[Federal Register Volume 72, Number 169 (Friday, August 31, 2007)]
[Proposed Rules]
[Pages 50305-50311]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-17196]
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 52
[EPA-R01-OAR-2007-0399; FRL-8462-3]
Approval and Promulgation of Air Quality Implementation Plans;
Connecticut; State Implementation Plan Revision To Implement the Clean
Air Interstate Rule
AGENCY: Environmental Protection Agency (EPA).
ACTION: Proposed rule.
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SUMMARY: EPA is proposing to approve a revision to the Connecticut
State Implementation Plan (SIP) submitted on April 26, 2007. This
revision addresses the requirements of EPA's Clean Air Interstate Rule
(CAIR), promulgated on May 12, 2005 and subsequently revised on April
28, 2006 and December 13, 2006. EPA is proposing to determine that the
SIP revision fully implements the CAIR requirements for Connecticut.
Therefore, as a consequence of the SIP approval, EPA will also withdraw
the CAIR Federal Implementation Plan (CAIR FIP) concerning
NOX ozone-season emissions for Connecticut. The CAIR FIPs
for all States in the CAIR region were promulgated on April 28, 2006
and subsequently revised on December 13, 2006.
DATES: Comments must be received on or before October 1, 2007.
ADDRESSES: Submit your comments, identified by FDMS Docket ID No. EPA-
R01-OAR-2007-0399, 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: (617) 918-0047.
4. Mail: ``FDMS Docket ID No. EPA-R01-OAR-2007-0399'', Anne Arnold,
U.S. Environmental Protection Agency, EPA New England Regional Office,
One Congress Street, Suite 1100 (mail code CAQ), Boston, MA 02114-2023.
5. Hand Delivery or Courier: Deliver your comments to: Anne Arnold,
Manager, Air Quality Planning Unit, Office of Ecosystem Protection,
U.S. Environmental Protection Agency, EPA New England Regional Office,
One Congress Street, 11th floor, (CAQ), Boston, MA 02114-2023. Such
deliveries are only accepted during the Regional Office's normal hours
of operation. The Regional Office's official hours of business are
Monday through Friday, 8:30 a.m. to 4:30 p.m., excluding federal
holidays.
Instructions: Direct your comments to Docket ID No. ``FDMS Docket
ID No. EPA-R01-OAR-2007-0399''. EPA's policy is that all comments
received will be included in the public docket without change and may
be made available online at http://www.regulations.gov, including any
personal information provided, unless the comment includes information
claimed to be Confidential Business Information (CBI) or other
information whose disclosure is restricted by statute. Do not submit
through http://www.regulations.gov or e-mail, information that you
consider to be CBI or otherwise protected. The http://www.regulations.gov Web site is an ``anonymous access'' system, which
means EPA will not know your identity or contact information unless you
provide it in the body of your comment. If you send an e-mail comment
directly to EPA without going through http://www.regulations.gov, your
e-mail address will be automatically captured and included as part of
the comment that is placed in the public docket and made available on
the Internet. If you submit an electronic comment, EPA recommends that
you include your name and other contact information in the body of your
comment and with any disk or CD-ROM you submit. If EPA cannot read your
comment due to technical difficulties and cannot contact you for
clarification, EPA may not be able to consider your comment. Electronic
files should avoid the use of special characters and any form of
encryption and should be free of any defects or viruses. For additional
information about EPA's public docket visit the EPA Docket Center
homepage at http://www.epa.gov/epahome/dockets.htm.
Docket: All documents in the electronic docket are listed in the
http://www.regulations.gov index. Although listed in the index, some
information is not publicly available, i.e., CBI or other information
whose disclosure is restricted by statute. Certain other material, such
as copyrighted material, is not placed on the Internet and will be
publicly available only in hard copy form. In addition to publicly
available docket materials available electronically in http://www.regulations.gov, the hard copy of these materials, including the
state submittal, is available at the Office of Ecosystem Protection,
U.S. Environmental Protection Agency, EPA New England Regional Office,
One Congress Street, Suite 1100, Boston, MA. EPA requests that if at
all possible, you contact the person listed in the FOR FURTHER
INFORMATION CONTACT section to schedule your inspection. The Regional
Office's official hours of business are Monday through Friday, 8:30
a.m. to 4:30 p.m., excluding federal holidays.
FOR FURTHER INFORMATION CONTACT: If you have questions concerning
today's proposal, please contact Alison C. Simcox, Air Quality Planning
Unit, U.S. Environmental Protection Agency, EPA New England Regional
Office, One Congress Street, Suite 1100 (CAQ), Boston, MA 02114-2023,
telephone number (617) 918-1684, fax number (617) 918-0684, e-mail
[email protected].
SUPPLEMENTARY INFORMATION:
Table of Contents
I. What Action Is EPA Proposing To Take?
[[Page 50306]]
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 Connecticut's CAIR SIP Submittal
A. State Budgets for Allowance Allocations
B. CAIR Cap-and-Trade Programs
C. Applicability Provisions for non-EGU NOX SIP Call
Sources
D. NOX Allowance Allocations
E. Individual Opt-in Units
VI. Proposed Action
VII. Statutory and Executive Order Reviews
I. What Action Is EPA Proposing To Take?
EPA is proposing to approve a revision to Connecticut's SIP,
submitted on April 26, 2007. This SIP revision includes a new
regulation, Regulations of Connecticut State Agencies (RCSA) section
22a-174-22c, ``The Clean Air Interstate Rule (CAIR) Nitrogen Oxides
(NOX) Ozone Season Trading Program'' (herein called
``Connecticut's proposed CAIR program''), repeal of RCSA section 22a-
174-22a (``The Connecticut NOX Budget Program''), as of May
1, 2009, and repeal of RCSA section 22a-174-22b, ``The Connecticut
Post-2002 NOX Budget Program'' (herein called the
``Connecticut NOX SIP Call trading program''), as of May 1,
2010. In its SIP revision, Connecticut would meet CAIR requirements by
requiring certain electric generating units (EGUs) to participate in
the EPA-administered State CAIR cap-and-trade program addressing
NOX ozone-season emissions. EPA is proposing to determine
that the Connecticut SIP as revised will meet the applicable
requirements of CAIR. Any final action approving the SIP will be taken
by the Regional Administrator for Region 1. As a consequence of the SIP
Approval, the Administrator of EPA will also issue a final rule to
withdraw the FIP concerning NOX ozone-season emissions for
Connecticut. This action will delete and reserve 40 CFR 52.386. The
withdrawal of the CAIR FIP for Connecticut is a conforming amendment
that must be made once the SIP is approved because EPA's authority to
issue the FIP was premised on a deficiency in the SIP for Connecticut.
Once the SIP is fully approved, EPA no longer has authority for the
FIP. Thus, EPA will not have the option of maintaining the FIP
following the full SIP approval. Accordingly, EPA does not intend to
offer an opportunity for a public hearing or an additional opportunity
for written public comment on the withdrawal of the FIP.
The Connecticut Department of Environmental Protection (DEP) has
requested that EPA ``parallel process'' Connecticut's proposed CAIR SIP
revision. Under this procedure, EPA prepared this action before the
State's final adoption of the regulations included in the SIP revision.
The DEP held a public hearing on its proposed CAIR SIP revision on
October 19, 2006. The DEP has prepared a response to the comments
received on its proposal and has developed a ``post-hearing final
draft'' version of the regulations dated April 10, 2007. This is the
version of the regulations included in Connecticut's April 26, 2007 SIP
submittal to EPA and the subject of EPA's proposal.
On June 19, 2007, the Connecticut DEP received adverse comments
regarding the allocation methodology in its proposed CAIR program.
Consequently, the DEP may revise its proposed regulations before final
promulgation. After the DEP submits its final adopted regulations, EPA
will review these final regulations to determine whether they differ
from the ``post-hearing final draft'' version that is the subject of
this proposal. If Connecticut's final regulations do in fact differ
from the ``post-hearing final draft'' version, then EPA would need to
determine whether any of the changes are significant. Ordinarily,
changes that are limited to the allocation methodology would not be
deemed significant for SIP approval purposes, assuming the methodology
does not lead to allocations in excess of the total state budget. Based
on EPA's determination regarding the significance of any changes in the
final regulations, EPA would then decide whether it is appropriate to
prepare a final rule and describe the changes in the final rulemaking
action, or re-propose action based on the state's final adopted
regulations.
II. What Is the Regulatory History of the CAIR and the CAIR FIPs?
The Clean Air Interstate Rule (CAIR) was published by EPA on May
12, 2005 (70 FR 25162). In this rule, EPA determined that 28 States and
the District of Columbia contribute significantly to nonattainment and
interfere with maintenance of the national ambient air quality
standards (NAAQS) for fine particles (PM2.5) and/or 8-hour
ozone in downwind States in the eastern part of the country. As a
result, EPA required those upwind States to revise their SIPs to
include control measures that reduce emissions of SO2, which
is a precursor to PM2.5 formation, and/or NOX,
which is a precursor to both ozone and PM2.5 formation. For
jurisdictions that contribute significantly to downwind
PM2.5 nonattainment, CAIR sets annual State-wide emission
reduction requirements (i.e., budgets) for SO2 and annual
State-wide emission reduction requirements for NOX.
Similarly, for jurisdictions that contribute significantly to 8-hour
ozone nonattainment, CAIR sets State-wide emission reduction
requirements for NOX for the ozone season (May 1st to
September 30th). Under CAIR, States may implement these reduction
requirements by participating in the EPA-administered cap-and-trade
programs or by adopting any other control measures.
CAIR explains to subject States what must be included in SIPs to
address the requirements of section 110(a)(2)(D) of the Clean Air Act
(CAA) with regard to interstate transport with respect to the 8-hour
ozone and PM2.5 NAAQS. EPA made national findings, effective
on May 25, 2005, that the States had failed to submit SIPs meeting the
requirements of section 110(a)(2)(D). The SIPs were due in July 2000, 3
years after the promulgation of the 8-hour ozone and PM2.5
NAAQS. These findings started a 2-year clock for EPA to promulgate a
Federal Implementation Plan (FIP) to address the requirements of
section 110(a)(2)(D). Under CAA section 110(c)(1), EPA may issue a FIP
anytime after such findings are made and must do so within two years
unless a SIP revision correcting the deficiency is approved by EPA
before the FIP is promulgated.
On April 28, 2006, EPA promulgated FIPs for all States covered by
CAIR in order to ensure the emissions reductions required by CAIR are
achieved on schedule. Each CAIR State is subject to the FIPs until the
State fully adopts, and EPA approves, a SIP revision meeting the
requirements of CAIR. The CAIR FIPs require EGUs to participate in the
EPA-administered CAIR SO2, NOX annual, and
NOX ozone season trading programs, as appropriate. The CAIR
FIP SO2, NOX annual, and NOX ozone
season trading programs impose essentially the same requirements as,
and are integrated with, the respective CAIR SIP trading programs. The
integration of the FIP and SIP trading programs means that these
trading programs will work together to create effectively a single
trading program for each regulated pollutant (SO2,
NOX annual, and NOX ozone-season) in all States
covered by the CAIR FIP or SIP trading program for that pollutant. The
CAIR FIPs also allow States to submit abbreviated SIP revisions that,
if approved by EPA, will automatically
[[Page 50307]]
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
units from their NOX SIP Call trading programs in their CAIR
NOX ozone season trading programs.
IV. What Are the Types of CAIR SIP Submittals?
States have the flexibility to choose the type of control measures
they will use to meet the requirements of CAIR. EPA anticipates that
most States will choose to meet the CAIR requirements by selecting an
option that requires EGUs to participate in the EPA-administered CAIR
cap-and-trade programs. For such States, EPA has provided two
approaches for submitting and obtaining approval for CAIR SIP
revisions. States may submit full SIP revisions that adopt the model
CAIR cap-and-trade rules. If approved, these SIP revisions will fully
replace the CAIR FIPs. Alternatively, States may submit abbreviated SIP
revisions. These SIP revisions will not replace the CAIR FIPs; however,
the CAIR FIPs provide that, when approved, the provisions in these
abbreviated SIP revisions will be used instead of or in conjunction
with, as appropriate, the corresponding provisions of the CAIR FIPs
(e.g., the NOX allowance allocation methodology).
A State submitting a full SIP revision may either adopt regulations
that are substantively identical to the model rules or incorporate by
reference the model rules. CAIR provides that States may only make
limited changes to the model rules if the States want to participate in
the EPA-administered trading programs. A full SIP revision may change
the model rules only by altering their applicability and allowance
allocation provisions to:
1. Include NOX SIP Call trading sources that are not
EGUs under CAIR in the CAIR NOX ozone season trading
program;
2. Provide for State allocation of NOX annual or ozone
season allowances using a methodology chosen by the State;
3. Provide for State allocation of NOX annual allowances
from the compliance supplement pool (CSP) using the State's choice of
allowed, alternative methodologies; or
4. Allow units that are not otherwise CAIR units to opt
individually into the CAIR SO2, NOX annual, or
NOX ozone season trading programs under the opt-in
provisions in the model rules.
An approved CAIR full SIP revision addressing EGUs' SO2,
NOX annual, or NOX ozone-season emissions will
replace the CAIR FIP for that State for the respective EGU emissions.
V. Analysis of Connecticut'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 of the CAIR program (2009-2014) and by 0.125
lb/mmBtu, for phase 2 of the CAIR program (2015 and thereafter) to
obtain regional NOX budgets for 2009-2014 and for 2015 and
thereafter, respectively. EPA derived the State NOX annual
and ozone-season budgets from the regional budgets using State heat
input data adjusted by fuel factors. Connecticut, however, is only
required to participate in the CAIR NOX ozone season program
and not the CAIR NOX annual or SO2 trading
programs. Therefore, only CAIR NOX ozone-season budgets
apply to the Connecticut CAIR program.
In today's action, EPA is proposing approval of Connecticut's SIP
revision, which will be codified at RCSA section 22a-174-22c. This SIP
revision adopts the budget established for the State in CAIR, i.e.,
2,559 tons of NOX ozone-season emissions for CAIR phases 1
and 2, plus an additional 132 tons of NOX ozone-season
emissions for both phases 1 and 2 to account for NOX
emissions from ``non-EGUs'' from the Connecticut NOX SIP
Call trading program (see section V.B. below). The total NOX
ozone-season budget is therefore 2,691 tons of NOX ozone-
season emissions for CAIR phases 1 and 2. Connecticut's SIP revision
sets this budget as the total number of allowances (with each allowance
authorizing one ton of NOX ozone-season emissions) available
for allocation for each year under the EPA-administered CAIR cap-and-
trade program.
B. CAIR Cap-and-Trade Programs
The CAIR NOX annual and ozone-season model trading rules
both largely mirror the structure of the NOX SIP Call model
trading rule in 40 CFR part 96, subparts A through I. While the
provisions of the NOX annual and ozone-season model rules
are similar, there are some differences. For example, the
NOX ozone-season model rule reflects the fact that the CAIR
NOX ozone season trading program replaces the NOX
SIP Call trading program after the 2008 ozone season and is coordinated
with the NOX SIP Call program. The NOX ozone-
season model rule provides incentives for early emissions reductions by
allowing banked, pre-2009 NOX SIP Call allowances to be used
for compliance in the CAIR NOX ozone season trading program.
In addition, States have the option of continuing to meet their
NOX SIP Call requirement by participating in the CAIR
NOX ozone season trading program and including all their
NOX SIP Call trading sources in that program. Connecticut
has decided to exercise the option of including all its NOX
SIP Call units in its State CAIR program. Therefore, the Connecticut
CAIR SIP revision includes amendments to the Connecticut NOX
SIP Call trading
[[Page 50308]]
program (RCSA section 22a-174-22b) such that the NOX SIP
Call trading program applies for the control periods from 2003 through
2008, but is then superseded by the Connecticut CAIR program beginning
with the control period in 2009.
EPA also used the CAIR model trading rules as the basis for the
trading programs in the CAIR FIPs. The CAIR FIP trading rules are
virtually identical to the CAIR model trading rules, with changes made
to account for federal rather than state implementation. The CAIR model
SO2, NOX annual, and NOX ozone season
trading rules and the respective CAIR FIP trading rules are designed to
work together as integrated SO2, NOX annual, and
NOX ozone season trading programs.
In the SIP revision, Connecticut proposes to implement its CAIR
budgets by requiring EGUs (as well as ``non-EGUs'' from its
NOX SIP Call trading program, as discussed below) to
participate in EPA-administered cap-and-trade programs for
NOX ozone-season emissions. Connecticut is proposing a full
SIP revision that adopts, with certain allowed changes discussed below,
the CAIR model cap-and-trade rules for NOX ozone season
emissions.
C. Applicability Provisions for Non-EGU NOX SIP Call Sources
In general, the CAIR model trading rules apply to any stationary,
fossil-fuel-fired boiler or stationary, fossil-fuel-fired combustion
turbine serving at any time, since the later of November 15, 1990 or
the start-up of the unit's combustion chamber, a generator with
nameplate capacity of more than 25 MWe producing electricity for sale.
States have the option of bringing in, for the CAIR NOX
ozone season program only, those units in the State's NOX
SIP Call trading program that are not EGUs as defined under CAIR
(herein called ``non-EGUs''). EPA advises States exercising this option
to add the applicability provisions in the State's NOX SIP
Call trading rule for ``non-EGUs'' to the applicability provisions in
40 CFR 96.304 in order to include in the CAIR NOX ozone
season trading program all units required to be in the State's
NOX SIP Call trading program that are not already included
under 40 CFR 96.304. Under this option, the CAIR NOX ozone
season program must cover all large industrial boilers and combustion
turbines, as well as any small EGUs (i.e. units serving a generator
with a nameplate capacity of 25 MWe or less) that the State currently
requires to be in the NOX SIP Call trading program.
In the SIP revision, Connecticut proposes to expand the
applicability provisions of the CAIR NOX ozone season
trading program to include all units in the State's NOX SIP
Call trading program, plus Exeter Energy, which is a waste-tire-fired
unit that EPA has determined meets the definition of a NOX
SIP Call unit and a CAIR unit. Units in the Connecticut NOX
SIP Call trading program include EGUs of 15 MW or more and non-EGUs
(such as industrial boilers and combustion turbines) with a maximum
design heat input of 250 MMBtu/hr or more. These units will be included
in the Connecticut CAIR program beginning with the control period in
2009.
EPA has determined that Connecticut's proposed SIP revision
includes the allowable CAIR applicability provisions relating to adding
all NOX SIP Call trading-program units to the Connecticut
CAIR NOX ozone season program.
D. NOX Allowance Allocations
Deadlines: There is one technical flaw in the SIP revision, but EPA
is proposing to approve the SIP revision despite this flaw. CAIR
requires states to submit to EPA the initial allocations for EGUs that
started operation before 2001 by October 31, 2006. Connecticut's
proposed SIP revision does not meet this requirement, nor did the state
in fact submit those allocations by this date. However, the purpose of
this date was to allow EPA sufficient time to process the allocations
data. EPA now has the allocations, and no outside party was prejudiced
by Connecticut's failure to meet this date.
Specifically, according to 40 CFR 51.123(aa)(2)(iii)(C), for a full
SIP revision, ``[t]he State's methodology must require that, for EGUs
commencing operation before January 1, 2001, the State will determine,
and notify the Administrator of, each unit's allocation of CAIR
NOX allowances by October 31, 2006 for the ozone seasons
2009, 2010, and 2011.'' Connecticut's proposed SIP revision does not
meet this requirement because it does not require that the State submit
the 2009-2011 allocations for pre-2001 EGUs by October 31, 2006.
Instead, Connecticut's SIP revision requires that it submit, and in
fact it did submit, these allocations by April 30, 2007, the deadline
that is applicable to abbreviated SIP revisions under 40 CFR
51.123(ee)(2)(ii)(C).
Since Connecticut has submitted a full SIP revision, not an
abbreviated SIP revision, this failure to require that the State will
submit allocations by October 31, 2006 is technically a deficiency in
the SIP. However, this does not render the SIP unapprovable. The
purpose of the October 31, 2006 deadline, as mentioned above, was to
allow EPA's Clean Air Markets Division sufficient time to process the
allocations. At this point, the deadline has elapsed; Connecticut has,
in fact, submitted its allocations; and the Clean Air Markets Division
is fully able to process the allocations despite having received them
later than CAIR envisions. Potentially regulated entities received
ample notice of Connecticut's plan for allocations when the State's
program was submitted for public comment on the state level.
Furthermore, in the context of this action, it makes no difference
whether EPA would have received the 2009-2011 allocations in April of
this year or October of last year, since EPA has, in fact, received
them well before the date of this document. No party is prejudiced by
the deficiency, since the deadline has passed, and any interested party
has a full opportunity to comment on any aspect of this proposed
action. Moreover, with Connecticut's April 2007 submission of the
allocations, EPA will still be able--after final approval of the SIP
revision--to record them in 2007 and, thereby, provide the allowances
to owners and operators sufficiently in advance of the 2009-2011
control periods. In sum, EPA has determined that the interests of the
public, potentially regulated entities, and EPA itself, including those
interests which 40 CFR 51.123(aa)(2)(iii)(C) sought to protect, have
been adequately met by the proposed SIP revision's adoption and, more
importantly, actual submission of 2009-2011 allocation data by April
30, 2007. Consequently, EPA proposes to approve this SIP revision
despite Connecticut's failure to meet the requirements of 40 CFR
51.123(aa)(2)(iii)(C).
NOX allowance-allocation methodology: Under the NOX
allowance-allocation methodology in the CAIR model trading rules and in
the CAIR FIP, NOX annual and ozone-season allowances are
allocated to units that have operated for five years (i.e., ``existing
units''), based on heat input data from a three-year period that are
adjusted for fuel type by using fuel factors of 1.0 for coal, 0.6 for
oil, and 0.4 for other fuels. The CAIR model trading rules and the CAIR
FIP also provide a new unit set-aside from which units without five
years of operation are allocated allowances based on the units' prior
year emissions.
States may establish in their SIP submissions a different
NOX allowance-allocation methodology that will be used to
allocate allowances to sources in
[[Page 50309]]
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.
In the SIP revision, Connecticut proposes to replace the provisions
of the CAIR NOX ozone-season model trading rule concerning
allowance allocations with its own methodology. For most fossil-fuel-
fired units, Connecticut proposes to allocate NOX ozone-
season allowances largely based on electric and thermal output, rather
than heat input. For cogeneration units, certain industrial boilers or
indirect heat exchangers, and waste-tire-fired units, Connecticut
proposes to allocate allowances based on the unit's actual or permitted
NOX emission rate. Connecticut also provides a percentage of
allowances for an energy efficiency/renewable energy set-aside and a
new unit set-aside.
(1) What Types of Set-Asides Are Included in Connecticut CAIR?
In the SIP revision, Connecticut proposes to include in its CAIR
program both an energy efficiency/renewable energy set-aside (EERESA)
to encourage Energy Efficiency Projects (EEPs), Renewable Energy
Projects (REPs), and Qualifying Other Project (QOPs), and a new unit
set-aside to allow for addition of new units.
Connecticut defines a new unit as any fossil-fuel-fired unit that
began operating on or after January 1, 2006 and that serves a generator
that produces electricity at an output of 15 MWe or more. A unit is
considered to be a new unit for 6 ozone-season control periods (or
portion thereof) following the date of initial operation. This change
in status means that a Connecticut CAIR ``new unit'' will then become a
Connecticut CAIR ``existing unit.''
Connecticut proposes to establish a new unit set-aside at 7 percent
of the State's CAIR budget during CAIR phase 1 (2009-2014), and at 5
percent of the State's CAIR budget during CAIR phase 2 (2015 and
thereafter). Therefore, the new unit set-aside would include 200 CAIR
NOX ozone-season allowances during CAIR phase 1, and 134
allowances during CAIR phase 2.
Connecticut proposes to establish an EERESA at 10 percent of the
State's CAIR budget for both phases of the CAIR program. Therefore, the
EERESA would include 268 CAIR NOX allowances for the 2009
and subsequent ozone-season control periods.
(2) Methodology for Allocating CAIR Allowances
Connecticut is proposing to replace the provisions of the CAIR
NOX ozone-season model trading rule concerning allowance
allocations with a largely output-based methodology. Under
Connecticut's proposed SIP revision, most fossil-fuel-fired units would
receive allocations based on their average net electricity output,
without adjustments for fuel type. For cogeneration, industrial, and
waste-tire-fired units, Connecticut proposes to allocate allowances
based on the units' actual or permitted NOX emission rates
and average heat input.
EPA has identified two potential ambiguities in the allocation
provisions of Connecticut's proposed CAIR program, and asked the
Connecticut DEP for its interpretations. The Connecticut DEP (Wendy
Jacobs, Bureau of Air Management) responded by electronic mail on June
20, 2007. After reviewing the Connecticut DEP's interpretations as
stated in that electronic mail message, EPA interprets the provisions
involved as follows.
First, the proposed regulation uses the term ``NOX
allowance'' in three places. See RCSA sections 22a-174-22c(c)(2), 22a-
174-22c(c)(3)(B), 22a-174-22c(g)(4). However, this term is defined
neither in the proposed SIP revision nor in the CAIR model rule.
According to the Connecticut DEP, the term ``NOX allowance''
when used in RCSA section 22a-174-22c is identical to the term ``CAIR
NOX Ozone Season allowance'' as defined at 40 CFR 96.302.
EPA adopts this interpretation.
Second, under RCSA sections 22a-174-22c(e)(7)(A) and (B) and 22a-
174-22c(e)(8)(A), there is no limit to the number of allowances that
can be allocated to cogeneration units, industrial units, waste-tire-
fired units, or Phase I units in any control period. In theory, these
provisions could operate to allocate more allowances to cogeneration
units, industrial units, waste-tire-fired units, or Phase I units than
are available in Connecticut's CAIR NOX ozone-season budget.
That said, RCSA sections 22a-174-22c(e)(2) and 22a-174-22c(e)(3), which
authorize the Connecticut DEP to allocate CAIR NOX ozone
season allowances, state the maximum number of allowances available for
allocation for all units other than new units.
According to the Connecticut DEP, RCSA sections 22a-174-
22c(e)(7)(A) and 22a-174-22c(e)(8)(A) are modeled after analogous
provisions in the Connecticut NOX Budget Program and the
Connecticut NOX SIP Call trading program, and under those
programs, the allocations for cogeneration units and industrial units
have never resulted in a shortage of allowances for units in other
categories. The DEP suggests that if the data support allocating
allowances to cogeneration units, industrial units and waste-tire-fired
units on an output basis, or if there are a significant number of new
entrants into these categories, DEP may revise its CAIR program to
allocate to these categories on an output basis.
For purposes of construing Connecticut's proposed SIP revision, EPA
interprets RCSA sections 22a-174-22c(e)(2) and 22a-174-22c(e)(3) to
prohibit the Connecticut DEP from allocating allowances in excess of
the total state budget, and to control in any conflict with RCSA
sections 22a-174-22c(e)(7)(A) and (B) and 22a-174-22c(e)(8)(A). Thus,
if the operation of RCSA sections 22a-174-22c(e)(7)(A)-(B) and/or 22a-
174-22c(e)(8)(A) were to yield allowances for cogeneration units,
industrial units, waste-tire-fired units, or Phase I units in excess of
the state budget, either by themselves or in combination with
allocations to other categories, then RCSA sections 22a-174-22c(e)(2)
and 22a-174-22c(e)(3) would require the Connecticut DEP to recalculate
or reallocate allowances so as not to exceed the state budget.
EPA is relying on this interpretation of Connecticut's proposed SIP
revision for the purposes of approving it as meeting the requirements
of the Act and the CAIR program. If EPA does not receive comments to
the contrary from the Connecticut DEP or any other party during the
public comment period, the interpretations stated above will represent
EPA's formal interpretations of the SIP provisions at issue for
purposes of federal law.
(3) NOX Reporting Requirements
Under the CAIR model rule, facilities that are subject to the Acid
Rain Program or the CAIR NOX and SO2 annual
trading programs must report emissions data year-round, but facilities
that are only subject to the NOX ozone season trading
program need only submit NOX emission data to the State
during the ozone season. As noted above, Connecticut is only required
to
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participate in the CAIR NOX ozone season program. However,
Connecticut's proposed CAIR program requires additional data reporting
beyond that required by the model CAIR NOX ozone season
rule. Specifically, all units would be required to provide annual
reports of net electricity output and useful steam output (or an
estimate of this steam output) for each control period. New CAIR units
would be required to provide annual estimates of the total number of
hours of operation for each control period. Units that are not subject
to an Acid Rain emissions limitation and that are monitoring
NOX emissions using a CEMS (but not those that are not
monitoring using a CEMS) would be required to report emissions on a
year-round basis.
EPA has determined that these modifications of the CAIR
NOX ozone season trading rule in regard to reporting of
output data are acceptable.
(4) Submittal of CAIR Allocations to EPA
In the SIP revision, Connecticut requires the State to provide EPA
with existing-unit CAIR allocations for each control period beyond 2011
by October 31st of each year beginning in 2008. For units starting
operation after January 1, 2001 that are treated as new units, the
State would notify EPA of each unit's allocation by July 31st of the
year for which the CAIR allowances are allocated. EPA has determined
that these proposed reporting deadlines are acceptable.
E. Individual Opt-In Units
The opt-in provisions of the CAIR SIP model trading rules allow
certain non-EGUs (i.e., boilers, combustion turbines, and other
stationary fossil-fuel-fired devices) that do not meet the
applicability criteria for a CAIR trading program to participate
voluntarily in (i.e., opt into) the CAIR trading program. A non-EGU may
opt into one or more of the CAIR trading programs. In order to qualify
to opt into a CAIR trading program, a unit must vent all emissions
through a stack and be able to meet monitoring, recordkeeping, and
recording requirements of 40 CFR part 75. The owners and operators
seeking to opt a unit into a CAIR trading program must apply for a CAIR
opt-in permit. If the unit is issued a CAIR opt-in permit, the unit
becomes a CAIR unit, is allocated allowances, and must meet the same
allowance-holding and emissions monitoring and reporting requirements
as other units subject to the CAIR trading program. The opt-in
provisions provide for two methodologies for allocating allowances for
opt-in units, one methodology that applies to opt-in units in general
and a second methodology that allocates allowances only to opt-in units
that the owners and operators intend to repower before January 1, 2015.
States have several options concerning the opt-in provisions.
States may adopt the CAIR opt-in provisions entirely or may adopt them
but exclude one of the methodologies for allocating allowances. States
may also decline to adopt the opt-in provisions at all.
The Connecticut CAIR SIP does not include opt-in provisions. Under
the model CAIR NOX ozone season trading rule, the energy-
output methodology that Connecticut proposes to use to allocate
allowances cannot be used for opt-in sources.
VI. Proposed Action
EPA is proposing to approve Connecticut's full CAIR SIP revision
submitted on April 26, 2007, including new RCSA section 22a-174-22c
(``The Clean Air Interstate Rule (CAIR) Nitrogen Oxides
(NOX) Ozone Season Trading Program''), repeal of existing
RCSA section 22a-174-22a (``The Connecticut NOX Budget
Program''), as of May 1, 2009, and repeal of existing RCSA section 22a-
174-22b (``The Connecticut Post-2002 NOX Budget Program''),
as of May 1, 2010. Under this SIP revision, Connecticut is choosing to
participate in the EPA-administered cap-and-trade program for
NOX ozone-season emissions. Connecticut's proposed SIP
revision meets the applicable requirements in 40 CFR 51.123(o) and
(aa), with regard to NOX ozone-season emissions. EPA is
proposing to determine that the SIP as revised will meet the
requirements of CAIR. As a consequence of the SIP approval, the
Administrator of EPA will also issue, without providing an opportunity
for a public hearing or an additional opportunity for written public
comment, a final rule to withdraw the CAIR FIP concerning
NOX ozone-season emissions for Connecticut. This action will
delete and reserve 40 CFR 52.386.
VII. Statutory and Executive Order Reviews
Under Executive Order 12866 (58 FR 51735, October 4, 1993), this
action is not a ``significant regulatory action'' and therefore is not
subject to review by the Office of Management and Budget. For this
reason, this action is also not subject to Executive Order 13211,
``Actions Concerning Regulations That Significantly Affect Energy
Supply, Distribution, or Use'' (66 FR 28355, May 22, 2001). This action
merely proposes to approve State law as meeting Federal requirements
and would impose no additional requirements beyond those imposed by
State law. Accordingly, the Administrator certifies that this proposed
rule would not have a significant economic impact on a substantial
number of small entities under the Regulatory Flexibility Act (5 U.S.C.
601 et seq.). Because this action proposes to approve pre-existing
requirements under State law and would not impose any additional
enforceable duty beyond that required by State law, it does not contain
any unfunded mandate or significantly or uniquely affect small
governments, as described in the Unfunded Mandates Reform Act of 1995
(Public Law 104-4).
This proposal also does not have tribal implications because it
would not have a substantial direct effect on one or more Indian
tribes, on the relationship between the Federal Government and Indian
tribes, or on the distribution of power and responsibilities between
the Federal Government and Indian tribes, as specified by Executive
Order 13175 (65 FR 67249, November 9, 2000). This proposed action also
does not have Federalism implications because it would not have
substantial direct effects on the States, on the relationship between
the national government and the States, or on the distribution of power
and responsibilities among the various levels of government, as
specified in Executive Order 13132 (64 FR 43255, August 10, 1999). This
action merely proposes to approve a State rule implementing a Federal
standard and will result, as a consequence of that approval, in the
Administrator's withdrawal of the CAIR FIP. It does not alter the
relationship or the distribution of power and responsibilities
established in the Clean Air Act. This proposed rule also is not
subject to Executive Order 13045 ``Protection of Children from
Environmental Health Risks and Safety Risks'' (62 FR 19885, April 23,
1997), because it would approve a State rule implementing a Federal
Standard.
In reviewing SIP submissions, EPA's role is to approve State
choices, provided that they meet the criteria of the Clean Air Act. In
this context, in the absence of a prior existing requirement for the
State to use voluntary consensus standards (VCS), EPA has no authority
to disapprove a SIP submission for failure to use VCS. It would thus be
inconsistent with applicable law for EPA, when it reviews a SIP
submission, to use VCS in place of a SIP submission that otherwise
satisfies the provisions of the Clean Air Act. Thus, the requirements
of section 12(d) of the
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National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272
note) do not apply. This proposed rule would not impose an information
collection burden under the provisions of the Paperwork Reduction Act
of 1995 (44 U.S.C. 3501 et seq.).
List of Subjects in 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: August 22, 2007.
Ira Leighton,
Acting Regional Administrator, EPA New England.
[FR Doc. E7-17196 Filed 8-30-07; 8:45 am]
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