[Federal Register Volume 74, Number 184 (Thursday, September 24, 2009)]
[Proposed Rules]
[Pages 48695-48702]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-23052]
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 52
[EPA-R03-OAR-2009-0370; FRL-8962-6]
Approval and Promulgation of Air Quality Implementation Plans;
Pennsylvania; Clean Air Interstate Rule; NOX SIP Call Rule; Amendments
to NOX Control Rules
AGENCY: Environmental Protection Agency (EPA).
ACTION: Proposed rule.
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SUMMARY: EPA is proposing to approve a revision to the Pennsylvania
State Implementation Plan (SIP). The revision addresses the
requirements of EPA's Clean Air Interstate Rule (CAIR) and modifies
other requirements in Pennsylvania's SIP that interact with CAIR
including: The termination of Pennsylvania's NOX Budget
Trading Program; statewide provisions for large, stationary internal
combustion engines; statewide provisions for large cement
[[Page 48696]]
kilns; provisions for small sources of NOX in the
Pennsylvania portion of the Philadelphia 8-hour ozone nonattainment
area; and emission reduction credits. Although the DC Circuit found
CAIR to be flawed, the rule was remanded without vacatur and 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,
Pennsylvania 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 Pennsylvania. Of note, a final approval action of this
SIP revision will result in the automatic withdrawal of the CAIR FIP in
Pennsylvania.
DATES: Written comments must be received on or before October 26, 2009.
ADDRESSES: Submit your comments, identified by Docket ID Number EPA-
R03-OAR-2009-0370 by one of the following methods:
A. http://www.regulations.gov. Follow the online instructions for
submitting comments.
B. E-mail: [email protected].
C. Mail: EPA-R03-OAR-2009-0370, 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-
2009-0370. 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 Pennsylvania Department of
Environmental Protection, Bureau of Air Quality Control, P.O. Box 8468,
400 Market Street, Harrisburg, Pennsylvania 17105.
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 Pennsylvania'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. Clarifications and Interpretations
H. Other Requirements in This SIP Revision
VI. Proposed Action
VII. Statutory and Executive Order Reviews
I. What Action Is EPA Proposing?
EPA is proposing to approve the SIP revision submitted by
Pennsylvania on May 23, 2008, 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. The SIP revision also includes provisions that
terminate Pennsylvania's NOX Budget Trading Program under
the NOX SIP Call and establishes emission caps for the non-
EGUs that were affected by the NOX Budget Trading Program.
EPA is also proposing to approve revisions that address NOX
ozone season emission reduction requirements for internal combustion
engines and cement kilns statewide, and small sources of NOX
in the five counties that comprise the Pennsylvania portion of the
Philadelphia 8-hour ozone nonattainment area, all of which were
originally approved as part of the Pennsylvania SIP on September 29,
2006.
II. What Is the Regulatory History of 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 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-
[[Page 48697]]
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 2, 2007, a
State's CAIR FIPs are automatically withdrawn when EPA approves a SIP
revision, in its entirety and without any conditions, as fully meeting
the requirements of CAIR. Where only portions of the SIP revision are
approved, the corresponding portions of the FIPs are automatically
withdrawn and the remaining portions of the FIP stay in place. Finally,
the CAIR FIPs also allow States to submit abbreviated SIP revisions
that, if approved by EPA, will automatically replace or supplement
certain CAIR FIP provisions (e.g., the methodology for allocating
NOX allowances to sources in the State), while the CAIR FIP
remains in place for all other provisions.
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.
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 Pennsylvania.
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. All States are meeting
the CAIR requirements through 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 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;
[[Page 48698]]
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 Pennsylvania's CAIR SIP Submittal
Pennsylvania's SIP revision is comprised of amendments to
Pennsylvania regulations codified at 25 Pa. Code Chapters 121, 129, and
145. These requirements were adopted by the Commonwealth to implement
the requirements of CAIR, terminate the Commonwealth's NOX
Budget Trading Program, require NOX emission limits for the
non-EGUs that were trading sources in the NOX Budget Trading
Program, revise provisions relating to the use of allowances by non-
CAIR sources and address provisions related to emission reduction
credits. A more detailed discussion of the State's submittal may be
found in section C of the TSD.
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 Pennsylvania's SIP
revision that incorporates by reference the budgets established in the
CAIR rules. These budgets are: 99,049 tons for NOX annual
emissions from 2009 through 2014 and 82,541 tons from 2015 and
thereafter; 42,171 tons for NOX ozone season emissions from
2009 through 2014 and 35,143 tons from 2015 and thereafter; and 275,990
tons for SO2 annual emissions from 2009 through 2014 and
193,193 tons from 2015 and thereafter. These are 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 approving the provisions of Pennsylvania's SIP
revision that use the SO2 and NOX budgets set
in CAIR, EPA is also approving, as discussed below, Pennsylvania'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 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. The CAIR FIP for
Pennsylvania is in place and will be automatically withdrawn upon final
approval of this SIP revision.
[[Page 48699]]
Pennsylvania has chosen 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. Pennsylvania has adopted a full SIP revision that
incorporates by reference the CAIR model cap-and-trade rules for
SO2, NOX annual, and NOX ozone season
emissions except for the provisions pertaining to: (1) The timing of
allocations, (2) the new unit set aside, (3) the priority for issuance
of allocations from its State budget, and (4) the establishment of a
set aside for certain units.
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.
Pennsylvania's CAIR rule adopts, by reference, the CAIR model trading
rule applicability described in 40 CFR 96.104, 96.204 and 96.304.
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.
Pennsylvania has chosen not to expand the applicability provisions
of the CAIR NOx ozone season trading program to include all non-EGUs
that participated in the Commonwealth's NOx Budget Trading Program.
Instead, Pennsylvania has adopted new requirements that establish
individual emissions caps for these units, as well as an overall
statewide emissions cap (see, Section V. H., below).
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.
Pennsylvania has chosen to adopt, by reference, the allocation
methodology of the model rule for both the NOX annual and
the NOX ozone season trading programs, as modified within
the flexibilities of CAIR. Pennsylvania has chosen to replace with its
own requirements the provisions of 40 CFR 96.141, 96.142, 96.341, and
96.342 relating to the distribution of allocations and timing of
allocations for the CAIR NOX annual trading program and the
CAIR NOX ozone season trading program The SIP revision
requires that allowances for 2010 through 2012 will be submitted to the
Administrator by April 30, 2008,\2\ allowances for 2013 will be
submitted by April 30, 2009, and allowances for each subsequent year
will be submitted by April 30 of the year four years prior to the
respective control period. While this is different from the model rule
provisions, the requirement that allocations be made by the
Commonwealth four years in advance of the respective control period
meets the CAIR requirements in 40 CFR 51.123(o)(2)(ii)(B) for the
NOX annual trading program and 40 CFR 51.123(aa)(2)(ii)(C)
for the NOX ozone season trading program.
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\2\ Because the Pennsylvania CAIR SIP was not in effect at the
time, the 2009 allocations for sources in Pennsylvania were issued
under the FIP. Allocations beginning with vintage year 2010 will be
issued in accordance with the Commonwealth's CAIR SIP when finally
approved.
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Similarly, the timing for allocation to new units in Pennsylvania
is modified. These allocations will be issued for the fifth year after
the year the new unit first had NOX emissions. The SIP
revision specifies that by April 30, 2011 and every April 30
thereafter, the allowance allocation for new units will be submitted to
the Administrator. This meets the CAIR timing requirements in 40 CFR
51.123(o)(2)(ii)(C) for the NOX annual trading program and
40 CFR 51.123(aa)(2)(iii)(D) for the NOX ozone season
trading program, which require that EPA be notified of the amount of
allowances to be allocated to new units by October 31 and July 31 of
the year of the allocation for the NOX annual trading
program and the NOX ozone season trading program,
respectively.
Also, Pennsylvania has chosen not to use a ``set-aside'' for
allocations to new units. Instead, existing units, new units, and
qualifying resources will be allocated from the same allowance pool.
Allocation priority is given to new units, after which existing units
and qualifying resources will receive allocations. New unit allowance
allocations will be published, and opportunity for public comment
provided, by March 31, 2011 and March 31 every year thereafter. The
allocation to new units will be based on the previous year's emissions.
Allowance allocations will be of a vintage year five years later than
the year in which the emissions were generated. A new unit may also
receive an allocation based on qualifying converted baseline heat input
for existing units, with concurrent allocations continuing each year
until the new unit no longer qualifies for new unit allocations. The
new unit will no longer qualify as a new unit five years after the
unit's first NOX emissions. After five years, the unit will
have transitioned into regular unit status and will no longer be
eligible for new unit allocations. Since the new units will receive
future year allowances (vintage five years later than the year the
emissions were generated) until the unit no longer qualifies as a new
unit, the owners and/or operators of the new unit will need to obtain
current or prior year (banked) allowances to comply with the current
year compliance obligations.
Pennsylvania has chosen this methodology to avoid oversubscription
of the set-aside (in which case allowances are prorated and new units
do not receive all of its requested allowances), allow new sources to
be integrated into the allowance pool, and
[[Page 48700]]
allow energy efficiency/renewable energy resources a share of
allowances allocated from the Commonwealth's budget. CAIR
NOX annual and CAIR NOX ozone season allocations
for new units in Pennsylvania were allocated under the CAIR
NOX Annual and CAIR NOX Ozone Season FIP for the
2009 control periods.
Pennsylvania has chosen to allocate CAIR NOX annual and
CAIR NOX ozone season allowances to renewable energy
qualifying resources or demand side management energy efficiency
qualifying resources. Pennsylvania will determine the allocation of
CAIR NOX annual and CAIR NOX ozone season
allowances based on conversion of the certified quantity of electrical
energy production, useful thermal energy, and the energy equivalent
value of the measures approved under the Pennsylvania Alternative
Energy Portfolio Standard to equivalent thermal energy. The equivalent
thermal energy will be the unit's baseline heat input for determining
the allowance allocations.
Finally, Pennsylvania has chosen to allocate up to 1.3 percent of
its CAIR NOX annual trading budget in each control period to
certain facilities that were exempted from the Acid Rain Program (see
CAA Section 405(g)(6)(A), 42 U.S.C. 7651d(g)(6)(A)). Because they were
not subject to the Acid Rain Program, they received no SO2
allowances under that program. (Acid Rain Program allowances are used
for SO2 compliance in CAIR.) These facilities are subject to
CAIR and receive NOX annual allowances and NOX
ozone season allowances. The additional NOX allowances are
distributed to these facilities for each control period beginning in
2010 until 2015.
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 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.
Pennsylvania sources are subject to the CAIR FIP for 2009 and CSP
allowances will be distributed under those provisions.
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 combustion 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.
Pennsylvania has chosen to adopt, by reference, the provisions of
the model rule allowing opt-ins for the NOX annual,
NOX ozone season, and SO2 annual trading
programs.
G. Clarifications and Interpretations
Use of ``Future'' Unallocated Allowances To Correct Any Errors in
Allocations
Sections 145.212(g) and 145.222(g) allow the use of ``future''
allowances that have not been allocated to correct errors in past
allocation. EPA is proposing to approve this revision to the
Pennsylvania SIP with the understanding that provisions in sections
145.212(g) and 145.222(g) impacting ``future'' allowances that have not
been allocated would rarely be implemented. EPA understands that any
corrections to the allocations would be based on calculation errors and
would not be routine. EPA understands that correcting errors in
allowance allocations would be unlikely since the data that is used to
determine allowance allocations is based on past emissions, heat input,
electrical energy production, or useful thermal energy and not on data
projections. EPA understands that any correction to the ``future''
allowance allocation under these provisions would not occur after the
allowances have been recorded by the Administrator.
H. Other Requirements in This SIP Revision
1. Use of CAIR Allowances for Non-CAIR Sources, Sections 129.201,
129.202, 129.204, Sections 145.113, 145.143
These provisions apply to sources not regulated by Pennsylvania's
CAIR program. Currently, owners and operators of small sources of
NOX in the five counties that comprise the Pennsylvania
portion of the Philadelphia 8-hour ozone non-attainment area are
subject to emission limits that, if exceeded, require them to surrender
NOX SIP Call allowances to the Commonwealth. These
provisions were approved by EPA into the Pennsylvania SIP on September
29, 2006 (71 FR 57428). Similarly, large stationary internal combustion
engines and large cement kilns that are subject to the NOX
SIP Call are required to surrender NOX SIP Call allowances
to the Commonwealth if they exceed their NOX emission
limits. Because the NOX SIP Call trading program has been
discontinued and NOX SIP Call allowances have been converted
to CAIR NOX ozone season allowances, these rules were
modified to instead require CAIR NOX ozone season allowance
and CAIR NOX allowance surrenders for emission limit
exceedances.
EPA is proposing to approve this SIP revision with the
understanding that the impact of these surrendered allowances on the
overall CAIR market will be minimal. Since these provisions were
originally adopted by the Commonwealth, the number of NOX
SIP Call allowances surrendered have been less than one percent of the
Commonwealth's total CAIR NOX ozone season budget, and would
likely
[[Page 48701]]
continue to be minimal in the CAIR trading program (See TSD at (C)(4)).
2. Chapter 145, Subchapter A, NOX Budget Trading Program;
Section 145.8 ``Transition to CAIR NOX Trading Programs''
EPA will not administer the NOX Budget Trading Program
after the 2008 ozone season. The provisions in section 145.8(a)
establish 2008 as the final year for NOX allowance
allocations under Chapter 145, subchapter A, NOX Budget
Trading Program. Allocations for 2009 will be made in accordance with
the CAIR NOX Ozone Season FIP. The CAIR NOX ozone
season allowance allocations for the control period starting May 1,
2010, and for each control period thereafter, will be distributed in
accordance with Chapter 145, Subchapter D, CAIR NOX Trading
Programs once Pennsylvania's CAIR SIP is finally approved. Under
section 145.8(b), any allowances already allocated for 2009 or later
under the NOX Budget Trading Program are terminated. EPA
understands that, under this provision and section 145.8(c), all
allowances for these years under the NOX Budget Trading
Program are terminated or retired.
Section 145.8(c) terminates the requirements of the NOX
Budget Trading Program by replacing that program's emissions
limitations and monitoring requirements related to the 2010 ozone
season (which starts on May 1, 2010) by the CAIR trading program's
emissions limitations and monitoring and other requirements related to
that ozone season. This section also converts leftover NOX
Budget Trading Program allowances to CAIR NOX ozone season
allowances and provides excess emission procedures for the final year
of the NOX Budget Trading Program. In summary, this section
clarifies that: For the 2008 ozone season, Pennsylvania's
NOX Budget Trading Program applies; for the 2009 ozone
season, the CAIR FIP applies; and beginning with the 2010 ozone season,
Pennsylvania's CAIR NOX ozone season trading program
applies.
Because Pennsylvania has chosen not to expand its CAIR
NOX ozone season trading program to include non-EGUs that
were subject to the State's NOX Budget Trading Program,
Pennsylvania is required to meet 40 CFR 51.121(f)(2) and (i)(4). These
provisions require either a NOX mass emissions cap on each
source, NOX emissions rate limit on each source assuming
maximum operating capacity for purposes of estimating mass
NOX emissions, or any other regulatory requirement that can
provide emission reductions from those sources to meet the 2007 ozone
season NOX budgets established under the NOX SIP
Call. A State must also impose enforceable mechanisms to assure that
collectively all such sources, including new or modified units, will
not exceed the total ozone season NOX budget. Pursuant to 40
CFR 51.121(i)(4), these sources must also comply with the monitoring
provisions of 40 CFR part 75, subpart H.
Pennsylvania has added new section 145.8(d) to address requirements
of units subject to the NOX Budget Trading Program, but not subject to
the CAIR NOX Ozone Season trading Program. Beginning with the 2009
ozone season, these units will be required to meet an emissions cap and
to continue monitoring using 40 CFR part 75 (required through
compliance with 40 CFR part 96, Subpart HHHH and related subparts
incorporated by reference). Pennsylvania's non-EGU NOX ozone
season emissions trading budget under the NOX SIP Call
totals 3,619 tons of NOX. Pennsylvania uses 3,438 tons as a
State-wide ozone season emission limitation for these units. Each unit
has an allowable emission rate, calculated by January 31 of each year,
based on the previous season's heat input. If the combined
NOX ozone season emissions from all the units subject to
section 145.8(d) exceed the statewide ozone season emission limit
(3,438 tons), the units that exceed their individual allowable
emissions for that ozone season must surrender to the Commonwealth one
CAIR NOX ozone season allowance and one CAIR NOX
annual allowance for each ton of emissions over its allowable emission
limit. The Commonwealth has set aside 181 tons of the non-EGU budget,
including tons that will be retired each year to compensate for sources
that were exempted under the ``twenty-five ton exemption'' in section
145.4(b) \3\. The balance of tons remaining in the set aside is
available to the Pennsylvania Department of Environmental Protection
annually for accounting corrections. EPA understands that any unused
amount from this set aside would be retired by the Commonwealth each
year.
---------------------------------------------------------------------------
\3\ Sources that were exempted under the ``25 ton exemption''
provisions of the NOX Budget Trading Program must
continue to have the same Federally enforceable permits limits (as
were required under the NOX Budget Trading Program),
including restricting the units to burning only natural gas or fuel
oil and NOX emissions to 25 tons or less in a control
period.
---------------------------------------------------------------------------
It is unlikely that the statewide NOX ozone season
emission limitation (3,438 tons) will be exceeded. Pennsylvania's non-
EGU sources' total emissions during each of the years they were trading
under the NOX Budget Trading Program have never exceeded
Pennsylvania's total non-EGU trading budget (3,619 tons) or the
statewide NOX ozone season emission limitation (3,438 tons)
(See TSD at (C)(4)). Therefore, the provision that the non-EGUs (that
were formerly trading sources under the NOX Budget Trading
Program) surrender CAIR allowances when the statewide NOX
Ozone season emission limitation budget is exceeded is unlikely to be
invoked.
Included in Subchapter D are provisions that integrate emission
reduction credits (ERCs) under new source review with CAIR allowances.
The provisions require that to the extent a CAIR unit is reducing its
NOX emissions and generating emission reduction credits for
use by another source to meet new source review requirements, the CAIR
NOX annual and ozone season budgets must be reduced an
amount equal to the ERCs. In years for which allowances have already
been allocated, allowances must be surrendered by the owner or operator
of the CAIR unit generating the ERC in order to reduce the budgets. In
years for which allowances have not yet been recorded, the budgets will
be reduced before allowances are recorded and distributed.
EPA expects that the amount of allowances removed from the CAIR
budgets as a result of these provisions would likely be minimal. EPA is
therefore proposing to approve these provisions.
VI. Proposed Action
EPA is proposing to approve Pennsylvania's full CAIR SIP revision
submitted on May 23, 2008. The SIP revision 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 also proposing to approve revisions to other
Pennsylvania regulations submitted as part of this SIP revision as
discussed in this notice. 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.
[[Page 48702]]
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 the Pennsylvania SIP
revision to meet the requirements of CAIR and transition from the
NOX Budget Program 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, Nitrogen dioxide,
Ozone, Particulate matter, Reporting and recordkeeping requirements,
Sulfur oxides.
Authority: 42 U.S.C. 7401 et seq.
Dated: September 15, 2009.
William C. Early,
Acting Regional Administrator, Region III.
[FR Doc. E9-23052 Filed 9-23-09; 8:45 am]
BILLING CODE 6560-50-P