Document ID: EPA-R05-OAR-2009-0368-0002
Agency: epa
Document Type: Rule
Title: Direct Final Approval of Amendments to Ohio CAIR Rules
Posted Date: 2009-09-25T21:42:59Z

[Federal Register: September 25, 2009 (Volume 74, Number 185)]
[Rules and Regulations]               
[Page 48857-48863]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr25se09-12]                         

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R05-OAR-2009-0368; FRL-8950-9]

 
Approval and Promulgation of Air Quality Implementation Plans; 
Ohio; Clean Air Interstate Rule

AGENCY: Environmental Protection Agency (EPA).

ACTION: Direct final rule.

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SUMMARY: EPA is approving a revision to the Ohio State Implementation 
Plan (SIP) that would address the requirements of EPA's Clean Air 
Interstate Rule (CAIR). EPA previously approved an ``abbreviated SIP'' 
for Ohio, primarily consisting of rules governing allocation of 
allowances to electric generating units (EGUs) for use in the trading 
programs established pursuant to CAIR and providing for voluntary opt-
in to these programs. The abbreviated SIP was implemented in 
conjunction with a Federal Implementation Plan (FIP) that specified 
requirements for emissions monitoring, permit provisions, and other 
elements of the CAIR programs. EPA is now approving the addition of 
non-EGUs to the CAIR Nitrogen Oxides (NOX) Ozone Season 
Trading Program, and EPA is issuing a ``full SIP'' approval under which 
the various CAIR implementation provisions would be governed by State 
rules rather than FIP rules. This rulemaking addresses rules Ohio 
submitted on July 15, 2009, and August 13, 2009. This action also 
causes the CAIR Federal Implementation Plans (CAIR FIPs) concerning 
sulfur dioxides (SO2), NOX annual, and 
NOX ozone season emissions by Ohio sources to be 
automatically withdrawn.

DATES: This direct final rule will be effective November 24, 2009, 
unless EPA receives adverse comments by October 26, 2009. If adverse 
comments are received, EPA will publish a timely withdrawal of the 
direct final rule in the Federal Register informing the public that the 
rule will not take effect.

ADDRESSES: Submit your comments, identified by Docket ID Number EPA-
R05-OAR-2009-0368 by one of the following methods:
    1. http://www.regulations.gov: Follow the on-line instructions for 
submitting comments.
    2. E-mail: mooney.john@epa.gov.
    3. Fax: (312) 692-2551.
    4. Mail: John M. Mooney, Chief, Criteria Pollutant Section, Air 
Programs Branch (AR-18J), U.S. Environmental Protection Agency, 77 West 
Jackson Boulevard, Chicago, Illinois 60604.
    5. Hand Delivery: John M. Mooney, Chief, Criteria Pollutant 
Section, Air Programs Branch (AR-18J), U.S. Environmental Protection 
Agency, 77 West Jackson Boulevard, Chicago, Illinois 60604. Such 
deliveries are only accepted during the Regional Office normal hours of 
operation, and special arrangements should be made for deliveries of 
boxed information. The Regional Office official hours of business are 
Monday through Friday, 8:30 a.m. to 4:30 p.m., excluding Federal 
holidays.
    Instructions: Direct your comments to Docket ID No. EPA-R05-OAR-
2009-0368. EPA's policy is that all comments received will be included 
in the public docket without change, and may be made available online 
at http://www.regulations.gov, including any personal information 
provided, unless the comment includes information claimed to be 
Confidential Business Information (CBI) or other information whose 
disclosure is restricted by statute. Do not submit information that you 
consider to be CBI or otherwise protected through http://
www.regulations.gov or e-mail.
    The http://www.regulations.gov Web site is an ``anonymous access'' 
system, which means EPA will not know your identity or contact 
information unless you provide it in the body of your comment. If you 
send an e-mail comment directly to EPA without going through http://
www.regulations.gov, your e-mail address will be automatically captured 
and included as part of the comment that is placed in the public docket 
and made available on the Internet. If you submit an electronic 
comment, EPA recommends that you include your name and other contact 
information in the body of your comment and with any disk or CD-ROM you 
submit. If EPA cannot read your comment due to technical difficulties 
and cannot contact you for clarification, EPA may not be able to 
consider your comment. Electronic files should avoid the use of special 
characters and any form of encryption and should be free of any defects 
or viruses.
    Docket: All documents in the electronic docket are listed in the 
http://www.regulations.gov index. Although listed in the index, some 
information is not publicly available, i.e., 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 in http://
www.regulations.gov or in hard copy during normal business hours at the 
Air and Radiation Division, U.S. Environmental Protection Agency, 
Region 5, 77 West Jackson Boulevard, Chicago, IL 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 telephone John Summerhays, 
Environmental Scientist, at (312) 886-6067, before visiting the Region 
5 office.

FOR FURTHER INFORMATION CONTACT: John Summerhays, (312) 886-6067, or by 
e-mail at summerhays.john@epa.gov.

SUPPLEMENTARY INFORMATION:

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. History of Ohio's CAIR Submittals
VI. Analysis of Ohio's CAIR SIP Submittal
    A. Elements of Ohio's Submittal
    B. State Budgets for Allowance Allocations
    C. CAIR Cap-and-Trade Programs
    D. Applicability Provisions
    E. NOX Allowance Allocations
    F. Allocation of NOX Allowances From Compliance 
Supplement Pool
    G. Individual Opt-In Units
VII. Final Action
VIII. Statutory and Executive Order Reviews

I. What Action Is EPA Taking?

    EPA is approving a ``full SIP'' revision addressing CAIR in Ohio. 
In this action, EPA is approving the entire set of rules in Ohio 
Administrative Code (OAC) Chapter 3745-109, entitled ``Clean Air 
Interstate Rule.'' Ohio submitted these rules in two parts: A submittal 
dated July 15, 2009, provided rules that were to become effective July 
16, 2009, and a submittal dated August 13, 2009, provided rules that 
had become effective on September 27, 2007.
    On February 1, 2008, at 73 FR 6034, EPA approved an ``abbreviated 
SIP,'' primarily consisting of rules governing allocation of 
NOX allowances to EGUs for use in the trading programs 
established pursuant to CAIR and rules

[[Page 48858]]

allowing sources to opt into the CAIR programs. The abbreviated SIP was 
implemented in conjunction with a FIP that specified requirements for 
emissions monitoring, permit provisions, and other elements of the CAIR 
programs. EPA is now approving the addition of non-EGUs to the CAIR 
NOX Ozone Season Trading Program, and EPA is issuing ``full 
SIP'' approval under which the various CAIR implementation provisions 
will be governed by State rules rather than FIP rules. EPA finds that 
Ohio's rules meet the applicable CAIR requirements by requiring certain 
EGUs to participate in the EPA-administered CAIR cap-and-trade programs 
addressing SO2, NOX annual, and NOX 
ozone season emissions, and by requiring certain non-EGUs to 
participate in the program for NOX ozone season emissions.

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

    EPA published CAIR on May 12, 2005 (70 FR 25162). In adopting this 
rule, EPA determined that 28 States and the District of Columbia 
contribute significantly to nonattainment and interfere with 
maintenance of the NAAQS for fine particles (PM2.5) 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 SO2, which 
is a precursor to PM2.5 formation, and/or NOX, 
which is a precursor to both ozone and PM2.5 formation. For 
jurisdictions that contribute significantly to downwind 
PM2.5 nonattainment, CAIR sets annual State-wide emission 
reduction requirements (i.e., budgets) for SO2 and annual 
State-wide emission reduction requirements for NOX. 
Similarly, for jurisdictions that contribute significantly to 8-hour 
ozone nonattainment, CAIR sets State-wide emission reduction 
requirements or budgets for NOX for the ozone season (May 
1st to September 30th). Under CAIR, States may implement these 
reduction requirements 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 
with regard to interstate transport with respect to the 8-hour ozone 
and PM2.5 NAAQS. EPA made national findings, effective on 
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 PM2.5 
NAAQS. These findings started a 2-year clock for EPA to promulgate a 
FIP to address the requirements of section 110(a)(2)(D). Under Clean 
Air Act 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. The CAIR FIPs require EGUs to participate in the 
EPA-administered CAIR trading programs for SO2, 
NOX annual, and NOX ozone emissions, as 
appropriate. These CAIR FIP trading programs impose essentially the 
same requirements as, and are integrated with, the respective CAIR SIP 
trading programs. The integration of the FIP and SIP trading programs 
means that these trading programs will work together to create 
effectively a single trading program for each regulated pollutant 
(SO2, NOX annual, and NOX ozone 
season) in all States covered by the CAIR FIP or SIP trading program 
for that pollutant. Further, as provided in a rule published by EPA on 
November 2, 2007, at 72 FR 59190, a State's CAIR FIPs are automatically 
withdrawn when EPA approves a SIP revision, in its entirety and without 
any conditions, as fully meeting the requirements of CAIR. Where only 
portions of the SIP revision are approved, the corresponding portions 
of the FIPs are automatically withdrawn and the remaining portions of 
the FIP stay in place. Finally, the CAIR FIPs also allow States to 
submit abbreviated SIP revisions that, if approved by EPA, will 
automatically replace or supplement certain CAIR FIP provisions (e.g., 
the methodology for allocating NOX allowances to sources in 
the State), while the CAIR FIP remains in place for all other 
provisions.
    On April 28, 2006, EPA published two additional CAIR-related final 
rules that added the States of Delaware and New Jersey to the list of 
States subject to CAIR for PM2.5 and announced EPA's final 
decisions on reconsideration of five issues, without making any 
substantive changes to the CAIR requirements.
    On October 19, 2007, at 72 FR 59190, EPA amended CAIR and the CAIR 
FIPs to clarify the definition of ``cogeneration unit'' and thus the 
applicability of the CAIR trading program to cogeneration units. Ohio 
has amended its rules to incorporate a clarified definition, a change 
that EPA is approving in this action.
    EPA was sued by a number of parties on various aspects of CAIR, and 
on July 11, 2008, the U.S. Court of Appeals for the District of 
Columbia Circuit issued its decision to vacate and remand both CAIR and 
the associated CAIR FIPs in their entirety. North Carolina v. EPA, 531 
F.3d 836 (DC Cir. Jul. 11, 2008). However, in response to EPA's 
petition for rehearing, the Court issued an order remanding CAIR to EPA 
without vacating either CAIR or the CAIR FIPs. North Carolina v. EPA, 
550 F.3d 1176 (DC Cir. Dec. 23, 2008). The Court thereby left CAIR in 
place in order to ``temporarily preserve the environmental values 
covered by CAIR'' until EPA replaces it with a rule consistent with the 
Court's opinion. Id. at 1178. The Court directed EPA to ``remedy CAIR's 
flaws'' consistent with its July 11, 2008 opinion, but declined to 
impose a schedule on EPA for completing that action. Id. Therefore, 
CAIR and the CAIR FIP are currently in effect in Ohio.

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

    CAIR establishes State-wide emission budgets for SO2 and 
NOX and is to be implemented in two phases. The first phase 
of NOX reductions starts in 2009 and continues through 2014, 
while the first phase of SO2 reductions starts in 2010 and 
continues through 2014. The second phase of reductions for both 
NOX and SO2 starts in 2015 and continues 
thereafter. CAIR requires States to implement the budgets by either: 
(1) Requiring EGUs to participate in the EPA-administered cap-and-trade 
programs; or (2) adopting other control measures of the State's 
choosing and demonstrating that such control measures will result in 
compliance with the applicable State SO2 and NOX 
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 NOX SIP Call trading programs in the CAIR 
NOX Ozone Season Trading Program.

[[Page 48859]]

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. As EPA anticipated, 
most States have chosen 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 NOX allowance allocation methodology).
    A State submitting a full SIP revision may either adopt regulations 
that are substantively identical to the model rules or incorporate by 
reference the model rules. CAIR provides that States may only make 
limited changes to the model rules if the States want to participate in 
the EPA-administered trading programs. A full SIP revision may change 
the model rules only by altering their applicability and allowance 
allocation provisions to:
    1. Include all NOX SIP Call trading sources that are not 
EGUs under CAIR in the CAIR NOX Ozone Season Trading 
Program;
    2. Provide for State allocation of NOX annual or ozone 
season allowances using a methodology chosen by the State;
    3. Provide for State allocation of NOX annual allowances 
from the compliance supplement pool (CSP) using the State's choice of 
allowed, alternative methodologies; or
    4. Allow units that are not otherwise CAIR units to opt 
individually into the CAIR SO2, NOX Annual, or 
NOX Ozone Season Trading Programs under the opt-in 
provisions in the model rules. An approved CAIR full SIP revision 
addressing EGUs' SO2, NOX annual, or 
NOX ozone season emissions will replace the CAIR FIP for 
that State for the respective EGU emissions. As discussed above, EPA 
approval in full, without any conditions, of a CAIR full SIP revision 
causes the CAIR FIPs to be automatically withdrawn.

V. History of Ohio CAIR Submittals

    Ohio's initial response to CAIR was a submittal, dated April 17, 
2007, providing draft rules. These rules were intended to constitute a 
full SIP submittal, addressing the requirements under CAIR without 
reliance on the CAIR FIPs. However, in its next submittal, dated 
September 26, 2007, Ohio acknowledged ongoing discussions with EPA 
regarding selected portions of the rules. In this submittal, Ohio 
requested abbreviated SIP approval, in order to expedite Ohio's 
participation in the CAIR trading programs, but Ohio also reiterated 
its desire for full SIP approval once it had completed rule revisions 
addressing EPA's concerns.
    Rulemaking on a full SIP submittal involves a broader range of 
issues than rulemaking on an abbreviated SIP submittal. EPA wished to 
expedite action on Ohio's NOx allowance allocation and its rules 
allowing sources voluntarily to opt into the trading programs. 
Therefore, as requested by Ohio, EPA took action on the abbreviated SIP 
portion of Ohio's submittal and did not act on other Ohio CAIR rules. 
EPA proposed direct final approval of these abbreviated SIP portions of 
Ohio's rules on October 16, 2007 (72 FR 58546), withdrew that action on 
December 5, 2007 (72 FR 68515), following receipt of a comment, and 
took final action on these rules on February 1, 2008 (73 FR 6034).
    Ohio and EPA continued to discuss Ohio's rules, leading Ohio to 
propose various rule revisions. These revisions amended Ohio's 
applicability provisions consistent with EPA's revised definition of 
cogeneration units, to help make Ohio's applicability provisions for 
non-EGUs consistent with EPA guidance. Additional revisions corrected 
rule references. However, before Ohio could adopt and submit these rule 
revisions, the Court of Appeals for the District of Columbia Circuit 
issued its opinion concluding that CAIR should be vacated. This opinion 
led Ohio to suspend rulemaking on its CAIR-related rules. Then, 
following the Court's issuance, on December 23, 2008, of its order 
remanding but not vacating CAIR, Ohio resumed work on these rule 
revisions. Ohio proposed revised rules, which it submitted to EPA on 
May 11, 2009. Ohio held a public hearing on its proposed rules on June 
2, 2009, and submitted final revised rules on July 15, 2009.
    Ohio's CAIR rules, in Ohio Administrative Code (OAC) Chapter 3745-
109, include rules from OAC 3745-109-01 to 3745-109-21. Thirteen of 
these rules reflect revisions that became effective on July 16, 2009; 
Ohio submitted these rules on July 15, 2009. The other eight rules, 
although effective on September 27, 2007, were not included in either 
Ohio's September 26, 2007, submittal or its July 15, 2009, submittal; 
these rules were submitted on August 13, 2009. Ohio's August 13, 2009, 
submittal also reaffirms Ohio's request for full SIP approval.

VI. Analysis of Ohio's CAIR SIP Submittal

A. Elements of Ohio's Submittal

    The rulemaking that EPA completed on February 1, 2008 (73 FR 6034), 
granting abbreviated SIP approval, addressed only six of Ohio's CAIR 
rules. EPA is today acting on Ohio's full set of rules, constituting a 
full SIP that will supersede the FIPs that are currently in effect in 
Ohio. Although some rules approved on February 1, 2008, have not 
changed, and thus arguably need not be approved again, EPA is acting 
again on these rules in conjunction with the remainder of Ohio's CAIR 
rules for purposes of clarity and administrative convenience. The 
following list identifies the rules that EPA is addressing today and 
the applicable submittal date:

3745-109-01 CAIR NOX annual, CAIR SO2 and CAIR 
NOX ozone season trading programs definitions and general 
provisions--submitted July 15, 2009.
3745-109-02 CAIR designated representative for CAIR NOX 
sources--submitted August 13, 2009.
3745-109-03 Permits--submitted August 13, 2009.
3745-109-04 CAIR NOX allowance allocations--submitted July 
15, 2009.
3745-109-05 CAIR NOX allowance tracking system--submitted 
August 13, 2009.
3745-109-06 CAIR NOX allowance transfers--submitted August 
13, 2009.
3745-109-07 Monitoring and Reporting--submitted July 15, 2009.
3745-109-08 CAIR NOX opt-in units--submitted July 15, 2009.
3745-109-09 CAIR designated representative for CAIR SO2 sources--
submitted August 13, 2009.
3745-109-10 Permits--submitted August 13, 2009.
3745-109-11 CAIR SO2 allowance tracking system--submitted July 15, 
2009.
3745-109-12 CAIR SO2 allowance transfers--submitted July 15, 2009.

[[Page 48860]]

3745-109-13 Monitoring and reporting--submitted July 15, 2009.
3745-109-14 CAIR SO2 opt-in units--submitted July 15, 2009.
3745-109-15 CAIR designated representative for CAIR NOX 
ozone season sources--submitted August 13, 2009.
3745-109-16 Permits--submitted August 13, 2009.
3745-109-17 CAIR NOX ozone season allowance allocations--
submitted July 15, 2009.
3745-109-18 CAIR NOX ozone season allowance tracking 
system--submitted July 15, 2009.
3745-109-19 CAIR NOX ozone season allowance transfers--
submitted July 15, 2009.
3745-109-20 Monitoring and reporting--submitted July 15, 2009.
3745-109-21 CAIR NOX ozone season opt-in units--submitted 
July 15, 2009.
    In order to provide an orderly transition from the NOX Budget 
Trading Program to the CAIR NOX Ozone Season Trading 
Program, EPA requires States to adopt rules clarifying that the rules 
of the NOX Budget Trading Program (adopted to address the NOX SIP Call) 
are no longer in effect. However, approval of such transition 
provisions is not a prerequisite for approval of Ohio's CAIR rules. 
Ohio is taking separate action to propose rule revisions to clarify 
that its rules for the NOX Budget Trading Program are no longer in 
effect, for as long as EPA is instead implementing the CAIR 
NOX Ozone Season Trading Program. EPA is not acting today on 
such rules and will conduct separate rulemaking on Ohio's transition 
rules at such time as Ohio adopts and submits the rules.

B. State Budgets for Allowance Allocations

    The CAIR NOX 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 NOX budgets for 2009-
2014 and for 2015 and thereafter, respectively. EPA derived the State 
NOX annual and ozone season budgets from the regional 
budgets using State heat input data adjusted by fuel factors.
    The CAIR State SO2 budgets were derived by discounting 
the tonnage of emissions authorized by annual allowance allocations 
under the Acid Rain Program under title IV of the Clean Air Act. Under 
CAIR, each allowance allocated in the Acid Rain Program for the years 
in phase 1 of CAIR (2010 through 2014) authorizes 0.5 ton of 
SO2 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 SO2 emissions in the 
CAIR trading program.
    In today's action, EPA is approving Ohio's SIP revision that adopts 
the budgets established for the State in CAIR. These annual emission 
budgets are: For NOX annual emissions, 108,667 tons from 
2009 through 2014, and 90,556 tons in 2015 and thereafter; for 
NOX ozone season emissions, 45,664 tons from 2009 through 
2014, and 39,945 tons in 2015 and thereafter; and, for SO2 
annual emissions, 333,520 tons from 2009 through 2014, and 233,464 tons 
in 2015 and thereafter. Additionally, the CAIR NOX ozone 
season budget will be increased annually by 4,030 tons to account for 
NOX SIP Call trading sources that are not EGUs under CAIR 
but are included in the CAIR NOX Ozone Season Trading 
Program. Ohio's SIP revision sets these budgets as the total amounts of 
allowances available for allocation for each year under the EPA-
administered cap-and-trade programs.
    In North Carolina, 531 F.3d at 916-21, the Court determined, among 
other things, that the State SO2 and NOX budgets 
established in CAIR were arbitrary and capricious.\1\ However, as 
discussed above, the Court also decided to remand CAIR but to leave the 
rule in place in order to ``temporarily preserve the environmental 
values covered by CAIR'' pending EPA's development and promulgation of 
a replacement rule that remedies CAIR's flaws. North Carolina, 550 F.3d 
at 1178. EPA had indicated to the Court that development and 
promulgation of a replacement rule would take about two years. Reply in 
Support of Petition for Rehearing or Rehearing en Banc at 5 (filed Nov. 
17, 2008 in North Carolina v. EPA, Case No. 05-1224, DC Cir.). The 
process at EPA of developing a proposal that will undergo notice and 
comment and result in a final replacement rule is ongoing. In the 
meantime, consistent with the Court's orders, EPA is implementing CAIR 
by approving State SIP revisions that are consistent with CAIR (such as 
the provisions setting State SO2 and NOX budgets 
for the CAIR trading programs) in order to ``temporarily preserve'' the 
environmental benefits achievable under the CAIR trading programs.
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    \1\ The Court also determined that the CAIR trading programs 
were unlawful (id. at 921-23). For the same reasons that EPA is 
approving the provisions of Ohio's SIP revision that use the 
SO2 and NOX budgets set in CAIR, EPA is also 
approving as discussed below, Ohio's SIP revision to the extent the 
SIP revision adopts the CAIR trading programs, including the 
provisions addressing applicability, allowance allocations, and use 
of title IV allowances.
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C. CAIR Cap-and-Trade Programs

    The CAIR NOX annual and ozone season model trading rules 
both largely mirror the structure of the NOX SIP Call model 
trading rule in 40 CFR Part 96, subparts A through I. While the 
provisions of the NOX annual and ozone season model rules 
are similar, there are some differences. For example, the 
NOX annual model rule (but not the NOX ozone 
season model rule) provides for a CSP, which is discussed below and 
under which allowances may be awarded for early reductions of 
NOX annual emissions. As a further example, the 
NOX ozone season model rule reflects the fact that the CAIR 
NOX Ozone Season Trading Program replaces the NOX 
SIP Call trading program after the 2008 ozone season and is coordinated 
with the NOX SIP Call program. The NOX ozone 
season model rule provides incentives for early emissions reductions by 
allowing banked, pre-2009 NOX SIP Call allowances to be used 
for compliance in the CAIR NOX ozone season trading program. 
In addition, States have the option of continuing to meet their 
NOX SIP Call requirements by participating in the CAIR 
NOX ozone season trading program and including all their 
NOX SIP Call trading sources in that program.
    The provisions of the CAIR SO2 model rule are also 
similar to the provisions of the NOX annual and ozone season 
model rules. However, since Clean Air Act title IV establishes an 
ongoing Acid Rain cap-and-trade program for SO2 and not for 
NOX, the model rule for SO2 must additionally be 
coordinated with the Acid Rain program. The SO2 model rule 
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 SO2 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 SO2 
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

[[Page 48861]]

changes made to account for Federal rather than State implementation. 
The CAIR model SO2, NOX annual, and 
NOX ozone season trading rules and the respective CAIR FIP 
trading rules are designed to work together as integrated 
SO2, NOX annual, and NOX ozone season 
trading programs.
    In the SIP revision EPA is approving, Ohio chooses to implement its 
CAIR budgets by requiring EGUs to participate in EPA-administered cap-
and-trade programs for SO2, NOX annual, and 
NOX ozone season emissions. Ohio has adopted State rules for 
a ``full SIP'' revision that adopts, with certain allowed changes 
discussed below, the CAIR model cap-and-trade rules for SO2, 
NOX annual, and NOX ozone season emissions. 
Finally, Ohio's rules provide that non-EGUs that were required to 
participate in the NOX Budget Trading Program must 
participate in the CAIR NOX Ozone Season Trading Program.

D. Applicability Provisions

    In general, the CAIR model trading rules 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 megawatts producing electricity for 
sale.
    States have the option of bringing in, for the CAIR NOX 
ozone season program only, those units in the State's NOX 
SIP Call trading program that are not EGUs as defined under CAIR. EPA 
advises States exercising this option to add the applicability 
provisions in the State's NOX SIP Call trading rule for non-
EGUs to the applicability provisions in 40 CFR 96.304 in order to 
include in the CAIR NOX ozone season trading program all 
units required to be in the State's NOX SIP Call trading 
program that are not already included under 40 CFR 96.304. Under this 
option, the CAIR NOX 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 
megawatts or less) that the State currently requires to be in the 
NOX SIP Call trading program. Ohio has chosen to expand the 
applicability provisions of the CAIR NOX Ozone Season 
Trading Program to include all non-EGUs that were subject to the 
State's NOX SIP Call trading program.

E. NOX Allowance Allocations

    Under the NOX allowance allocation methodology in the 
CAIR model trading rules and in the CAIR FIP, NOX 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.
    States may establish in their SIP submissions a different 
NOX 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 
NOX 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, their size.
    Consistent with the flexibility given to States in the CAIR rules, 
Ohio has chosen to distribute NOX annual and NOX 
ozone season allowances in a manner that differs in selected respects 
from the distribution in the Part 96 model rule. First, as noted above, 
the State's NOX ozone season allocation provisions have been 
modified to bring the State's non-EGUs into the CAIR NOX 
ozone season trading program. Second, while Ohio's NOX ozone 
season program rules provide the same set aside for new sources as in 
the Part 96 model rule (reflecting five percent of budgeted emissions 
for 2009 to 2014 and three percent of budgeted emissions for 2015 and 
thereafter), the State provides additional set asides of one percent of 
budgeted emissions for energy efficiency and renewable energy projects 
and one percent of budgeted emissions for innovative technology 
projects. Ohio's rules also authorize Ohio EPA to increase the size of 
these two set asides up to five percent of budgeted emissions in the 
event that requests for these set asides significantly exceed the one 
percent level, with provision that a correspondingly smaller number of 
allowances would be issued in the primary allowance distribution so as 
to allocate no more than the budgeted number of allowances. In the 
February 1, 2008 notice, EPA asked Ohio to clarify these set aside 
allocation provisions. EPA believes that this revision provides 
sufficient clarification.
    As is done in EPA's model rule, Ohio's rules distribute allowances 
according to each source's proportion of heat input of subject sources. 
CAIR NOX ozone season allowances for non-EGUs are 
distributed according to heat input from a separate allowance pool from 
the pool for EGUs.

F. Allocation of NOX Allowances From Compliance Supplement Pool

    CAIR establishes a CSP to provide an incentive for early reductions 
in NOX annual emissions. The CSP consists of 200,000 CAIR 
NOX annual allowances of vintage 2009 for the entire CAIR 
region, and a State's share of the CSP is based upon the projected 
magnitude of the emission reductions required by CAIR in that State. 
States may distribute CSP allowances, one allowance for each ton of 
early reduction, to sources that make NOX 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 annual NOX model trading rule 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 the States.
    Consistent with the flexibility given to States in CAIR, Ohio has 
chosen to adopt a modified version of the provisions of the CAIR 
NOX annual model trading rule concerning the allocation of 
allowances from the CSP. EPA approved these provisions, as discussed in 
EPA's earlier rulemaking. (See 73 FR 6038 (February 1, 2008).) In 
brief, Ohio's CSP is comprised of 25,037 allowances. Unlike the model 
rule, which allocates allowances in the amount that either (1) early 
reductions occur, or (2) allowances are needed to avoid disruption of 
electricity supply (provided the total does not exceed the State's 
share of the CSP), Ohio's rule provides (1) an initial allocation 
reflecting early reductions, limited to the source's proportionate 
share of the CSP, with provision for (2) distribution of the remainder 
of the CSP according to the distribution of additional early 
reductions. Ohio's recent rulemaking did not significantly change these 
provisions, but the revised rule does clarify that Ohio will submit CSP 
allocations to the Administrator by

[[Page 48862]]

November 30, 2009, as EPA requested in its February 1, 2008, rulemaking 
notice. The revised rule continues to satisfy EPA requirements.

G. Individual Opt-In Units

    The opt-in provisions of the CAIR SIP model trading rules allow 
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 repower before January 1, 2015.
    States have several options concerning the opt-in provisions. 
States may adopt the CAIR opt-in provisions entirely or may adopt them 
but exclude one of the methodologies for allocating allowances. States 
may also decline to adopt the opt-in provisions at all.
    Consistent with this flexibility, Ohio has chosen to allow non-EGUs 
meeting certain requirements to participate in the CAIR NOX 
annual trading program, the CAIR NOX ozone season trading 
program, and the CAIR SO2 trading program. EPA approved 
Ohio's earlier version of rules authorizing these opt-ins (see 73 FR 
6038 (February 1, 2008)), and Ohio's revised rules make only minor 
ministerial changes.

VII. Final Action

    EPA is approving Ohio's full CAIR SIP revision, which includes 
rules submitted on July 15, 2009, and August 13, 2009. With these 
rules, Ohio is providing for continued participation in the EPA-
administered CAIR cap-and-trade programs for SO2, 
NOX annual, and NOX ozone season emissions. The 
requested SIP revision meets the applicable requirements of CAIR, which 
are set forth in 40 CFR 51.123(o) and (aa), with regard to 
NOX annual and NOX ozone season emissions, and 40 
CFR 51.124(o), with regard to SO2 emissions. In accordance 
with 40 CFR 52.35 and 52.36, as an automatic consequence of the 
approval of Ohio's full CAIR SIP revision, EPA is also amending the 
Ohio plan to withdraw the CAIR FIPs for SO2, NOX 
annual, and NOX ozone season emissions for Ohio sources.
    We are publishing this action without prior proposal because we 
view this as a noncontroversial amendment and anticipate no adverse 
comments. However, in the proposed rules section of this Federal 
Register publication, we are publishing a separate document that will 
serve as the proposal to approve the State plan if relevant adverse 
written comments are filed. This rule will be effective November 24, 
2009 without further notice unless we receive relevant adverse written 
comments by October 26, 2009. If we receive such comments, we will 
withdraw this action before the effective date by publishing a 
subsequent document that will withdraw the final action. All public 
comments received will then be addressed in a subsequent final rule 
based on the proposed action. EPA will not institute a second comment 
period. Any parties interested in commenting on this action should do 
so at this time. If we do not receive any comments, this action will be 
effective November 24, 2009.

VIII. Statutory and Executive Order Reviews

    Under the Clean Air Act, the Administrator is required to approve a 
SIP submission that complies with the provisions of the Clean Air Act 
and applicable Federal regulations. 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 Clean Air Act. 
Accordingly, this 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 action:
     Is not a ``significant regulatory action'' subject to 
review by the Office of Management and Budget under Executive Order 
12866 (58 FR 51735, October 4, 1993);
     Does not impose an information collection burden under the 
provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);
     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.);
     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);
     Does not have Federalism implications as specified in 
Executive Order 13132 (64 FR 43255, August 10, 1999);
     Is not an economically significant regulatory action based 
on health or safety risks subject to Executive Order 13045 (62 FR 
19885, April 23, 1997);
     Is not a significant regulatory action subject to 
Executive Order 13211 (66 FR 28355, May 22, 2001);
     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 Clean Air Act; and
     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).
    In addition, this rule does not have Tribal implications as 
specified by Executive Order 13175 (65 FR 67249, November 9, 2000), 
because the SIP is not approved to apply in Indian country located in 
the State, and EPA notes that it will not impose substantial direct 
costs on Tribal governments or preempt Tribal law.

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Incorporation by 
reference, Nitrogen dioxide, Ozone, Particulate matter, Reporting and 
recordkeeping requirements, Sulfur oxides.

    Dated: August 19, 2009.
Walter W. Kovalick, Jr.,
Acting Regional Administrator, Region 5.

0
40 CFR part 52 is amended as follows:

PART 52--[AMENDED]

0
1. The authority citation for part 52 continues to read as follows:

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

Subpart KK--Ohio

0
2. Section 52.35 is amended by:
0
a. In paragraph (d)(1), by removing ``[STATE NAME]'' and by adding 
``Ohio'', in its place; and
0
b. In paragraph (d)(2), by removing ``[STATE NAME]'' and by adding, 
``Ohio'', in its place.

[[Page 48863]]

0
3. Section 52.36 is amended in paragraph (c) by removing ``[STATE 
NAME]'' and by adding, ``Ohio'', in its place.

0
4. Section 52.1870 is amended by revising paragraph (c)(140) to read as 
follows:

Sec.  52.1870  Identification of plan.

* * * * *
    (c) * * *
    (140) On July 15, 2009, and August 13, 2009, Ohio submitted rules 
addressing the requirements of the Clean Air Interstate Rule.
    (i) Incorporation by reference.
    (A) Ohio Administrative Code Rule 3745-109-01 ``CAIR NOX 
annual, CAIR SO2 and CAIR NOX ozone season 
trading programs definitions and general provisions.'', Rule 3745-109-
04 ``CAIR NOX allowance allocations.'', Rule 3745-109-07 
``Monitoring and Reporting.'', Rule 3745-109-08 ``CAIR NOX 
opt-in units.'', Rule 3745-109-11 ``CAIR SO2 allowance 
tracking system.'', Rule 3745-109-12 ``CAIR SO2 allowance 
transfers.'', Rule 3745-109-13 ``Monitoring and reporting.'', Rule 
3745-109-14 ``CAIR SO2 opt-in units.'', Rule 3745-109-17 
``CAIR NOX ozone season allowance allocations.'', Rule 3745-
109-18 ``CAIR NOX ozone season allowance tracking system.'', 
Rule 3745-109-19 ``CAIR NOX ozone season allowance 
transfers.'', Rule 3745-109-20 ``Monitoring and reporting.'', and Rule 
3745-109-21 ``CAIR NOX ozone season opt-in units.'', adopted 
on July 6, 2009, effective on July 16, 2009.
    (B) July 6, 2009, ``Director's Final Findings and Orders'', signed 
by Chris Korleski, Director, Ohio Environmental Protection Agency.
    (C) Ohio Administrative Code Rule 3745-109-02 ``CAIR designated 
representative for CAIR NOX sources.'', Rule 3745-109-03 
``Permits.'', Rule 3745-109-05 ``CAIR NOX allowance tracking 
system.'', Rule 3745-109-06 ``CAIR NOX allowance 
transfers.'', Rule 3745-109-09 ``CAIR designated representative for 
CAIR SO2 sources.'', Rule 3745-109-10 ``Permits.'', Rule 
3745-109-15 ``CAIR designated representative for CAIR NOX 
ozone season sources.'', and Rule 3745-109-16 ``Permits.'', adopted on 
September 17, 2007, effective on September 27, 2007.
    (D) September 17, 2007, ``Director's Final Findings and Orders'', 
signed by Chris Korleski, Director, Ohio Environmental Protection 
Agency.

0
5. Section 52.1891 is removed.

0
6. Section 52.1892 is removed.

[FR Doc. E9-23254 Filed 9-24-09; 8:45 am]

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