[Federal Register Volume 82, Number 158 (Thursday, August 17, 2017)]
[Proposed Rules]
[Pages 39070-39078]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-17341]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R04-OAR-2017-0415; FRL-9966-45-Region 4]


Air Plan Approval; Alabama; Cross-State Air Pollution Rule

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: The Environmental Protection Agency (EPA) is proposing to 
approve portions of the October 26, 2015, and May 19, 2017, State 
Implementation Plan (SIP) revisions from Alabama replacing the Cross-
State Air Pollution Rule (CSAPR) federal implementation plan (FIP). 
Under CSAPR, large electricity generating units (EGUs) in Alabama are 
subject to FIP provisions requiring the units to participate in a 
federal allowance trading program for ozone season emissions of 
nitrogen oxides (NO<INF>X</INF>). This action would approve into 
Alabama's SIP the State's regulations requiring Alabama's affected 
units to participate in a new state allowance trading program for ozone 
season NO<INF>X</INF> emissions integrated with the CSAPR federal 
trading programs, replacing the corresponding CSAPR FIP requirements 
for Alabama. This state trading program is substantively identical to 
the federal trading program except with regard to the provisions 
allocating emission allowances among Alabama units. Under the CSAPR 
regulations, final approval of these portions of the SIP revisions 
would automatically eliminate Alabama units' FIP requirements to 
participate in CSAPR's federal allowance trading program for ozone 
season NO<INF>X</INF> emissions. Approval would also fully satisfy 
Alabama's good neighbor obligation under the Clean Air Act (CAA or Act) 
to prohibit emissions which will significantly contribute to 
nonattainment or interfere with maintenance of the 1997 8-hour Ozone 
National Ambient Air Quality Standards (NAAQS) in any other state; and 
would partially satisfy Alabama's good neighbor obligation under the 
CAA to prohibit emissions which will significantly contribute to 
nonattainment or interfere with maintenance of the 2008 8-hour Ozone 
NAAQS in any other state.

DATES: Comments must be received on or before September 18, 2017.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-R04-
OAR-2017-0415 at http://www.regulations.gov. Follow the online 
instructions for submitting comments. Once submitted, comments cannot 
be edited or removed from Regulations.gov. EPA may publish any comment 
received to its public docket. Do not submit electronically any 
information you consider to be Confidential Business Information (CBI) 
or other information whose disclosure is restricted by statute. 
Multimedia submissions (audio, video, etc.) must be accompanied by a 
written comment. The written comment is considered the official comment 
and should include discussion of all points you wish to make. EPA will 
generally not consider comments or comment contents located outside of 
the primary submission (i.e., on the web, cloud, or other file sharing 
system). For additional submission methods, the full EPA public comment 
policy, information about CBI or multimedia submissions, and general 
guidance on making effective comments, please visit http://www2.epa.gov/dockets/commenting-epa-dockets.

FOR FURTHER INFORMATION CONTACT: Ashten Bailey, Air Regulatory 
Management Section, Air, Pesticides and Toxics Management Division, 
U.S. Environmental Protection Agency, Region 4, 61 Forsyth Street SW., 
Atlanta, Georgia 30303-8960. Ms. Bailey can be reached by telephone at 
(404) 562-9164 or via electronic mail at <a href="/cdn-cgi/l/email-protection#3f5d5e56535a46115e4c574b5a517f5a4f5e11585049"><span class="__cf_email__" data-cfemail="ceacafa7a2abb7e0afbda6baaba08eabbeafe0a9a1b8">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: 

I. Summary

    EPA is proposing to approve the portions of the October 26, 2015, 
and May 19, 2017, SIP revisions from Alabama concerning CSAPR \1\ 
allowance trading programs for ozone season emissions of 
NO<INF>X</INF>. Large EGUs in Alabama are currently subject to CSAPR 
FIPs that require the units to participate in the federal CSAPR 
NO<INF>X</INF> Group 2 Ozone Season Trading Program. The CSAPR 
regulations provide a process for the submission and approval of SIP 
revisions to replace the requirements of CSAPR FIPs with SIP 
requirements under which a state's units participate in CSAPR state 
trading programs that are integrated with and, with certain permissible 
exceptions, substantively

[[Page 39071]]

identical to the CSAPR federal trading programs.
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    \1\ Cross-State Air Pollution Rule Update for the 2008 Ozone 
NAAQS (CSAPR Update), 81 FR 74504 (October 26, 2016) (codified as 
amended at 40 CFR 52.38 and 52.39 and subparts AAAAA through EEEEE 
of 40 CFR part 97); see also Federal Implementation Plans; 
Interstate Transport of Fine Particulate Matter and Ozone and 
Correction of SIP Approvals, 76 FR 48208 (August 8, 2011). EPA 
previously approved a SIP revision that replaced the CSAPR FIPs for 
the annual trading programs in Alabama. See 81 FR 59869 (Aug. 31, 
2016).
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    The portions of the SIP revisions proposed for approval would 
incorporate into Alabama's SIP state allowance trading program 
regulations for ozone season NO<INF>X</INF> emissions that would 
replace EPA's federal trading program regulations for those emissions 
from Alabama units. EPA is proposing to approve these portions of the 
SIP revisions, as clarified in a letter provided on August 4, 2017, 
because they meet the requirements of the CAA and EPA's regulations for 
approval of a CSAPR full SIP revision replacing a federal trading 
program with a state trading program that is integrated with and 
substantively identical to the federal trading program except for 
permissible differences with respect to emission allowance allocation 
provisions. Under the CSAPR regulations, approval of these portions of 
the SIP revisions would automatically eliminate the obligations of EGUs 
in Alabama (but not any units in Indian country within Alabama's 
borders) to participate in CSAPR's federal trading programs for ozone 
season NO<INF>X</INF> emissions under the corresponding CSAPR FIPs. EPA 
proposes to find that approval of these portions of the SIP revisions 
would satisfy Alabama's obligation pursuant to CAA section 
110(a)(2)(D)(i)(I) to prohibit emissions which will significantly 
contribute to nonattainment or interfere with maintenance of the 1997 
8-hour Ozone NAAQS in any other state. EPA also proposes to find that 
approval of these portions of the SIP revisions would partially satisfy 
Alabama's obligation pursuant to CAA section 110(a)(2)(D)(i)(I) to 
prohibit emissions which will significantly contribute to nonattainment 
or interfere with maintenance of the 2008 8-hour Ozone NAAQS in any 
other state.
    Section II of this document summarizes relevant aspects of the 
CSAPR federal trading programs and FIPs as well as the range of 
opportunities states have to submit SIP revisions to modify or replace 
the FIP requirements while continuing to rely on CSAPR's trading 
programs to address the states' obligations to mitigate interstate air 
pollution. Section III describes the specific conditions for approval 
of such SIP revisions. Section IV contains EPA's analysis of Alabama's 
SIP submittal. Section V addresses incorporation by reference. Section 
VI sets forth EPA's proposed action on the submittal. Section VII 
addresses statutory and Executive Order reviews.

II. Background on CSAPR and CSAPR-Related SIP Revisions

    EPA issued CSAPR in July 2011 and the CSAPR Update \2\ in 2016 to 
address the requirements of CAA section 110(a)(2)(D)(i)(I) concerning 
interstate transport of air pollution for specific NAAQS. As amended 
(including by the 2016 CSAPR Update), CSAPR requires 27 eastern states 
to limit their statewide emissions of sulfur dioxide (SO<INF>2</INF>) 
and/or NO<INF>X</INF> in order to mitigate transported air pollution 
unlawfully impacting other states' ability to attain or maintain four 
NAAQS: the 1997 annual PM<INF>2.5</INF> NAAQS, the 2006 24-hour 
PM<INF>2.5</INF> NAAQS, the 1997 8-hour Ozone NAAQS, and the 2008 8-
hour Ozone NAAQS. The CSAPR emissions limitations are defined in terms 
of maximum statewide ``budgets'' for emissions of annual 
SO<INF>2</INF>, annual NO<INF>X</INF>, and/or ozone season 
NO<INF>X</INF> by each covered state's large EGUs. The CSAPR state 
budgets are implemented in two phases of generally increasing 
stringency: The Phase 1 budgets apply to emissions in 2015 and 2016; 
and the Phase 2 and CSAPR Update budgets apply to emissions in 2017 and 
later years. As a mechanism for achieving compliance with the emissions 
limitations, CSAPR establishes five federal emissions trading programs: 
a program for annual NO<INF>X</INF> emissions; two geographically 
separate programs for annual SO<INF>2</INF> emissions; and two 
geographically separate programs for ozone season NO<INF>X</INF> 
emissions. CSAPR also establishes FIP requirements applicable to the 
large EGUs in each covered state.\3\ Currently, the CSAPR FIP 
provisions require each state's units to participate in up to three of 
the five CSAPR trading programs.
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    \2\ See 81 FR 74504 (October 26, 2016). The CSAPR Update was 
promulgated to address interstate pollution with respect to the 2008 
8-hour Ozone NAAQS and to address a judicial remand of certain 
original CSAPR ozone season NO<INF>X</INF> budgets promulgated with 
respect to the 1997 8-hour Ozone NAAQS. Id. at 74505. The CSAPR 
Update established new emission reduction requirements addressing 
the more recent ozone NAAQS and coordinated them with the remaining 
emission reduction requirements addressing the older NAAQS, so that 
starting in 2017, CSAPR includes two geographically separate trading 
programs for ozone season NO<INF>X</INF> emissions covering EGUs in 
a total of 23 states. See 40 CFR 52.38(b)(1)-(2).
    \3\ States are required to submit good neighbor SIPs three years 
after a NAAQS is promulgated. CAA section 110(a)(1) and (2). Where 
EPA finds that a state fails to submit a required SIP or disapproves 
a SIP, EPA is obligated to promulgate a FIP addressing the 
deficiency. CAA section 110(c). EPA found that Alabama failed to 
make timely submissions required to address the good neighbor 
provision with respect to the 1997 annual PM<INF>2.5</INF> and 8-
hour ozone NAAQS (70 FR 21147, Apr. 25, 2005), and the 2008 8-hour 
ozone NAAQS (80 FR 39961, June 13, 2015). In addition, EPA 
disapproved Alabama's SIP revision submitted to address the good 
neighbor provision with respect to the 2006 24-hour PM<INF>2.5</INF> 
NAAQS. See 76 FR 43128 (July 20, 2011). Accordingly, as a part of 
CSAPR and the CSAPR Update, EPA promulgated FIPs applicable to 
sources in Alabama addressing the good neighbor provision with 
respect to these standards.
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    CSAPR includes provisions under which states may submit and EPA 
will approve SIP revisions to modify or replace the CSAPR FIP 
requirements while allowing states to continue to meet their transport-
related obligations using either CSAPR's federal emissions trading 
programs or state emissions trading programs integrated with the 
federal programs, provided that the SIP revisions meet all relevant 
criteria.\4\ Through such a SIP revision, a state may replace EPA's 
default provisions for allocating emission allowances among the state's 
units, employing any state-selected methodology to allocate or auction 
the allowances, subject to timing conditions and limits on overall 
allowance quantities. In the case of CSAPR's federal trading programs 
for ozone season NO<INF>X</INF> emissions (or an integrated state 
trading program), a state may also expand trading program applicability 
to include certain smaller EGUs.\5\ If a state wants to replace the 
CSAPR FIP requirements with SIP requirements under which the state's 
units participate in a state trading program that is integrated with 
and identical to the federal trading program even as to the allocation 
and applicability provisions, the state may submit a SIP revision for 
that purpose as well. However, no emissions budget increases or other 
substantive changes to the trading program provisions are allowed. A 
state whose units are subject to multiple CSAPR federal trading 
programs may submit SIP revisions to modify or replace either some or 
all of those FIP requirements.
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    \4\ See 40 CFR 52.38, 52.39. States also retain the ability to 
submit SIP revisions to meet their transport-related obligations 
using mechanisms other than the CSAPR federal trading programs or 
integrated state trading programs.
    \5\ States covered by both the CSAPR Update and the 
NO<INF>X</INF> SIP Call have the additional option to expand 
applicability under the CSAPR NO<INF>X</INF> Ozone Season Group 2 
Trading Program to include non-EGUs that would have participated in 
the NO<INF>X</INF> Budget Trading Program.
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    States can submit two basic forms of CSAPR-related SIP revisions 
effective for emissions control periods in 2017 or later years.\6\ 
Specific conditions for approval of each form of SIP revision are set 
forth in the CSAPR regulations, as described in section III below. 
Under

[[Page 39072]]

the first alternative--an ``abbreviated'' SIP revision--a state may 
submit a SIP revision that upon approval replaces the default allowance 
allocation and/or applicability provisions of a CSAPR federal trading 
program for the state.\7\ Approval of an abbreviated SIP revision 
leaves the corresponding CSAPR FIP and all other provisions of the 
relevant federal trading program in place for the state's units.
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    \6\ CSAPR also provides for a third, more streamlined form of 
SIP revision that is effective only for control periods in 2016 (or 
2018 for CSAPR NO<INF>X</INF> Ozone Season Group 2 units) and is not 
relevant here. See Sec.  52.38(a)(3), (b)(3), (b)(7); Sec.  
52.39(d), (g).
    \7\ 40 CFR 52.38(a)(4), (b)(4), (b)(8); 52.39(e), (h).
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    Under the second alternative--a ``full'' SIP revision--a state may 
submit a SIP revision that upon approval replaces a CSAPR federal 
trading program for the state with a state trading program integrated 
with the federal trading program, so long as the state trading program 
is substantively identical to the federal trading program or does not 
substantively differ from the federal trading program except as 
discussed above with regard to the allowance allocation and/or 
applicability provisions.\8\ For purposes of a full SIP revision, a 
state may either adopt state rules with complete trading program 
language, incorporate the federal trading program language into its 
state rules by reference (with appropriate conforming changes), or 
employ a combination of these approaches.
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    \8\ 40 CFR 52.38(a)(5), (b)(5), (b)(9); 52.39(f), (i).
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    The CSAPR regulations identify several important consequences and 
limitations associated with approval of a full SIP revision. First, 
upon EPA's approval of a full SIP revision as correcting the deficiency 
in the state's SIP that was the basis for a particular set of CSAPR FIP 
requirements, the obligation to participate in the corresponding CSAPR 
federal trading program is automatically eliminated for units subject 
to the state's jurisdiction without the need for a separate EPA 
withdrawal action, so long as EPA's approval of the SIP revision as 
meeting the requirements of the CSAPR regulations is full and 
unconditional.\9\ Second, approval of a full SIP revision does not 
terminate the obligation to participate in the corresponding CSAPR 
federal trading program for any units located in any Indian country 
within the borders of the state, and if and when a unit is located in 
Indian country within a state's borders, EPA may modify the SIP 
approval to exclude from the SIP, and include in the surviving CSAPR 
FIP instead, certain trading program provisions that apply jointly to 
units in the state and to units in Indian country within the state's 
borders.\10\ Finally, if at the time a full SIP revision is approved 
EPA has already started recording allocations of allowances for a given 
control period to a state's units, the federal trading program 
provisions authorizing EPA to complete the process of allocating and 
recording allowances for that control period to those units will 
continue to apply, unless EPA's approval of the SIP revision provides 
otherwise.\11\
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    \9\ 40 CFR 52.38(a)(6), (b)(10)(i); 52.39(j).
    \10\ 40 CFR 52.38(a)(5)(iv)-(v), (a)(6), (b)(5)(v)-(vi), 
(b)(9)(vi)-(vii), (b)(10)(i); 52.39(f)(4)-(5), (i)(4)-(5), (j).
    \11\ 40 CFR 52.38(a)(7), (b)(11); 52.39(k).
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III. Conditions for Approval of CSAPR-Related SIP Revisions

    Each CSAPR-related abbreviated or full SIP revision must meet the 
following general submittal conditions:
    <bullet> Timeliness and completeness of SIP submittal. If a state 
wants to replace the default allowance allocation or applicability 
provisions of a CSAPR federal trading program, the complete SIP 
revision must be submitted to EPA by December 1 of the year before the 
deadlines described below for submitting allocation or auction amounts 
to EPA for the first control period for which the state wants to 
replace the default allocation and/or applicability provisions.\12\ 
This SIP submission deadline is inoperative in the case of a SIP 
revision that seeks only to replace a CSAPR FIP and federal trading 
program with a SIP and a substantively identical state trading program 
integrated with the federal trading program. The SIP submittal 
completeness criteria in section 2.1 of appendix V to 40 CFR part 51 
also apply.
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    \12\ 40 CFR 52.38(a)(4)(ii), (a)(5)(vi), (b)(4)(iii), 
(b)(5)(vii), (b)(8)(iv), (b)(9)(viii); 52.39(e)(2), (f)(6), (h)(2), 
(i)(6).
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    In addition to the general submittal conditions, a CSAPR-related 
abbreviated or full SIP seeking to address the allocation or auction of 
emission allowances must meet the following further conditions:
    <bullet> Methodology covering all allowances potentially requiring 
allocation. For each federal trading program addressed by a SIP 
revision, the SIP revision's allowance allocation or auction 
methodology must replace both the federal program's default allocations 
to existing units \13\ at 40 CFR 97.411(a), 97.511(a), 97.611(a), 
97.711(a), or 97.811(a), as applicable, and the federal trading 
program's provisions for allocating allowances from the new unit set-
aside (NUSA) for the state at 40 CFR 97.411(b)(1) and 97.412(a), 
97.511(b)(1) and 97.512(a), 97.611(b)(1) and 97.612(a), 97.711(b)(1) 
and 97.712(a), or 97.811(b)(1) and 97.812(a), as applicable.\14\ In the 
case of a state with Indian country within its borders, while the SIP 
revision may neither alter nor assume the federal program's provisions 
for administering the Indian country NUSA for the state, the SIP 
revision must include procedures addressing the disposition of any 
otherwise unallocated allowances from an Indian country NUSA that may 
be made available for allocation by the state after EPA has carried out 
the Indian country NUSA allocation procedures.\15\
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    \13\ In the context of the approval conditions for CSAPR-related 
SIP revisions, an ``existing unit'' is a unit for which EPA has 
determined default allowance allocations (which could be allocations 
of zero allowances) in the rulemakings establishing and amending 
CSAPR. A document describing EPA's default allocations to existing 
units is available at https://www.epa.gov/sites/production/files/2017-05/documents/csapr_allowance_allocations_final_rule_tsd.pdf.
    \14\ 40 CFR 52.38(a)(4)(i), (a)(5)(i), (b)(4)(ii), (b)(5)(ii), 
(b)(8)(iii), (b)(9)(iii); 52.39(e)(1), (f)(1), (h)(1), (i)(1).
    \15\ See 40 CFR 97.412(b)(10)(ii), 97.512(b)(10)(ii), 
97.612(b)(10)(ii), 97.712(b)(10)(ii), 97.812(b)(10)(ii).
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    <bullet> Assurance that total allocations will not exceed the state 
budget. For each federal trading program addressed by a SIP revision, 
the total amount of allowances auctioned or allocated for each control 
period under the SIP revision (prior to the addition by EPA of any 
unallocated allowances from any Indian country NUSA for the state) 
generally may not exceed the state's emissions budget for the control 
period less the sum of the amount of any Indian country NUSA for the 
state for the control period and any allowances already allocated to 
the state's units for the control period and recorded by EPA.\16\ Under 
its SIP revision, a state is free to not allocate allowances to some or 
all potentially affected units, to allocate or auction allowances to 
entities other than potentially affected units, or to allocate or 
auction fewer than the maximum permissible quantity of allowances and 
retire the remainder. Under the CSAPR NO<INF>X</INF> Ozone Season Group 
2 Trading Program only, additional allowances may be allocated if the 
state elects to expand applicability to non-EGUs that would have been 
subject to the NO<INF>X</INF> Budget Trading Program established for 
compliance with the NO<INF>X</INF> SIP Call.\17\
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    \16\ 40 CFR 52.38(a)(4)(i)(A), (a)(5)(i)(A), (b)(4)(ii)(A), 
(b)(5)(ii)(A), (b)(8)(iii)(A), (b)(9)(iii)(A); 52.39(e)(1)(i), 
(f)(1)(i), (h)(1)(i), (i)(1)(i).
    \17\ 40 CFR 52.38(b)(8)(iii)(A), (b)(9)(iii)(A).
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    <bullet> Timely submission of state-determined allocations to EPA. 
The SIP revision must require the state to submit

[[Page 39073]]

to EPA the amounts of any allowances allocated or auctioned to each 
unit for each control period (other than allowances initially set aside 
in the state's allocation or auction process and later allocated or 
auctioned to such units from the set-aside amount) by the following 
deadlines.\18\ Note that the submission deadlines differ for amounts 
allocated or auctioned to units considered existing units for CSAPR 
purposes and amounts allocated or auctioned to other units.
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    \18\ 40 CFR 52.38(a)(4)(i)(B)-(C), (a)(5)(i)(B)-(C), 
(b)(4)(ii)(B)-(C), (b)(5)(ii)(B)-(C), (b)(8)(iii)(B)-(C), 
(b)(9)(iii)(B)-(C); 52.39(e)(1)(ii)-(iii), (f)(1)(ii)-(iii), 
(h)(1)(ii)-(iii), (i)(1)(ii)-(iii).

CSAPR NOX Annual, CSAPR NOX Ozone Season Group 1, CSAPR SO2 Group 1, and
                   CSAPR SO2 Group 2 Trading Programs
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                                                        Deadline for
                                   Year of the      submission to EPA of
             Units                control period       allocations or
                                                      auction results
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Existing......................  2017 and 2018....  June 1, 2016.
                                2019 and 2020....  June 1, 2017.
                                2021 and 2022....  June 1, 2018.
                                2023 and later     June 1 of the fourth
                                 years.             year before the year
                                                    of the control
                                                    period.
Other.........................  All years........  July 1 of the year of
                                                    the control period.
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             CSAPR NOX Ozone Season Group 2 Trading Program
------------------------------------------------------------------------
                                                        Deadline for
                                   Year of the      submission to EPA of
             Units                control period       allocations or
                                                      auction results
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Existing......................  2019 and 2020....  June 1, 2018.
                                2021 and 2022....  June 1, 2019.
                                2023 and 2024....  June 1, 2020.
                                2025 and later     June 1 of the fourth
                                 years.             year before the year
                                                    of the control
                                                    period.
Other.........................  All years........  July 1 of the year of
                                                    the control period.
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    <bullet> No changes to allocations already submitted to EPA or 
recorded. The SIP revision must not provide for any change to the 
amounts of allowances allocated or auctioned to any unit after those 
amounts are submitted to EPA or any change to any allowance allocation 
determined and recorded by EPA under the federal trading program 
regulations.\19\
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    \19\ 40 CFR 52.38(a)(4)(i)(D), (a)(5)(i)(D), (b)(4)(ii)(D), 
(b)(5)(ii)(D), (b)(8)(iii)(D), (b)(9)(iii)(D); 52.39(e)(1)(iv), 
(f)(1)(iv), (h)(1)(iv), (i)(1)(iv).
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    <bullet> No other substantive changes to federal trading program 
provisions. The SIP revision may not substantively change any other 
trading program provisions, except in the case of a SIP revision that 
also expands program applicability as described below.\20\ Any new 
definitions adopted in the SIP revision (in addition to the federal 
trading program's definitions) may apply only for purposes of the SIP 
revision's allocation or auction provisions.\21\
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    \20\ 40 CFR 52.38(a)(4), (a)(5), (b)(4), (b)(5), (b)(8), (b)(9); 
52.39(e), (f), (h), (i).
    \21\ 40 CFR 52.38(a)(4)(i), (a)(5)(ii), (b)(4)(ii), (b)(5)(iii), 
(b)(8)(iii), (b)(9)(iv); 52.39(e)(1), (f)(2), (h)(1), (i)(2).
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    In addition to the general submittal conditions, a CSAPR-related 
abbreviated or full SIP revision seeking to expand applicability under 
the CSAPR NO<INF>X</INF> Ozone Season Group 1 or CSAPR NO<INF>X</INF> 
Ozone Season Group 2 Trading Programs (or an integrated state trading 
program) must meet the following further conditions:
    <bullet> Only electricity generating units with nameplate capacity 
of at least 15 MWe. The SIP revision may expand applicability only to 
additional fossil fuel-fired boilers or combustion turbines serving 
generators producing electricity for sale, and only by lowering the 
generator nameplate capacity threshold used to determine whether a 
particular boiler or combustion turbine serving a particular generator 
is a potentially affected unit. The nameplate capacity threshold 
adopted in the SIP revision may not be less than 15 MWe.\22\ In 
addition or alternatively, applicability under the CSAPR NO<INF>X</INF> 
Ozone Season Group 2 Trading Program may be expanded to non-EGUs that 
would have been subject to the NO<INF>X</INF> Budget Trading Program 
established for compliance with the NO<INF>X</INF> SIP Call.\23\
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    \22\ 40 CFR 52.38(b)(4)(i), (b)(5)(i), (b)(8)(i), (b)(9)(i).
    \23\ 40 CFR 52.38(b)(8)(ii), (b)(9)(ii).
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    <bullet> No other substantive changes to federal trading program 
provisions. The SIP revision may not substantively change any other 
trading program provisions, except in the case of a SIP revision that 
also addresses the allocation or auction of emission allowances as 
described above.\24\
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    \24\ 40 CFR 52.38(b)(4), (b)(5), (b)(8), (b)(9).
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    In addition to the general submittal conditions and the other 
applicable conditions described above, a CSAPR-related full SIP 
revision must meet the following further conditions:
    <bullet> Complete, substantively identical trading program 
provisions. The SIP revision must adopt complete state trading program 
regulations substantively identical to the complete federal trading 
program regulations at 40 CFR 97.402 through 97.435, 97.502 through 
97.535, 97.602 through 97.635, 97.702 through 97.735, or 97.802 through 
97.835, as applicable, except as described above in the case of a SIP 
revision that seeks to replace the default allowance allocation and/or 
applicability provisions.\25\
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    \25\ 40 CFR 52.38(a)(5), (b)(5), (b)(9); 52.39(f), (i).
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    <bullet> Only non-substantive substitutions for the term ``State.'' 
The SIP revision may substitute the name of the state for the term 
``State'' as used in the federal trading program regulations, but only 
to the extent that EPA determines that the substitutions do not 
substantively change the trading program regulations.\26\
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    \26\ 40 CFR 52.38(a)(5)(iii), (b)(5)(iv), (b)(9)(v); 
52.39(f)(3), (i)(3).
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    <bullet> Exclusion of provisions addressing units in Indian 
country. The SIP revision may not impose requirements on any unit in 
any Indian country within the state's borders and must not include the 
federal trading program provisions governing allocation of allowances 
from any Indian country NUSA for the state.\27\
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    \27\ 40 CFR 52.38(a)(5)(iv), (b)(5)(v), (b)(9)(vi); 52.39(f)(4), 
(i)(4).

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[[Page 39074]]

IV. Alabama's SIP Submittal and EPA's Analysis

A. Alabama's SIP Submittal

    In the CSAPR rulemaking, among other findings, EPA determined that 
air pollution transported from Alabama would unlawfully affect other 
states' ability to attain or maintain the 1997 8-hour Ozone NAAQS.\28\ 
In the CSAPR Update rulemaking, EPA determined that air pollution 
transported from Alabama would unlawfully affect other states' ability 
to attain or maintain the 2008 8-hour Ozone NAAQS and established an 
ozone season NO<INF>X</INF> budget for Alabama's EGUs representing a 
partial remedy for the State's interstate transport obligations with 
respect to that NAAQS; \29\ determined that Alabama's previous ozone 
season NO<INF>X</INF> budget established in the CSAPR rulemaking as a 
partial remedy for the State's interstate transport obligations with 
respect to the 1997 8-hour Ozone NAAQS now represented a full remedy 
with respect to that NAAQS; \30\ and coordinated compliance 
requirements by allowing compliance with the new CSAPR Update budget to 
serve the purpose of addressing the State's obligations with respect to 
both NAAQS.\31\ Alabama units meeting the CSAPR applicability criteria 
are consequently subject to CSAPR FIP requirements for participation in 
the CSAPR NO<INF>X</INF> Ozone Season Group 2 Trading Program in order 
to address the State's interstate transport obligations with respect to 
both the 1997 8-hour Ozone NAAQS (full remedy) and the 2008 8-hour 
Ozone NAAQS (partial remedy).\32\
---------------------------------------------------------------------------

    \28\ See 76 FR 48208, 48210, 48213 (August 8, 2011). EPA also 
determined in the CSAPR rulemaking that air pollution transported 
from Alabama would unlawfully affect other states' ability to attain 
or maintain the 1997 annual PM<INF>2.5</INF> NAAQS and the 2006 24-
hour PM<INF>2.5</INF> NAAQS. Alabama previously submitted, and EPA 
previously approved, a SIP revision that replaces the CSAPR FIPs for 
the annual trading programs in Alabama. See 81 FR 59869 (August 31, 
2016).
    \29\ CSAPR Update, 81 FR at 74507-08.
    \30\ Id. at 74525.
    \31\ Id. at 74563 n.169.
    \32\ 40 CFR 52.38(b)(2), (b)(2)(iii); 52.54(a), (b).
---------------------------------------------------------------------------

    On October 26, 2015, Alabama submitted to EPA a SIP revision 
including provisions that, if approved, would incorporate into 
Alabama's SIP state trading program regulations that would replace the 
CSAPR federal trading program regulations with regard to Alabama units' 
ozone season NO<INF>X</INF> emissions.\33\ On May 19, 2017, Alabama 
submitted to EPA a SIP revision that supersedes portions of the October 
26, 2015, submittal to reflect changes from the CSAPR Update.\34\ On 
August 4, 2017, Alabama sent a letter clarifying the State's 
interpretation concerning the allowances for the Indian country NUSA 
for Alabama. The Alabama ozone season submittals include duly adopted 
state rules at rules 335-3-8-.39 through 335-3-8-.70, which establish 
Alabama's ``TR NO<INF>X</INF> Ozone Season Group 2 Trading Program.'' 
\35\ In general, each individual rule in Alabama's CSAPR state trading 
program rules is designed to replace one individual section (or in a 
few cases two or three sections) of the corresponding federal trading 
program regulations, and the set of rules is designed to collectively 
replace all sections of the corresponding federal trading program 
regulations at subpart EEEEE of 40 CFR part 97 (i.e., 40 CFR 97.801 
through 97.835).
---------------------------------------------------------------------------

    \33\ As discussed above, the October 26, 2015 submittal also 
contained provisions related to the annual NO<INF>X</INF> and 
SO<INF>2</INF> trading programs, which EPA approved in a separate 
rulemaking. See 81 FR 59869 (August 31, 2016).
    \34\ For the purposes of this rulemaking, the October 26, 2015, 
and May 19, 2017, submittals together may also be referred to as the 
``Alabama ozone season submittals.''
    \35\ Alabama's rules use the terms ``Transport Rule'' and ``TR'' 
instead of the updated terms ``Cross-State Air Pollution Rule'' and 
``CSAPR.'' For simplicity, EPA uses the updated terms here except 
where otherwise noted.
---------------------------------------------------------------------------

    With regard to form, some of the individual rules for each Alabama 
CSAPR state trading program are set forth as full regulatory text--
notably the rules addressing program applicability, emissions budgets 
and variability limits, and allowance allocations--but most of the 
rules incorporate the corresponding federal trading program section or 
sections by reference. Several of the Alabama rules adopt cross-
references to other Alabama rules in place of cross-references to 
specific federal trading program sections that would be replaced by 
those other Alabama rules.
    With regard to substance, the rules for the Alabama CSAPR state 
ozone season trading program differ from the corresponding CSAPR 
federal trading program regulations in three main ways. First, the 
applicability provisions in the Alabama rules require participation in 
Alabama's CSAPR state trading programs only for units in Alabama, not 
for units in any other state or in Indian country within the borders of 
Alabama or any other state. Second, the Alabama rules set forth a 
methodology for allocating emission allowances among Alabama units that 
differs from the default allowance allocation provisions in the federal 
trading program regulations.\36\ Finally, the Alabama rules omit a 
number of federal trading program provisions not applicable to 
Alabama's state trading programs, including: provisions setting forth 
the amounts of emissions budgets, NUSAs, Indian country NUSAs, and 
variability limits for other states; provisions addressing EPA's 
procedures for allocating allowances from Indian country NUSAs; and 
provisions addressing EPA's recordation of certain allowance 
allocations.
---------------------------------------------------------------------------

    \36\ EPA notes that in the CSAPR Update, the allocations of 
Alabama's allowance budget to the state's units under the federal 
CSAPR NO<INF>X</INF> Ozone Season Group 2 Trading Program were 
determined using a methodology similar to the methodology in 
Alabama's October 26, 2015 SIP submittal, 81 FR at 74564.
---------------------------------------------------------------------------

    Each SIP revision was submitted to EPA by a letter from the 
Director of the Alabama Department of Environmental Management. The 
letters and enclosures describe steps taken by Alabama to provide 
public notice prior to adoption of the state rules.
    EPA has previously approved portions of Alabama's October 26, 2015, 
submittal replacing the FIPs for the CSAPR NO<INF>X</INF> Annual 
Trading Program and the CSAPR SO<INF>2</INF> Group 2 Trading Program 
for Alabama.\37\
---------------------------------------------------------------------------

    \37\ See 81 FR 59869 (August 31, 2016).
---------------------------------------------------------------------------

B. EPA's Analysis of Alabama's Submittals

    As described in section IV.A above, at this time EPA is taking 
action on the portions of Alabama's ozone season submittals designed to 
replace the federal CSAPR NO<INF>X</INF> Ozone Season Group 2 Trading 
Program. The analysis discussed in this section addresses only the 
portions of Alabama's ozone season submittals on which EPA is taking 
action at this time. For simplicity, throughout this section EPA refers 
to the portions of the submittals on which EPA is proposing to take 
action as ``the Alabama ozone season submittals'' or ``the SIP 
revisions'' without repeating the qualification that at this time EPA 
is analyzing and proposing to act on only portions of the SIP 
submittal.
1. Timeliness and Completeness of SIP Submittal
    Together, the Alabama ozone season submittals seek in part to 
replace the default allowance allocation provisions in the CSAPR 
federal trading program regulations for ozone season NO<INF>X</INF> 
emissions as applied to Alabama units with state regulations 
establishing a different state-determined methodology, starting with 
the control periods in 2019. Under 40 CFR 52.38(b)(9)(iii)(B), the 
deadline for submission of state-determined allowance allocations for 
the 2019 and 2020 control periods is June 1, 2018, which under Sec.  
52.38(b)(9)(viii) makes December 1, 2017, the deadline for submission 
to

[[Page 39075]]

EPA of a complete SIP revision establishing state-determined 
allocations for those control periods. Alabama submitted its SIP 
revisions on October 26, 2015 and May 19, 2017, and EPA has determined 
that the submittals comply with the applicable minimum completeness 
criteria in section 2.1 of appendix V to 40 CFR part 51. Because 
Alabama's SIP revisions were timely submitted and meet the applicable 
completeness criteria, they meet the conditions under 40 CFR 
52.38(b)(9)(viii) for timely submission of a complete SIP revision.
2. Methodology Covering All Allowances Potentially Requiring Allocation
    Paragraph 335-3-8-.46(1) of the Alabama rules sets forth total 
amounts of 13,211 CSAPR NO<INF>X</INF> Ozone Season Group 2 allowances 
that would be allocated to Alabama units for each control period in 
2019 and later years according to the allocation procedures set forth 
under the remaining paragraphs of Alabama rule 335-3-8-.46 (Paragraph 
335-3-8-.45(1) sets forth the same amounts as the respective state 
emissions budgets, in conjunction with the corresponding variability 
limits). These totals match the amounts of the Phase 2 emissions 
budgets for Alabama established under the federal trading program 
regulations for ozone NO<INF>X</INF> emissions, thereby addressing the 
full quantities of allowances that could be allocated to Alabama units 
under the default allocation provisions for the federal trading 
programs.\38\ In addition, Alabama's rule--through provisions that 
create an iterative process for allocating allowances--addresses the 
disposition of otherwise unallocated allowances from an Indian country 
NUSA. The allocation provisions in the Alabama rules therefore enable 
Alabama's SIP revision to meet the condition under 40 CFR 
52.38(b)(9)(iii) that the state's allocation or auction methodology 
must cover all allowances potentially requiring allocation by the 
state.
---------------------------------------------------------------------------

    \38\ 40 CFR 97.810(a)(1)(i).
---------------------------------------------------------------------------

3. Assurance That Total Allocations Will Not Exceed the State Budget
    As discussed in section IV.B.2 above, paragraph 335-3-8-.46(1) of 
the Alabama rules sets forth the total amount of CSAPR Ozone Season 
Group 2 NO<INF>X</INF> allowances to be allocated to Alabama units for 
each control period under the state trading program and this amount 
equals the amount of the ozone season NO<INF>X</INF> emissions budget 
established for Alabama units under the CSAPR federal trading program 
regulations. Although under the State's rules, Alabama will provide EPA 
with allocations for allowances equal to the total amount of the state 
budget, the State has clarified in its August 4, 2017, letter that, 
under the State's interpretation of its rules, the allocations of a 
portion of the total state budget equal to the Indian country NUSA are 
to be implemented by EPA only if and when the total quantity of 
allowances in the State's Indian country NUSA is released for state 
allocation pursuant to 40 CFR 97.812(b)(10)(ii), and if that total 
quantity of allowances is not released for state allocation, then the 
State's allocations of that portion of the budget are void.\39\ To 
clarify the separate, contingent nature of the State's allocations of 
the Indian country NUSA allowances, the State will submit its 
allocations of those allowances to the EPA as a separate set of 
allocations from the allocations of the remaining allowances in the 
state budget.\40\ EPA has not yet allocated or recorded CSAPR 
allowances for the control periods in 2019 or later years. As 
interpreted by the State, the allocation methodology in Alabama's SIP 
revision therefore meets the condition under 40 CFR 52.38(b)(9)(iii)(A) 
that the total amount of allowances allocated under the SIP revision 
(before the addition of any otherwise unallocated allowances from an 
Indian country NUSA) may not exceed the state's budget for the control 
period less the amount of the Indian country NUSA for the state and any 
allowances already allocated and recorded by EPA.
---------------------------------------------------------------------------

    \39\ August 4, 2017, Letter from R. Gore (ADEM) to B. Banister 
(EPA, Region 4), available in the docket for this action.
    \40\ Id.
---------------------------------------------------------------------------

4. Timely Submission of State-Determined Allocations to EPA
    Paragraphs 335-3-8-.46(2)(a) through (d) of the Alabama rules 
provide for all allowance allocations to Alabama units established 
under the Alabama rules to be submitted to EPA by the following 
deadlines: Allocations for the control periods in 2019 and 2020, by 
June 1, 2017; allocations for the control periods in 2021 and 2022, by 
June 1, 2018; and allocations for later control periods, by June 1 of 
the fourth or fifth year before the year of the control period. These 
submission deadlines match or precede the submission deadlines 
discussed in section III above (specifically, the deadlines under 40 
CFR 52.38(b)(9)(iii)(B) for allocations to units considered existing 
units for CSAPR purposes and the submission deadlines under Sec.  
52.38(b)(9)(iii)(C) for allocations to other units). Alabama's SIP 
revision therefore meets the conditions under 40 CFR 
52.38(b)(9)(iii)(B) and (C) requiring that the SIP revision provide for 
submission of state-determined allowance allocations to EPA by the 
deadlines specified in those provisions.
5. No Changes to Allocations Already Submitted to EPA or Recorded
    The Alabama rules include no provisions allowing alteration of 
allocations after the allocation amounts have been provided to EPA and 
no provisions allowing alteration of any allocations made and recorded 
by EPA under the federal trading program regulations, thereby meeting 
the condition under 40 CFR 52.38(b)(9)(iii)(D).
6. No Other Substantive Changes to Federal Trading Program Provisions
    With the exception of the provisions addressing the allowance 
allocation methodology discussed above, the Alabama state trading 
program rules generally incorporate sections of the corresponding 
federal trading program regulations by reference or set forth full text 
that is very similar to the text in the corresponding federal trading 
program regulations.\41\ Some of the differences between the Alabama 
rules and the corresponding federal trading program regulations are 
clearly non-substantive. For example, in instances where an Alabama 
rule contains full text substituting for the text of a section of the 
federal trading program regulations, the remaining Alabama rules adopt 
cross-references to the full-text Alabama rule in place of cross-
references to the section of the federal trading program regulations 
that would be replaced by the full-text Alabama rule. The Alabama rules 
also contain definitions for certain terms used in the State trading 
program's allocation provisions that are not used in the federal 
trading program regulations, as expressly permitted under the CSAPR 
regulations.\42\ Most of the remaining differences between the Alabama 
rules and the corresponding sections of the federal trading program 
regulations consist of non-substantive renumbering of the 
provisions.\43\
---------------------------------------------------------------------------

    \41\ The CSAPR federal regulations explicitly provide that terms 
in the federal CSAPR regulations that include ``CSAPR'' are 
considered synonymous with otherwise identical terms in approved SIP 
revisions that include ``TR'' instead of ``CSAPR''. 40 CFR 97.802 
(introductory text).
    \42\ 40 CFR 52.38(b)(9)(iv).
    \43\ Instances where Alabama's CSAPR state trading program rules 
omit provisions of the CSAPR federal trading program regulations are 
discussed in sections IV.B.7 and 9 below.
---------------------------------------------------------------------------

    In addition to the clearly non-substantive or expressly authorized

[[Page 39076]]

differences summarized above, a few of Alabama's rules contain other 
differences from the federal trading program regulations. In each case, 
EPA has determined that the changes do not represent substantive 
changes to the federal trading program regulations. First, paragraphs 
335-3-8-.40(1)(c), 335-3-8-.41(1)(a), and 335-3-8-.66(2)(a), of the 
Alabama rules require Alabama units to submit certain petitions, 
statements, and notices not only to EPA but also to the Alabama 
Department of Environmental Management. In addition, paragraph 335-3-
8-.42(e) of the Alabama rules allow the Department to extend on-site 
storage of records beyond five years. Because the additional 
notification requirements do not alter the respective authorities or 
responsibilities of EPA and the Department, EPA considers the 
requirements to be non-substantive changes.
    Second, paragraphs 335-3-8-.52(2)(a), and 335-3-8-.55(2)(a) of the 
Alabama rules provide that, like EPA, the Department will not 
adjudicate certain private legal disputes. Because the Department is 
not required to adjudicate such disputes under the federal trading 
program regulations in any event, these additions to the text of the 
state trading program rules merely clarify that the Department is not 
undertaking a new adjudication responsibility under the state trading 
programs. EPA therefore considers these additions to be non-substantive 
changes.
    Third, paragraph 335-3-8-.61 of the Alabama rule substitutes 
references to Alabama rule 335-3-8-.46(3)(i) (the Alabama rule 
addressing units incorrectly allocated allowances). Because the Alabama 
rule substitution seeks to replace 40 CFR 97.811(c) with 333-3-
8.46(3)(i), which in turn incorporates by reference 40 CFR 97.811(c), 
EPA proposes to find that the provisions are substantively identical.
    Fourth, paragraph 335-3-8-.65 of the Alabama rules substitutes 
references for Alabama rule 335-3-8-.41 (the Alabama rule covering 
retired unit exemptions). This substitution is appropriate as it 
substitutes Alabama's retired unit exemption for the CSAPR retired unit 
exemptions at 40 CFR 97.805. With the exception of the notification 
required above and changes related to identification of the state 
trading program instead of the federal trading program, Alabama has 
incorporated the text of 40 CFR 97.805 into Alabama Rule 335-3-8-.41. 
Because the referenced provisions are substantively identical, EPA 
proposes to determine that these substitutions have no substantive 
effect.
    Finally, paragraphs 335-3-8-.42(2)(a) and (b) of the Alabama rules 
substitute references to Alabama rule 335.3.16-.13(3) (the Alabama rule 
addressing minor permit modification procedures) for references to 40 
CFR 70.7(e)(2) (the minor permit modification procedures section of the 
federal regulations governing state operating permit programs under CAA 
title V) in the federal trading program regulations regarding title V 
permit requirements. As applied to Alabama units only, the substituted 
Alabama rule provisions are substantively identical to the provisions 
in 40 CFR 70.7(e)(2) that would be replaced. Because in the context of 
Alabama's CSAPR state trading programs these particular provisions need 
to address only Alabama units and not units from other states 
participating in the CSAPR trading programs, EPA proposes to determine 
that these substitutions have no substantive effect.
    For the reasons discussed above, EPA has preliminarily determined 
that none of the textual additions or substitutions made to the CSAPR 
federal trading program regulations in Alabama's corresponding CSAPR 
state trading program rules are substantive, and that Alabama's SIP 
revision therefore meets the condition under 40 CFR 52.38(b)(9) of 
making no substantive changes to the provisions of the federal trading 
program regulations beyond the provisions addressing allowance 
allocations.
7. Complete, Substantively Identical Trading Program Provisions
    With the following exceptions, the Alabama rules comprising 
Alabama's CSAPR state trading program for ozone season NOx emissions 
either incorporate by reference or adopt full-text replacements for all 
of the provisions of 40 CFR 97.802 through 97.835. The first exception 
is that Alabama rule 335-3-8-.46, which generally addresses the amount 
of emissions budget and related quantities, omits the provisions of 40 
CFR 97.810 setting forth the amounts of all emissions budgets, NUSAs, 
Indian country NUSAs, and variability limits for other states. Omission 
of the budget, NUSA, Indian country NUSA, and variability limit 
provisions for other states from state trading programs in which only 
Alabama units participate does not undermine the completeness of the 
state trading programs.
    The second exception is that Alabama rule 335-3-8-.46, generally 
addressing allowance allocations, omits 40 CFR 97.811(b)(2) and 
97.812(b), concerning EPA's administration of Indian country NUSAs. 
Omission of these provisions from Alabama's state trading program rules 
is required, as discussed in section IV.B.9 below.
    The third exception is that Alabama rule 335-3-8-.56, which 
generally incorporates by reference the federal trading programs' 
recordation schedule provisions, excludes from incorporation by 
reference 40 CFR 97.821(a), (b), (h), (i) and (j) concerning EPA's 
schedule for recording certain allowance allocations. The federal 
trading program provisions at Sec.  97.821(a) and (b), which address 
recordation of allocations to units considered existing units for CSAPR 
purposes of allowances for the compliance periods in 2017 and 2018, do 
not need to be included in Alabama's state trading program rules 
because those allocations have already been recorded. The federal 
trading program provision at Sec.  97.821(h), which address recordation 
of allocations from Indian country NUSAs, are appropriately excluded 
from state trading programs because a state may not administer an 
Indian country NUSA. The federal trading program provision at Sec.  
97.821(i) and (j), which address recordation of second-round NUSA 
allocations, are not needed in Alabama's state trading program rules 
because Alabama would provide EPA the amounts of its NUSA allocations 
on the earlier schedule applicable to allocations to units considered 
existing units for CSAPR purposes.\44\ Omission of these provisions 
from Alabama's state trading programs therefore does not undermine the 
completeness of the state trading programs.
---------------------------------------------------------------------------

    \44\ For the same reason, Alabama's state rules could 
permissibly omit 40 CFR 97.821(g), which address recordation of 
first-round NUSA allocations. Note that notwithstanding the lack of 
provisions addressing recordation of NUSA allocations in Alabama's 
state trading program rules, EPA would retain authority to complete 
the recordation of 2017 NUSA allocations to Alabama units because 
EPA has already started recording allocations to Alabama units of 
allowances for the compliance periods in 2017. See 40 CFR 
52.38(b)(11)(i).
---------------------------------------------------------------------------

    Because none of the omissions undermines the completeness of 
Alabama's state trading programs and because, as discussed in section 
IV.B.6 above, EPA has preliminarily determined that Alabama's SIP 
revision makes no other substantive changes to the provisions of the 
federal trading program regulations beyond the provisions addressing 
allowance allocations, Alabama's SIP revision meets the condition under 
40 CFR 52.38(b)(9) that the SIP revision must adopt complete state 
trading program regulations substantively identical to the complete 
federal trading program regulations at 40 CFR 97.802 through

[[Page 39077]]

97.835, except for permissible differences in allowance allocation and/
or applicability provisions.
8. Only Non-Substantive Substitutions for the Term ``State''
    Paragraph 335-3-8-.40(1)(a)1 of the Alabama rules substitute the 
term ``the State of Alabama,'' and paragraph 335-3-8-.40(1)(b) of the 
Alabama rules similarly substitute the term ``the State'' (meaning 
Alabama), for the phrase ``a State (or Indian country within the 
borders of such State)'' in the corresponding federal trading program 
regulations at 40 CFR 97.810(a)(1) and (b). These provisions of the 
Alabama rules define the units that are required to participate in 
Alabama's CSAPR state trading programs. The substitutions appropriately 
exclude units located in other states and units located in Indian 
country within the borders of Alabama or any other state, thereby 
limiting the applicability of Alabama's state trading programs to units 
that are subject to Alabama's jurisdiction. These substitutions do not 
substantively change the provisions of CSAPR's federal trading program 
regulations. The remaining Alabama rules do not substitute for the term 
``State'' as used in the federal trading program regulations. EPA 
proposes to find that Alabama's SIP revision therefore meets the 
condition under 40 CFR 52.38(b)(9)(v) that the SIP revision may 
substitute the name of the state for the term ``State'' as used in the 
federal trading program regulations, but only to the extent that EPA 
determines that the substitutions do not substantively change the 
provisions of the federal trading program regulations.
9. Exclusion of Provisions Addressing Units in Indian Country
    The Alabama rules do not set forth any full text provisions 
directly addressing units in Indian country within the state's borders. 
As discussed in section IV.B.8 above, paragraph 335-3-8-.40(1)(a)1 of 
the Alabama rule define the units required to participate in Alabama's 
state trading programs in a manner that appropriately excludes units 
located in Indian country within Alabama's borders from coverage under 
Alabama's CSAPR state trading programs. Although various other 
provisions of the CSAPR federal trading program regulations 
incorporated by reference into the Alabama rules without modification 
refer to units in Indian country, the clear exclusion of any such units 
from coverage under the state trading program applicability 
provisions--in other words, the fact that such units are not ``TR NOx 
Ozone Season Group 2 units'' for purposes of the state trading 
program--renders the remaining provisions of Alabama's state trading 
program rules inoperative as to the units. EPA therefore interprets the 
Alabama rules as not imposing any requirements on units located in 
Indian country within the State's borders.
    As discussed in section IV.B.7 above, Alabama rule 335-3-8-.46, 
which addresses allowance allocations under the state trading programs, 
contains no provisions replacing 40 CFR 97.811(b)(2) or 97.812(b), the 
portions of the federal trading program regulations governing 
allocations of allowances from Indian country NUSAs. Thus, the Alabama 
rules do not include any express state rule provisions concerning 
administration of Indian country NUSAs. Further, Alabama rules 335-3-
8-.56, which generally incorporate by reference the federal trading 
programs' recordation schedule provisions, excludes 40 CFR 97.821(h), 
addressing recordation of Indian country NUSA allocations. Similarly, 
paragraph 335-3-8-.46(3)(i) of the Alabama rules, which incorporates by 
reference the federal trading program regulations generally addressing 
corrections of incorrect allocations, excludes 40 CFR 
97.811(c)(5)(iii), addressing corrections of certain incorrect Indian 
country NUSA allocations. EPA therefore interprets the Alabama state 
rules as sufficiently excluding provisions addressing administration of 
the Indian country NUSA provisions under the federal trading programs.
    In summary, EPA has preliminarily determined that Alabama's SIP 
revision adequately meets the condition under 40 CFR 52.38(b)(9)(vi) 
that a SIP submittal must not impose any requirement on any unit in 
Indian country within the borders of the State and must exclude certain 
provisions related to administration of Indian country NUSAs.

V. Incorporation by Reference

    In this rule, EPA is proposing to include in a final EPA rule 
regulatory text that includes incorporation by reference. In accordance 
with requirements of 1 CFR 51.5, EPA is proposing to incorporate by 
reference ADEM Administrative Code rules 335-3-8-.39 through 335-3-
8-.70, state effective on June 9, 2017, comprising Alabama's TR 
NO<INF>X</INF> Ozone Season Trading Program. EPA has made, and will 
continue to make, these materials generally available through 
www.regulations.gov and/or at the EPA Region 4 office (please contact 
the person identified in the FOR FURTHER INFORMATION CONTACT section of 
this preamble for more information).

VI. EPA's Proposed Action on Alabama's Submittal

    EPA is proposing to approve the portions the Alabama ozone season 
submittals concerning the establishment for Alabama units of CSAPR 
state trading programs for ozone season NO<INF>X</INF> emissions for 
compliance periods in 2019 and later years. The proposed revision would 
adopt into the SIP the state trading program rules codified in ADEM 
Administrative Code rules 335-3-8-.39 through 335-3-8-.70 (establishing 
Alabama's ``TR NO<INF>X</INF> Ozone Group 2 Trading Program''), as 
interpreted by the State in the August 5, 2017, clarification 
letter.\45\ This Alabama CSAPR state trading program would be 
integrated with the federal CSAPR NO<INF>X</INF> Ozone Season Group 2 
Trading Program and would be substantively identical to the federal 
trading program except with regard to the allowance allocation 
provisions. If EPA approves these portions of the SIP revisions, 
Alabama units would generally be required to meet requirements under 
Alabama's CSAPR state trading program equivalent to the requirements 
the units otherwise would have been required to meet under the 
corresponding CSAPR federal trading program, but allocations to Alabama 
units of CSAPR NO<INF>X</INF> Ozone Season Group 2 allowances for 
compliance periods in 2019 and later years would be determined 
according to the SIP's allocation provisions at Alabama rule 335-3-
8-.46 instead of EPA's default allocation provisions at 40 CFR 
97.811(a), 97.811(b)(1), and 97.812(a). EPA is proposing to approve 
these portions of the SIP revisions because, as clarified by the 
State's August 4, 2017, letter, they meet the requirements of the CAA 
and EPA's regulations for approval of a CSAPR full SIP revision 
replacing a federal trading program with a state trading program that 
is integrated with and substantively identical to the federal trading 
program except for permissible differences with respect to emission 
allowance allocation provisions, as discussed in section IV above.
---------------------------------------------------------------------------

    \45\ The Alabama rules use the terms ``Transport Rule'' and 
``TR'' instead of the updated terms ``Cross-State Air Pollution 
Rule'' and ``CSAPR,'' which is permissible under the CSAPR Update. 
81 FR at 74579.
---------------------------------------------------------------------------

    EPA promulgated the FIP provisions requiring Alabama units to 
participate in the federal CSAPR NO<INF>X</INF> Ozone Season Group 2 
Trading Program in order to address Alabama's obligations under CAA 
section 110(a)(2)(D)(i)(I)

[[Page 39078]]

with respect to the 1997 8-hour Ozone NAAQS and the 2008 8-hour Ozone 
NAAQS in the absence of SIP provisions addressing those requirements. 
Under the CSAPR regulations, upon EPA's full and unconditional approval 
of a SIP revision as correcting the SIP's deficiency that is the basis 
for a particular CSAPR FIP, the obligation to participate in the 
corresponding CSAPR federal trading program is automatically eliminated 
for units subject to the state's jurisdiction (but not for any units 
located in any Indian country within the state's borders).\46\ Approval 
of the portions of Alabama's SIP submittal adopting CSAPR state trading 
program rules for ozone season NO<INF>X</INF> substantively identical 
to the corresponding CSAPR federal trading program regulations (or 
differing only with respect to the allowance allocation methodology) 
would satisfy Alabama's obligation pursuant to CAA section 
110(a)(2)(D)(i)(I) to prohibit emissions which will significantly 
contribute to nonattainment or interfere with maintenance of the 1997 
8-hour Ozone NAAQS in any other state. This proposed approval would 
also partially satisfy Alabama's obligation pursuant to CAA section 
110(a)(2)(D)(i)(I) to prohibit emissions which will significantly 
contribute to nonattainment or interfere with maintenance of the 2008 
8-hour Ozone NAAQS in any other state. Thus, the proposed approval 
would correct the same deficiency in the SIP that otherwise would be 
corrected by those CSAPR FIPs. The proposed approval of the portions of 
Alabama's SIP submittal establishing CSAPR state trading program rules 
for ozone season NO<INF>X</INF> emissions therefore would result in 
automatic termination of the obligations of Alabama units to 
participate in the federal CSAPR NO<INF>X</INF> Ozone Season Group 2 
Trading Program.
---------------------------------------------------------------------------

    \46\ 40 CFR 52.38(b)(10); see also 40 CFR 52.54(b)(1) & (2).
---------------------------------------------------------------------------

VII. Statutory and Executive Order Reviews

    Under the CAA, the Administrator is required to approve a SIP 
submission that complies with the provisions of the Act and applicable 
federal regulations. See 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in 
reviewing SIP submissions, EPA's role is to approve state choices, 
provided that they meet the criteria of the CAA. Accordingly, this 
proposed action merely approves state law as meeting federal 
requirements and does not impose additional requirements beyond those 
imposed by state law. For that reason, this proposed action:
    <bullet> Is not a significant regulatory action subject to review 
by the Office of Management and Budget under Executive Orders 12866 (58 
FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21, 2011);
    <bullet> does not impose an information collection burden under the 
provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);
    <bullet> is certified as not having a significant economic impact 
on a substantial number of small entities under the Regulatory 
Flexibility Act (5 U.S.C. 601 et seq.);
    <bullet> 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);
    <bullet> does not have Federalism implications as specified in 
Executive Order 13132 (64 FR 43255, August 10, 1999);
    <bullet> is not an economically significant regulatory action based 
on health or safety risks subject to Executive Order 13045 (62 FR 
19885, April 23, 1997);
    <bullet> is not a significant regulatory action subject to 
Executive Order 13211 (66 FR 28355, May 22, 2001);
    <bullet> is not subject to requirements of Section 12(d) of the 
National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 
note) because application of those requirements would be inconsistent 
with the CAA; and
    <bullet> does not provide EPA with the discretionary authority to 
address, as appropriate, disproportionate human health or environmental 
effects, using practicable and legally permissible methods, under 
Executive Order 12898 (59 FR 7629, February 16, 1994).
    The SIP is not approved to apply on any Indian reservation land or 
in any other area where EPA or an Indian tribe has demonstrated that a 
tribe has jurisdiction. In those areas of Indian country, the rule does 
not have tribal implications as specified by Executive Order 13175 (65 
FR 67249, November 9, 2000), nor will it impose substantial direct 
costs on tribal governments or preempt tribal law.

List of Subjects in 40 CFR Part 52

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

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

    Dated: August 7, 2017.
V. Anne Heard,
Acting Regional Administrator, Region 4.
[FR Doc. 2017-17341 Filed 8-16-17; 8:45 am]
 BILLING CODE 6560-50-P


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