure the emissions reductions required by CAIR are achieved on schedule. Each CAIR State is subject to the FIPs until the State fully adopts, and EPA approves, a SIP revision meeting the requirements of CAIR. The CAIR FIPs require certain EGUs to participate in the EPA-administered CAIR SO                    2                    , NO                    X                     annual, and NO                    X                     ozone-season model trading programs, as appropriate. The CAIR FIP SO                    2                    , NO                    X                     annual, and NO                    X                     ozone season trading programs impose essentially the same requirements as, and are integrated with, the respective CAIR SIP trading programs. The integration of the CAIR FIP and SIP trading programs means that these trading programs will work together to create effectively a single trading program for each regulated pollutant (SO                    2                    , NO                    X                     annual, and NO                    X                     ozone season) in all States covered by CAIR FIP or SIP trading program for that pollutant. The CAIR FIPs also allow States to submit abbreviated SIP revisions that, if approved by EPA, will automatically replace or supplement the corresponding CAIR FIP provisions (e.g., the methodology for allocating NO                    X                     allowances to sources in the state), while the CAIR FIP remains in place for all other provisions.                

                    On April 28, 2006, EPA published two more CAIR-related final rules that added the States of Delaware and New Jersey to the list of States subject to CAIR for PM                    2.5                     and announced EPA's final decisions on reconsideration of five issues without making any substantive changes to the CAIR requirements.                

## III. What Are the General Requirements of CAIR and the CAIR FIPs?

                    CAIR establishes State-wide emission budgets for SO                    2                     and NO                    X                     and is to be implemented in two phases. The first phase of NO                    X                     reductions starts in 2009 and continues through 2014, while the first phase of SO                    2                     reductions starts in 2010 and continues through 2014. The                           ( print page 6036)                        second phase of reductions for both NO                    X                     and SO                    2                     starts in 2015 and continues thereafter. CAIR requires States to implement the budgets by either requiring EGUs to participate in the EPA-administered cap-and-trade programs or adopting other control measures of the State's choosing and demonstrating that such control measures will result in compliance with the applicable State SO                    2                     and NO                    X                     budgets.                

                    The May 12, 2005, and April 28, 2006, CAIR rules provide model rules that States must adopt (with certain limited changes, if desired) if they want to participate in the EPA-administered trading programs. With two exceptions, only States that choose to meet the requirements of CAIR through methods that exclusively regulate EGUs are allowed to participate in the EPA-administered trading programs. One exception is for States that adopt the opt-in provisions of the model rules to allow non-EGUs individually to opt into the EPA-administered trading programs. The other exception is for States that include all non-EGUs from their NO                    X                     SIP Call trading programs in their CAIR NO                    X                     ozone season trading programs.                

## IV. What Are the Types of CAIR SIP Submittals?

                    States have the flexibility to choose the type of control measures they will use to meet the requirements of CAIR. EPA anticipates that most States will choose to meet the CAIR requirements by selecting an option that requires EGUs to participate in the EPA-administered CAIR cap-and-trade programs. For such States, EPA has provided two approaches for submitting and obtaining approval for CAIR SIP revisions. States may submit full SIP revisions that adopt the model CAIR cap-and-trade rules. If approved, these SIP revisions will fully replace the CAIR FIPs. Alternatively, States may submit abbreviated SIP revisions. These SIP revisions will not replace the CAIR FIPs; however, the CAIR FIPs provide that, when approved, the provisions in these abbreviated SIP revisions will be used instead of or in conjunction with, as appropriate, the corresponding provisions of the CAIR FIPs (e.g., the NO                    X                     allowance allocation methodology).                

A State submitting an abbreviated SIP revision, may submit limited SIP revisions to tailor the CAIR FIP cap-and-trade programs to the state submitting the revision. Specifically, an abbreviated SIP revision may establish certain applicability and allowance allocation provisions that, the CAIR FIPs provide, will be used instead of or in conjunction with the corresponding provisions in the CAIR FIP rules in that State. Specifically, the abbreviated SIP revisions may:

                    1. Include NO                    X                     SIP Call trading sources that are not EGUs under CAIR in the CAIR FIP NO                    X                     ozone season trading program;                

                    2. Provide for allocation of NO                    X                     annual or ozone season allowances by the State, rather than the Administrator, and using a methodology chosen by the State;                

                    3. Provide for allocation of NO                    X                     annual allowances from the CSP by the State, rather than by the Administrator, and using the State's choice of allowed, alternative methodologies; and/or                

4. Allow units that are not otherwise CAIR units to opt individually into the CAIR FIP cap-and-trade programs under the opt-in provisions in the CAIR FIP rules.

                    With approval of an abbreviated SIP revision, the CAIR FIP remains in place, as tailored to sources in the State by that approved SIP revision. Abbreviated SIP revisions can be submitted in lieu of, or as part of, CAIR full SIP revisions. States may want to designate part of their full SIP as an abbreviated SIP for EPA to act on first when the timing of the State's submission might not provide EPA with sufficient time to approve the full SIP prior to the deadline for recording NO                    X                     allocations. This will help ensure that the elements of the trading programs where flexibility is allowed are implemented according to the State's decisions. Submission of an abbreviated SIP revision does not preclude future submission of a CAIR full SIP revision. In this case, the September 26, 2007, submittal from Ohio has been submitted as an abbreviated SIP revision. As discussed below, Ohio requested three of the four provisions for which a State may request an abbreviated SIP. The State requested that its allocation of NO                    X                     annual and NO                    X                     ozone season allowances for EGUs under the FIP be used instead of the corresponding provisions of the CAIR FIPs in effect in the State. The State requested that its allocation by the State of NO                    X                     annual allowances from the CSP be used instead of the corresponding provisions of the CAIR FIPs in effect in the State. Finally, the State also provided that units that are not otherwise CAIR units may opt individually into the CAIR FIP cap-and-trade program under the opt-in provisions in the CAIR FIP rules.                

## V. Analysis of Ohio's CAIR SIP Submittal

### A. State Budgets for Allowance Allocations

                    The CAIR NO                    X                     annual and ozone season budgets were developed from historical heat input data for EGUs. Using these data, EPA calculated annual and ozone season regional heat input values, which were multiplied by 0.15 lb/mmBtu, for phase 1, and 0.125 lb/mmBtu, for phase 2, to obtain regional NO                    X                     budgets for 2009-2014 and for 2015 and thereafter, respectively. EPA derived the State NO                    X                     annual and ozone season budgets from the regional budgets using State heat input data adjusted by fuel factors.                

                    The CAIR State SO                    2                     budgets were derived by discounting the tonnage of emissions authorized by annual allowance allocations under the Acid Rain Program under title IV of the CAA. Under CAIR, each allowance allocated under the Acid Rain Program for the years in phase 1 of CAIR (2010 through 2014) authorizes 0.5 ton of SO                    2                     emissions in the CAIR trading program, and each Acid Rain Program allowance allocated for the years in phase 2 of CAIR (2015 and thereafter) authorizes 0.35 ton of SO                    2                     emissions in the CAIR trading program.                

                    The CAIR FIPs established the budgets for Ohio as 108,667 tons for NO                    X                     annual emissions, 45,664 tons for NO                    X                     ozone season emissions, and 333,520 tons for SO                    2                     emissions. Ohio's SIP revision, approved in today's action, does not affect these budgets, which are total amounts of allowances available for allocation for each year under the EPA-administered cap-and-trade programs under the CAIR FIPs. In short, the abbreviated SIP revision only affects allocations of allowances under the established budgets.                

### B. CAIR Cap-and-Trade Programs

                    The CAIR NO                    X                     annual and ozone-season FIPs both largely mirror the structure of the NO                    X                     SIP Call model trading rule in 40 CFR part 96, subparts A through I. While the provisions of the NO                    X                     annual and ozone-season FIPs are similar, there are some differences. For example, the NO                    X                     annual FIP (but not the NO                    X                     ozone season FIP) provides for a CSP, which is discussed below and under which allowances may be awarded for early reductions of NO                    X                     annual emissions. As a further example, the NO                    X                     ozone season FIP reflects the fact that the CAIR NO                    X                     ozone season trading program replaces the NO                    X                     SIP Call trading program after the 2008 ozone season and is coordinated with the NO                    X                     SIP Call program. The NO                    X                                                ( print page 6037)                        ozone season FIP provides incentives for early emissions reductions by allowing banked, pre-2009 NO                    X                     SIP Call allowances to be used for compliance in the CAIR NO                    X                     ozone-season trading program. In addition, States have the option of continuing to meet their NO                    X                     SIP Call requirement by participating in the CAIR NO                    X                     ozone season trading program and including all of their NO                    X                     SIP Call trading sources in that program.                

                    The provisions of the CAIR SO                    2                     FIP are also similar to the provisions of the NO                    X                     annual and ozone season FIPs. However, the SO                    2                     FIP is coordinated with the ongoing Acid Rain SO                    2                     cap-and-trade program under CAA title IV. The SO                    2                     FIP uses the title IV allowances for compliance, with each allowance allocated for 2010-2014 authorizing only 0.50 ton of emissions and each allowance allocated for 2015 and thereafter authorizing only 0.35 ton of emissions. Banked title IV allowances allocated for years before 2010 can be used at any time in the CAIR SO                    2                     cap-and-trade program, with each such allowance authorizing 1 ton of emissions. Title IV allowances are to be freely transferable among sources covered by the Acid Rain Program and sources covered by the CAIR SO                    2                     cap-and-trade program.                

                    EPA used the CAIR model trading rules as the basis for the trading programs in the CAIR FIPs. The CAIR FIP trading rules are virtually identical to the CAIR model trading rules, with changes made to account for Federal rather than state implementation. The CAIR model SO                    2                    , NO                    X                     annual, and NO                    X                     ozone season trading rules and the respective CAIR FIP trading rules are designed to work together as integrated SO                    2                    , NO                    X                     annual, and NO                    X                     ozone season trading programs.                

                    Ohio is subject to the CAIR FIPs concerning SO                    2                    , NO                    X                     annual, and NO                    X                     ozone season emissions, and the CAIR FIP trading programs for SO                    2                    , NO                    X                     annual, and NO                    X                     ozone season apply to sources in Ohio. Consistent with the flexibility they give to States, the CAIR FIPs provide that States may submit abbreviated SIP revisions that will replace or supplement, as appropriate, certain provisions of the CAIR FIP trading programs. The Ohio EPA September 26, 2007, submission is such an abbreviated SIP revision.                

###                     C. Applicability Provisions for non-EGUs NO                    *X*                     SIP Call Sources                

In general, the CAIR FIP trading programs apply to any stationary, fossil-fuel-fired boiler or stationary, fossil-fuel-fired combustion turbine serving at any time, since the later of November 15, 1990, or the start-up of the unit's combustion chamber, a generator with nameplate capacity of more than 25 MWe producing electricity for sale.

                    States have the option of bringing in, for the CAIR NO                    *X*                     ozone season program only, those units in the State's NO                    X                     SIP Call trading program that are not EGUs as defined under CAIR. EPA advises States exercising this option to use provisions for applicability that are substantively identical to the provisions in 40 CFR 96.304 and add the applicability provisions in the State's NO                    X                     SIP Call trading rule for non-EGUs to the applicability provisions in 40 CFR 96.304 in order to include in the CAIR NO                    X                     ozone season trading program all units required to be in the State's NO                    X                     SIP Call trading program that are not already included under 40 CFR 96.304. Under this option, the CAIR NO                    X                     ozone season program must cover all large industrial boilers and combustion turbines, as well as any small EGUs (i.e. units serving a generator with a nameplate capacity of 25 MWe or less), that the State currently requires to be in the NO                    X                     SIP Call trading program.                

                    Consistent with the flexibility given to States in the CAIR FIP, Ohio has not chosen, in the abbreviated CAIR SIP approved here, to expand the applicability provisions of the CAIR NO                    X                     ozone season trading program to include all non-EGUs in the State's NO                    X                     SIP Call trading program. However, EPA notes that Ohio has indicated that the full SIP revision submitted on September 26, 2007, expands the applicability provisions of CAIR NO                    X                     ozone season trading program in this manner. As such, EPA is not taking final action on the non-EGU portion of the State's September 26, 2007, full CAIR SIP revision. The full CAIR SIP revision including actions to approve the non-EGU portions of the State's CAIR rule will be the subject of a separate future action.                

###                     D. NO                    *X*                     Allowance Allocations                

                    Under the NO                    X                     allowance allocation methodology in the CAIR model trading rules and in the CAIR FIP, NO                    X                     annual and ozone season allowances are allocated to units that have operated for five years, based on heat input data from a three-year period that are adjusted for fuel type by using fuel factors of 1.0 for coal, 0.6 for oil, and 0.4 for other fuels. The CAIR model trading rules and the CAIR FIP also provide a new unit set-aside from which units without five years of operation are allocated allowances based on the units' prior year emissions.                

                    The CAIR FIP provides States the flexibility to establish a different NO                    X                     allowance allocation methodology that will be used to allocate allowances to sources in the States if certain requirements are met concerning the timing of submission of units' allocations to the Administrator for recordation and the total amount of allowances allocated for each control period. In adopting alternative NO                    X                     allowance allocation methodologies, States have flexibility with regard to:                

1. The cost to recipients of the allowances, which may be distributed for free or auctioned;

2. The frequency of allocations;

3. The basis for allocating allowances, which may be distributed, for example, based on historical heat input or electric and thermal output; and

4. The use of allowance set-asides and, if used, the size of the set-aside.

                    Consistent with the flexibility given to States in the CAIR FIPs, Ohio has chosen to replace the provisions of the CAIR NO                    X                     annual FIP concerning the allocation of NO                    X                     annual allowances with its own methodology. Ohio has chosen to distribute NO                    X                     annual allowances based upon heat input data from a three year period adjusted for fuel type by using fuel adjustment factors of 1.0 for coal, 0.6 for oil, and 0.4 for other fuels. Based on this methodology, Ohio determined NO                    X                     allocations for EGUs in the State under the CAIR FIP, and submitted its allocations to EPA on April 24, 2007.                

                    Ohio also has included, in the abbreviated SIP revision, provisions regarding set-aside programs for energy efficiency/renewable energy and innovative technology projects under the CAIR NO                    X                     Ozone Season program. The State's energy-efficiency/renewable energy (EE/RE) and innovative technology set-aside program provisions establish two set-asides for each control period—one set-aside for EE/RE projects and one set-aside for innovative technology projects—and specify procedures for allocating the allowances in the set-asides. Each set-aside is limited to one percent of the state trading budget for NO                    X                     ozone season allowance allocations. Beginning with the end of 2009 and every three years thereafter, Ohio EPA will review the number of allowances allocated from the set-asides and will, under certain circumstances, increase the size of each set-aside in future years as necessary, up to a maximum of five percent of the state trading budget.                

                    EPA notes that the set-aside provisions do not explicitly state how allowances will be reserved in the set-asides if the total amount of allowances requested from a set-aside exceeds the total amount of allowances in that set-aside. However, set-aside provisions                           ( print page 6038)                        explicitly limit the amount of allowances available from each set-aside to one percent of the state trading budget unless Ohio EPA expands the set-asides in future years. In addition, Ohio informed EPA, in the September 26, 2007, letter, that its guidance for the set-asides provides that set-aside allowances will be reserved on a pro-rata basis if the total requested allowances exceed the size of the set-aside. Ohio has indicated that it will clarify its set-aside provisions consistent with this guidance.                

                    The set-aside provisions also do not explicitly state how a set-aside will be increased up to five percent of the state trading budget if the existing set-aside amounts plus the total amounts allocated to units with and without baseline heat input under Ohio's other allocation provisions for NO                    X                     ozone season allowances already equal the state trading budget. However, Ohio's CAIR NO                    X                     ozone season allocation provisions clearly limit the total allocations for each control period of CAIR NO                    X                     ozone season allowances to the amount of the state trading budget for that control period. Further, as written, the provisions for expanding the set-asides cannot have any effect on the current allocations, which Ohio has already submitted to the Administrator for phase 1 of the trading program. In addition, Ohio informed EPA, in the September 28, 2007 letter, that Ohio EPA will reduce the total amount of allowances allocated to existing units under the other allocation provisions to the extent the size of a set-aside is increased in the future. Ohio has indicated that it will clarify its allocation provisions consistent with this statement in the September 28, 2007, letter.                

                    Consequently, EPA interprets Ohio's abbreviated SIP to limit, consistent with the requirements of 40 CFR 51.123(ee)(2)(ii)(B), the total allocations for each control period of CAIR NO                    X                     ozone season allowances—whether from current or expanded set-asides or under the other allocation provisions in the abbreviated SIP—to the state trading budget.                

###                     E. Allocation of NO                    *X*                     Allowances From the Compliance Supplement Pool                

                    The CSP provides an incentive for early reductions in NO                    X                     annual emissions. The CSP consists of 200,000 CAIR NO                    X                     annual allowances of vintage 2009 for the entire CAIR region, and a State's share of the CSP is based upon the State's share of the projected emission reductions under CAIR. States may distribute CSP allowances, one allowance for each ton of early reduction, to sources that make NO                    X                     reductions during 2007 or 2008 beyond what is required by any applicable State or Federal emission limitation. States also may distribute CSP allowances based upon a demonstration of need for an extension of the 2009 deadline for implementing emission controls.                

                    The CAIR NO                    X                     annual FIP establishes specific methodologies for allocations of CSP allowances. States may choose an allowed, alternative CSP allocation methodology to be used to allocate CSP allowances to sources in those States.                

                    Consistent with the flexibility given to States in the FIP, Ohio has chosen to modify the provisions of the CAIR NO                    X                     annual FIP concerning the allocation of allowances from the CSP. Ohio has chosen to distribute CSP allowances using an allocation methodology that provides more certainty to unit owners and operators that a known quantity of allowances per unit will be available for distribution at the beginning of the control period. Ohio also provides owners and operators with an incentive for the operation of expensive post-combustion control equipment year-round and provides incentives for early reductions in emissions before 2009. Ohio EPA is required to submit allocations from the CSP to the Administrator by July 1, 2009, or such time when unit's 2008 emissions data are available so that the allocations can be determined. Ohio's abbreviated SIP also states that the Administrator will record the allocations by January 1, 2010. While Ohio's abbreviated SIP does not explicitly state that allocations will be submitted to the Administrator by November 30, 2009, EPA notes that units' 2008 emissions data should certainly be available before that date and that the allocations need to be submitted by that date in order to ensure that the Administrator will complete recordation of allowances by January 1, 2010. Further, Ohio has indicated, in the September 26, 2007, letter, that it will clarify its CSP provisions to provide for a November 30, 2009, deadline for submission of CSP allocations to the Administrator. Consequently, EPA considers the Ohio abbreviated SIP to meet the requirements of 40 CFR 51.123(p)(2).                

### F. Individual Opt-in Units

The opt-in provisions allow for certain non-EGUs (i.e., boilers, combustion turbines, and other stationary fossil-fuel-fired devices) that do not meet the applicability criteria for a CAIR trading program to participate voluntarily in (i.e., opt into) the CAIR trading program. A non-EGU may opt into one or more of the CAIR trading programs. In order to qualify to opt into a CAIR trading program, a unit must vent all emissions through a stack and be able to meet monitoring, recordkeeping, and recording requirements of 40 CFR part 75. The owners and operators seeking to opt a unit into a CAIR trading program must apply for a CAIR opt-in permit. If the unit is issued a CAIR opt-in permit, the unit becomes a CAIR unit, is allocated allowances, and must meet the same allowance-holding and emissions monitoring and reporting requirements as other units subject to the CAIR trading program. The opt-in provisions provide for two methodologies for allocating allowances for opt-in units, one methodology that applies to opt-in units in general and a second methodology that allocates allowances only to opt-in units that the owners and operators intend to re-power before January 1, 2015.

States have several options concerning the opt-in provisions. The rules for each of the CAIR FIP trading programs include opt-in provisions that are essentially the same as those in the respective CAIR SIP model rules, except that the CAIR FIP opt-in provisions become effective in a State only if the State's abbreviated SIP revision adopts the opt-in provisions. The State may adopt the opt-in provisions entirely or may adopt them but exclude one of the allowance allocation methodologies. The State also has the option of not adopting any opt-in provisions in the abbreviated SIP revision and thereby providing for the CAIR FIP trading program to be implemented in the State without the ability for units to opt into the program.

                    Consistent with the flexibility given to States in the FIPs, Ohio has chosen to allow non-EGUs meeting certain requirements to participate in the CAIR NO                    X                     annual trading program, the CAIR NO                    X                     ozone season trading program and the CAIR SO                    2                     trading program. Ohio EPA submitted the CAIR SIP program rules, OAC 3745-109-08 and OAC 3745-109-14 and OAC 3745-109-21, which incorporate the opt-in provisions as provided in the final EPA CAIR rule of April 28, 2006. These rules address opt-ins for NO                    X                     ozone season, NO                    X                     annual, and SO                    2                     annual programs.                

## VI. Public Comments

*Comment:*                     On November 9, 2007, the Connecticut Department of Environmental Protection (CTDEP) submitted comments on EPA's direct final rule (DFR) notice approving Ohio's abbreviated CAIR SIP. CTDEP encourages EPA to approve the state's CAIR program adopted to meet the                           ( print page 6039)                        emission reduction requirements of CAIR. However, it argues that before approving state plans, EPA should evaluate individually and in the aggregate each state's clean air programs. CTDEP argues that such evaluation is necessary to ensure that each state's emissions do not significantly contribute to ozone nonattainment in Connecticut. CTDEP asserts its belief that the CAIR program does not ensure that the CAA section 110(a)(2)(D)(i) requirements to prohibit transported emissions that significantly contribute to nonattainment in Connecticut and other states will be met. CTDEP expresses concern that EPA is determining through this and other similar rulemakings that CAIR programs are sufficient to meet States' section 110(a)(2)(D)(i) obligations. CTDEP asserts, based on EPA and State modeling for CAIR, that the levels of transported pollution remaining after CAIR implementation are large enough that, even with local controls, it may be difficult for Connecticut to attain the 8-hour ozone NAAQS by 2010. Finally, CTDEP questions EPA's determination that highly cost effective controls are adequate to address States' section 110(a)(2)(D)(i) obligations as compared to “reasonable cost” controls that could be achieved to effect more stringent NO                    X                     reductions.                

*Response:*                     EPA does not agree that it is appropriate or necessary for EPA to conduct additional analysis before approving the Ohio abbreviated CAIR SIP for NO                    X                     allowances and NO                    X                     allowance methodology. Ohio has chosen an abbreviated SIP for NO                    X                     allowances and NO                    X                     allocation methodology, one of four SIP elements for which states may request an abbreviated SIP. With an abbreviated SIP, the CAIR FIP remains in place for Ohio. EPA's proposed approval of Ohio's abbreviated SIP would therefore only have the effect of replacing, as provided for in the CAIR FIP, the corresponding FIP provisions with the State's preferred allocations and methodology. EPA has evaluated this abbreviated SIP revision and determined that it complies with the requirements of the CAIR FIP provisions regarding abbreviated SIPs. CTDEP does not challenge this determination. Thus, CTDEP's comments do not specifically pertain to any aspect of EPA's proposed specific action to approve the Ohio CAIR SIP revision. Rather, the comments appear to be directed broadly at EPA's decisions with regard to States' section 110(a)(2)(D)(i) obligations. These decisions were made by EPA in the context of the CAIR rulemaking, which was promulgated on May 12, 2005 (70 FR 25162), not in the EPA action to approve Ohio's abbreviated CAIR SIP revision. Therefore, CTDEP's comments are not relevant to this final action. CTDEP had ample opportunity to submit comments both during the comment period for the proposed CAIR rulemaking of January 30, 2004 (69 FR 4566), and during the comment period for the proposed CAIR FIP of August 24, 2005 (70 FR 49708). EPA's action to approve Ohio's abbreviated CAIR SIP did not reopen either the CAIR or CAIR FIP rulemakings. Consequently, CTDEP's comments are not relevant to this rulemaking, or timely with respect to the CAIR and CAIR FIP rulemakings. Thus, EPA does not believe it is necessary to conduct additional analysis on whether Ohio or any other state satisfies the requirements of 110(a)(2)(D) before approving the Ohio abbreviated CAIR SIP submission.                

## VII. Final Action

                    EPA is promulgating the rules contained in Ohio's abbreviated CAIR SIP revision submitted on September 26, 2007. Ohio is covered by the CAIR FIPs, which require participation in the EPA-administered CAIR FIP cap-and-trade programs for SO                    2                    , NO                    X                     annual, and NO                    X                     ozone season emissions. Under this abbreviated SIP revision, and consistent with the flexibility given to States in the FIPs, Ohio adopts provisions for allocating allowances under the CAIR FIP NO                    X                     annual and ozone season trading programs. In addition, Ohio adopts in the abbreviated SIP revision provisions that establish a methodology for allocating allowances in the CSP and allow for individual non-EGUs to opt into the CAIR FIP SO                    2                    , NO                    X                     annual, NO                    X                     ozone season cap-and-trade programs. As provided for in the CAIR FIPs, these provisions in the abbreviated SIP revision will replace or supplement the corresponding provisions of the CAIR FIPs in Ohio. The abbreviated SIP revision meets the applicable requirements in 40 CFR 51.123(p) and (ee), with regard to NO                    X                     annual and NO                    X                     ozone season emissions, and 40 CFR 51.124(r), with regard to SO                    2                     emissions. EPA is not making any changes to the CAIR FIP, but is amending the appropriate appendices in the CAIR FIP trading rules simply to note that approval.                

In accordance with 5 U.S.C 553(d), EPA finds that there is good cause for these actions to become effective immediately upon publication. Ordinarily, a delay in the effective date is provided to give affected sources more time to plan for meeting applicable requirements. In this case, the various requirements under Ohio's rule take effect at fixed times, and an immediate effective date (and nearly immediate issuance of allowances under Ohio's allocation rules) will provide sources more time to plan for meeting the rules' requirements. Thus, an immediate effective date better serves the purposes of 5 U.S.C. 553 than would a delayed effective date. An immediate effective date will provide positive impact from the final rule on sources which can utilize the allowances methodology under the State's rule. EPA concluded that the Connecticut comment did not oppose approval of Ohio's rule and was not intended to delay implementation of the Ohio CAIR program. The immediate effective date for this action is authorized under both 5 U.S.C. 553(d)(1), which provides that rulemaking actions may become effective less than 30 days after publication if the rule “* * * grants or recognizes an exemption or relieves a restriction,” and section 553(d)(3)e which allows an effective date less than 30 days after publication “* * * as otherwise provided by the agency for good cause found and published with the rule.” The purpose of the 30-day waiting period prescribed in 553(d) is to give the affected parties a reasonable time to adjust their planning actions as the final rule takes effect. Today's rule, however, does not create any new regulatory requirements such that affected parties would need time to prepare before the rule takes effect. Rather, today's “immediate effective” action provides sufficient time for affected sources to plan the use of allowances under the State rule through the implementation of the Ohio abbreviated CAIR implementation plan.

## VIII. Statutory and Executive Order Reviews

                    Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” and, therefore, is not subject to review by the Office of Management and Budget. For this reason, this action is also not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001). This action merely approves state law as meeting Federal requirements and would impose no additional requirements beyond those imposed by state law. Accordingly, the Administrator certifies that this rule would 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 action approves pre-existing                           ( print page 6040)                        requirements under state law and would 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 rule also does not have tribal implications because it would 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). This action also does not have Federalism implications because it would not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999). This action merely approves a state rule implementing a federal standard and to amend the appropriate appendices in the CAIR FIP trading rules to note that approval. It does not alter the relationship or the distribution of power and responsibilities established in the CAA. This rule also is not subject to Executive Order 13045 “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), because it would approve a state rule implementing a federal standard.

                    In reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the CAA. 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 CAA. 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. This rule would not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501,                     *et seq.*).                

                    The Congressional Review Act, 5 U.S.C. 801,                     *et seq.*, as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the                     **Federal Register**                    . A major rule cannot take effect until 60 days after it is published in the                     **Federal Register**                    . This action is not a “major rule” as defined by 5 U.S.C. 804(2).                

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by April 1, 2008. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2)).

# List of Subjects

### 40 CFR Part 52

      - Environmental protection
      - Air pollution control
      - Electric utilities
      - Incorporate by reference
      - Intergovernmental relations
      - Nitrogen oxides
      - Ozone
      - Particulate matter
      - Reporting and recordkeeping requirements
      - Sulfur dioxide

### 40 CFR Part 97

      - Environmental protection
      - Air pollution control
      - Electric utilities
      - Intergovernmental relations
      - Nitrogen oxides
      - Ozone
      - Particulate matter
      - Reporting and recordkeeping requirements
      - Sulfur dioxide

Dated: January 11, 2008.

Gary Gulezian,

Acting Regional Administrator, Region 5.

For the reasons set forth in the preamble, parts 52 and 97 of chapter 1 of title 40 of the Code of Federal Regulations are amended as follows:

# PART 52—[AMENDED]

1. The authority citation for part 52 continues to read as follows: 

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

# Subpart KK—Ohio

2. Section 52.1870 is amended by adding paragraph (c)(140) to read as follows: 

§ 52.1870 

* * * * *

(c) * * *

                            (140) Ohio Environmental Protection Agency submitted amendments on September 26, 2007, to the State Implementation Plan to control emissions from electric generating units (EGU). Rules affecting these units include: Ohio Administrative Code (OAC) 3745-109-01 (B)(59) and (72), 3745-109-04, 3745-109-08, 3745-109-14, 3745-109-17 (except the following: the language in paragraph (A) referencing the state trading budget for non-EGUs in 3745-109-17-01(C)(4), paragraphs (C)(1)(a)(i)(                            *d*), (C)(2)(b), (C)(2)(d), (C)(2)(e), and (C)(2)(f), and the language in paragraph (C)(3)(a) referencing non-EGUs), and 3745-109-21.                        

                            (i)                             *Incorporation by reference*. The following sections of the Ohio Administrative Code (OAC) are incorporated by reference.                        

                            (A) OAC 3745-109-01(B)(59) “Energy efficiency/renewable energy project”; OAC 3745-109-01(B)(72) “Innovative technology project”; OAC 3745-109-04 “CAIR NOX                             allowance allocations”; OAC 3745-109-08 “CAIR NOX                             opt-in units”; OAC 3745-109-14 “CAIR SO2                             opt-in units”; and OAC 3745-109-21 “CAIR NOX                             ozone season opt-in units”; effective on September 27, 2007.                        

                            (B) OAC 3745-109-17 “CAIR NOX                             ozone season allowance allocations”; effective on September 27, 2007, except the following: the language in paragraph (A) referencing the state trading budget for non-EGUs in 3745-109-17-01(C)(4), paragraphs (C)(1)(a)(i)(                            *d*), (C)(2)(b), (C)(2)(d), (C)(2)(e), and (C)(2)(f), and the language in paragraph (C)(3)(a) referencing non-EGUs.                        

# PART 97—[AMENDED]

3. The authority citation for part 97 continues to read as follows: 

Authority:42 U.S.C. 7401, 7403, 7410, 7426, 7601, and 7651,                             *et seq.*

4. Appendix A to subpart EE is amended by adding in alphabetical order the entry “Ohio” under paragraphs 1. and 2. to read as follows: 

## Appendix A to Subpart EE of Part 97—States With Approved State Implementation Plan Revisions Concerning Allocations

1. * * *

Ohio

* * * * *

2. * * *

Ohio

* * * * *

5. Appendix A to subpart II is amended by adding in alphabetical       ( print page 6041)                            order the entry “Ohio” under paragraphs 1. and 2. to read as follows:                    

##                         Appendix A to Subpart II of Part 97—States With Approved State Implementation Plan Revisions Concerning CAIR NOX                         Opt-In Units                    

1. * * *

Ohio

* * * * *

2. * * *

Ohio

* * * * *

6. Appendix A to subpart III of part 97 is amended by adding in alphabetical order the entry “Ohio” under paragraphs 1. and 2. to read as follows: 

##                         Appendix A to Subpart III of Part 97—States With Approved State Implementation Plan Revisions Concerning CAIR SO2                         Opt-In Units                    

1. * * *

Ohio

* * * * *

2. * * *

Ohio

* * * * *

7. Appendix A to subpart EEEE of part 97 is amended by adding in alphabetical order the entry “Ohio” to read as follows: 

## Appendix A to Subpart EEEE of Part 97—States With Approved State Implementation Plan Revisions Concerning Allocations

* * * * *

Ohio

* * * * *

8. Appendix A to subpart IV of part 97 is amended by adding in alphabetical order the entry “Ohio” under paragraphs 1. and 2. to read as follows: 

##                         Appendix A to Subpart IV of Part 97—States With Approved State Implementation Plan Revisions Concerning CAIR NOX                         Ozone Season Opt-In Units                    

1. * * *

Ohio

2. * * *

Ohio

* * * * *

[FR Doc. E8-1804 Filed 1-31-08; 8:45 am]

BILLING CODE 6560-50-P