[Federal Register Volume 74, Number 111 (Thursday, June 11, 2009)]
[Proposed Rules]
[Pages 27731-27737]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-13725]
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 52
[EPA-R03-OAR-2009-0033; FRL-8916-8]
Approval and Promulgation of Air Quality Implementation Plans;
West Virginia; 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 West Virginia
State Implementation Plan (SIP). This revision addresses the
requirements of
[[Page 27732]]
EPA's Clean Air Interstate Rule (CAIR), and recodifies and revises
provisions pertaining to internal combustion engines and cement kilns
that are subject to the nitrogen oxides (NOX) SIP Call.
Although the D.C. Circuit found CAIR to be flawed, the rule was
remanded without vacatur and thus remains in place. Thus, EPA is
continuing to take action on CAIR SIPs as appropriate. CAIR, as
promulgated, requires States to reduce emissions of sulfur dioxide
(SO2) and nitrogen oxides (NOX) that
significantly contribute to, or interfere with maintenance of, the
national ambient air quality standards (NAAQS) for fine particulates
and/or ozone in any downwind state. CAIR establishes budgets for
SO2 and NOX for States that contribute
significantly to nonattainment in downwind States and requires the
significantly contributing States to submit SIP revisions that
implement these budgets. States have the flexibility to choose which
control measures to adopt to achieve the budgets, including
participation in EPA-administered cap-and-trade programs addressing
SO2, NOX annual, and NOX ozone season
emissions. In the SIP revision that EPA is proposing to approve, West
Virginia will meet CAIR requirements by participating in these cap-and-
trade programs. EPA is proposing to approve the SIP revision, as
interpreted and clarified herein, as fully implementing the CAIR
requirements for West Virginia.
DATES: Written comments must be received on or before July 13, 2009.
ADDRESSES: Submit your comments, identified by Docket ID Number EPA-
R03-OAR-2009-0033 by one of the following methods:
A. http://www.regulations.gov. Follow the on-line instructions for
submitting comments.
B. E-mail: [email protected].
C. Mail: EPA-R03-OAR-2009-0033, Cristina Fernandez, Chief, Air
Quality Planning Branch, Mailcode 3AP21, U.S. Environmental Protection
Agency, Region III, 1650 Arch Street, Philadelphia, Pennsylvania 19103.
D. Hand Delivery: At the previously-listed EPA Region III address.
Such deliveries are only accepted during the Docket's normal hours of
operation, and special arrangements should be made for deliveries of
boxed information.
Instructions: Direct your comments to Docket ID No. EPA-R03-OAR-
2009-0033. 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 information that you
consider to be CBI or otherwise protected through http://www.regulations.gov or e-mail. The http://www.regulations.gov Web site
is an ``anonymous access'' system, which means EPA will not know your
identity or contact information unless you provide it in the body of
your 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, any form of encryption, and be free of
any defects or viruses.
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 during normal business hours at the
Air Protection Division, U.S. Environmental Protection Agency, Region
III, 1650 Arch Street, Philadelphia, Pennsylvania 19103. Copies of the
State submittal are available at the West Virginia Department of
Environmental Protection, Division of Air Quality, 601 57th Street,
SE., Charleston, West Virginia 25304.
FOR FURTHER INFORMATION CONTACT: Marilyn Powers, (215) 814-2308, or by
e-mail at [email protected].
SUPPLEMENTARY INFORMATION:
Table of Contents
I. What Action Is EPA Proposing?
II. What Is the Regulatory History of CAIR and the CAIR Federal
Implementation Plans (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 West Virginia's CAIR SIP Submittal
A. State Budgets for Allowance Allocations
B. CAIR Cap-and-Trade Programs
C. Applicability Provisions
D. NOX Allowance Allocations
E. Allocation of NOX Allowances from Compliance
Supplement Pool
F. Individual Opt-in Units
G. Additional Interpretations
VI. Proposed Action
VI. Statutory and Executive Order Reviews
I. What Action Is EPA Proposing?
EPA is proposing to approve the SIP revision submitted by West
Virginia on April 22, 2008, as interpreted and clarified herein, as
meeting the applicable CAIR requirements by requiring certain electric
generating units (EGUs) to participate in the EPA-administered CAIR
cap-and-trade programs addressing SO2, NOX
annual, and NOX ozone season emissions. EPA is also
proposing to approve recodification and revision of provisions that
address NOX ozone season emission reduction requirements for
internal combustion engines and cement kilns, updated only to revise
NOX SIP Call references to CAIR references. These provisions
for internal combustion engines and cement kilns were previously
approved as part of West Virginia regulation 45CSR1. 45CSR1 set forth
the requirements for both: non-EGUs that were part of the
NOX Budget Trading Program, and non-EGUs that were not part
of the trading program but instead had specific emission requirements.
EPA will no longer administer the NOX Budget Trading program
after 2008, therefore West Virginia chose to sunset its NOX
Budget Trading Program rules by repealing 45CSR1 and 45CSR26 (which
applied to EGUs) in their entirety. The units that participated in the
NOX Budget Trading Program in 45CSR1 and 45CSR26 will now be
subject to the requirements of the CAIR trading program, as proposed in
this action. The provisions for internal combustion engines and cement
kilns have been recodified into separate sections of 45CSR40 (sections
45-40-90 and 45-40-100, respectively).
II. What Is the Regulatory History of the CAIR and the CAIR FIPs?
EPA published CAIR 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
NAAQS for fine particles (PM2.5) and/or
[[Page 27733]]
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 or budgets 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. 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.
Further, as provided in a rule published by EPA on November 7, 2007, a
State's CAIR FIPs are automatically withdrawn when EPA approves a SIP
revision, in its entirely and without any conditions, as fully meeting
the requirements of CAIR. Where only portions of the SIP revision are
approved, the corresponding portions of the FIPs are automatically
withdrawn and the remaining portions of the FIP stay in place. Finally,
the CAIR FIPs also allow States to submit abbreviated SIP revisions
that, if approved by EPA, will automatically replace or supplement
certain CAIR FIP provisions (e.g., the methodology for allocating
NOX allowances to sources in the State), while the CAIR FIP
remains in place for all other provisions.
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.
On October 19, 2007, EPA amended CAIR and the CAIR FIPs to clarify
the definition of ``cogeneration unit'' and thus the applicability of
the CAIR trading program to cogeneration units. There are no sources in
West Virginia that are affected by the clarification of this
definition, however, West Virginia must still revise their rules to
address this clarification and submit the revised rule as a SIP
revision.
EPA was sued by a number of parties on various aspects of CAIR, and
on July 11, 2008, the U.S. Court of Appeals for the District of
Columbia Circuit issued its decision to vacate and remand both CAIR and
the associated CAIR FIPs in their entirety. North Carolina v. EPA, 531
F.3d 836 (DC Cir. Jul. 11, 2008). However, in response to EPA's
petition for rehearing, the Court issued an order remanding CAIR to EPA
without vacating either CAIR or the CAIR FIPs. North Carolina v. EPA,
550 F.3d 1176 (DC Cir. Dec. 23, 2008). The Court thereby left CAIR in
place in order to ``temporarily preserve the environmental values
covered by CAIR'' until EPA replaces it with a rule consistent with the
Court's opinion. Id. at 1178. The Court directed EPA to ``remedy CAIR's
flaws'' consistent with its July 11, 2008 opinion, but declined to
impose a schedule on EPA for completing that action. Id. Therefore,
CAIR and the CAIR FIP are currently in effect in West Virginia.
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 27734]]
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 all 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. As discussed above, EPA
approval in full, without any conditions, of a CAIR full SIP revision
causes the CAIR FIPs to be automatically withdrawn.
V. Analysis of West Virginia's CAIR SIP Submittal
A. State Budgets for Allowance Allocations
The CAIR NOX annual and ozone season budgets were
developed from historical heat input data for EGUs. Using these data,
EPA calculated annual and ozone season regional heat input values,
which were multiplied by 0.15 lb/mmBtu, for phase 1 and 0.125 lb/mmBtu,
for phase 2, to obtain regional NOX budgets for 2009-2014
and for 2015 and thereafter, respectively. EPA derived the State
NOX annual and ozone season budgets from the regional
budgets using State heat input data adjusted by fuel factors.
The CAIR State SO2 budgets were derived by discounting
the tonnage of emissions authorized by annual allowance allocations
under the Acid Rain Program under title IV of the CAA. Under CAIR, each
allowance allocated in the Acid Rain Program for the years in phase 1
of CAIR (2010 through 2014) authorizes 0.5 ton of SO2
emissions in the CAIR trading program, and each Acid Rain Program
allowance allocated for the years in phase 2 of CAIR (2015 and
thereafter) authorizes 0.35 ton of SO2 emissions in the CAIR
trading program.
In today's action, EPA is proposing to approve West Virginia's SIP
revision that adopts the budgets established for the State in CAIR.
These budgets are: 74,220 tons for NOX annual emissions from
2009 through 2014 and 61,850 tons from 2015 and thereafter; 26,859 tons
for NOX ozone season emissions from 2009 through 2014 and
26,525 tons from 2015 and thereafter; and 215,881 tons for
SO2 annual emissions from 2009 through 2014 and 151,117 tons
from 2015 and thereafter. Additionally, the CAIR NOX ozone
season budget would be increased annually by 2,184 tons to account for
NOX SIP Call trading sources that are not EGUs under CAIR,
but are included in the CAIR NOX ozone season trading
program. West Virginia'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.
EPA notes that, in North Carolina, id. at 916-21, the Court
determined, among other things, that the State SO2 and
NOX budgets established in CAIR were arbitrary and
capricious.\1\ However, as discussed above, the Court also decided to
remand CAIR but to leave the rule in place in order to ``temporarily
preserve the environmental values covered by CAIR'' pending EPA's
development and promulgation of a replacement rule that remedies CAIR's
flaws. Id. at 1178. EPA had indicated to the Court that development and
promulgation of a replacement rule would take about two years. Reply in
Support of Petition for Rehearing or Rehearing en Banc at 5 (filed Nov.
17, 2008 in North Carolina v. EPA, Case No. 05-1224, DC Cir.). The
process at EPA of developing a proposal that will undergo notice and
comment and result in a final replacement rule is ongoing. In the
meantime, consistent with the Court's orders, EPA is implementing CAIR
by approving State SIP revisions that are consistent with CAIR (such as
the provisions setting State SO2 and NOX budgets
for the CAIR trading programs) in order to ``temporarily preserve'' the
environmental benefits achievable under the CAIR trading programs.
North Carolina, 550 F.3d at 1178.
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\1\ The Court also determined that the CAIR trading programs
were unlawful (id. at 906-8) and that the treatment of title IV
allowances in CAIR was unlawful (id. at 921-23). For the same
reasons that EPA is proposing approval of the provisions of West
Virginia's SIP revision that use the SO2 and
NOX budgets set in CAIR, EPA is also proposing approval,
as discussed below, of West Virginia's SIP revision to the extent
the SIP revision adopts the CAIR trading programs, including the
provisions addressing applicability, allowance allocations, and use
of title IV allowances.
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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
[[Page 27735]]
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, West Virginia 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. West Virginia 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
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.
Under the CAIR model trading rules, exemptions are provided for a unit
otherwise covered by these general applicability criteria that is a
cogeneration unit meeting a specified limit on its electricity sales or
that is a solid waste incineration unit meeting a specified limit on
combustion of fossil fuel. In the applicability section of each of West
Virginia's CAIR trading rules, these exemptions are set forth in
subsection 4.2, which begins with the phrase ``[w]ith limited
exception'' and then goes on to state that units meeting the exemption
criteria that are set forth are not CAIR units. EPA interprets this
phrase to mean, in each of West Virginia's CAIR trading rules, that the
provisions in subsection 4.2 that set forth the exemptions for
cogeneration units and solid waste incineration units are the ``limited
exceptions'' to the general applicability criteria in subsection 4.1
and that these provisions are not altered by the reference to ``limited
exception'' and are intended to be the same as the exemptions set forth
in the CAIR model trading rules. In other words, there are no
exceptions to the general applicability criteria other than those
listed in subsection 4.2, and all units meeting the exemption criteria
in subsection 4.2 are not CAIR units. In a letter submitted to EPA on
April 30, 2008, the West Virginia Department of Environmental
Protection adopted this interpretation.
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) that the State currently requires to be in the
NOX SIP Call trading program.
West Virginia 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,
including the only unit (PPG Natrium Plant Unit 002) that opted into
the State's NOX SIP Call trading program. Under 40 CFR
51.123(aa)(2)(i), a State may include ``all non-EGUs subject to'' the
State's NOX SIP Call trading program. EPA believes that,
although the unit voluntarily entered the State's NOX SIP
Call trading program, West Virginia properly included this unit in the
CAIR NOX ozone season trading program because the unit
became subject to that trading program in 2003, installed emission
controls for compliance with program requirements, and has continued to
participate in the program through 2008. Consistent with the fact
(discussed below) that West Virginia's SIP revision does not allow for
opt-in units in the CAIR NOX ozone season trading program,
the SIP revision treats this unit like any other CAIR unit and does not
give this unit the option of leaving the CAIR NOX ozone
season trading program.
Further, in connection with the inclusion, as CAIR units in the
CAIR NOX ozone season trading program, of non-EGUs in the
State's NOX SIP Call trading program, West Virginia's SIP
revision includes (in subsection 2.37.b) a special definition of
``commence operation'' for such non-EGUs that become CAIR units after
they have commenced operation. Section 45-2.37.b incorrectly references
``subsections 4.2 or 4.3,'' which were renumbered in the latest version
of West Virginia's SIP revision as ``subsections 4.3 or 4.4.'' Because
this appears to be a scrivener's error, EPA interprets the references
to be to ``subsections 4.3 or 4.4.'' In a letter submitted to EPA on
April 30, 2008, the West Virginia Department of Environmental
Protection adopted this interpretation.
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.
West Virginia has chosen to distribute NOX annual and
NOX ozone season allowances in a manner substantively
identical to that in the Part 96 model rule. The State's NOX
ozone season allocation provisions have been modified only to the
extent necessary to add requirements associated with West Virginia's
option to bring its non-EGUs into the CAIR NOX ozone season
trading program.
E. Allocation of NOX Allowances From Compliance Supplement
Pool
The CAIR establishes a 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
[[Page 27736]]
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.
West Virginia's compliance supplement pool is comprised of 4,898
allowances. West Virginia has chosen to modify the provisions of the
CAIR NOX annual model trading rule concerning the allocation
of allowances from the CSP. West Virginia has chosen to distribute CSP
allowances to any CAIR NOX Annual unit in the State whose
average annual NOX emission rate for 2007 or 2008 is less
than 0.25 lb/mmBtu and whose NOX averaging plan (if the unit
is included in an Acid Rain Program NOX averaging plan under
40 CFR 76.11) for that year has an actual weighted average
NOX emission rate that is equal to or less than the actual
weighted average NOX emission rate for the year before the
unit achieves NOX emission reductions in 2007 or 2008.
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
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. West Virginia
has declined to adopt the opt-in provisions.
G. Additional Interpretations
1. References to NOX Emitting Equipment in Section 45-40-9
West Virginia's SIP revision includes provisions (in sections 45-
40-90 and 45-40-100) addressing NOX ozone season emission
reduction requirements for internal combustion engines and cement
kilns, none of which sources are included in the CAIR NOX
ozone season trading program. The NOX ozone season emission
reduction requirements in these sections--which have been moved from
the portion of West Virginia's rules addressing the NOX SIP
Call to the portion addressing CAIR--are identical to those previously
approved in West Virginia's SIP for purposes of meeting requirements
under the NOX SIP Call, except that references to the
NOX SIP Call trading program are replaced by references to
the CAIR NOX ozone season trading program. EPA is therefore
proposing to approve the recodification and revision of sections 45-40-
90 and 45-40-100, as interpreted and clarified below.
Some of the language in section 45-40-90 could be interpreted as
being inconsistent with the above-discussed CAIR trading program
applicability provisions in section 45-40-4 in West Virginia's SIP
revision. Specifically, subsections 90.1, 90.4.d, 90.4.g, and 90.4.i
refer to stationary internal combustion engines and ``other significant
NOX emitting equipment'' located at facilities controlled by
the same owner or operator. Section 90.1 states that both of these
categories of equipment ``will not be * * * subject to the CAIR
NOX Ozone Season Trading Program requirements under sections
4 through 88.'' Subsections 90.4.g and 90.4.i include similar language
stating the ``other significant NOX emitting equipment''
will not be subject to trading program requirements; however, these
sections clarify that the ``other significant NOX emitting
equipment'' that is not subject to the trading program requirements is
only to equipment ``that is not a CAIR NOX Ozone Season unit
under section 4'' (i.e., section 45-40-4). Subsections 90.1 and 90.4.d
lack this clarifying language. Section 45-40-4 does not exempt from the
CAIR NOX ozone season trading program ``other significant
NOX emitting equipment'' covered by section 45-40-90.
Therefore, if subsections 90.1 and 90.4.d. were interpreted to exempt
``other significant NOX emitting equipment'' regardless of
whether it is covered by the CAIR trading programs, these subsections
would be inconsistent with section 45-40-4. In order for West Virginia
to participate in the CAIR trading program as the State clearly
intends, the applicability of the CAIR trading program to ``significant
NOX emitting equipment'' must be determined by section 45-
40-4 (not section 45-40-90). EPA interprets all references to ``other
significant NOX emitting equipment'' in section 45-40-90 to
be limited to such equipment that is not a CAIR NOX Ozone
Season unit under section 45-40-4. In a letter submitted to EPA on
April 30, 2008, the West Virginia Department of Environmental
Protection adopted this interpretation.
2. Treatment of CAIR Allowances Allocated to Opt-in Units
Having chosen not to allow units to opt into the CAIR trading
programs, West Virginia properly removed from its CAIR trading rules
most of the provisions that are in the CAIR model trading rules and
address CAIR opt-in units. However, while, as discussed above, West
Virginia has the option of participating in the CAIR trading programs
with or without allowing units in its jurisdiction to opt into the
trading programs, other States also have that option, and some States
have chosen to allow units in their respective jurisdictions to opt in.
Consequently, any CAIR SO2 unit, including those in West
Virginia, may obtain CAIR SO2 allowances allocated to a CAIR
opt-in unit and use them to comply with the allowance-holding
requirements in the CAIR SO2 trading program. Under the CAIR
SO2 model trading rule, compliance with these requirements
is determined in two steps: First, CAIR units that are also Acid Rain
units must show compliance consistent with the Acid Rain Program
allowance-holding requirement and so can use only title IV allowances;
and second, all CAIR units must then show compliance with the CAIR
trading program allowance-holding requirement using either title IV
allowances or CAIR SO2 allowances allocated to CAIR opt-in
units. Language in the compliance provisions of the CAIR SO2
model trading rule states explicitly when CAIR SO2
allowances allocated to CAIR opt-in units can and cannot be used. West
Virginia's SIP inadvertently omitted this language from section 45-41-
54, apparently because the language refers to the CAIR
[[Page 27737]]
opt-in unit provisions. However, West Virginia's rule still requires
compliance initially with the Acid Rain Program requirement set forth
in sections 73.35 and 77.5 of the Acid Rain Program rules, which
themselves require the use of only title IV allowances. Consequently,
EPA interprets subsections 54.2.a.1 and 54.2.a.2 to allow only for the
use of title IV allowances. Moreover, since West Virginia's rule
defines ``CAIR SO2 allowance'' as including allowances
allocated to CAIR opt-in units, EPA interprets subsections 54.2.a.3,
54.2.b, 54.2.b.2, and 54.4.a to allow for the use of title IV
allowances and allowances allocated to CAIR opt-in units. In a letter
submitted to EPA on April 30, 2008, the West Virginia Department of
Environmental Protection adopted this interpretation.
VI. Proposed Action
EPA is proposing to approve West Virginia's full CAIR SIP revision
submitted on April 22, 2008, as interpreted and clarified herein. EPA
is proposing to approve the recodification and revision of provisions
(in sections 45-40-90 and 45-40-100) addressing NOX ozone
season emission reduction requirements for internal combustion engines
and cement kilns, none of which are included in the CAIR trading
programs. Under the SIP revision, West Virginia is choosing to
participate in the EPA-administered CAIR cap-and-trade programs for
SO2, NOX annual, and NOX ozone season
emissions. The SIP revision, as interpreted and clarified herein, meets
the applicable requirements of CAIR, set forth 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. EPA is soliciting public comments on the issues discussed in
this document. These comments will be considered before taking final
action.
VII. Statutory and Executive Order Reviews
Under the Clean Air Act, the Administrator is required to approve a
SIP submission that complies with the provisions of the Act and
applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a).
Thus, in reviewing SIP submissions, EPA's role is to approve state
choices, provided that they meet the criteria of the Clean Air Act.
Accordingly, this action merely proposes to approve state law as
meeting Federal requirements and does not impose additional
requirements beyond those imposed by state law. For that reason, this
proposed action:
Is not a ``significant regulatory action'' subject to
review by the Office of Management and Budget under Executive Order
12866 (58 FR 51735, October 4, 1993);
Does not impose an information collection burden under the
provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);
Is certified as not having a significant economic impact
on a substantial number of small entities under the Regulatory
Flexibility Act (5 U.S.C. 601 et seq.);
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);
Does not have Federalism implications as specified in
Executive Order 13132 (64 FR 43255, August 10, 1999);
Is not an economically significant regulatory action based
on health or safety risks subject to Executive Order 13045 (62 FR
19885, April 23, 1997);
Is not a significant regulatory action subject to
Executive Order 13211 (66 FR 28355, May 22, 2001);
Is not subject to requirements of Section 12(d) of the
National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272
note) because application of those requirements would be inconsistent
with the Clean Air Act; and
Does not provide EPA with the discretionary authority to
address, as appropriate, disproportionate human health or environmental
effects, using practicable and legally permissible methods, under
Executive Order 12898 (59 FR 7629, February 16, 1994).
In addition, this proposed approval of West Virginia's SIP revision
to meet the requirements of CAIR does not have tribal implications as
specified by Executive Order 13175 (65 FR 67249, November 9, 2000),
because the SIP is not approved to apply in Indian country located in
the state, and EPA notes that it will not impose substantial direct
costs on tribal governments or preempt tribal law.
List of Subjects in 40 CFR Part 52
Environmental protection, Air pollution control, Incorporation by
reference, Nitrogen dioxide, Ozone, Particulate matter, Reporting and
recordkeeping requirements, Sulfur oxides.
Authority: 42 U.S.C. 7401 et seq.
Dated: May 29, 2009.
William C. Early,
Acting Regional Administrator, Region III.
[FR Doc. E9-13725 Filed 6-10-09; 8:45 am]
BILLING CODE 6560-50-P