[Federal Register Volume 72, Number 177 (Thursday, September 13, 2007)]
[Proposed Rules]
[Pages 52320-52324]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-18061]
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 52
[EPA-R05-OAR-2006-0976; FRL-8467-4]
Approval and Promulgation of Air Quality Implementation Plans;
Ohio; Oxides of Nitrogen Budget Trading Program
AGENCY: Environmental Protection Agency (EPA).
ACTION: Proposed rule.
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SUMMARY: EPA is proposing to approve Ohio's request to permanently
retire 240 oxides of nitrogen (NOX) allowances from the
State's 2005 new source set aside, which would otherwise have been
distributed to existing sources that are required participants in the
State of Ohio's NOX budget. Under the Federal NOX
Budget Trading Program, each participating state receives a main pool
of `allowances', which are credits that permit a source to emit one ton
of NOX per allowance. Allowances are apportioned state-wide
to electricity generating units and other large NOX sources
which are subject to the budget trading program. Each year, a certain
number of allowances are set aside from the main pool by the State,
specifically for use by any new sources subject to the trading program
which may come
[[Page 52321]]
on-line during that year. If no new sources are created, and no new
source set aside allowances are used, the new source set aside
allowances are returned to the main pool of allowances for use the
following year.
Retiring 240 new source set aside allowances will provide surplus
emission reductions to help compensate for the discontinuation of
Ohio's `E-Check' motor vehicle inspection and maintenance (I/M) program
in the Cincinnati and Dayton areas for the year 2006 (Ohio is in the
process of seeking approval of the removal of E-Check from the State
Implementation Plan (SIP), which will be addressed in a separate
action). Withholding and permanently retiring 240 new source set aside
allowances from the year 2006 control period will provide 240 tons of
surplus NOX emission reductions that are creditable for
replacing reductions that otherwise would have occurred from the E-
Check program during the 2006 ozone season.
DATES: Comments must be received on or before October 15, 2007.
ADDRESSES: Submit your comments, identified by Docket ID No. EPA-R05-
OAR-2006-0976, by one of the following methods:
1. http://www.regulations.gov: Follow the on-line instructions for
submitting comments.
2. E-mail: [email protected].
3. Fax: (312) 886-5824.
4. Mail: John M. Mooney, Chief, Criteria Pollutant Section, Air
Programs Branch (AR-18J), U.S. Environmental Protection Agency, 77 West
Jackson Boulevard, Chicago, Illinois 60604.
5. Hand Delivery: John M. Mooney, Chief, Criteria Pollutant
Section, Air Programs Branch (AR-18J), U.S. Environmental Protection
Agency, 77 West Jackson Boulevard, Chicago, Illinois 60604. Such
deliveries are only accepted during the Regional Office normal hours of
operation, and special arrangements should be made for deliveries of
boxed information. The Regional Office official hours of business are
Monday through Friday, 8:30 a.m. to 4:30 p.m. excluding Federal
holidays.
Instructions: Direct your comments to Docket ID No. EPA-R05-OAR-
2006-0976. EPA's policy is that all comments received will be included
in the public docket without change and may be made available online at
www.regulations.gov, including any personal information provided,
unless the comment includes information claimed to be Confidential
Business Information (CBI) or other information whose disclosure is
restricted by statute. Do not submit information that you consider to
be CBI or otherwise protected through www.regulations.gov or e-mail.
The 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 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, any form of
encryption, and be free of any defects or viruses. For additional
instructions on submitting comments, go to Section I of the
SUPPLEMENTARY INFORMATION section of this document.
Docket: All documents in the docket are listed in the
www.regulations.gov index. Although listed in the index, some
information is not publicly available, e.g., CBI or other information
whose disclosure is restricted by statute. Certain other material, such
as copyrighted material, will be publicly available only in hard copy.
Publicly available docket materials are available either electronically
in 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. This Facility is open from 8:30
a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. We
recommend that you telephone Anthony Maietta, Life Scientist, at (312)
353-8777 before visiting the Region 5 office.
FOR FURTHER INFORMATION CONTACT: Anthony Maietta, Life Scientist,
Criteria Pollutant Section, Air Programs Branch (AR-18J), Environmental
Protection Agency, Region 5, 77 West Jackson Boulevard, Chicago,
Illinois 60604, (312) 353-8777, [email protected].
SUPPLEMENTARY INFORMATION: Throughout this document whenever ``we,''
``us,'' or ``our'' is used, we mean EPA. This supplementary information
section is arranged as follows:
I. What should I consider as I prepare my comments for EPA?
II. Does this proposed rule apply to me?
III. Background
A. Why has the State requested revisions to this rule?
B. When did the State submit the requested rule revisions to
EPA?
C. When did the State adopt these rule revisions, and have they
become effective?
D. When were public hearings held?
E. What comments did the State receive, and how did the State
respond?
IV. Review of the State's Submittal
V. What action is EPA taking?
VI. Statutory and Executive Order Reviews
I. What should I consider as I prepare my comments for EPA?
When submitting comments, remember to:
1. Identify the rulemaking by docket number and other identifying
information (subject heading, Federal Register date and page number).
2. Follow directions--The EPA may ask you to respond to specific
questions or organize comments by referencing a Code of Federal
Regulations (CFR) part or section number.
3. Explain why you agree or disagree; suggest alternatives and
substitute language for your requested changes.
4. Describe any assumptions and provide any technical information
and/or data that you used.
5. If you estimate potential costs or burdens, explain how you
arrived at your estimate in sufficient detail to allow for it to be
reproduced.
6. Provide specific examples to illustrate your concerns, and
suggest alternatives.
7. Explain your views as clearly as possible, avoiding the use of
profanity or personal threats.
8. Make sure to submit your comments by the comment period deadline
identified.
II. Does this proposed rule apply to me?
This proposed rule affects electrical generation units (EGUs) as
well as large boilers which are subject to Ohio's NOX budget
trading program and are not considered to be ``new'' units under the
guidelines of the trading program. Affected units will not receive
certain excess new unit set aside allowances for the year 2006.
III. Background
A. Why has the State requested revisions to this rule?
On December 31, 2005, Ohio discontinued the motor vehicle
inspection and maintenance (I/M) programs, otherwise known as E-Check,
in the Cincinnati and Dayton areas. According to section 110(l) of the
Clean Air Act, EPA may not approve the
[[Page 52322]]
discontinuation of this program unless the State can demonstrate that
the revision will not interfere with attainment of the health-based
National Ambient Air Quality Standards. For this purpose, Ohio is
providing emission reductions that compensate for the emission increase
expected to result from discontinuation of E-Check. It should be noted
that Ohio is currently seeking approval of the removal of E-Check from
the SIP, which will be addressed in a separate rulemaking.
As compensation for the emissions reductions lost through the
discontinuation of E-Check, Ohio adopted requirements for low-
volatility gasoline and requirements for lower emissions from gas cans,
solvent degreasing, and automobile refinishing. EPA approved the gas
can, solvent degreasing, and automobile refinishing measures in a
rulemaking action published on March 30, 2007, (72 FR 15045). The
lower-volatility gasoline requirement was originally intended to be
implemented in 2006, but was delayed until June 2008. (For more
information see rulemaking published on May 25, 2007, at 72 FR 29269).
Without the low-volatility gasoline program to compensate for
emissions in 2006 resulting from discontinuation of E-Check, Ohio asked
EPA, in a May 6, 2005, letter, if emission control devices that were
installed on various power plants around the Cincinnati-Dayton area
could provide the compensatory NOX emissions reduction. In
our response, dated September 20, 2005, EPA noted that, while the
reductions clearly occurred and clearly provide both local and regional
air quality benefits, these actions would not be considered surplus
emission reductions because these reductions would have occurred anyway
through regular implementation of the Regional NOX Budget
Trading Program, otherwise known as the NOX SIP Call.
The NOX SIP Call created a market-based cap and trade
program to reduce NOX emissions from power plants and other
large sources across the Eastern half of the United States. The program
is designed to allow states to have greater flexibility to achieve
state-wide emission reductions with local as well as regional benefits.
Because the NOX SIP Call garners reductions which are not
source-specific, Ohio does not have the ability to decide exactly where
reductions will take place.
However, we noted that if Ohio were to withdraw and retire new
source set aside allowances, this action would yield surplus
reductions. By retiring new source set aside allowances that would
otherwise have been redistributed the following year for use by
existing sources subject to the trading program, Ohio has mandated a
reduction in emissions that EPA considers surplus reductions beyond the
reductions of the existing NOX SIP Call.
Ohio adopted changes to Ohio Administrative Code (OAC) Chapters
3745-72-01 and 3745-14-05, and submitted them for approval on October
11, 2006. These rules provide a revised start date for the use of low-
volatility gasoline and provide the necessary quantity of interim,
surplus NOX emission reductions through the permanent
retirement of new source set aside allowances from the State's
NOX budget trading program.
Withholding and retiring new source set aside allowances from the
year 2005 ensured that these allowances would not return to existing
NOX budget trading program sources in 2006, therefore
providing surplus emission reductions for 2006. As indicated above, the
portion of the submittal concerning low-volatility gasoline has been
addressed by EPA in a separate rulemaking action.
B. When did the State submit the requested rule revisions to EPA?
The Director of the Ohio Environmental Protection Agency (Ohio EPA)
submitted a request for EPA to approve revisions to OAC 3745-14-05
(NOX allowance allocations) in a letter dated October 11,
2006.
C. When did the State adopt these rule revisions, and have they become
effective?
The proposed rule language was filed as an emergency rule on April
24, 2006. A proposed permanent adoption package for this rule was filed
the same day. The Director of the Ohio Environmental Protection Agency
issued an order of adoption for permanent revisions to OAC 3745-14-05
on July 10, 2006. The effective date of this order was July 17, 2006.
EPA is rulemaking on the permanent rule revisions and is not acting on
the emergency rules.
D. When were public hearings held?
A public hearing on revisions to OAC 3745-14-05 was held on June 2,
2006, in Columbus, Ohio.
E. What comments did the State receive, and how did the State respond?
A commenter questioned the necessity of amending OAC rule 3745-14-
05; the commenter stated that the Cincinnati/Dayton area had already
monitored attainment, so meeting anti-backsliding regulations is not
necessary. Ohio EPA disagreed with the commenter, noting that the
Cincinnati area may still be monitoring nonattainment air quality at
four sites. Also, OEPA noted that the anti-backsliding elements of the
areas' 1-hour ozone nonattainment requirements cannot be removed;
therefore the State's proposed rule revisions are, in fact, necessary.
A commenter representing Buckeye Power, Inc., Columbus Southern
Power Company, Dayton Power & Light Company, Duke Energy, Ohio Power
Company, and Ohio Valley Electric Corporation (hereafter described as
the `Utilities') objected to the proposed rule revisions because local
reductions were being realized by applying regional reductions to
NOX budgets, which wouldn't necessarily have local benefit
to the Cincinnati/Dayton areas. Ohio EPA responded by noting that air
quality modeling indicates that the optimum scenario for reducing ozone
in the Cincinnati/Dayton areas is a combination of regional
NOX reductions coupled with local VOC reductions. Ohio EPA
also noted that EPA had commented on the regionalism of the retired new
source set aside allowances.
The `Utilities' believe that withdrawal and retirement of 240 new
source set aside allowances undermines the stability of the regional
NOX trading program. Ohio EPA disagreed, and noted that the
retired allowances were set aside, and unused, by new sources in the
specified time period, and that such a small amount of retired new
source set aside allowances would not have an impact on the budget
trading program.
The `Utilities' commented that they believe the retirement of
NOX allowances is unlawful under Ohio statute, and that the
Ohio EPA has no authority to retire or otherwise remove allowances from
the pool. Ohio EPA disagreed, noting that they have indeed had the
authority to retire or remove allowances since the program's inception
in 2002. Additionally, Ohio EPA found it important to make clear that a
NOX budget allowance does not constitute a property right.
The `Utilities' commented that they believe retiring allowances
will not create emission reductions because sources can simply purchase
more allowances from anywhere in the U.S. at the end of the ozone
season. Ohio EPA responded by noting that the point of the
NOX Budget Trading Program is not to limit individual
sources, but to limit regional emissions, which-as they had already
stated-will benefit Cincinnati and Dayton.
[[Page 52323]]
The `Utilities' comment that they had provided Ohio EPA with an
alternative proposal for emission reductions in 2005, but Ohio EPA
chose not to adopt the proposal. Ohio EPA responded by noting that the
utilities' proposal to reduce emissions through compliance with the
NOX Budget Trading Program could not be considered to garner
surplus emissions unless allowances were retired to make those
reductions surplus. Ohio EPA noted that the utilities did not appear to
be willing to retire the associated allowances.
A commenter representing American Municipal Power (AMP) Ohio stated
that Ohio EPA had not demonstrated that low-RVP gasoline was not
available for the 2006 ozone season. Ohio EPA responded by noting the
multitude of issues which caused it to conclude that institution of 7.8
RVP fuel was not an option for the 2006 ozone season. The reasons
included a U.S. EPA survey indicating that refinery production
capabilities for 7.8 RVP gasoline would fall short for the Cincinnati
and Dayton areas, as well as lack of a preemption waiver from U.S. EPA
allowing the adoption of low-RVP fuel. Additionally, Ohio EPA noted
that if it were to allow noncompliant fuel into the area, compliant
suppliers providing low-RVP fuel would be at a disadvantage.
A commenter representing AMP Ohio stated that the Ohio EPA targeted
NOX budget sources for NOX reductions without
fully evaluating other appropriate reduction sources. Ohio EPA
disagreed, noting that prior to establishing the RVP fuel program for
Cincinnati and Dayton, they fully evaluated numerous control strategies
to offset the emissions reduction shortfall that resulted from closing
the E-Check program.
A commenter representing the Ohio Manufacturers' Association (OMA)
stated that Ohio's manufacturing sector only represents 7% of the
state's total NOX emissions, yet the manufacturing sector is
being called on to, in their own words, ``solve the problem''. Ohio EPA
noted that the effect of retiring 240 allowances on non-EGU's would be
very small for a one-time allocation adjustment. Ohio EPA noted that 15
non-EGU's are participating in Ohio's NOX trading program,
and two of those units are shut down. Furthermore, of the 240
allowances being retired, non-EGU's represent 19 of the 240 allowances
spread across the 15 non-EGU facilities whether still in operation or
not.
IV. Review of the State's Submittal
The State of Ohio has adopted revisions to its NOX
budget trading program regulations. On October 11, 2006, the State
requested that EPA approve these rule revisions for incorporation into
Ohio's SIP. Specifically, Ohio's revisions to this rule are:
OAC 3745-14-05 (C)(7):
Ohio inserted this new paragraph which withholds and permanently
retires 240 new source set aside allowances from the 2005 control
period to offset emission increases associated with the termination of
the E-Check program in Cincinnati and Dayton. These withheld and
retired allowances would normally have been allocated to existing Ohio
NOX budget sources in 2006.
On February 23, 2007, Ohio supplemented its submittal with
information regarding NOX emission reductions that have
occurred in the Cincinnati/Dayton area. This letter identifies several
actions that substantially reduced NOX emissions starting
from before the 2006 ozone season, which include installation of
selective catalytic reduction controls at 3 units and installation of
low NOX burners at 9 other units. Ohio estimates that the
total emission reduction from these actions is over 10,000 tons per
ozone season.
In ordinary circumstances, an emission limit can be imposed on a
specific source, and the surplus emission reduction clearly occurs at
the location of that source. However, a different relationship between
regulatory action and resulting emission reductions applies to power
plants and other sources regulated under the NOX SIP Call.
The NOX SIP Call provides a restricted set of allowances
that allow a reduced quantity of NOX emissions across the
entire NOX SIP Call region, while maximizing the flexibility
of participants in the program to decide where these reductions will
occur. In particular, allowances may be bought and sold and used
anywhere in the NOX SIP Call region. Since the allowances
are not assigned to particular locations, Ohio posed the question to
EPA of how best to pursue utility emission reductions in the
Cincinnati/Dayton area to obtain creditable reductions. EPA responded
that reductions at utilities could not be considered surplus to the
NOX SIP Call unless Ohio provided for retirement of
allowances, but EPA added that Ohio had substantial flexibility in what
allowances to retire.
Ohio's action creates a surplus reduction of 240 tons of
NOX emissions. This action fully conforms with EPA
regulations concerning the NOX SIP Call and other relevant
regulations, and so this action is fully approvable. More at issue is
whether this action may be treated as fully offsetting the loss of 240
tons of NOX emission reductions (or its VOC equivalent) from
the discontinuation of E-Check in the Cincinnati and Dayton areas.
An important underpinning of the NOX SIP Call is the
interchangeability of emission reductions, i.e. a finding that the
impacts of the emissions are sufficiently regional in nature and
sufficiently insensitive to the spatial distribution of the emission
reductions that EPA need not restrict where allowances are used. This
finding underlying the NOX SIP Call has important
implications for Ohio's action in retiring allowances. EPA believes
that Ohio's retirement of 240 allowances may be credited to make 240
tons of the actual emission reductions occurring in the Cincinnati/
Dayton area surplus. We find that the retirement benefits Cincinnati/
Dayton air quality, and is reasonable under the circumstances,
including the actual emissions reductions in the area.
EPA believes that Ohio may reasonably assign the surplus reductions
it has mandated to actual emission reductions that have occurred in the
Cincinnati/Dayton area. Allowances have no inherent geographic
location. That is, the allowances have no inherent properties that
dictate the location of the emission reduction that is attributed to a
particular retirement of a particular allowance. Substantial emission
reductions have occurred in the Cincinnati/Dayton area. While most of
the reductions would be attributable to the NOX SIP Call,
EPA believes that Ohio has latitude to attribute 240 tons of the 2006
NOX emission reductions in the Cincinnati/Dayton area to its
retirement of 240 allowances. Furthermore, even if Ohio or EPA were to
associate the allowance retirement with emission reductions in a
geographically broader area, EPA believes that the corresponding air
quality benefit in the Cincinnati/Dayton area would be similar to the
benefit of 240 tons of NOX emission reductions within the
Cincinnati/Dayton area. Indeed, the regional influence of
NOX emissions is the fundamental basis for EPA to establish
the NOX trading program as a regional program without
restriction on where (within the trading area) allowances may be used.
EPA views Ohio as having made surplus 240 tons of the emission
reductions in 2006. The surplus reductions that result from this
retirement provide significant benefit to the Cincinnati/Dayton area,
and it is reasonable to assign 240 tons of NOX emission
reductions credit to the
[[Page 52324]]
Cincinnati/Dayton area, and to count 240 tons of the area's actual
reductions as attributable to the retirement of 240 allowances.
Therefore, EPA proposes to approve this rule change, and to conclude
that Ohio has provided compensatory emissions decreases for
discontinuing the E-Check program in this area in the amount of 240
tons of NOX emission reduction for the year 2006.
EPA received a January 12, 2007, letter commenting on this issue
from a law firm on behalf of the Environmental Committee of the Ohio
Electric Utility Institute. This law firm submitted additional comments
on February 15, 2007, and on March 13, 2007. EPA views these letters as
commenting on the action being proposed here. EPA will review these
comments, and address any comments it receives during the comment
period, as we prepare final rulemaking on Ohio's submittal.
OAC 3745-14-05 (C)(8) through (C)(10):
Ohio renumbered the existing paragraphs (C)(7) through (C)(9) to
(C)(8) through (C)(10), in order to accommodate the inclusion of the
new paragraph (C)(7). As the addition of a new paragraph (C)(7)
necessitates renumbering the existing paragraphs, we find this rule
change to be acceptable and approvable.
V. What action is EPA taking?
EPA is proposing to approve the addition of paragraph (C)(7) to OAC
3745-14-05, and its incorporation into the Ohio SIP, as adopted by the
State of Ohio, as defined in Ohio's October 11, 2006, submittal. EPA is
also proposing to approve the renumbering of the original OAC 3745-14-
05 paragraphs (C)(7) through (C)(9) to (C)(8) through (C)(10),
respectively. If EPA takes final action as proposed here, EPA would
then retire 240 allowances from Ohio's new source set aside as
instructed in this rule. EPA proposes to conclude that Ohio has thereby
provided compensatory emissions decreases for discontinuing the E-Check
program in this area in the amount of 240 tons of NOX
emission reduction for the year 2006.
VI. Statutory and Executive Order Reviews
Executive Order 12866: Regulatory Planning and Review
Under Executive Order 12866 (58 FR 51735, September 30, 1993), this
action is not a ``significant regulatory action'' and, therefore, is
not subject to review by the Office of Management and Budget.
Paperwork Reduction Act
This proposed 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.).
Regulatory Flexibility Act
This proposed action merely proposes to approve state law as
meeting Federal requirements and imposes no additional requirements
beyond those imposed by state law. Accordingly, the Administrator
certifies that this proposed 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 proposes to approve 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 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 proposes to approve 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.
Executive Order 13175: Consultation and Coordination With Indian Tribal
Governments
This proposed 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).
Executive Order 13045: Protection of Children From Environmental Health
and Safety Risks
This proposed rule also is not subject to Executive Order 13045
``Protection of Children from Environmental Health Risks and Safety
Risks'' (62 FR 19885, April 23, 1997), because it is not economically
significant.
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 regulatory 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).
National Technology Transfer Advancement Act
Section 12(d) of the National Technology Transfer and Advancement
Act of 1995 (NTTAA), 15 U.S.C. 272, requires Federal agencies to use
technical standards that are developed or adopted by voluntary
consensus to carry out policy objectives, so long as such standards are
not inconsistent with applicable law or otherwise impractical. In
reviewing SIP submissions, EPA's role is to approve state choices,
provided that they meet the criteria of the Clean Air Act. Absent a
prior existing requirement for the state to use voluntary consensus
standards, EPA has no authority to disapprove a SIP submission for
failure to use such standards, and it would thus be inconsistent with
applicable law for EPA to use voluntary consensus standards in place of
a program submission that otherwise satisfies the provisions of the
Clean Air Act. Therefore, the requirements of section 12(d) of the NTTA
do not apply.
List of Subjects in 40 CFR Part 52
Environmental protection, Air pollution control, Intergovernmental
relations, Nitrogen dioxide, Reporting and recordkeeping requirements.
Dated: September 4, 2007.
Bharat Mathur,
Acting Regional Administrator, Region 5.
[FR Doc. E7-18061 Filed 9-12-07; 8:45 am]
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