Document ID: EPA-R01-OAR-2007-0401-0001
Agency: epa
Document Type: Proposed Rule
Title: Approval and Promulgation of Air Quality Implementation Plans; Massachusetts; State Implementation Plan Revision To Implement the Clean Air Interstate Rule
Posted Date: 2007-08-01T04:00Z

[Federal Register: August 1, 2007 (Volume 72, Number 147)]
[Proposed Rules]               
[Page 41970-41975]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01au07-29]                         

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R01-OAR-2007-0401; FRL-8448-3]

 
Approval and Promulgation of Air Quality Implementation Plans; 
Massachusetts; State Implementation Plan Revision To Implement the 
Clean Air Interstate Rule

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: EPA is proposing to approve a revision to the Massachusetts 
State Implementation Plan (SIP) submitted on March 30, 2007. This 
revision addresses the requirements of EPA's Clean Air Interstate Rule 
(CAIR), promulgated on May 12, 2005 and subsequently revised on April 
28, 2006 and December 13, 2006. EPA is proposing to determine that the 
SIP revision fully implements the CAIR requirements for Massachusetts. 
Therefore, as a consequence of the SIP approval, EPA will also withdraw 
the CAIR Federal Implementation Plan (CAIR FIP) concerning 
NOX ozone-season emissions for Massachusetts. The CAIR FIPs 
for all States in the CAIR region were promulgated on April 28, 2006 
and subsequently revised on December 13, 2006.
    In the SIP revision that EPA is proposing to approve, Massachusetts 
would meet CAIR requirements by participating in the EPA-administered 
cap-and-trade program addressing NOX ozone-season emissions. 
Massachusetts's SIP revision is based on EPA's model CAIR 
NOX ozone season rule and is in most respects substantively 
identical to that model rule. The Massachusetts CAIR program has two 
major substantive differences from that model rule (expanded 
applicability, and a different methodology for allocating 
NOX allowances), both of which are consistent with the 
flexibility allowed under CAIR for state participation in the EPA-
administered cap-and-trade program. The SIP revision complies with the 
statutory and regulatory requirements for approval of a CAIR 
NOX ozone-season program.

DATES: Comments must be received on or before August 31, 2007.

ADDRESSES: Submit your comments, identified by FDMS Docket ID No. EPA-
R01-OAR-2007-0401, by one of the following methods:
    1. http://www.regulations.gov: Follow the on-line instructions for 

submitting comments.
    2. E-mail: arnold.anne@epa.gov.
    3. Fax: (617) 918-0047.
    4. Mail: ``FDMS Docket ID No. EPA-R01-OAR-2007-0401'', Anne Arnold, 
U.S. Environmental Protection Agency, EPA New England Regional Office, 
One Congress Street, Suite 1100 (mail code CAQ), Boston, MA 02114-2023.
    5. Hand Delivery or Courier: Deliver your comments to: Anne Arnold, 
Manager, Air Quality Planning Unit, Office of Ecosystem Protection, 
U.S. Environmental Protection Agency, EPA New England Regional Office, 
One Congress Street, 11th floor, (CAQ), Boston, MA 02114-2023. Such 
deliveries are only accepted during the Regional Office's normal hours 
of operation. The Regional Office's official hours of business are 
Monday through Friday, 8:30 to 4:30, excluding federal holidays.
    Instructions: Direct your comments to Docket ID No. ``FDMS Docket 
ID No. EPA-R01-OAR-2007-0401''. 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 
through http://www.regulations.gov or e-mail, information that you consider to 

be CBI or otherwise protected. 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. For additional information about EPA's 
public docket visit the EPA Docket Center homepage at http://www.epa.gov/epahome/dockets.htm
.

    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. In addition to publicly 
available docket materials available electronically in 
http://www.regulations.gov, the hard copy of these materials, including the 

state submittal and EPA's technical support document, is available at 
the Office of Ecosystem Protection, U.S. Environmental Protection 
Agency, EPA New England Regional Office, One Congress Street, Suite 
1100, Boston, MA. EPA requests that if at all possible, you contact the 
person listed in the FOR FURTHER INFORMATION CONTACT section to 
schedule your inspection. The Regional Office's official hours of 
business are Monday through Friday, 8:30 to 4:30, excluding federal 
holidays.

FOR FURTHER INFORMATION CONTACT: If you have questions concerning 
today's proposal, please contact Alison C. Simcox, Air Quality Planning 
Unit, U.S. Environmental Protection Agency, EPA New England Regional 
Office, One Congress Street, Suite 1100 (CAQ), Boston, MA 02114-2023, 
telephone number (617) 918-1684, fax number (617) 918-0684, e-mail 
simcox.alison@epa.gov.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. What Action Is EPA Proposing to Take?
II. What Is the Regulatory History of CAIR and the CAIR FIPs?
III. What are the General Requirements of CAIR and the CAIR FIPs?
IV. What are the Types of CAIR SIP Submittals?
V. Analysis of Massachusetts's CAIR SIP Submittal
    A. State Budgets for Allowance Allocations
    B. CAIR Cap-and-Trade Programs
    C. Applicability Provisions for non-EGU NOX SIP Call 
Sources
    D. NOX Allowance Allocations
    E. Individual Opt-in Units
VI. Proposed Action
VII. Statutory and Executive Order Reviews

[[Page 41971]]

I. What Action Is EPA Proposing to Take?

    EPA is proposing to approve a revision to Massachusetts's SIP, 
submitted on March 30, 2007. This SIP revision includes a new 
regulation, 310 CMR 7.32, ``Massachusetts Clean Air Interstate Rule,'' 
and amendments to existing regulation 310 CMR 7.28, ``NOX 
Allowance Trading Program.'' In its SIP revision, Massachusetts would 
meet CAIR requirements by requiring certain electric generating units 
(EGUs) to participate in the EPA-administered State CAIR cap-and-trade 
program addressing NOX ozone-season emissions. EPA is 
proposing to determine that the Massachusetts SIP as revised will meet 
the applicable requirements of CAIR. Any final action approving the SIP 
will be taken by the Regional Administrator for Region 1. As a 
consequence of the SIP Approval, the Administrator of EPA will also 
issue a final rule to withdraw the FIP concerning NOX ozone-
season emissions for Massachusetts. This action will delete and reserve 
40 CFR 52.1140. The withdrawal of the CAIR FIP for Massachusetts is a 
conforming amendment that must be made once the SIP is approved because 
EPA's authority to issue the FIP was premised on a deficiency in the 
SIP for Massachusetts. Once the SIP is fully approved, EPA no longer 
has authority for the FIP. Thus, EPA will not have the option of 
maintaining the FIP following the full SIP approval. Accordingly, EPA 
does not intend to offer an opportunity for a public hearing or an 
additional opportunity for written public comment on the withdrawal of 
the FIP.

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

    The Clean Air Interstate Rule (CAIR) was published by EPA on May 
12, 2005 (70 FR 25162). In this rule, EPA determined that 28 States and 
the District of Columbia contribute significantly to nonattainment and 
interfere with maintenance of the national ambient air quality 
standards (NAAQS) for fine particles (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 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 
(CAA) 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 
Federal Implementation Plan (FIP) to address the requirements of 
section 110(a)(2)(D). Under CAA section 110(c)(1), EPA may issue a FIP 
anytime after such findings are made and must do so within two years 
unless a SIP revision correcting the deficiency is approved by EPA 
before the FIP is promulgated.
    On April 28, 2006, EPA promulgated FIPs for all States covered by 
CAIR in order to ensure the emissions reductions required by CAIR are 
achieved on schedule. Each CAIR State is subject to the FIPs until the 
State fully adopts, and EPA approves, a SIP revision meeting the 
requirements of CAIR. The CAIR FIPs require EGUs to participate in the 
EPA-administered CAIR SO2, NOX annual, and 
NOX ozone season trading programs, as appropriate. The CAIR 
FIP SO2, NOX annual, and NOX ozone 
season 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. 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.

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 their 
CAIR NOX ozone season trading programs.

IV. What are the Types of CAIR SIP Submittals?

    States have the flexibility to choose the type of control measures 
they will use to meet the requirements of CAIR. EPA anticipates that 
most States will choose to meet the CAIR requirements by selecting an 
option that requires EGUs to participate in the EPA-administered CAIR 
cap-and-trade programs. For such States, EPA has provided two 
approaches for submitting and obtaining approval for CAIR SIP 
revisions. States may submit full SIP revisions that adopt the model 
CAIR cap-and-trade rules. If approved, these

[[Page 41972]]

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 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.

V. Analysis of Massachusetts's CAIR SIP Submittal

    A summary of EPA's review of Massachusetts's CAIR program is given 
below. Additional details regarding requirements of Massachusetts's 310 
CMR 7.32 regulation and EPA's evaluation of this regulation are 
detailed in a memorandum dated July 16, 2007, entitled ``Technical 
Support Document (TSD) for revisions to the Massachusetts SIP: 310 CMR 
7.32 (``Massachusetts Clean Air Interstate Rule'').'' The TSD and 
Massachusetts's CAIR SIP submittal are available in the docket 
supporting this action.

A. 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 pounds per million British thermal units 
(lb/mmBtu), for phase 1 of the CAIR program (2009-2014) and by 0.125 
lb/mmBtu, for phase 2 of the CAIR program (2015 and thereafter) 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. Massachusetts, however, is only 
required to participate in the CAIR NOX ozone-season 
program, not the CAIR NOX annual or SO2 trading 
programs. Therefore, only CAIR NOX ozone-season budgets 
apply to the Massachusetts CAIR program.
    In today's action, EPA is proposing approval of Massachusetts's SIP 
revision at 310 CMR 7.32. This SIP revision adopts the budgets 
established for the State in CAIR, i.e., 7,551 tons of NOX 
ozone-season emissions for CAIR phase 1 and 6,293 tons for CAIR phase 
2, plus an additional 363 tons of NOX ozone-season emissions 
for both phases 1 and 2 to account for NOX emissions from 
``non-EGU'' units from the Massachusetts NOX SIP Call 
trading program (see section V.B. below). The total NOX 
ozone-season budget is therefore 7,914 tons of NOX ozone-
season emissions for CAIR phase 1 and 6,656 tons for CAIR phase 2. 
Massachusetts's SIP revision sets this budget as the total number of 
allowances (with each allowance authorizing one ton of NOX 
ozone-season emissions) available for allocation for each year under 
the EPA-administered CAIR cap-and-trade program.

B. 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 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 requirement by participating in the CAIR 
NOX ozone season trading program and including all their 
NOX SIP Call trading sources in that program. Massachusetts 
has decided to exercise the option of including all its NOX 
SIP Call units in its State CAIR program. Therefore, the Massachusetts 
CAIR SIP revision includes amendments to the Massachusetts 
NOX SIP Call trading program (310 CMR 7.28) such that the 
NOX SIP Call trading program applies for the control periods 
from 2003 through 2008, but is then superseded by the Massachusetts 
CAIR program (310 CMR 7.32) beginning with the control period in 2009.
    EPA also used the CAIR model trading rules as the basis for the 
trading programs in the CAIR FIPs. The CAIR FIP trading rules are 
virtually identical to the CAIR model trading rules, with changes made 
to account for federal rather than state implementation. The CAIR model 
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, Massachusetts chooses to implement its CAIR 
budgets by requiring EGUs (as well as ``non-EGUs'' from its 
NOX SIP Call trading program, as discussed below) to 
participate in EPA-administered cap-and-trade programs for 
NOX ozone-season emissions. Massachusetts has adopted a full 
SIP revision that adopts, with certain allowed changes discussed below, 
the CAIR model cap-and-trade rules for NOX ozone-season 
emissions.

C. Applicability Provisions for non-EGU NOX SIP Call Sources

    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 MWe 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 
(herein called ``non-EGUs''). 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

[[Page 41973]]

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 MWe or less) that 
the State currently requires to be in the NOX SIP Call 
trading program.
    Massachusetts has chosen to expand the applicability provisions of 
the CAIR NOX ozone season trading program to include all 
units in the State's NOX SIP Call trading program. Units in 
the Massachusetts NOX SIP Call trading program include units 
that burn more than 50-percent fossil fuel and that have a maximum 
heat-input capacity of 250 million British thermal units (MMBtu) or 
more, or serve a generator with a nameplate capacity of 15 MWe or more. 
These units are included in the Massachusetts NOX SIP Call 
trading program whether or not they produce electricity for sale, and, 
as noted above, will be included in the Massachusetts CAIR program 
beginning with the control period in 2009.
    EPA has determined that Massachusetts 310 CMR 7.32 includes the 
allowable CAIR applicability provisions relating to adding all 
NOX SIP Call trading program units to the Massachusetts CAIR 
NOX ozone season program.

D. NOX Allowance Allocations

    Deadlines: There is one technical flaw in the SIP revision, but EPA 
is proposing to approve the SIP revision despite this flaw. CAIR 
requires states to submit to EPA the initial allocations for EGUs that 
started operation before 2001 by October 31, 2006. Massachusetts's 
proposed SIP revision does not meet this requirement, nor did the state 
submit those allocations by this date. However, the purpose of this 
date was to allow EPA sufficient time to process the allocations data. 
EPA now has the allocations, and no outside party was prejudiced by 
Massachusetts's failure to meet this date. The TSD associated with this 
Notice of Proposed Rulemaking explains this issue and EPA's rationale 
for proposing to approve the SIP revision despite this technical flaw.
    NOX allowance-allocation methodology: 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 (i.e., ``existing units''), 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.
    Massachusetts has chosen to replace the provisions of the CAIR 
NOX ozone-season model trading rule concerning allowance 
allocations with its own methodology. Massachusetts's 310 CMR 7.32 
distributes NOX ozone-season allowances based upon 
historical electric and thermal output, rather than heat input. 
Massachusetts also provides a percentage of allowances for Public 
Benefit and new unit set-asides.
(1) What Types of Set-Asides are Included in Massachusetts CAIR?
    Massachusetts 310 CMR 7.32 includes both a Public Benefit set-aside 
(PBSA) to encourage Energy Efficiency Projects (EEPs) and Renewable 
Energy Projects (REPs), and a new unit set-aside to allow for addition 
of new units. Both of these types of set-asides were included in the 
State's NOX SIP Call trading program.
    Massachusetts has set a new unit set-aside at 5 percent of the 
State's CAIR budget for both phases of the CAIR program. Therefore, the 
new unit set-aside includes 396 CAIR NOX ozone-season 
allowances during CAIR phase 1 (2009-2014), and 333 allowances during 
CAIR phase 2 (2015 and thereafter).
    Massachusetts has set a PBSA at 10 percent of the State's CAIR 
budget for both phases of the CAIR program. Therefore, the PBSA 
includes 791 CAIR NOX ozone-season allowances during CAIR 
phase 1 (2009-2014), and 666 allowances during CAIR phase 2 (2015 and 
thereafter).
(2) Banking and Transferring of Set-Asides
    The Massachusetts CAIR SIP establishes an account for any 
unallocated PBSA or new unit set-aside allowances so that these can be 
allocated in future years. This is similar to the account established 
under the State's NOX SIP Call trading program. If the 
number of banked set-aside allowances is 10 percent or more of the 
total Massachusetts CAIR budget after allocations and compliance 
deductions have been made for a given year, the State will allocate 
allowances that exceed 5 percent of the State's CAIR budget to existing 
CAIR NOX ozone-season units using the allocation methodology 
described below.
    If Massachusetts approves the allocation of more allowances for 
EEPs and REPs than are available in the PBSA, Massachusetts will allow 
transfer of unallocated allowances from the new unit set-aside to the 
PBSA. However, allowances may not be transferred from the PBSA to the 
new unit set-aside.
(3) Methodology for Allocating CAIR Allowances
    Massachusetts has chosen to replace the provisions of the CAIR 
NOX ozone-season model trading rule concerning allowance 
allocations with a methodology similar to that used in the 
Massachusetts NOX SIP Call trading program. This 
methodology, which is based on energy output, allocates allowances to 
existing units and, to the extent possible, to new units based on their 
steam and/or electricity output. More details on Massachusetts's 
methodology for allocating CAIR allowances can be found in the TSD 
associated with this Notice of Proposed Rulemaking.
(4) Massachusetts CAIR Permits and Reporting Requirements
    The Massachusetts CAIR SIP includes most of the permitting 
provisions of the CAIR model rule. Massachusetts, however, has modified 
the rule as it applies to collection of output data and also requires 
all Massachusetts CAIR units to have Massachusetts CAIR permits.
    Under the CAIR model rule, facilities that are subject to the Acid 
Rain Program or the CAIR NOX and SO2 annual 
trading programs must report emissions data year-round, but facilities 
that are only subject to the NOX ozone-season trading 
program need only submit NOX emission data to the State 
during the ozone season. As noted above, Massachusetts is only required 
to participate in the CAIR NOX ozone-

[[Page 41974]]

season program. However, under Massachusetts's CAIR NOX 
ozone season allowance trading program, all units recording 
NOX emissions data with Continuous Emission Monitoring 
Systems (CEMS) are required to submit quarterly data emission reports 
year-round.
    Because of the importance to Massachusetts of obtaining emissions 
data for air-quality planning efforts related to EPA's programs to 
address Regional Haze and Particulate Matter (PM), which are both year-
round air-quality issues, Massachusetts has decided to require that all 
of the State's CAIR units with CEMS report NOX emissions to 
the State on a year-round basis. Massachusetts will not require units 
without CEMS to report emissions on a year-round basis. EPA has 
determined that these modifications of the CAIR NOX ozone-
season trading rule in regard to collection of output data and CAIR 
permits are acceptable.

E. 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.
    The Massachusetts CAIR SIP does not include opt-in provisions 
because the State has chosen to allocate CAIR allowances using an 
energy-output methodology that cannot be used for opt-in sources under 
the model CAIR NOX ozone-season trading rule. The 
Massachusetts NOX SIP Call trading program (310 CMR 7.28), 
however, does allow for opt-in sources (although no sources have opted 
into this program to date). Therefore, sources that wish to be part of 
the Massachusetts CAIR program can take advantage of the opt-in 
provisions of the State's NOX SIP Call program until the end 
of 2008.
    Beginning with the 2009 ozone season, the NOX SIP Call 
program will be replaced by the State's CAIR Program, and no further 
opt-in units will be allowed.

VI. Proposed Action

    EPA is proposing to approve Massachusetts's full CAIR SIP revision 
submitted on March 30, 2007, including regulations 310 CMR 7.32 
(``Massachusetts CAIR'') and amendments to 310 CMR 7.28 
(``NOX Allocation Trading Program''). Under this SIP 
revision, Massachusetts is choosing to participate in the EPA-
administered cap-and-trade program for NOX ozone-season 
emissions. The SIP revision meets the applicable requirements in 40 CFR 
51.123(aa) with regard to NOX ozone-season emissions. EPA is 
proposing to determine that the SIP as revised will meet the 
requirements of CAIR. As a consequence of the SIP approval, the 
Administrator of EPA will also issue, without providing an opportunity 
for a public hearing or an additional opportunity for written public 
comment, a final rule to withdraw the CAIR FIP concerning 
NOX ozone-season emissions for Massachusetts. This action 
will delete and reserve 40 CFR section 52.1140 in Part 52.

VII. Statutory and Executive Order Reviews

    Under Executive Order 12866 (58 FR 51735, October 4, 1993), this 
action is not a ``significant regulatory action'' and therefore is not 
subject to review by the Office of Management and Budget. For this 
reason, this action is also not subject to Executive Order 13211, 
``Actions Concerning Regulations That Significantly Affect Energy 
Supply, Distribution, or Use'' (66 FR 28355, May 22, 2001). This action 
merely proposes to approve State law as meeting Federal requirements 
and would impose no additional requirements beyond those imposed by 
State law. Accordingly, the Administrator certifies that this proposed 
rule would not have a significant economic impact on a substantial 
number of small entities under the Regulatory Flexibility Act (5 U.S.C. 
601 et seq.). Because this action proposes to approve pre-existing 
requirements under State law and would not impose any additional 
enforceable duty beyond that required by State law, it does not contain 
any unfunded mandate or significantly or uniquely affect small 
governments, as described in the Unfunded Mandates Reform Act of 1995 
(Pub. L. 104-4).
    This proposal also does not have tribal implications because it 
would not have a substantial direct effect on one or more Indian 
tribes, on the relationship between the Federal Government and Indian 
tribes, or on the distribution of power and responsibilities between 
the Federal Government and Indian tribes, as specified by Executive 
Order 13175 (65 FR 67249, November 9, 2000). This proposed action also 
does not have Federalism implications because it would not have 
substantial direct effects on the States, on the relationship between 
the national government and the States, or on the distribution of power 
and responsibilities among the various levels of government, as 
specified in Executive Order 13132 (64 FR 43255, August 10, 1999). This 
action merely proposes to approve a State rule implementing a Federal 
standard and will result, as a consequence of that approval, in the 
Administrator's withdrawal of the CAIR FIP. It does not alter the 
relationship or the distribution of power and responsibilities 
established in the Clean Air Act. This proposed rule also is not 
subject to Executive Order 13045 ``Protection of Children from 
Environmental Health Risks and Safety Risks'' (62 FR 19885, April 23, 
1997), because it would approve a State rule implementing a Federal 
Standard.
    In reviewing SIP submissions, EPA's role is to approve State 
choices, provided that they meet the criteria of the Clean Air Act. In 
this context, in the absence of a prior existing requirement for the 
State to use voluntary consensus standards (VCS), EPA has no authority 
to disapprove a SIP submission for failure to use VCS. It would thus be 
inconsistent with applicable law for EPA, when it reviews a SIP 
submission, to use VCS in place of a SIP submission that otherwise 
satisfies the provisions of the Clean Air Act.
    Thus, the requirements of section 12(d) of the National Technology 
Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. 
This proposed rule would not impose an information collection burden 
under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 
3501 et seq.).

[[Page 41975]]

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Intergovernmental 
relations, Nitrogen dioxide, Ozone, Particulate matter, Reporting and 
recordkeeping requirements, Sulfur oxides.

    Dated: July 24, 2007.
Robert W. Varney,
Regional Administrator, EPA New England.
 [FR Doc. E7-14887 Filed 7-31-07; 8:45 am]

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