Document ID: EPA-R05-OAR-2007-0390-0002
Agency: epa
Document Type: Rule
Title: Direct Final Approval of the Ohio CAIR Rules
Posted Date: 2007-10-16T04:00Z

[Federal Register: October 16, 2007 (Volume 72, Number 199)]
[Rules and Regulations]               
[Page 58546-58553]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr16oc07-20]                         

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 52 and 97

[EPA-R05-OAR-2007-0390; FRL-8481-2]

 
Approval of 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) submitted on September 26, 2007. Ohio initially submitted a 
SIP revision on April 17, 2007, with a proposed rule and then revised 
it and submitted a SIP revision with a final rule on September 26, 
2007. This SIP revision incorporates provisions related to the 
implementation of EPA's Clean Air Interstate Rule (CAIR), promulgated 
on May 12, 2005, and subsequently revised on April 28, 2006, and 
December 13, 2006, and the CAIR Federal Implementation Plan (CAIR FIP) 
concerning sulfur dioxide (SO2), oxides of nitrogen 
(NOX) annual, and NOX ozone season emissions for 
the State of Ohio, promulgated on April 28, 2006 and subsequently 
revised December 13, 2006. EPA is not making any changes to the CAIR 
FIP, but is amending to the extent EPA approves Ohio's SIP revision, 
the appropriate appendices in the CAIR FIP trading rules simply to note 
that approval.
    The Ohio SIP revision that was submitted on April 17, 2007, was a 
full CAIR SIP revision. In a letter submitted on September 26, 2007, 
Ohio requested that EPA consider the September 26, 2007, submittal as 
two separate submittals, i.e., as a full CAIR SIP and as an abbreviated 
CAIR SIP. Ohio requested that EPA act on specific portions of the 
September 26, 2007,

[[Page 58547]]

submittal as an abbreviated CAIR SIP. Consequently, today, EPA is 
taking final action only on the abbreviated SIP revision and not the 
full CAIR SIP revision, which will be the subject of a separate future 
action. EPA is approving Ohio's abbreviated SIP revision that addresses 
the methodology used to allocate annual and ozone season NOX 
allowances to affected electric generating units (EGUs), and the opt-in 
provisions, under the CAIR trading programs and the CAIR FIP.

DATES: This direct final rule is effective December 17, 2007 without 
further notice, unless EPA receives adverse comment by November 15, 
2007. If EPA receives such comments, it will publish a timely 
withdrawal of the direct final rule in the Federal Register and inform 
the public that the rule will not take effect.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-R05-
OAR-2007-0390, 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) 886-5824.
    4. Mail: Reference EPA-R05-OAR-2007-0390 Docket, Air Programs 
Branch, U.S. Environmental Protection Agency, (AR-18J), 77 West Jackson 
Boulevard, Chicago, Illinois 60604.
    5. Hand Delivery or Courier: John Mooney, Chief, Criteria Pollutant 
Section, Air Programs Branch, U.S. Environmental Protection Agency, 
(AR-18J), 77 West Jackson Boulevard, Chicago, Illinois 60604. 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. ``EPA-R05-OAR-
2007-0390''. 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. Publicly available docket 
materials are available either electronically in http://www.regulations.gov or 

in hard copy at the Environmental Protection Agency, Region 5, Air and 
Radiation Division, 77 West Jackson Boulevard, Chicago, Illinois 60604. 
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: John Paskevicz, Engineer, Criteria 
Pollutant Section, Air Programs Branch (AR-18J), Environmental 
Protection Agency, Region 5, 77 West Jackson Boulevard, Chicago, 
Illinois 60604. The telephone number is (312) 886-6084. Mr. Paskevicz 
can also be reached via electronic mail at: paskevicz.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. Analysis of Ohio's CAIR SIP Submittal
    A. State Budgets for Allowance Allocations
    B. CAIR Cap-and-Trade Programs
    C. Applicability Provisions for Non-EGUs NOX SIP Call 
Sources
    D. NOX Allowance Allocations
    E. Allocation of NOX Allowances From the Compliance 
Supplement Pool (CSP)
    F. Individual Opt-in Units
VI. Final Action
VII. Statutory and Executive Order Reviews

I. What Action Is EPA Taking?

CAIR SIP Approval

    EPA is approving a revision to Ohio's SIP, submitted on September 
26, 2007, that modifies the application of certain provisions of the 
CAIR FIP concerning SO2, NOX annual, and 
NOX ozone season emissions. (As discussed below, this less 
comprehensive CAIR SIP is termed an abbreviated SIP.) Ohio is subject 
to the CAIR FIPs that implement the CAIR requirements by requiring 
certain EGUs to participate in the EPA-administered Federal CAIR 
SO2, NOX annual, and NOX ozone season 
cap-and-trade programs. The SIP revision provides a methodology for 
allocating NOX allowances for the NOX annual and 
NOX ozone season trading programs. The CAIR FIPs provide 
that this methodology will be used to allocate NOX 
allowances to sources in Ohio, instead of the federal allocation 
methodology otherwise provided in the FIPs. The SIP revision provides a 
methodology for allocating the compliance supplement pool in the CAIR 
NOX annual trading program. The SIP also allows for 
individual units not otherwise subject to the CAIR trading programs to 
opt into such trading programs in accordance with opt-in provisions of 
the CAIR FIPs. Consistent with the flexibility provided in the FIPs, 
these provisions will be used to replace or supplement, as appropriate, 
the corresponding provisions in the CAIR FIPs for Ohio. EPA is not 
making any changes to the CAIR FIPs, but is amending to the extent EPA 
approves Ohio's SIP revision, the appropriate appendices in the CAIR 
FIP trading rules simply to note that approval.

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

    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

[[Page 58548]]

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 emission 
budgets by participating in the EPA-administered cap-and-trade programs 
or by adopting any other control measures.
    CAIR explains to subject States what must be included in SIPs to 
address the requirements of section 110(a)(2)(D) of the Clean Air Act 
(CAA) with regard to interstate transport with respect to the 8-hour 
ozone and PM2.5 NAAQS. EPA made national findings, effective 
May 25, 2005, that the States had failed to submit SIPs meeting the 
requirements of section 110(a)(2)(D). The SIPs were due in July 2000, 3 
years after the promulgation of the 8-hour ozone and 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 certain EGUs to participate 
in the EPA-administered CAIR SO2, NOX annual, and 
NOX ozone-season model 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 CAIR FIP and SIP trading programs means that 
these trading programs will work together to create effectively a 
single trading program for each regulated pollutant (SO2, 
NOX annual, and NOX ozone season) in all States 
covered by CAIR FIP or SIP trading program for that pollutant. The CAIR 
FIPs also allow States to submit abbreviated SIP revisions that, if 
approved by EPA, will automatically replace or supplement the 
corresponding CAIR FIP provisions (e.g., the methodology for allocating 
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 more 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 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 an abbreviated SIP revision may submit limited 
SIP revisions to tailor the CAIR FIP cap-and-trade programs to the 
state submitting the revision. Specifically, an abbreviated SIP 
revision may establish certain applicability and allowance allocation 
provisions that, the CAIR FIPs provide, will be used instead of or in 
conjunction with the corresponding provisions in the CAIR FIP rules in 
that State. Specifically, the abbreviated SIP revisions may:
    1. Include NOX SIP Call trading sources that are not 
EGUs under CAIR in the CAIR FIP NOX ozone season trading 
program;
    2. Provide for allocation of NOX annual or ozone season 
allowances by the State, rather than the Administrator, and using a 
methodology chosen by the State;
    3. Provide for allocation of NOX annual allowances from 
the CSP by the State, rather than by the Administrator, and using the 
State's choice of allowed, alternative methodologies; and/or
    4. Allow units that are not otherwise CAIR units to opt 
individually into the CAIR FIP cap-and-trade programs under the opt-in 
provisions in the CAIR FIP rules.

With approval of an abbreviated SIP revision, the CAIR FIP remains in 
place, as tailored to sources in the State by that approved SIP 
revision.
    Abbreviated SIP revisions can be submitted in lieu of, or as part 
of, CAIR full SIP revisions. States may want to designate part of their 
full SIP as an abbreviated SIP for EPA to act on first when the timing 
of the State's submission might not provide EPA with sufficient time to 
approve the full SIP prior to the deadline for recording NOX 
allocations. This will help ensure that the elements of the trading 
programs where flexibility is allowed are

[[Page 58549]]

implemented according to the State's decisions. Submission of an 
abbreviated SIP revision does not preclude future submission of a CAIR 
full SIP revision. In this case, the September 26, 2007, submittal from 
Ohio requests an abbreviated SIP revision. As discussed below, Ohio 
requested three of the four provisions for which a State may request an 
abbreviated SIP. The State requested that its allocation of 
NOX annual and NOX ozone season allowances for 
EGUs under the FIP be used instead of the corresponding provisions of 
the CAIR FIPs in effect in the State. The State requested that its 
allocation of NOX annual allowances from the compliance 
supplement pool (CSP) be used instead of the corresponding provisions 
of the CAIR FIPs in effect in the State. Finally, the State asked that 
units, that are not otherwise CAIR units, may opt individually into the 
CAIR FIP cap-and-trade program under the opt-in provisions in the CAIR 
FIP rules.

V. Analysis of Ohio's CAIR SIP Submittal

A. State Budgets for Allowance Allocations

    The CAIR 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 CAA. Under CAIR, each 
allowance allocated under the Acid Rain Program for the years in phase 
1 of CAIR (2010 through 2014) authorizes 0.5 ton of 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 emissions in the CAIR trading 
program.
    The CAIR FIPs established the budgets for Ohio as 108,667 tons for 
NOX annual emissions, 45,664 tons for NOX ozone 
season emissions, and 333,520 tons for SO2 emissions. The 
Ohio SIP revision, approved in today's action, does not affect these 
budgets, which are total amounts of allowances available for allocation 
for each year under the EPA-administered cap-and-trade programs under 
the CAIR FIPs. In short, the abbreviated SIP revision only affects 
allocations of allowances under the established budgets.

B. CAIR Cap-and-Trade Programs

    The CAIR NOX annual and ozone-season FIPs 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 FIPs are similar, there are some 
differences. For example, the NOX annual FIP (but not the 
NOX ozone season FIP) 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 FIP 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 FIP 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.
    The provisions of the CAIR SO2 FIP are also similar to 
the provisions of the NOX annual and ozone season FIPs. 
However, the SO2 FIP is coordinated with the ongoing Acid 
Rain SO2 cap-and-trade program under CAA title IV. The 
SO2 FIP uses the title IV allowances for compliance, with 
each allowance allocated for 2010-2014 authorizing only 0.50 ton of 
emissions and each allowance allocated for 2015 and thereafter 
authorizing only 0.35 ton of emissions. Banked title IV allowances 
allocated for years before 2010 can be used at any time in the CAIR 
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 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.
    Ohio is subject to the CAIR FIPs concerning SO2, 
NOX annual, and NOX ozone season emissions, and 
the CAIR FIP trading programs for SO2, NOX 
annual, and NOX ozone season apply to sources in Ohio. 
Consistent with the flexibility they give to States, the CAIR FIPs 
provide that States may submit abbreviated SIP revisions that will 
replace or supplement, as appropriate, certain provisions of the CAIR 
FIP trading programs. The Ohio EPA September 26, 2007, submission is 
such an abbreviated SIP revision.

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

    In general, the CAIR FIP trading programs apply to any stationary, 
fossil-fuel-fired boiler or stationary, fossil-fuel-fired combustion 
turbine serving at any time, since the later of November 15, 1990, or 
the start-up of the unit's combustion chamber, a generator with 
nameplate capacity of more than 25 MWe producing electricity for sale.
    States have the option of bringing in, for the CAIR 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 use provisions for 
applicability that are substantively identical to the provisions in 40 
CFR 96.304 and add the applicability provisions in the State's 
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 MWe or less), that 
the State currently requires to be in the NOX SIP Call 
trading program.
    Consistent with the flexibility given to States in the CAIR FIP 
Ohio has not chosen, in the abbreviated CAIR SIP approved here, to 
expand the applicability provisions of the CAIR NOX ozone 
season trading program to include all non-EGUs in the State's 
NOX SIP Call trading program. However, EPA notes that Ohio 
has indicated that the full SIP revision submitted on September 26, 
2007, expands the applicability provisions of CAIR NOX ozone 
season trading program in this manner. As such, EPA is not taking final

[[Page 58550]]

action on the non-EGU portion of the State's September 26, 2007, full 
CAIR SIP revision. The full CAIR SIP revision including actions to 
approve the non-EGU portions of the State's CAIR rule will be the 
subject of a separate future action.

D. 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.
    The CAIR FIP provides States the flexibility to establish 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/or
    4. The use of allowance set-asides and, if used, the size of the 
set-aside.
    Consistent with the flexibility given to States in the CAIR FIPs, 
Ohio has chosen to replace the provisions of the CAIR NOX 
annual FIP concerning the allocation of NOX annual 
allowances with its own methodology. Ohio has chosen to distribute 
NOX annual allowances based upon heat input data from a 
three year period adjusted for fuel type by using fuel adjustment 
factors of 1.0 for coal, 0.6 for oil, and 0.4 for other fuels. Based on 
this methodology, Ohio determined NOX allocations for EGUs 
in the State under the CAIR FIP, and submitted its allocations to EPA 
on April 24, 2007.
    Ohio also has included, in the abbreviated SIP revision, provisions 
regarding set-aside programs for energy efficiency/renewable energy and 
innovative technology projects under the CAIR NOX Ozone 
Season program. The State's energy-efficiency/renewable energy (EE/RE) 
and innovative technology set-aside program provisions establish two 
set-asides for each control period, one set-aside for EE/RE projects 
and one set-aside for innovative technology projects, and specify 
procedures for allocating the allowances in the set-asides. Each set-
aside is limited to one percent of the state trading budget for 
NOX ozone season allowance allocations. Beginning with the 
end of 2009 and every three years thereafter, Ohio EPA will review the 
number of allowances allocated from the set-asides and will, under 
certain circumstances, increase the size of each set-aside in future 
years as necessary, up to a maximum of five percent of the state 
trading budget.
    EPA notes that the set-aside provisions do not explicitly state how 
allowances will be reserved in the set-asides if the total amount of 
allowances requested from a set-aside exceeds the total amount of 
allowances in that set-aside. However, set-aside provisions explicitly 
limit the amount of allowances available from each set-aside to one 
percent of the state trading budget unless Ohio EPA expands the set-
asides in future years. In addition, Ohio informed EPA, in the 
September 26, 2007, letter, that its guidance for the set-asides 
provides that set-aside allowances will be reserved on a pro-rata basis 
if the total requested allowances exceed the size of the set-aside. 
Ohio has indicated that it will clarify its set-aside provisions 
consistent with this guidance.
    The set-aside provisions also do not explicitly state how a set-
aside will be increased up to five percent of the state trading budget 
if the existing set-aside amounts plus the total amounts allocated to 
units with and without baseline heat input under Ohio's other 
allocation provisions for NOX ozone season allowances 
already equal the state trading budget. However, Ohio's CAIR 
NOX ozone season allocation provisions clearly limit the 
total allocations for each control period of CAIR NOX ozone 
season allowances to the amount of the state trading budget for that 
control period. Further, as written, the provisions for expanding the 
set-asides cannot have any effect on the current allocations, which 
Ohio has already submitted to the Administrator for phase 1 of the 
trading program. In addition, Ohio informed EPA, in the September 28, 
2007, letter, that Ohio EPA will reduce the total amount of allowances 
allocated to existing units under the other allocation provisions to 
the extent the size of a set-aside is increased in the future. Ohio has 
indicated that it will clarify its allocation provisions consistent 
with this statement in the September 28, 2007, letter.
    Consequently, EPA interprets Ohio's abbreviated SIP to limit the 
total allocations for each control period of CAIR NOX ozone 
season allowances (whether from current or expanded set-asides or under 
the other allocation provisions in the abbreviated SIP) to the state 
trading budget, consistent with the requirements of 40 CFR 
51.123(ee)(2)(ii)(B).

E. Allocation of NOX Allowances From the Compliance Supplement Pool 
(CSP)

    The CSP provides 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 State's share 
of the projected emission reductions under CAIR. States may distribute 
CSP allowances, one allowance for each ton of early reduction, to 
sources that make 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 NOX annual FIP establishes specific 
methodologies for allocations of CSP allowances. States may choose an 
allowed, alternative CSP allocation methodology to be used to allocate 
CSP allowances to sources in those States.
    Consistent with the flexibility given to States in the FIP, Ohio 
has chosen to modify the provisions of the CAIR NOX annual 
FIP concerning the allocation of allowances from the CSP. Ohio has 
chosen to distribute CSP allowances using an allocation methodology 
that provides more certainty to unit owners and operators that a known 
quantity of allowances per unit will be available for distribution at 
the beginning of the control period. Ohio also provides owners and 
operators with an incentive for the operation of expensive post-
combustion control equipment year-round and provides incentives for 
early reductions in emissions before 2009. Ohio EPA is required to 
submit allocations from the CSP to the Administrator by July 1, 2009, 
or such time when unit's 2008 emissions data are available so that the 
allocations can be determined. Ohio's abbreviated SIP also states that 
the Administrator will record the allocations by January 1, 2010. While 
Ohio's abbreviated SIP does not explicitly state that allocations will 
be submitted to the Administrator by

[[Page 58551]]

November 30, 2009, EPA notes that units' 2008 emissions data should 
certainly be available before that date and that the allocations need 
to be submitted by that date in order to ensure that the Administrator 
will complete recordation of allowances by January 1, 2010. Further, 
Ohio has indicated, in the September 26, 2007, letter, that it will 
clarify its CSP provisions to provide for a deadline of November 30, 
2009, for submission of CSP allocations to the Administrator. 
Consequently, EPA considers the Ohio abbreviated SIP to meet the 
requirements of 40 CFR 51.123(p)(2).

F. Individual Opt-in Units

    The opt-in provisions allow for certain non-EGUs (i.e., boilers, 
combustion turbines, and other stationary fossil-fuel-fired devices) 
that do not meet the applicability criteria for a CAIR trading program 
to participate voluntarily in (i.e., opt into) the CAIR trading 
program. A non-EGU may opt into one or more of the CAIR trading 
programs. In order to qualify to opt into a CAIR trading program, a 
unit must vent all emissions through a stack and be able to meet 
monitoring, recordkeeping, and recording requirements of 40 CFR part 
75. The owners and operators seeking to opt a unit into a CAIR trading 
program must apply for a CAIR opt-in permit. If the unit is issued a 
CAIR opt-in permit, the unit becomes a CAIR unit, is allocated 
allowances, and must meet the same allowance-holding and emissions 
monitoring and reporting requirements as other units subject to the 
CAIR trading program. The opt-in provisions provide for two 
methodologies for allocating allowances for opt-in units, one 
methodology that applies to opt-in units in general and a second 
methodology that allocates allowances only to opt-in units that the 
owners and operators intend to repower before January 1, 2015.
    States have several options concerning the opt-in provisions. The 
rules for each of the CAIR FIP trading programs include opt-in 
provisions that are essentially the same as those in the respective 
CAIR SIP model rules, except that the CAIR FIP opt-in provisions become 
effective in a State only if the State's abbreviated SIP revision 
adopts the opt-in provisions. The State may adopt the opt-in provisions 
entirely or may adopt them but exclude one of the allowance allocation 
methodologies. The State also has the option of not adopting any opt-in 
provisions in the abbreviated SIP revision and thereby providing for 
the CAIR FIP trading program to be implemented in the State without the 
ability for units to opt into the program.
    Consistent with the flexibility given to States in the FIPs, Ohio 
has chosen to allow non-EGUs meeting certain requirements to 
participate in the CAIR NOX annual trading program, the CAIR 
NOX ozone season trading program and the CAIR SO2 
trading program. Ohio EPA submitted the CAIR SIP program rules, OAC 
3745-109-08 and OAC 3745-109-14 and OAC 3745-109-21, which incorporate 
the opt-in provisions as provided in the final EPA CAIR rule of April 
28, 2006. These rules address opt-ins for NOX ozone season, 
NOX annual, and SO2 annual programs.

VI. Final Action

    EPA is approving the rules contained in Ohio's abbreviated CAIR SIP 
revision submitted on September 26, 2007. Ohio is covered by the CAIR 
FIPs, which require participation in the EPA-administered CAIR FIP cap-
and-trade programs for SO2, NOX annual, and 
NOX ozone season emissions. Under this abbreviated SIP 
revision, and consistent with the flexibility given to States in the 
FIPs, Ohio adopts provisions for allocating allowances under the CAIR 
FIP NOX annual and ozone season trading programs. In 
addition, Ohio adopts in the abbreviated SIP revision provisions that 
establish a methodology for allocating allowances in the CSP and allow 
for individual non-EGUs to opt into the CAIR FIP SO2, 
NOX annual, NOX ozone season cap-and-trade 
programs. As provided for in the CAIR FIPs, these provisions in the 
abbreviated SIP revision will replace or supplement the corresponding 
provisions of the CAIR FIPs in Ohio. The abbreviated SIP revision meets 
the applicable requirements in 40 CFR 51.123(p) and (ee), with regard 
to NOX annual and NOX ozone season emissions, and 
40 CFR 51.124(r), with regard to SO2 emissions. EPA is not 
making any changes to the CAIR FIPs, but is amending the appropriate 
appendices in the CAIR FIP trading rules simply to note that approval.

VII. Statutory and Executive Order Reviews

Executive Order 12866: Regulatory Planning and Review

    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.

Executive Order 13211: Actions That Significantly Affect Energy Supply, 
Distribution, or Use

    Because it is not a ``significant regulatory action'' under 
Executive Order 12866 or a ``significant energy action,'' 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).

Regulatory Flexibility Act

    This action merely approves state law as meeting Federal 
requirements and imposes no additional requirements beyond those 
imposed by state law. Accordingly, the Administrator certifies that 
this rule will 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.).

Unfunded Mandates Reform Act

    Because this rule approves pre-existing requirements under State 
law and does 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).

Executive Order 13175: Consultation and Coordination With Indian Tribal 
Governments

    This rule also does not have tribal implications because it will 
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 (59 
FR 22951, November 9, 2000).

Executive Order 13132: Federalism

    This action also does not have Federalism implications because it 
does not have substantial direct effects on the States, on the 
relationship between the national government and the States, or on the 
distribution of power and responsibilities among the various levels of 
government, as specified in Executive Order 13132 (64 FR 43255, August 
10, 1999). This action merely approves a State rule implementing a 
Federal standard, and does not alter the relationship or the 
distribution of power and responsibilities established in the Clean Air 
Act.

[[Page 58552]]

Executive Order 13045: Protection of Children From Environmental Health 
and Safety Risks

    This rule also is not subject to Executive Order 13045 ``Protection 
of Children from Environmental Health Risks and Safety Risks'' (62 FR 
19885, April 23, 1997), because it approves a State rule implementing a 
Federal Standard.

National Technology Transfer Advancement Act

    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.

Paperwork Reduction Act

    This rule does not impose an information collection burden under 
the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 
et seq.).

Congressional Review Act

    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the 
Small Business Regulatory Enforcement Fairness Act of 1996, generally 
provides that before a rule may take effect, the agency promulgating 
the rule must submit a rule report, which includes a copy of the rule, 
to each House of the Congress and to the Comptroller General of the 
United States. EPA will submit a report containing this rule and other 
required information to the U.S. Senate, the U.S. House of 
Representatives, and the Comptroller General of the United States prior 
to publication of the rule in the Federal Register. A major rule cannot 
take effect until 60 days after it is published in the Federal 
Register. This action is not a ``major rule'' as defined by 5 U.S.C. 
804(2).
    Under section 307(b)(1) of the Clean Air Act, petitions for 
judicial review of this action must be filed in the United States Court 
of Appeals for the appropriate circuit by December 17, 2007. Filing a 
petition for reconsideration by the Administrator of this final rule 
does not affect the finality of this rule for the purposes of judicial 
review nor does it extend the time within which a petition for judicial 
review may be filed, and shall not postpone the effectiveness of such 
rule or action. This action may not be challenged later in proceedings 
to enforce its requirements. (See section 307(b)(2).)

List of Subjects

40 CFR Part 52

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

40 CFR Part 97

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

    Dated: September 28, 2007.
Bharat Mathur,
Acting Regional Administrator, Region 5.

0
For the reasons set forth in the preamble, parts 52 and 97 of chapter 1 
of title 40 of the Code of Federal Regulations are amended as follows:

PART 52--[AMENDED]

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

Sec.  52.1870  Identification of plan.

* * * * *
    (c) * * *
    (140) Ohio Environmental Protection Agency submitted amendments on 
September 26, 2007, to the State Implementation Plan to control 
emissions from electric generating units (EGU). Rules affecting these 
units include: Ohio Administrative Code (OAC) 3745-109-01 (B)(59) and 
(72), 3745-109-04, 3745-109-08, 3745-109-14, 3745-109-17 (except the 
following: the language in paragraph (A) referencing the state trading 
budget for non-EGUs in 3745-109-17-01(C)(4), paragraphs 
(C)(1)(a)(i)(d), (C)(2)(b), (C)(2)(d), (C)(2)(e), and (C)(2)(f), and 
the language in paragraph (C)(3)(a) referencing non-EGUs), and 3745-
109-21.
    (i) Incorporation by reference. The following sections of the Ohio 
Administrative Code (OAC) are incorporated by reference.
    (A) OAC 3745-109-01(B)(59) ``Energy efficiency/renewable energy 
project''; OAC 3745-109-01(B)(72) ``Innovative technology project''; 
OAC 3745-109-04 ``CAIR NOX allowance allocations''; OAC 
3745-109-08 ``CAIR NOX opt-in units''; OAC 3745-109-14 
``CAIR SO2 opt-in units''; and OAC 3745-109-21 ``CAIR 
NOX ozone season opt-in units''; effective on September 27, 
2007.
    (B) OAC 3745-109-17 ``CAIR NOX ozone season allowance 
allocations''; effective on September 27, 2007, except the following: 
the language in paragraph (A) referencing the state trading budget for 
non-EGUs in 3745-109-17-01(C)(4), paragraphs (C)(1)(a)(i)(d), 
(C)(2)(b), (C)(2)(d), (C)(2)(e), and (C)(2)(f), and the language in 
paragraph (C)(3)(a) referencing non-EGUs.

PART 97--[AMENDED]

0
3. The authority citation for part 97 continues to read as follows:

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

0
4. Appendix A to subpart EE is amended by adding in alphabetical order 
the entry ``Ohio'' under paragraphs 1. and 2. to read as follows:

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

    1. * * *
    Ohio
* * * * *
    2. * * *
    Ohio
* * * * *

0
5. Appendix A to subpart II is amended by adding in alphabetical order 
the entry ``Ohio'' under paragraphs 1. and 2. to read as follows:

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

    1. * * *
    Ohio
* * * * *
    2. * * *
    Ohio
* * * * *

0
6. Appendix A to subpart III of part 97 is amended by adding in 
alphabetical order the entry ``Ohio'' under paragraphs 1. and 2. to 
read as follows:

[[Page 58553]]

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

    1. * * *
    Ohio
* * * * *
    2. * * *
    Ohio
* * * * *

0
7. Appendix A to subpart EEEE of part 97 is amended by adding in 
alphabetical order the entry ``Ohio'' to read as follows:

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

* * * * *
    Ohio
* * * * *

0
8. Appendix A to subpart IIII of part 97 is amended by adding in 
alphabetical order the entry ``Ohio'' under paragraphs 1. and 2. to 
read as follows:

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

    1. * * *
    Ohio
    2. * * *
    Ohio
* * * * *
 [FR Doc. E7-20252 Filed 10-15-07; 8:45 am]

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