Document ID: EPA-R04-OAR-2007-0835-0002
Agency: epa
Document Type: Rule
Title: Approval of Implementation Plans of Kentucky: Clean Air Interstate Rule
Posted Date: 2007-10-04T04:00Z

[Federal Register: October 4, 2007 (Volume 72, Number 192)]
[Rules and Regulations]               
[Page 56623-56628]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04oc07-5]                         

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R04-OAR-2007-0835-200740(a); FRL-8475-4]

 
Approval of Implementation Plans of Kentucky: 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 Kentucky State 
Implementation Plan (SIP) submitted on July 19, 2007. This revision 
addresses the requirements of EPA's Clean Air Interstate Rule (CAIR), 
promulgated on May 12, 2005 and subsequently revised on April 28, 2006, 
and December 13, 2006. EPA has determined that the SIP revision fully 
implements the CAIR requirements for Kentucky. Therefore, as a 
consequence of the SIP approval, EPA will also withdraw the CAIR 
Federal Implementation Plans (FIPs) concerning sulfur dioxide 
(SO2), nitrogen oxides (NOX) annual, and 
NOX ozone season emissions for Kentucky. The CAIR FIPs for 
all States in the CAIR region were promulgated on April 28, 2006, and 
subsequently revised on December 13, 2006.
    CAIR requires States to reduce emissions of SO2 and 
NOX that significantly contribute to, and interfere with 
maintenance of, the national ambient air quality standards for fine 
particulates and/or ozone in any downwind state. CAIR establishes State 
budgets for SO2 and NOX and requires States to 
submit SIP revisions that implement these budgets in States that EPA 
concluded did contribute to nonattainment in downwind states. States 
have the flexibility to choose which control measures to adopt to 
achieve the budgets, including participating in the EPA-administered 
cap-and-trade programs. In the SIP revision that EPA is approving, 
Kentucky would meet CAIR requirements by participating in the EPA-
administered cap-and-trade programs addressing SO2, 
NOX annual, and NOX ozone season emissions.

DATES: This direct final rule is effective December 3, 2007 without 
further notice, unless EPA receives adverse comment by November 5, 
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-R04-
OAR-2007-0835, by one of the following methods:
    1. http://www.regulations.gov: Follow the on-line instructions for 

submitting comments.
    2. E-mail: Lesane.Heidi@epa.gov.
    3. Fax: (404) 562-9019.
    4. Mail: ``EPA-R04-OAR-2007-0835'', Regulatory Development Section, 
Air Planning Branch, Air, Pesticides and Toxics Management Division, 
U.S. Environmental Protection Agency, Region 4, 61 Forsyth Street, SW., 
Atlanta, Georgia 30303-8960.
    5. Hand Delivery or Courier: Heidi Lesane, Regulatory Development 
Section, Air Planning Branch, Air, Pesticides and Toxics Management 
Division, U.S. Environmental Protection Agency, Region 4, 61 Forsyth 
Street, SW., Atlanta, Georgia 30303-8960. 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-R04-OAR-
2007-0835''. 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 Regulatory Development Section, Air Planning 
Branch, Air, Pesticides and Toxics Management Division, U.S. 
Environmental Protection Agency, Region 4, 61 Forsyth Street, SW., 
Atlanta, Georgia 30303-8960. EPA requests that if at all possible, you 
contact the person listed in the FOR FURTHER INFORMATION CONTACT 
section to schedule your inspection. The Regional Office's official 
hours of business are Monday through Friday, 8:30 to 4:30, excluding 
Federal holidays.

FOR FURTHER INFORMATION CONTACT: If you have questions concerning 
today's action, please contact Heidi LeSane, Regulatory Development 
Section, Air Planning Branch, Air, Pesticides and Toxics Management 
Division, U.S. Environmental Protection Agency, Region 4, 61 Forsyth 
Street, SW., Atlanta, Georgia 30303-8960. The telephone number is (404) 
562-9074. Mrs. LeSane can also be reached via electronic mail at 
LeSane.Heidi@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 Kentucky's CAIR SIP Submittal
    A. State Budgets for Allowance Allocations
    B. CAIR Cap-and-Trade Programs
    C. Applicability Provisions for non-EGU NOX SIP Call 
Sources
    D. NOX Allowance Allocations
    E. Allocation of NOX Allowances From the Compliance 
Supplement Pool
    F. Individual Opt-In Units
VI. Final Action
VII. Statutory and Executive Order Reviews

[[Page 56624]]

I. What Action Is EPA Taking?

    EPA is approving a revision to Kentucky's SIP, submitted on July 
19, 2007. In its SIP revision, Kentucky meets CAIR requirements by 
requiring certain electric generating units (EGUs) to participate in 
the EPA-administered State CAIR cap-and-trade programs addressing 
SO2, NOX annual, and NOX ozone season 
emissions. EPA has determined that the SIP as revised meets the 
applicable requirements of CAIR. As a consequence of this SIP approval, 
EPA will also issue a final rule to withdraw the FIPs concerning 
SO2, NOX annual, and NOX ozone season 
emissions for Kentucky. This action will delete and reserve 40 CFR 
52.940 and 40 CFR 52.941. The withdrawal of the CAIR FIPs for Kentucky 
is a conforming amendment that must be made once the SIP is approved 
because EPA's authority to issue the FIPs was premised on a deficiency 
in the SIP for Kentucky. Once the SIP is fully approved, EPA no longer 
has authority for the FIPs. Thus, EPA will not have the option of 
maintaining the FIPs following the full SIP approval. Accordingly, EPA 
does not intend to offer an opportunity for a public hearing or an 
additional opportunity for written public comment on the withdrawal of 
the FIPs.

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

    The 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 particulates (PM2.5) and /or 8-hour ozone in downwind 
States in the eastern part of the country. As a result, EPA required 
those upwind States to revise their SIPs to include control measures 
that reduce emissions of SO2, which is a precursor to 
PM2.5 formation, and/or NOX, which is a precursor 
to both ozone and PM2.5 formation. For jurisdictions that 
contribute significantly to downwind PM2.5 nonattainment, 
CAIR sets annual State-wide emission reduction requirements (i.e., 
budgets) for SO2 and annual State-wide emission reduction 
requirements for NOX. Similarly, for jurisdictions that 
contribute significantly to 8-hour ozone nonattainment, CAIR sets 
State-wide emission reduction requirements for NOX for the 
ozone season (May 1st to September 30th). Under CAIR, States may 
implement these reduction requirements by participating in the EPA-
administered cap-and-trade programs or by adopting any other control 
measures.
    CAIR explains to subject States what must be included in SIPs to 
address the requirements of section 110(a)(2)(D) of the Clean Air Act 
(CAA) with regard to interstate transport with respect to the 8-hour 
ozone and PM2.5 NAAQS. EPA made national findings, effective 
on May 25, 2005, that the States had failed to submit SIPs meeting the 
requirements of section 110(a)(2)(D). The SIPs were due in July 2000, 3 
years after the promulgation of the 8-hour ozone and PM2.5 
NAAQS. These findings started a 2-year clock for EPA to promulgate a 
FIP to address the requirements of section 110(a)(2)(D). Under CAA 
section 110(c)(1), EPA may issue a FIP anytime after such findings are 
made and must do so within two years unless a SIP revision correcting 
the deficiency is approved by EPA before the FIP is promulgated.
    On April 28, 2006, EPA promulgated FIPs for all States covered by 
CAIR in order to ensure the emissions reductions required by CAIR are 
achieved on schedule. Each CAIR State is subject to the FIPs until the 
State fully adopts, and EPA approves, a SIP revision meeting the 
requirements of CAIR. The CAIR FIPs require EGUs to participate in the 
EPA-administered CAIR SO2, NOX annual, and 
NOX ozone season trading programs, as appropriate. The CAIR 
FIP SO2, NOX annual, and NOX ozone 
season trading programs impose essentially the same requirements as, 
and are integrated with, the respective CAIR SIP trading programs. The 
integration of the FIP and SIP trading programs means that these 
trading programs will work together to create effectively a single 
trading program for each regulated pollutant (SO2, 
NOX annual, and NOX ozone season) in all States 
covered by the CAIR FIP or SIP trading program for that pollutant. The 
CAIR FIPs also allow States to submit abbreviated SIP revisions that, 
if approved by EPA, will automatically replace or supplement certain 
CAIR FIP provisions (e.g., the methodology for allocating 
NOX allowances to sources in the State), while the CAIR FIP 
remains in place for all other provisions.
    On April 28, 2006, EPA published two additional CAIR-related final 
rules that added the States of Delaware and New Jersey to the list of 
States subject to CAIR for PM2.5 and announced EPA's final 
decisions on reconsideration of five issues, without making any 
substantive changes to the CAIR requirements.

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

    CAIR establishes State-wide emission budgets for SO2 and 
NOX and is to be implemented in two phases. The first phase 
of NOX reductions starts in 2009 and continues through 2014, 
while the first phase of SO2 reductions starts in 2010 and 
continues through 2014. The second phase of reductions for both 
NOX and SO2 starts in 2015 and continues 
thereafter. CAIR requires States to implement the budgets by either: 
(1) Requiring EGUs to participate in the EPA-administered cap-and-trade 
programs; or (2) adopting other control measures of the State's 
choosing and demonstrating that such control measures will result in 
compliance with the applicable State SO2 and NOX 
budgets.
    The May 12, 2005 and April 28, 2006 CAIR rules provide model rules 
that States must adopt (with certain limited changes, if desired) if 
they want to participate in the EPA-administered trading programs.
    With two exceptions, only States that choose to meet the 
requirements of CAIR through methods that exclusively regulate EGUs are 
allowed to participate in the EPA-administered trading programs. One 
exception is for States that adopt the opt-in provisions of the model 
rules to allow non-EGUs individually to opt into the EPA-administered 
trading programs. The other exception is for States that include all 
non-EGUs from their NOX SIP Call trading programs in their 
CAIR NOX ozone season trading programs.

IV. What Are the Types of CAIR SIP Submittals?

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

[[Page 56625]]

NOX allowance allocation methodology).
    A State submitting a full SIP revision may either adopt regulations 
that are substantively identical to the model rules or incorporate by 
reference the model rules. CAIR provides that States may only make 
limited changes to the model rules if the States want to participate in 
the EPA-administered trading programs. A full SIP revision may change 
the model rules only by altering their applicability and allowance 
allocation provisions to:
    1. Include NOX SIP Call trading sources that are not 
EGUs under CAIR in the CAIR NOX ozone season trading 
program;
    2. Provide for allocation of NOX annual or ozone season 
allowances by the State, rather than the Administrator of the EPA or 
the Administrator's duly authorized representative (Administrator), and 
using a methodology chosen by the State;
    3. Provide for State allocation of NOX annual allowances 
from the compliance supplement pool (CSP) using the State's choice of 
allowed, alternative methodologies; or
    4. Allow units that are not otherwise CAIR units to opt 
individually into the CAIR SO2, NOX annual, or 
NOX ozone season trading programs under the opt-in 
provisions in the model rules.
    An approved CAIR full SIP revision addressing EGUs' SO2, 
NOX annual, or NOX ozone season emissions will 
replace the CAIR FIP for that State for the respective EGU emissions.

V. Analysis of Kentucky'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 pounds per million British thermal units 
(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 in the Acid Rain Program for the years in phase 1 
of CAIR (2010 through 2014) authorizes 0.50 ton of SO2 
emissions in the CAIR trading program, and each Acid Rain Program 
allowance allocated for the years in phase 2 of CAIR (2015 and 
thereafter) authorizes 0.35 ton of SO2 emissions in the CAIR 
trading program.
    In this action, EPA is approving Kentucky's SIP revision that 
adopts the budgets established for the Commonwealth in CAIR, i.e., 
83,205 (2009-2014) and 69,337 (2015-thereafter) tons for NOX 
annual emissions, 36,109 (2009-2014) and 30,651 (2015-thereafter) tons 
for NOX ozone season emissions, and 188,773 (2010-2014) and 
132,141 (2015-thereafter) tons for SO2 emissions. Kentucky's 
SIP revision sets these budgets as the total amounts of allowances 
available for allocation for each year under the EPA-administered cap-
and-trade programs.

B. CAIR Cap-and-Trade Programs

    The CAIR NOX annual and ozone-season model trading rules 
both largely mirror the structure of the NOX SIP Call model 
trading rule in 40 CFR part 96, subparts A through I. While the 
provisions of the NOX annual and ozone-season model rules 
are similar, there are some differences. For example, the 
NOX annual model rule (but not the NOX ozone 
season model rule) provides for a CSP, which is discussed below and 
under which allowances may be awarded for early reductions of 
NOX annual emissions. As a further example, the 
NOX ozone season model rule reflects the fact that the CAIR 
NOX ozone season trading program replaces the NOX 
SIP Call trading program after the 2008 ozone season and is coordinated 
with the NOX SIP Call program. The NOX ozone 
season model rule provides incentives for early emissions reductions by 
allowing banked, pre-2009 NOX SIP Call allowances to be used 
for compliance in the CAIR NOX ozone-season trading program. 
In addition, States have the option of continuing to meet their 
NOX SIP Call 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 model rule are also 
similar to the provisions of the NOX annual and ozone season 
model rules. However, the SO2 model rule is coordinated with 
the ongoing Acid Rain SO2 cap-and-trade program under CAA 
title IV. The SO2 model rule uses the title IV allowances 
for compliance, with each allowance allocated for 2010-2014 authorizing 
only 0.50 ton of emissions and each allowance allocated for 2015 and 
thereafter authorizing only 0.35 ton of emissions. Banked title IV 
allowances allocated for years before 2010 can be used at any time in 
the CAIR SO2 cap-and-trade program, with each such allowance 
authorizing 1 ton of emissions. Title IV allowances are to be freely 
transferable among sources covered by the Acid Rain Program and sources 
covered by the CAIR SO2 cap-and-trade program.
    EPA also used the CAIR model trading rules as the basis for the 
trading programs in the CAIR FIPs. The CAIR FIP trading rules are 
virtually identical to the CAIR model trading rules, with changes made 
to account for federal rather than state implementation. The CAIR model 
SO2, NOX annual, and NOX ozone season 
trading rules and the respective CAIR FIP trading rules are designed to 
work together as integrated SO2, NOX annual, and 
NOX ozone season trading programs.
    In the SIP revision, Kentucky chooses to implement its CAIR budgets 
by requiring EGUs to participate in EPA-administered cap-and-trade 
programs for SO2, NOX annual, and NOX 
ozone season emissions. Kentucky has adopted a full SIP revision that 
adopts, with certain allowed changes discussed below, the CAIR model 
cap-and-trade rules for SO2, NOX annual, and 
NOX ozone season emissions.

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

    In general, the CAIR model trading rules apply to any stationary, 
fossil-fuel-fired boiler or stationary, fossil-fuel-fired combustion 
turbine serving at any time, since the later of November 15, 1990 or 
the start-up of the unit's combustion chamber, a generator with 
nameplate capacity of more than 25 megawatt electrical (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 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)

[[Page 56626]]

that the State currently requires to be in the NOX SIP Call 
trading program.
    Kentucky has chosen 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. Kentucky 
has committed to revising the applicability section in its CAIR 
NOX ozone season rule in order to clarify that, as intended 
by the State, units subject to its NOX SIP Call program and 
brought into its CAIR program through the allowed expansion of the CAIR 
NOX ozone season applicability provisions are to be treated 
as CAIR NOX ozone season units and certain definitions from 
401 KAR 51:001 apply to the provisions that bring these units into the 
CAIR program. EPA determined after review of Kentucky's final rules, 
and after Kentucky had adopted other necessary revisions to its CAIR 
rules, that these provisions needed clarification. However, while the 
clarifications are needed, EPA interprets Kentucky's current rule to 
provide that the NOX SIP Call units are subject to the 
requirements for CAIR NOX ozone season units and that the 
NOX SIP Call definitions are used in applying the 
applicability provisions that bring in NOX SIP Call units. 
In addition, Kentucky has committed to correct two citation references 
in its CAIR NOX ozone season allowance allocation 
methodology needed in order to reference correctly its applicability 
section. EPA interprets Kentucky's current rule as applying the correct 
references.
    Kentucky has also committed to revising the definitions of 
``commence commercial operation'' and ``commence operation'' in its 
CAIR NOX ozone season rule in order to clarify the 
deadlines, for meeting monitoring and reporting requirements, that 
apply to the NOX SIP Call units that are brought into the 
CAIR program but do not serve generators producing electricity for 
sale, as intended by the State. EPA determined after review of 
Kentucky's final rules, and after Kentucky had adopted other necessary 
revisions to its CAIR rules, that these provisions needed 
clarification.
    EPA has outlined these necessary revisions in a technical support 
document. EPA received a letter from Kentucky dated September 11, 2007, 
that provides a commitment to make these rule revisions in its CAIR 
rules in 2008. Specifically, in the September 11, 2007, letter, 
Kentucky commits to make the revisions discussed above to its CAIR 
NOX Ozone Season trading rule, 401 KAR 51:220.

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.
    States may establish in their SIP submissions a different 
NOX allowance allocation methodology that will be used to 
allocate allowances to sources in the States if certain requirements 
are met concerning the timing of submission of units' allocations to 
the Administrator for recordation and the total amount of allowances 
allocated for each control period. In adopting alternative 
NOX allowance allocation methodologies, States have 
flexibility with regard to:
    1. The cost to recipients of the allowances, which may be 
distributed for free or auctioned;
    2. The frequency of allocations;
    3. The basis for allocating allowances, which may be distributed, 
for example, based on historical heat input or electric and thermal 
output; and
    4. The use of allowance set-asides and, if used, their size.
    Kentucky has chosen to replace the provisions of the CAIR 
NOX annual and CAIR NOX ozone season model 
trading rules concerning the allocation of NOX annual and 
ozone season allowances with its own methodology. Kentucky has chosen 
to distribute 98% of its NOX annual allowances based upon 
adjusted heat input. In Kentucky's final CAIR SIP submittal, Kentucky 
already made initial allocations for the control periods spanning from 
2009 to 2014. In 2009, Kentucky will submit one-year allocations for 
the 2015 control period, and for every control period thereafter 
Kentucky will continue to submit allocations six years in advance. For 
example, in 2010, one-year allocations will be made for the 2016 
control period; in 2011, one-year allocations will be made for the 2017 
control period, etc. The remaining 2% of Kentucky's allowances will be 
held and sold as needed by the Commonwealth of Kentucky, with the 
proceeds to be deposited into Kentucky's general fund.

E. Allocation of NOX Allowances From the Compliance 
Supplement Pool

    The CAIR establishes a compliance supplement pool (CSP) to provide 
an incentive for early reductions in NOX annual emissions. 
The CSP consists of 200,000 CAIR NOX annual allowances of 
vintage 2009 for the entire CAIR region, and a State's share of the CSP 
is based upon the projected magnitude of the emission reductions 
required by CAIR in that State. States may distribute CSP allowances, 
one allowance for each ton of early reduction, to sources that make 
NOX reductions during 2007 or 2008 beyond what is required 
by any applicable State or Federal emission limitation. States also may 
distribute CSP allowances based upon a demonstration of need for an 
extension of the 2009 deadline for implementing emission controls.
    The CAIR annual NOX model trading rule establishes 
specific methodologies for allocations of CSP allowances. States may 
choose an allowed, alternative CSP allocation methodology to be used to 
allocate CSP allowances to sources in the States.
    Kentucky has chosen to modify the provisions of the CAIR 
NOx annual model trading rule concerning the allocation of 
allowances from the CSP. Kentucky has chosen to distribute CSP 
allowances using an allocation methodology that continues to reward 
early reductions, but hinges on heat input data. Initially, the portion 
of the CSP that is available to a given source is determined by the 
following formula:
[GRAPHIC] [TIFF OMITTED] TR04OC07.000

Where: ERCU is the Early Reduction Credit available to 
the unit, BHIU is the Baseline Heat Input of the unit, 
BHIT is the Baseline Heat Input from all sources within 
Kentucky, and CSPT is 14,935 tons, the Early Reduction 
Credits available pursuant to 40 CFR 96.143(a).

    Kentucky also makes available portions of the CSP for units that 
are able to demonstrate need, in a manner that is identical to 40 CFR 
96.143(c). Remaining credits are then distributed on a pro rata basis, 
up to the total early reduction credits requested pursuant to 40 CFR 
96.143(b), to those CAIR NOX units with early reduction 
credits that exceeded the amount of credits made available by the 
previous calculation.

F. Individual Opt-In Units

    The opt-in provisions of the CAIR SIP model trading rules allow 
certain non-EGUs (i.e., boilers, combustion turbines, and other 
stationary fossil-fuel-fired devices) that do not meet the

[[Page 56627]]

applicability criteria for a CAIR trading program to participate 
voluntarily in (i.e., opt into) the CAIR trading program. A non-EGU may 
opt into one or more of the CAIR trading programs. In order to qualify 
to opt into a CAIR trading program, a unit must vent all emissions 
through a stack and be able to meet monitoring, recordkeeping, and 
recording requirements of 40 CFR part 75. The owners and operators 
seeking to opt a unit into a CAIR trading program must apply for a CAIR 
opt-in permit. If the unit is issued a CAIR opt-in permit, the unit 
becomes a CAIR unit, is allocated allowances, and must meet the same 
allowance-holding and emissions monitoring and reporting requirements 
as other units subject to the CAIR trading program. The opt-in 
provisions provide for two methodologies for allocating allowances for 
opt-in units, one methodology that applies to opt-in units in general 
and a second methodology that allocates allowances only to opt-in units 
that the owners and operators intend to repower before January 1, 2015.
    States have several options concerning the opt-in provisions. 
States may adopt the CAIR opt-in provisions entirely or may adopt them 
but exclude one of the methodologies for allocating allowances. States 
may also decline to adopt the opt-in provisions at all.
    Kentucky has chosen to allow non-EGUs meeting certain requirements 
to opt into the CAIR NOX annual trading program, including 
both of the opt-in allocation methods in the model rule.
    Kentucky has chosen to allow non-EGUs meeting certain requirements 
to opt into the CAIR NOX ozone season trading program, 
including both of the opt-in allocation methods in the model rule.
    Kentucky has chosen to allow certain non-EGUs to opt into the CAIR 
SO2 trading program, including both of the opt-in allocation 
methods in the model rule.

VI. Final Action

    EPA is approving Kentucky's full CAIR SIP revision submitted on 
July 19, 2007. Under this SIP revision, Kentucky is choosing to 
participate in the EPA-administered cap-and-trade programs for 
SO2, NOX annual, and NOX ozone season 
emissions. The SIP revision (interpreted and clarified as discussed 
above) meets the applicable requirements in 40 CFR 51.123(o) and (aa), 
with regard to NOX annual and NOX ozone season 
emissions, and 40 CFR 51.124(o), with regard to SO2 
emissions. Further, Kentucky has agreed to make the technical 
corrections to certain provisions as discussed above. Therefore, EPA 
has determined that the SIP as revised will meet the requirements of 
CAIR. As a consequence of the SIP approval, the Administrator of EPA 
will also issue, without providing an opportunity for a public hearing 
or an additional opportunity for written public comment, a final rule 
to withdraw the CAIR FIPs concerning SO2, NOX 
annual, and NOX ozone season emissions for Kentucky. This 
action will delete and reserve 40 CFR 52.940 and 40 CFR 52.941.
    EPA is approving the aforementioned changes to the SIP. EPA is 
publishing this rule without prior proposal because the Agency views 
this as a noncontroversial submittal and anticipates no adverse 
comments. However, in the proposed rules section of this Federal 
Register publication, EPA is publishing a separate document that will 
serve as the proposal to approve the SIP revision should adverse 
comments be filed. This rule will be effective December 3, 2007 without 
further notice unless the Agency receives adverse comments by November 
5, 2007.
    If the EPA receives such comments, then EPA will publish a document 
withdrawing the final rule and informing the public that the rule will 
not take effect. All public comments received will then be addressed in 
a subsequent final rule based on the proposed rule. EPA will not 
institute a second comment period. Parties interested in commenting 
should do so at this time. If no such comments are received, the public 
is advised that this rule will be effective on December 3, 2007 and no 
further action will be taken on the proposed rule.

VII. Statutory and Executive Order Reviews

    Under Executive Order 12866 (58 FR 51735, October 4, 1993), this 
action is not a ``significant regulatory action'' and therefore is not 
subject to review by the Office of Management and Budget. For this 
reason, this action is also not subject to Executive Order 13211, 
``Actions Concerning Regulations That Significantly Affect Energy 
Supply, Distribution, or Use'' (66 FR 28355, May 22, 2001). This action 
merely 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.). 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).
    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 (65 
FR 67249, November 9, 2000). 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 CAA. 
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 is not economically significant.
    In reviewing SIP submissions, EPA's role is to approve state 
choices, provided that they meet the criteria of the CAA. 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 CAA. Thus, the requirements of section 
12(d) of the National Technology Transfer and Advancement Act of 1995 
(15 U.S.C. 272 note) do not apply. This 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.).
    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

[[Page 56628]]

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 CAA, petitions for judicial review 
of this action must be filed in the United States Court of Appeals for 
the appropriate circuit by December 3, 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, Intergovernmental relations, Nitrogen oxides, Ozone, 
Particulate matter, Reporting and recordkeeping requirements, Sulfur 
dioxide.

    Dated: September 21, 2007.
J.I. Palmer, Jr.,
Regional Administrator, Region 4.

0
40 CFR part 52 is amended as follows:

PART 52--[AMENDED]

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

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

Subpart S--Kentucky

0
2. In Sec.  52.920(c) Table 1 is amended under Chapter 51 by adding in 
numerical order the entries for ``401 KAR 51.210,'' ``401 KAR 51.220,'' 
and ``401 KAR 51.230'' to read as follows:

Sec.  52.920  Identification of plan.

* * * * *
    (c) * * *

                                                       Table 1.--EPA Approved Kentucky Regulations
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  State
         State citation                          Title/subject                  effective            EPA approval date                 Explanation
                                                                                   date
--------------------------------------------------------------------------------------------------------------------------------------------------------

                                                                      * * * * * * *
                                   Chapter 51 Attainment and Maintenance of the National Ambient Air Quality Standards
--------------------------------------------------------------------------------------------------------------------------------------------------------

                                                                      * * * * * * *
401 KAR 51.210..................  CAIR NOX Annual Trading Program............     2/2/2007  10/4/2007 [Insert citation of
                                                                                             publication].
401 KAR 51.220..................  CAIR NOX Ozone Season Trading Program......    6/13/2007  10/4/2007 [Insert citation of
                                                                                             publication].
401 KAR 51.230..................  CAIR SO2 Trading Program...................     2/2/2007  10/4/2007 [Insert citation of
                                                                                             publication].

                                                                      * * * * * * *
--------------------------------------------------------------------------------------------------------------------------------------------------------

[FR Doc. E7-19327 Filed 10-3-07; 8:45 am]

BILLING CODE 6560-50-P