Document ID: EPA_FRDOC_0001-20106
Agency: epa
Document Type: Proposed Rule
Title: Allocations of Cross-State Air Pollution Rule Allowances From New Unit Set-Asides for 2016 Control Periods
Posted Date: 2016-12-09T05:00Z

[Federal Register Volume 81, Number 237 (Friday, December 9, 2016)]
[Proposed Rules]
[Pages 89035-89036]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-29441]

[[Page 89035]]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 97

[FRL-9956-22-OAR]

Allocations of Cross-State Air Pollution Rule Allowances From New 
Unit Set-Asides for 2016 Control Periods

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of data availability (NODA).

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SUMMARY: The Environmental Protection Agency (EPA) is providing notice 
of the availability of preliminary lists of units eligible for 
allocations of emission allowances under the Cross-State Air Pollution 
Rule (CSAPR). Under the CSAPR federal implementation plans (FIPs), 
portions of each covered state's annual emissions budgets for each of 
the CSAPR emissions trading programs are reserved for allocation to 
electricity generating units that commenced commercial operation on or 
after a certain date (new units) and certain other units not otherwise 
obtaining allowance allocations under the FIPs. The quantities of 
allowances allocated to eligible units from each new unit set-aside 
(NUSA) under the FIPs are calculated in an annual one- or two-round 
allocation process. EPA previously completed the first round of NUSA 
allowance allocations for the 2016 control periods for all the CSAPR 
trading programs, as well as the second round of allocations for the 
CSAPR NOX Ozone Season Trading Program, and is now making 
available preliminary lists of units eligible for allocations in the 
second round of the NUSA allocation process for the CSAPR 
NOX Annual, SO2 Group 1, and SO2 Group 
2 Trading Programs. EPA has posted spreadsheets containing the 
preliminary lists on EPA's Web site. EPA will consider timely 
objections to the lists of eligible units contained in the spreadsheets 
and will promulgate a document responding to any such objections no 
later than February 15, 2017, the deadline for recording the second-
round allocations of CSAPR NOX Annual, SO2 Group 
1, and SO2 Group 2 allowances in sources' compliance 
accounts. This document may concern CSAPR-affected units in the 
following states: Alabama, Georgia, Illinois, Indiana, Iowa, Kansas, 
Kentucky, Maryland, Michigan, Minnesota, Missouri, Nebraska, New 
Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, 
Tennessee, Texas, Virginia, West Virginia, and Wisconsin.

DATES: Objections to the information referenced in this document must 
be received on or before January 9, 2017.

ADDRESSES: Submit your objections via email to CSAPR_NUSA@epa.gov. 
Include ``2016 NUSA allocations'' in the email subject line and include 
your name, title, affiliation, address, phone number, and email address 
in the body of the email.

FOR FURTHER INFORMATION CONTACT: Questions concerning this action 
should be addressed to Robert Miller at (202) 343-9077 or 
miller.robertL@epa.gov or Kenon Smith at (202) 343-9164 or 
smith.kenon@epa.gov.

SUPPLEMENTARY INFORMATION: Under the CSAPR FIPs, the mechanisms by 
which initial allocations of emission allowances are determined differ 
for ``existing'' and ``new'' units. For ``existing'' units--that is, 
units commencing commercial operation before January 1, 2010 for 
purposes of the original four \1\ CSAPR trading programs--the specific 
amounts of CSAPR FIP allowance allocations for all control periods have 
been established through rulemaking. EPA has announced the availability 
of spreadsheets showing the CSAPR FIP allowance allocations to existing 
units in previous document.\2\
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    \1\ In the recently finalized Cross-State Air Pollution Rule 
Update for the 2008 Ozone NAAQS (CSAPR Update Rule), 81 FR 74504 
(October 26, 2016), EPA is establishing new or modified FIP 
requirements for EGUs in 22 states to address transported pollution 
with regard to the 2008 ozone NAAQS, including requirements to 
participate in a new fifth CSAPR trading program--the CSAPR 
NOX Ozone Season Group 2 Trading Program--for emissions 
occurring in 2017 and later years. In the same rule, EPA is also 
withdrawing the FIP provisions requiring EGUs in 24 states to 
participate in the existing trading program addressing transported 
pollution with regard to the 1997 ozone NAAQS for emissions 
occurring after 2016. (When the CSAPR Update rule takes effect in 
December 2016, the existing ozone season program will be renamed the 
CSAPR NOX Ozone Season Group 1 Trading Program.) The 2016 
allowance allocations described in this document concern the CSAPR 
annual trading programs and are not affected by the CSAPR Update 
Rule.
    \2\ The latest spreadsheet of CSAPR FIP allowance allocations to 
existing units covered by CSAPR NOX Annual, 
SO2 Group 1, and SO2 Group 2 Trading Programs, 
updated in 2014 to reflect changes to CSAPR's implementation 
schedule but with allocation amounts unchanged since June 2012, is 
available at https://www.epa.gov/csapr/date-change-affirmation-rules-cross-state-air-pollution-rule-csapr under the ``Notice of 
Data Availability'' header. See Availability of Data on Allocations 
of Cross-State Air Pollution Rule Allowances to Existing Electricity 
Generating Units, 79 FR 71674 (December 3, 2014).
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    ``New'' units--that is, units commencing commercial operation on or 
after January 1, 2010 for purposes of the original four CSAPR trading 
programs--as well as certain older units that would not otherwise 
obtain FIP allowance allocations do not have pre-established allowance 
allocations. Instead, the CSAPR FIPs reserve a portion of each state's 
total annual emissions budget for each CSAPR emissions trading program 
as a new unit set-aside (NUSA) \3\ and establish an annual process for 
allocating NUSA allowances to eligible units. States with Indian 
country within their borders have separate Indian country NUSAs. The 
annual process for allocating allowances from the NUSAs and Indian 
country NUSAs to eligible units is set forth in the CSAPR regulations 
at 40 CFR 97.411(b) and 97.412 (NOX Annual Trading Program), 
97.511(b) and 97.512 (NOX Ozone Season Trading Program), 
97.611(b) and 97.612 (SO2 Group 1 Trading Program), and 
97.711(b) and 97.712 (SO2 Group 2 Trading Program). Each 
NUSA allowance allocation process involves up to two rounds of 
allocations to new units followed by the allocation to existing units 
of any allowances not allocated to new units. EPA provides public 
notice at certain points in the process.
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    \3\ The NUSA amounts range from two percent to eight percent of 
the respective state budgets. The variation in percentages reflects 
differences among states in the quantities of emission allowances 
projected to be required by known new units at the time the budgets 
were set or amended.
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    EPA has already completed the first round of allocations of 2016 
NUSA allowances for all the CSAPR trading programs, as well as the 
second round of 2016 NUSA allocations to units subject to the CSAPR 
Ozone Season Trading Program, as announced in documents previously 
published in the Federal Register.\4\ The first and second-round NUSA 
allocation process was discussed in those previous documents. This 
document concerns the second round of NUSA allowance allocations for 
the CSAPR NOx Annual, SO2 Group 1, and SO2 Group 
2 Trading Programs for the 2016 control period.\5\
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    \4\ 81 FR 33636 (May 27, 2016); 81 FR 50630 (August 2, 2016); 81 
FR 63156 (September 14, 2016); 81 FR 80593 (November 16, 2016).
    \5\ At this time, EPA is not aware of any unit eligible for a 
second-round allocation from any Indian country NUSA.
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    The units eligible to receive second-round NUSA allocations for the 
CSAPR NOX Annual, SO2 Group 1, and SO2 
Group 2 Trading Programs are defined in Sec. Sec.  97.411(b)(1)(iii) 
and 97.412(a)(9)(i), 97.611(b)(1)(iii) and 97.612(a)(9)(i), and 
97.711(b)(1)(iii) and 97.712(a)(9)(i), respectively. Generally, 
eligible units include any CSAPR-affected unit that commenced 
commercial operation between January 1 of the year before the control 
period in question and November 30 of the year of the control period in 
question. In the case of the

[[Page 89036]]

2016 control period, an eligible unit therefore must have commenced 
commercial operation between January 1, 2015 and November 30, 2016 
(inclusive).
    The total quantity of allowances to be allocated through the 2016 
NUSA allowance allocation process for each state and emissions trading 
program--in the two rounds of the allocation process combined--is 
generally the state's 2016 emissions budget less the sum of (1) the 
total of the 2016 CSAPR FIP allowance allocations to existing units and 
(2) the amount of the 2016 Indian country NUSA, if any.\6\ The amounts 
of CSAPR NOX Annual, SO2 Group 1, and 
SO2 Group 2 NUSA allowances may be increased in certain 
circumstances as set forth in Sec. Sec.  97.412(a)(2), 97.612(a)(2), 
and 97.712(a)(2), respectively.
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    \6\ The quantities of allowances to be allocated through the 
NUSA allowance allocation process may differ slightly from the NUSA 
amounts set forth in Sec. Sec.  97.410(a), 97.510(a), 97.610(a), and 
97.710(a) because of rounding in the spreadsheet of CSAPR FIP 
allowance allocations to existing units.
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    Second-round NUSA allocations for a given state, trading program, 
and control period are made only if the NUSA contains allowances after 
completion of the first-round allocations.
    The amounts of second-round allocations of CSAPR NOX 
Annual, SO2 Group 1, and SO2 Group 2 allowances 
to eligible new units from each NUSA are calculated according to the 
procedures set forth in Sec. Sec.  97.412(a)(9), (10) and (12), 
97.612(a)(9), (10), and (12), and 97.712(a)(9), (10), and (12), 
respectively. Generally, the procedures call for each eligible unit to 
receive a second-round 2016 NUSA allocation equal to the positive 
difference, if any, between its emissions during the 2016 annual 
control periods (i.e., January 1, 2016 through December 31, 2016) as 
reported under 40 CFR part 75 and any first-round allocation the unit 
received, unless the total of such allocations to all eligible units 
would exceed the amount of allowances in the NUSA, in which case the 
allocations are reduced on a pro-rata basis.
    Any allowances remaining in the CSAPR NOX Annual, 
SO2 Group 1, or SO2 Group 2 NUSA for a given 
state and control period after the second round of NUSA allocations to 
new units will be allocated to the existing units in the state 
according to the procedures set forth in Sec. Sec.  97.412(a)(10) and 
(12), 97.612(a)(10) and (12), and 97.712(a)(10) and (12), respectively.
    EPA notes that an allocation or lack of allocation of allowances to 
a given EGU does not constitute a determination that CSAPR does or does 
not apply to the EGU. EPA also notes that allocations are subject to 
potential correction if a unit to which NUSA allowances have been 
allocated for a given control period is not actually an affected unit 
as of the start of that control period.\7\
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    \7\ See 40 CFR 97.411(c), 97.611(c), and 97.711(c).
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    The preliminary lists of units eligible for second-round 2016 NUSA 
allowance allocations for the three CSAPR annual trading programs are 
set forth in Excel spreadsheets titled 
``CSAPR_NUSA_2016_NOX_Annual_2nd_Round_Prelim_Data,'' 
``CSAPR_NUSA_2016_SO2_Group_1_2nd_Round_Prelim_Data,'' and 
``CSAPR_NUSA_2016_SO2_Group_2_2nd_Round_Prelim_Data'' 
available on EPA's Web site at https://www.epa.gov/csapr/csapr-compliance-year-2016-nusa-nodas. Each spreadsheet contains a separate 
worksheet for each state covered by that program showing each unit 
preliminarily identified as eligible for a second-round NUSA 
allocation.
    Each state worksheet also contains a summary showing (1) the 
quantity of allowances initially available in that state's 2016 NUSA, 
(2) the sum of the 2016 NUSA allowance allocations that were made in 
the first-round to new units in that state (if any), and (3) the 
quantity of allowances in the 2016 NUSA available for distribution in 
second-round allocations to new units (or ultimately for allocation to 
existing units).
    Objections should be strictly limited to whether EPA has correctly 
identified the new units eligible for second-round 2016 NUSA 
allocations of CSAPR NOX Annual, SO2 Group 1, and 
SO2 Group 2 allowances according to the criteria described 
above and should be emailed to the address identified in ADDRESSES. 
Objections must include: (1) Precise identification of the specific 
data the commenter believes are inaccurate, (2) new proposed data upon 
which the commenter believes EPA should rely instead, and (3) the 
reasons why EPA should rely on the commenter's proposed data and not 
the data referenced in this document.

    Authority: 40 CFR 97.411(b), 97.611(b), and 97.711(b).

    Dated: December 1, 2016.
Reid P. Harvey,
Director, Clean Air Markets Division, Office of Atmospheric Programs, 
Office of Air and Radiation.
[FR Doc. 2016-29441 Filed 12-8-16; 8:45 am]
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