Document ID: EPA-HQ-OAR-2009-0430-0001
Agency: epa
Document Type: Notice
Title: Notice of Data Availability Concerning Compliance Supplement Pool Allowance Allocations Under the Clean Air Interstate Rule Federal Implementation Plan
Posted Date: 2009-08-06T04:00Z

[Federal Register: August 6, 2009 (Volume 74, Number 150)]
[Notices]               
[Page 39315-39321]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06au09-57]                         

=======================================================================
-----------------------------------------------------------------------

ENVIRONMENTAL PROTECTION AGENCY

[EPA-HQ-OAR-2009-0430; FRL-8941-8]

 
Notice of Data Availability Concerning Compliance Supplement Pool 
Allowance Allocations Under the Clean Air Interstate Rule Federal 
Implementation Plan

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of data availability (NODA).

-----------------------------------------------------------------------

SUMMARY: EPA is administering--under the Clean Air Interstate Rule 
(CAIR) Federal Implementation Plans (FIPs)--the CAIR NOX 
Annual Trading Program Compliance Supplement Pool (CAIR CSP) for the 
States of Delaware, Louisiana, Maryland, Pennsylvania, and Wisconsin. 
The CAIR FIPs require the Administrator to determine by order the CAIR 
CSP allowance allocations for units in these States that requested and 
qualify for these allocations and to provide the public with the 
opportunity to object to the allocation determinations. In this Notice 
of Data Availability (NODA), EPA is making available, to the public, 
data and other information relating to the CAIR CSP allowance 
allocations and denial of allocations to individual units whose owners 
and operators requested such an allocation from EPA. The allocations 
and denial of allocations are based on each unit's emissions data 
reported to EPA in quarterly emissions reports submitted by the unit's 
owners and operators under the CAIR trading program and other programs 
and on EPA's interpretations of the regulation governing the allocation 
of CAIR CSP allowances. The NODA presents the

[[Page 39316]]

emissions data and other information, including the CAIR CSP allowance 
allocation calculations for each individual unit and the resulting 
allocation for each unit.

DATES: Objections must be received by September 8, 2009.

ADDRESSES: Submit your objections, identified by Docket Number OAR-
2009-0430 by one of the following methods:
    A. Federal Rulemaking Portal: http://www.regulations.gov. This NODA 
is not a rulemaking, but you may use the Federal Rulemaking Portal to 
submit objections to the NODA. To submit objections, follow the on-line 
instructions for submitting comments.
    B. Mail: Air Docket, ATTN: Docket Number OAR-2009-0430, 
Environmental Protection Agency, Mail Code: 6102T, 1200 Pennsylvania 
Ave., NW., Washington, DC 20460.
    C. E-mail: A-AND-R-Docket@epa.gov.
    D. Hand Delivery: EPA Docket Center, 1301 Constitution Avenue, NW., 
Room B102, Washington, DC. Such deliveries are only accepted during the 
Docket's normal hours of operation, and special arrangements should be 
made for deliveries of boxed information.
    Instructions: Direct your objections to Docket ID No. OAR-2009-
0430. EPA's policy is that all objections received will be included in 
the public docket without change and may be made available online at 
http://www.epa.gov/edocket, including any personal information 
provided, unless the objection 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 objection. If you send an e-mail objection directly to EPA without 
going through http://www.regulations.gov, your e-mail address will be 
automatically captured and included as part of the objection that is 
placed in the public docket and made available on the Internet. If you 
submit an electronic objection, EPA recommends that you include your 
name and other contact information in the body of your objection and 
with any disk or CD-ROM you submit. If EPA is unable to read your 
objection and contact you for clarification due to technical 
difficulties, EPA may not be able to consider your objection. 
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 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 EPA Docket Center, EPA West, 
Room B102, 1301 Constitution Avenue, NW., Washington, DC. The Public 
Reading Room is open from 8:30 a.m. to 4:30 p.m, Monday through Friday, 
excluding legal holidays. The telephone number for the Public Reading 
Room is (202) 566-1744, and the telephone number for the Air Docket is 
(202) 566-1742.

FOR FURTHER INFORMATION CONTACT: Questions concerning this action 
should be addressed to Robert L. Miller, EPA Headquarters, CAMD 
(6204J), 1200 Pennsylvania Ave., NW., Washington, DC 20460, telephone 
(202) 343-9077, and e-mail miller.robertl@epa.gov. If mailing by 
courier, address package to Robert L. Miller, 1310 L St., NW., Room 
254B, Washington, DC 20005.

SUPPLEMENTARY INFORMATION: 

Outline

1. General Information
2. What Is the Purpose of this NODA?
3. What Are the Requirements for Requesting and Receiving CAIR CSP 
Allowances and the Procedures for Allocating Such Allowances?
4. How Is EPA Applying to Individual CAIR Units the Requirements for 
Requesting and Receiving CAIR CSP Allowance Allocations?
5. How Do I Interpret the Data Made Available by This NODA?

1. General Information

    EPA published the Clean Air Interstate Rule (CAIR) on May 12, 2005 
(70 FR 25162 (May 12, 2005)), in which 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 half of the country. As a 
result, EPA required those upwind States to revise their state 
implementation plans (SIPs) to include control measures that reduce 
emissions of sulfur dioxide (SO2), which is a precursor to 
PM2.5, and/or nitrogen oxides (NOX), which is a 
precursor to both ozone and PM2.5. Under CAIR, States may 
implement these reduction requirements by participating in EPA-
administered CAIR SO2, NOX annual, and 
NOX ozone season trading programs or by adopting any other 
control measures.
    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 (71 FR 25328 (Apr. 28, 2006)). The CAIR FIPs 
require electric generating units (EGUs) to participate in EPA-
administered CAIR SO2, NOX annual, and 
NOX ozone season trading programs, as appropriate. These 
trading programs impose essentially the same requirements as, and are 
integrated with, the respective CAIR SIP trading programs. Further, as 
provided in a rule published by EPA on November 2, 2007, 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. As a result of EPA's 
approval of some States' CAIR-related SIP or abbreviated SIP 
provisions, EPA is administering the CAIR CSP provisions in the CAIR 
NOX annual trading program only for the States of Delaware, 
Louisiana, Maryland, Pennsylvania, and Wisconsin, and the remaining 
States are responsible for administering the CAIR CSP for their 
respective CAIR units.
    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

[[Page 39317]]

``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.
    This NODA provides data and other information concerning the 
allocation of CAIR CSP allowances under Sec.  97.143 of the CAIR FIPs 
for CAIR units in Delaware, Louisiana, Maryland, Pennsylvania, and 
Wisconsin. That rule requires that the Administrator determine by order 
the CAIR CSP allowance allocations and provide an opportunity for the 
public to submit objections.

Does This Action Apply to Me?

    This NODA applies to CAIR units in the States of Delaware, 
Louisiana, Maryland, Pennsylvania, and Wisconsin whose owners and 
operators requested on or before May 1, 2009 a CAIR CSP allowance 
allocation. If you have any questions regarding the applicability of 
this NODA to a particular entity, consult the person listed in the 
preceding section under ``for further information contact.''

What Should I Consider as I Prepare and Submit Any Objections for EPA?

    When preparing and submitting objections, remember to:
    (1) Identify the NODA by docket number and other identifying 
information (subject heading, Federal Register date and page number).
    (2) Follow directions. EPA may ask you to respond to specific 
questions or organize objections in a specific manner.
    (3) Make sure to submit your objections by the deadline identified.
    To expedite EPA's review, you are encouraged to send a separate 
copy of your objections, in addition to the copy you submit to the 
official docket, to Robert L. Miller, EPA Headquarters, CAMD (6204J), 
1200 Pennsylvania Ave., NW., Washington, DC 20460 and e-mail 
miller.robertl@epa.gov. If you e-mail the copy of your objections to 
Mr. Miller, put ``objection for Docket Number OAR-2009-0430'' in the 
subject line to alert Mr. Miller that an objection is included. If 
mailing by courier, address package to Robert L. Miller, 1310 L St., 
NW., Room 254B, Washington, DC 20005.
    Do not submit CBI to EPA through http://www.regulations.gov or e-
mail. Clearly mark any portion of the information that you claim to be 
CBI. For CBI in a disk or CD ROM that you mail to EPA, mark the outside 
of the disk or CD ROM as CBI and then identify electronically within 
the disk or CD ROM the specific information that is claimed as CBI. In 
addition to one complete version of the objection that includes 
information claimed as CBI, a copy of the objection that does not 
contain the information claimed as CBI must be submitted for inclusion 
in the public docket. Information so marked will not be disclosed 
except in accordance with procedures set forth in 40 CFR part 2. Send 
or deliver information identified as CBI only to the following address: 
Robert L. Miller, EPA Headquarters, CAMD (6204J), 1200 Pennsylvania 
Avenue, NW., Washington DC 20460.

2 What Is the Purpose of This NODA?

    In this NODA, EPA is making available under the CAIR FIPs for 
Delaware, Louisiana, Maryland, Pennsylvania, and Wisconsin the 
following data and other information: (1) The list of each CAIR unit in 
these States for which the owners and operators requested, and that 
qualifies or does not quality for, allocation of CAIR CSP allowances, 
(2) the data for each such unit from quarterly emission reports 
submitted under EPA's monitoring, reporting, and recordkeeping rules 
applicable to trading programs (i.e., 40 CFR part 75) by the owners and 
operators, and EPA's interpretations of Sec.  97.143, on which are 
based the determination of each unit's qualification or failure to 
qualify for a CAIR CSP allowance allocation and the calculation of the 
amount of CAIR CSP allowances that each qualifying unit receives, (3) 
the calculation, and resulting amount, of the CAIR CSP allowance 
allocations for each qualifying unit; and (4) the basis for each 
allocation or denial, in whole or in part, of an allocation for each 
unit.
    The purpose of making the data available for objection is to ensure 
that the data on which the applicable determinations for each unit are 
based are correct. EPA is providing unit owners, unit operators, and 
the public an opportunity to make objections to any of the data made 
available in this NODA. Any person objecting to any of the data should 
explain the basis for his or her objection, should provide alternative 
data and supporting documentation, and explain why the alternative data 
are the best available data. Supporting documentation can include, but 
is not limited to, spreadsheets, explanations of why the data on such 
spreadsheets are more accurate, and information on the data source. In 
general, EPA does not anticipate revising a unit's NOX 
emission rate and heat input data reported to EPA in quarterly 
emissions reports in accordance with part 75 because, in submitting the 
reports, the designated representative of the unit's owners and 
operators certified the data's correctness, completeness, and 
consistency with part 75 requirements. However, EPA will consider any 
objections to the data.
    The provisions of Sec.  97.143--which govern the submission of 
requests for CAIR CSP allowance allocations and set forth the criteria 
for qualification for, and the methodologies for calculating, such 
allocations for each individual unit--are final and are not being 
reopened in this NODA. These provisions are described in this NODA 
solely for informational purposes and are not open for objection. 
However, EPA's interpretation of these rule provisions in applying them 
to each unit requesting a CAIR CSP allowance allocation, and EPA's 
reasons for allocating such allowances or denying such allocations are 
open for objection, subject to the above-described limitation that the 
provisions of Sec.  97.143 themselves are not a proper subject of 
objection. See 40 CFR 97.143(d)(4) (explaining that objections must be 
limited to whether EPA's determination of each unit's CAIR CSP 
allowance allocations are in accordance with Sec.  97.143(b), (c), and 
(d)(2) and (3)).

3. What Are the Requirements for Requesting and Receiving CAIR CSP 
Allowances and the Procedures for Allocating Such Allowances?

    In the final CAIR FIPs, EPA adopted the CAIR NOX Annual 
Trading Program as part of the Federal remedy for CAIR. The CAIR FIPs 
established, for each State subject to CAIR with respect to annual 
NOX emissions, an amount of CAIR NOX allowances--
comprising the amounts in the State NOX annual budget and 
the State's share of the CAIR CSP--that EPA allocates to CAIR units in 
the State. As explained in the preamble of the CAIR FIPs (71 FR at 
25361-62), the CAIR CSP was established to provide allowances to units 
subject to the CAIR NOX Annual Trading Program to 
incentivize early, annual NOX emissions reductions and to 
prevent undue risk to the reliability of electricity supply due to 
compliance with 2009 CAIR NOX annual emissions limitation. 
The CAIR CSP comprises 200,000 vintage 2009 CAIR NOX 
allowances for the entire CAIR region, apportioned to each State. EPA 
is administering the allocation of the portions of the CAIR CSP for 
Delaware, Louisiana, Maryland,

[[Page 39318]]

Pennsylvania, and Wisconsin,\1\ which are 843 allowances for Delaware, 
2,251 allowances for Louisiana, 4,670 allowances for Maryland, 16,009 
allowances for Pennsylvania, and 4,898 allowances for Wisconsin. Under 
Sec.  97.143(b) and (c), the owners and operators of any unit for which 
CAIR CSP allowances were sought had to submit to EPA a request for CAIR 
CSP allowance allocations by May 1, 2009. The owners and operators of a 
CAIR unit in these States could request a CAIR CSP allowance allocation 
if (1) The unit made early NOX reductions in 2007 or 2008 
(Sec.  97.143(b)) or (2) if the owners and operators demonstrated that 
compliance with the CAIR NOX emissions limitation for 2009 
would create an undue risk to the reliability of the electricity supply 
during 2009 (Sec.  97.143(c)).
---------------------------------------------------------------------------

    \1\ As noted above, the remaining States covered by CAIR or the 
CAIR FIPs are administering the allocation of their respective 
portions of the CAIR CSP under their SIPs or abbreviated SIPs.
---------------------------------------------------------------------------

    In Sec.  97.143(b), the CAIR FIPs provide both the specific 
criteria for determining whether a CAIR unit qualifies to receive a 
CAIR CSP allowance allocation for early NOX reductions and 
the methodology for determining the amount of early NOX 
reductions and calculating the CAIR CSP allowance allocation based on 
such reductions. To qualify for a CAIR CSP allowance allocation under 
Sec.  97.143(b), a unit must meet three criteria. First, the unit must 
have for each year (i.e., 2007 and/or 2008) for which the allocation is 
sought, a NOX annual emission rate below 0.25 lb/mmBtu. In 
addition, for any unit included in an Acid Rain Program NOX 
averaging plan under Sec.  76.11, the weighted average annual 
NOX emission rate for the group of units under such 
averaging plan for the year for which the allocation is sought must be 
at or below the weighted average annual group NOX emission 
rate for the year preceding that year. Lastly, the unit must 
demonstrate that it achieved a NOX emission reduction in 
each year for which the allocation is sought.
    As EPA explained in the preamble of the CAIR FIPs (71 FR 25361), 
the CSP under the CAIR FIP is modeled on the CSP in Sec.  96.143 of the 
CAIR model trading rules. The preamble of the CAIR model trading rules 
in turn explained that the CSP in the CAIR model trading rules was:

    patterned after the NOX SIP Call's CSP * * * 
Similarities include: Limiting the total number of allowances that 
can be distributed; limiting the years in which CSP allowances can 
be earned; populating the CSP with allowances vintaged the first 
compliance year; and using distribution criteria of early reductions 
and need. 70 Fed. Reg. 25162, 25286 (May 12, 2005).

    Under the NOX SIP Call, as originally promulgated by 
EPA, May 1, 2003 was the commencement date, and 2003 was the first 
compliance year, of the NOX Budget Trading Program, which 
covered ozone season (i.e., May 1-September 30) NOX 
emissions, rather than annual NOX emissions. The 
NOX SIP Call CSP was a pool of 200,000 allowances available 
for each unit that ``reduce[d] its NOX emission rate in the 
2001 or 2002 control period [i.e., ozone season]''. 40 CFR 96.55(c); 
see also 40 CFR 51.123(e)(4)(iii)(A)(2) (requiring verification of 
emissions reduction ``having occurred during an ozone season between 
September 30, 1999 and May 1, 2003''). The unit was required to monitor 
NOX emissions in accordance with the NOX Budget 
Trading Program (generally involving the use of continuous emissions 
monitoring systems in accordance with part 75) starting in the 2000 
control period and thereafter. In order to qualify for NOX 
SIP Call CSP allowances for 2001 or 2002 early reductions, the unit had 
to have a NOX emission rate in the respective year of less 
than 0.25 lb/mmBtu and less than 80% of the NOX emission 
rate in 2000. 40 CFR 96.55(c)(1) and (3). In short, the requirement 
that early reductions occurred in 2001 or 2002 meant that the unit had 
to have an emission rate in 2001 or 2002 respectively that was less 
than that unit's emission rate in the year preceding the required 
period (2001-2002) for the early reductions, i.e., 2000. See 63 FR 
57414 (explaining that monitored emissions data ``from the 2000 ozone 
season shall be used to establish a baseline emission rate'' that the 
unit's emission rate in 2001 or 2002 must be at least 20% below). The 
NOX SIP Call CSP was also available for sources for which 
compliance in 2003 would create ``undue risk for the reliability of the 
electricity supply'' (40 CFR 51.121(e)(4)(iii)(B)(2)(i)) or comparable 
undue risk for a non-electric generating source or its associated 
industry (40 CFR 51.121(e)(4)(iii)(B)(2)(ii)).
    The requirements for qualifying for the CAIR CSP--which, as 
discussed above, was patterned after the NOX SIP Call CSP--
are structured in a similar way to the NOX SIP Call CSP 
qualification requirements. In particular, the first year for 
compliance under the CAIR NOX Annual Trading Program is 
2009, and, in order to qualify for the CAIR CSP for early reductions, a 
unit must ``achieve[ ] emissions reductions in 2007 and 2008.'' 40 CFR 
97.143(b); see also 40 CFR 51.123(e)(4)(iii)(A)(2) (stating that 
emission reductions must ``have occurred during 2007 and 2008'') and 40 
CFR 96.143(b) (CAIR model trading rule provision requiring emission 
reductions ``achieve[d] in 2007 and 2008''). Consistent with the 
approach adopted for determining qualification for the NOX 
SIP Call CSP, EPA interprets the CAIR CSP qualification requirement for 
early reductions to mean that the unit must have an emission rate in 
2007 or 2008 that is less than the unit's emission rate in the year 
before 2007-2008, i.e., 2006. In short, the unit's emission rate in 
2006 is used to establish the baseline emission rate for determining 
whether the unit reduced its emission rate in 2007 or 2008. Thus, in 
order to qualify for allocations from the CSP under the CAIR FIPs, a 
unit must--in addition to meeting in 2007 or 2008 the above-described 
requirements concerning the 0.25 lb/mmBtu ceiling on the annual 
NOX emission rate and the weighted average group 
NOX emission rate in any NOX averaging plan 
covering the unit--have an annual NOX emission rate in 2007 
or 2008 below the unit's 2006 annual NOX emission rate.
    Once EPA determines which individual units in a given State meet 
these qualification requirements for receiving a CAIR CSP allowance 
allocation under Sec.  97.143(b) for 2007 and/or 2008, EPA then 
determines the amount of such allocation for each qualifying unit for 
each of the applicable years. EPA calculates such allocation by: 
multiplying the difference between 0.25 lb/mmBtu and the unit's annual 
NOX emission rate (rounded to the nearest hundredth) for 
such year by the annual heat input (in mmBtu) of the unit for such 
year; dividing the results by 2,000 lb/ton; and rounding to the nearest 
whole number of tons as appropriate.
    The CAIR FIPs, like the NOX SIP Call, provide a second 
means of qualifying for CSP allowance allocations. Specifically, in 
Sec.  97.143(c), the CAIR FIPs set forth specific criteria that a CAIR 
unit must meet in order to qualify for a CAIR CSP allowance allocation 
in order to prevent the unit's compliance for 2009 with CAIR 
NOX emission limitation under the CAIR NOX Annual 
Trading Program (i.e., the requirement to hold CAIR NOX 
allowances covering annual NOX emissions) from creating 
undue risk to the reliability of the electricity supply. A request for 
CAIR CSP allowances under that provision must demonstrate that, without 
the requested allowances, compliance for 2009 will result in such undue 
risk. That demonstration must include a

[[Page 39319]]

showing that it would not be feasible for the unit's owners and 
operators to obtain sufficient electricity from other electricity 
generators during the installation of emission control technology at 
the unit for compliance, or to obtain sufficient allowances, to avoid 
undue risk. If EPA determines that any individual units qualify for 
CAIR CSP allowances under the electric reliability criterion, EPA then 
determines the minimum amount of CAIR CSP allowance that each such unit 
needs to prevent undue risk. See 40 CFR 97.143(c)(1) (requiring request 
be for ``minimum amount'' of allowances necessary to remove undue risk) 
and 97.143(d)(1) (requiring EPA to adjust requests as necessary to make 
the requested amounts comply with the requirements of Sec.  97.143(b) 
and (c)).
    Finally, EPA makes any necessary adjustments under Sec.  
97.143(d)(2) and (3) to the CAIR CSP allocations calculated under Sec.  
97.143(b) and (c) in order to ensure that the total amount of CAIR CSP 
allowances allocated to units in a given State does not exceed that 
State's share of the CAIR CSP. If the sum of all of the calculated 
allocations for units in a given State is less than that State's 
portion of the CAIR CSP, then such units are allocated the full 
calculated amount. If the sum of all of the calculated allocations for 
units in a given State is greater than that State's portion of the CAIR 
CSP, then each unit is allocated its proportionate share, i.e., the 
calculated amount multiplied by the State's CAIR CSP portion divided by 
the sum of the calculated amounts for all units in that State.
    Under Sec.  97.143(d)(4), by July 31, 2009, EPA must determine by 
order the CAIR CSP allowance allocations in accordance with Sec.  
97.143(d)(1) through (3) and:

make available to the public each determination of * * * [CAIR CSP 
allowance allocations] and will provide an opportunity of submission 
of objections to the determination. Objections shall be limited to 
addressing whether the determination is in accordance with [Sec.  
97.143(b), (c), and (d)(2) and (3)], as appropriate. Based on any 
such objections [EPA] will adjust each determination to the extent 
necessary to ensure that it is in accordance with such [rule 
provisions]. 40 CFR 97.143(d)(4).

In this NODA, EPA is carrying out its responsibilities under Sec.  
97.143(d)(4).

4. How Is EPA Applying to Individual CAIR Units the Requirements for 
Requesting and Receiving CAIR CSP Allowance Allocations?

    On March 18, 2009, EPA sent an e-mail--to the designated 
representatives, alternate designated representatives, and their 
respective agents under the CAIR NOX allowance tracking 
system for CAIR units in Delaware, Louisiana, Pennsylvania, and 
Wisconsin--that provided instructions on the proper submission of a 
CAIR CSP allowance allocation request.\2\ The March 18, 2009 e-mail 
explained what data should be submitted with the request, depending on 
whether the request was made pursuant to Sec.  97.143(b) or (c) and 
reminded addressees of the May 1, 2009 deadline for such requests. 
Among the data elements for a request under Sec.  97.143(b) were: the 
annual NOX rate of the unit for years 2006, 2007, and 2008; 
the annual heat input for years 2007 and 2008; data demonstrating that 
the unit made NOX reductions in 2007 or 2008; and the 
calculations showing the number of allowances that the unit was 
entitled to receive under Sec.  97.143(b)(2). Among the data elements 
for a request under Sec.  97.143(c) were: The calculation of the 
minimum amount of allowances necessary to remove undue risk to 
electricity supply reliability and a demonstration that the owners and 
operators of the unit involved could not obtain sufficient electricity 
from other electricity generators, or sufficient allowances, to prevent 
such undue risk. Because most CAIR units have also been affected units 
under the Acid Rain Program since at least 2000, EPA already had 
access, through quarterly emissions reports submitted by the unit's 
owners and operators in accordance with part 75 for 2006 through 2008, 
to the emissions and other data needed to determine whether most of the 
units qualified for CAIR CSP allowance allocations based on early 
reductions and, if so, for how many allowances. Nevertheless, EPA 
requested from owners and operators the data elements set forth in the 
March 18, 2009 e-mail in order to ensure that there were no data errors 
and that the owners and operators would know the maximum number of CAIR 
CSP allowances the unit could expect to receive. In contrast to the 
information necessary to allocate CAIR CSP allowances for early 
reductions, the information necessary to allocate such allowances to 
prevent undue risk to electricity supply reliability had not previously 
been collected by EPA and, on its face, would reflect unit owners' and 
operators' unique circumstances concerning the electricity supply 
available to them and their customers and the owners' and operators' 
access to allowances. EPA therefore required that the owners and 
operators provide this information as part of any request for CAIR CSP 
allowances to prevent undue risk to electricity supply reliability.
---------------------------------------------------------------------------

    \2\ On April 28, 2009, Maryland sent essentially the same e-mail 
to the designated representatives, alternate designated 
representatives, and their respective agents under the CAIR 
NOX allowance tracking system for CAIR units in Maryland.
---------------------------------------------------------------------------

    EPA received timely requests for CAIR CSP allowance allocations for 
2007 and 2008 for about 60 CAIR units in Delaware, Louisiana, Maryland, 
Pennsylvania, and Wisconsin.\3\ Many of the CAIR CSP allowance 
allocation requests expressly stated that the owners and operators were 
seeking allowances pursuant to Sec.  97.143(b). However, some requests 
did not identify the provision under which CAIR CSP allowances were 
being sought, but provided data that were only relevant to 
qualification for such allowances under Sec.  97.143(b). Moreover, 
while many of the requests provided all of the data needed, and 
referenced in the March 18, 2009 e-mail, for determining qualification 
for allowances under Sec.  97.143(b), some provided only a portion of 
such data or provided incorrect data. Some requests either overstated 
or understated the amount of allowances the unit involved was qualified 
to receive. In many cases, those requests were based on emissions data 
that differed from the EPA-accepted emissions values in the quarterly 
emission reports submitted and certified by the designated 
representatives of the owners and operators of the units under part 75, 
and no explanation or justification supporting the use of the values 
not certified under part 75 was provided. Consistent with the 
requirements of Sec.  97.143(b) to use data provided in accordance with 
part 75 and because the quarterly emissions report values had 
previously been certified as correct, complete, and consistent with the 
requirements (such as those for quality assurance) of part 75, EPA 
maintains that such data are the correct data to use for purposes of 
allocating CAIR CSP allowances. See 40 CFR 97.143(b)(1) (requiring a 
unit to monitor and report NOX emissions during 2007-2008 in 
accordance with subpart HH of the CAIR FIP NOX annual 
trading program rules, which is based on, and references, 40 CFR part 
75); and 40 CFR 75.64(c) (requiring certification statement in 
quarterly emissions reports). In other cases, the requests reflected a 
misunderstanding, or misapplication, of the CAIR CSP allocation 
methodology

[[Page 39320]]

(which is summarized above) in Sec.  97.143(b). None of the requests 
specifically referenced Sec.  97.143(c) or provided the information 
needed, and referenced in the March 18, 2009 e-mail, for determining 
qualification for allowances under that provision. Finally, in the case 
of one company's units, the request did not reference either Sec.  
97.143(b) or Sec.  97.143(c) as the basis for receiving CAIR CSP 
allowances and instead requested such allowances on other grounds.
---------------------------------------------------------------------------

    \3\ EPA also received requests for units in Minnesota. Because 
EPA recently proposed to stay the effectiveness of CAIR and the CAIR 
FIPs to Minnesota and sources in that State, EPA is not addressing 
here any requests concerning Minnesota.
---------------------------------------------------------------------------

    Rather than denying any request that did not provide all the 
necessary data, provided incorrect data, miscalculated the amount of 
allowances for which the unit qualified, or failed to state expressly 
that the request was being made under Sec.  97.143(b) or Sec.  
97.143(c), EPA has decided to evaluate each unit for which a timely 
request for CAIR CSP allowances on any grounds was submitted, determine 
if that unit qualifies for allowances for early reductions under Sec.  
97.143(b), and, if so, determine the maximum amount of allowances that 
the unit can receive under that provision. EPA is taking this approach 
because, for the reasons discussed above, EPA already has the necessary 
data to make such determinations for every unit for which a timely 
request was submitted, and therefore requesting owners and operators to 
amend or correct their requests would unnecessarily delay completion of 
the CAIR CSP allowance allocations.
    However, with regard to CAIR CSP allowance allocations to prevent 
undue risk to electricity supply reliability under Sec.  97.143(c), EPA 
does not have the information necessary to support a request for 
allowances under that provision. As discussed above, this information 
is not already available to EPA and involves circumstances unique to 
the particular owners and operators involved. Consequently, EPA is 
taking the approach of considering a unit's qualification for CAIR CSP 
allowances under Sec.  97.143(c) only if the owners and operators of 
the unit expressly request allowances under that provision. Because 
none of the requests received by EPA referenced Sec.  97.143(c) as a 
basis for the unit involved obtaining CAIR CSP allowances, much less 
provided the necessary information to demonstrate qualification for 
such allowances under that provision, EPA has determined that no CAIR 
CSP allowances are being allocated under the provision.
    Applying the approaches discussed above, EPA evaluated each 
individual unit for which the owners and operators submitted a request 
for a CAIR CSP allowance allocation and determined whether the unit 
qualified under Sec.  97.143(b) for such allowances and, if so, 
calculated the maximum amount for which the unit qualified, reflecting 
any adjustment necessary to ensure that the total amount of such 
allowances allocated to the units in a given State would not exceed 
that State's portion of the CAIR CSP. The detailed unit-by-unit data, 
determinations, and calculations are set forth in a technical support 
document, which is a single Excel spreadsheet titled ``CAIR FIP CSP 
Allocations Data'' and is available on EPA's CAMD Web site at http://
www.epa.gov/airmarkets/cair/csp and in the CAIR CSP Docket (Docket ID 
No. OAR-2009-0430). The unit-by-unit allocations and denials of 
allocations that are shown in the technical support document are 
summarized below:
    For 2007:
    1. Each individual unit whose 2007 annual NOX emission 
rate reported in accordance with part 75 was less than 0.25 lb/mmBtu 
and less than the unit's 2006 annual NOX emission rate 
reported in accordance with part 75 and whose NOX averaging 
plan (if any) had a weighted average group NOX emission rate 
for 2007 determined in accordance with part 75 that did not exceed the 
plan's weighted average group NOX emission rate for 2006 
reported in accordance with part 75 is allocated CAIR CSP allowances 
calculated in accordance with Sec.  97.143(b) and (d). To the extent 
the amount allocated is less than the amount requested for the unit, 
EPA is denying, in part, the request, as well as providing an 
allocation. In virtually all cases, the basis for such denials is that 
the request was based on data not certified under part 75 for which no 
supporting explanation or justification was provided or an 
interpretation of Sec.  97.143(b) and (d) that was inconsistent with 
the rule text or EPA's interpretation (set forth in this NODA) of the 
rule text.
    2. Each individual unit whose 2007 annual NOX emission 
rate reported in accordance with part 75 exceeded 0.25 lb/mmBtu or 
exceeded the unit's 2006 annual NOX emission rate reported 
in accordance with part 75 or whose NOX averaging plan (if 
any) had a weighted average group NOX emission rate for 2007 
determined in accordance with part 75 exceeded the plan's weighted 
average group NOX emission rate for 2006 determined in 
accordance with part 75 is not allocated any CAIR CSP allowances. For 
each of these units, EPA is denying in full the requested allocation.
    For 2008:
    3. Each individual unit whose 2008 annual NOX emission 
rate reported in accordance with part 75 was less than 0.25 lb/mmBtu 
and less than the unit's 2006 annual NOX emission rate 
reported in accordance with part 75 and whose NOX averaging 
plan (if any) had a weighted average group NOX emission rate 
for 2008 determined in accordance with part 75 that did not exceed the 
plan's weighted average group NOX emission rate for 2007 
reported in accordance with part 75 is allocated CAIR CSP allowances 
calculated in accordance with Sec.  97.143(b) and (d). To the extent 
the amount allocated is less than the amount requested for the unit, 
EPA is denying, in part, the request, as well as providing an 
allocation. In virtually all cases, the basis for such denials is that 
the request was based on data not certified under part 75 for which no 
supporting explanation or justification was provided or an 
interpretation of Sec.  97.143(b) and (d) that was inconsistent with 
the rule text or EPA's interpretation (set forth in this NODA) of the 
rule text.
    4. Each individual unit whose 2008 annual NOX emission 
rate reported in accordance with part 75 exceeded 0.25 lb/mmBtu or 
exceeded the unit's 2006 annual NOX emission rate reported 
in accordance with part 75 or whose NOX averaging plan (if 
any) had a weighted average group NOX emission rate for 2008 
determined in accordance with part 75 exceeded the plan's weighted 
average group NOX emission rate for 2007 determined in 
accordance with part 75 is not allocated any CAIR CSP allowances. For 
each of these units, EPA is denying in full the requested allocation.
    For 2007 and 2008:
    5. In addition to the basis stated in paragraphs 1 through 4 above, 
for allocating and for denying in full or in part a request for CAIR 
CSP allowance allocations, there is an additional basis for denying in 
full or in part the allocations for individual units covered by one 
request for such allocations. In that request, a company requested that 
each of its units in Louisiana be given a certain amount of CAIR CSP 
allowances (exceeding the amount allocated for the unit by EPA in this 
NODA) on the ground that these units were underallocated CAIR 
NOX allowances and CAIR NOX ozone season 
allowances. As noted by the company, EPA took the approach in CAIR of 
establishing State NOX annual and NOX ozone 
season budgets using, inter alia, the heat input for units in the State 
and fuel factors that gave the greatest weight to heat input from coal, 
less weight to heat input from oil, and the least weight to heat input 
from natural gas. On appeal the U.S. Court of Appeals for the

[[Page 39321]]

District of Columbia determined that ``EPA's approach contravenes 
section 110(a)(2)(D)(i)(I)'' (North Carolina, 531 F.3d at 921 and that 
``the resulting state budgets were arbitrary and capricious'' (id.). 
Subsequently, the Court remanded CAIR, without vacatur, on this and 
several other issues ``so that EPA may remedy CAIR's flaws.'' North 
Carolina, 550 F.3d at 1178. According to the company, revising the 
State budgets and State allowance allocation methodologies to eliminate 
the use of the fuel factors would result in the company's units in 
Louisiana being allocated a total of 10,764 more CAIR NOX 
annual allowances and 4,913 more CAIR NOX ozone season 
allowances in 2009 under the CAIR trading programs. Entergy's April 30, 
2009 Compliance Supplement Pool CAIR NOx Allowance Request at 1. In its 
April 30, 2009 request for CAIR CSP allowance allocations, the company 
requested that its units in Louisiana therefore be allocated ``from the 
Compliance Supplement Pool'' 10,764 CAIR NOX annual 
allowances and 4,913 CAIR NOX ozone season allowances.\4\ 
Entergy's April 30, 2009 Compliance Supplement Pool CAIR NOx Allowance 
Request at 1.
---------------------------------------------------------------------------

    \4\ The company subsequently revised its calculations of 
additional amounts of CAIR allowances its units would be allocated 
as a result of eliminating the use of the fuel factors. These 
revisions resulted in turn in revisions of the amount of CAIR CSP 
allowances the company requested. See Entergy's July 13, 2009 
Compliance Supplement Pool CAIR NOX Allowance Request by 
Entergy companies (supplementing the company's April 30, 2009 
request). The company also noted that the CAIR CSP does not include 
any CAIR NOX ozone season allowances. The company 
indicated that EPA should allocate additional CAIR NOX 
allowances (apparently from the CAIR CSP) equal to the amount or the 
value of the CAIR NOX ozone season allowances requested 
by the company. See Entergy's July 13, 2009 Compliance Supplement 
Pool CAIR NOX Allowance Request by Entergy companies 
(supplementing the company's April 30, 2009 request). None of these 
changes in the amounts of CAIR CSP allowances requested by the 
company change the amounts of the CAIR CSP allowances allocated by 
EPA for the company's individual units in Louisiana or affect the 
basis for EPA's allocations and denials of allocations discussed in 
this NODA.
---------------------------------------------------------------------------

    In this request, the company did not reference Sec.  97.143(b) or 
(c) or claim that its units should be given CAIR CSP allowances under 
those provisions and provided only some of the information necessary to 
apply Sec.  97.143(b) and none of the information necessary to apply 
Sec.  97.143(c).\5\ In essence, the company requested that EPA allocate 
CAIR CSP allowances on grounds that Sec.  97.143 does not allow to be 
used for making such allocations. Nevertheless, for reasons discussed 
above, EPA evaluated whether the company's units in Louisiana qualify 
for CAIR CSP allowance allocations under grounds provided for in Sec.  
97.143. Specifically, for the reasons discussed above, EPA is 
determining in this NODA that the units can be allocated CAIR CSP 
allowances to the extent the units qualify for allocations for early 
reductions under Sec.  97.143(b). However, the amounts determined by 
EPA for the company's individual units are less than the amounts 
requested by the company, and, to the extent of the differences between 
these amounts for each individual unit, EPA is denying in whole (with 
regard to units for which EPA is allocating no CAIR CSP allowances) or 
in part (with regard to units for which EPA is allocating some CAIR CSP 
allowances) the company's request. In order to allocate the full, 
requested amount of CAIR CSP allowances for any of the individual units 
covered by the company's request, EPA would have to ignore, and 
contravene, the requirements of the rule (Sec.  97.143) governing the 
qualification of a unit for CAIR CSP allowance allocations and the 
calculation of the amount of such allocations. For these reasons, EPA 
denies in whole or in part (as applicable) the company's request for 
CAIR CSP allowance allocations for each of the company's units in 
Louisiana.
---------------------------------------------------------------------------

    \5\ The company's vague statement that it ``believes that 
allowances may be in short supply at the end of 2009'' and so the 
company should receive CAIR CSP allowances to ``help ensure there is 
no disruption of service'' (Entergy's July 7, 2009 Compliance 
Supplement Pool CAIR NOX Allowance Request by Entergy 
Companies at 1 (supplementing the company's April 30, 2009 request)) 
does not provide any of the detailed information required in Sec.  
97.143(c)(1) and (2) and is entirely unsupported.
---------------------------------------------------------------------------

5. How Do I Interpret the Data Made Available by This NODA?

    As discussed above, the detailed unit-by-unit data, determinations, 
and calculations with respect to CAIR CSP allowance allocations and 
denials of allocations are contained in a technical support document, 
which is a single Excel spreadsheet titled ``CAIR FIP CSP Allocations 
Data''.
    The Excel spreadsheet is divided into 4 worksheets. For each year 
2007 and 2008, there are two worksheets: one addressing ``allocations'' 
of CAIR CSP allowances, i.e., the allocations for all individual units 
receiving some allowances, whether the amount is less than,\6\ equals, 
or exceeds the amount requested; and the other addressing ``denials of 
allocations'' of CAIR CSP allowances, i.e., the denials for all 
individual units receiving no allowances and so whose request is denied 
in full. The CAIR CSP allocation and denial worksheets include: the 
relevant data from units' quarterly emissions reports; column notes 
providing the basis for allocations and denials of allocations under 
Sec.  97.143(b) and (d); and notes at the bottom explaining any 
adjustment, under Sec.  97.143(d), of each individual unit's CAIR CSP 
allowance allocation to ensure that the total amount of CAIR CSP 
allowance allocations do not exceed the relevant State's portion of the 
CAIR CSP. The basis, provided in the technical support document, for 
each allocation and each denial (in full or in part) of allocations is 
summarized and supplemented in section 4 of this NODA.
---------------------------------------------------------------------------

    \6\ The requests of these units are being denied in part.

    Dated: July 31, 2009.
Brian McLean,
Director, Office of Atmospheric Programs.
[FR Doc. E9-18861 Filed 8-5-09; 8:45 am]

BILLING CODE 6560-50-P