[Federal Register Volume 63, Number 4 (Wednesday, January 7, 1998)]
[Proposed Rules]
[Pages 714-770]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-244]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 73

[FRL-5947-4]
RIN 2060-AG86


Acid Rain Program: 1998 Reallocation of Allowances

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: Title IV of the Clean Air Act, as amended by Clean Air Act 
Amendments of 1990, (``the Act'') authorizes the Environmental 
Protection Agency (``EPA'' or ``Agency'') to establish the Acid Rain 
Program. The purpose of the Acid Rain Program is to significantly 
reduce emissions of sulfur dioxide and nitrogen oxides from utility 
electric generating plants in order to reduce the adverse health and 
ecological impacts of acidic deposition (or acid rain) resulting from 
such emissions. On March 23, 1993, (``1993 rule'') the Agency 
promulgated final rules allocating allowances to utility units. That 
rule provided the methodology for revising allowances for utility units 
in 1998, based on statutory requirements. On December 27, 1996 (``1996 
proposal''), the Agency proposed changes in unadjusted allowances of 
certain units. These changes were proposed in response to litigation 
over the Agency's interpretation of section 405(c) of the Act, to 
correct documented Agency errors in making the allocations, and to 
incorporate more recent information on whether or not certain new units 
met requirements pertaining to their construction or commencement of 
commercial operation. Today's proposed rule addresses how the Agency 
will implement the revision methodology in the 1993 rule and 
incorporate changes in unadjusted allowances from the 1996 proposal.

DATES: Comments on the regulations proposed by this action must be 
received on or before March 9, 1998.
    Public Hearing. Anyone requesting a public hearing must contact the 
EPA no later than January 19, 1998. If a hearing is held it will take 
place January 21, 1998, beginning at 10:00 am.

ADDRESSES: Comments. All written comments must be identified with the 
appropriate docket number (Docket No. A-97-23) and must be submitted in 
duplicate to EPA Air Docket Section (6102), Waterside Mall, Room M1500, 
1st Floor, 401 M Street, SW, Washington DC 20460.
    Docket. Docket No. A-97-23, containing supporting information used 
to develop the proposal is available for public inspection and copying 
from 8:00 a.m. to 5:30 p.m., Monday through Friday, excluding legal 
holidays, at EPA's Air Docket Section at the above address. Information 
on the allowance revisions in the 1996 proposal, which are incorporated 
in this proposal, is in Docket No. A-95-56. Information concerning the 
original rules and some of the revisions proposed today is found in 
Docket Nos. A-91-36 (proposed National Allowance Data Base), A-92-06 
(proposed allowance allocation rule), and A-92-07 (final National 
Allowance Data Base). A reasonable fee may be charged for copying.

FOR FURTHER INFORMATION CONTACT: Kathy Barylski at (202) 564-9074 Acid 
Rain Division (6204J), U.S. Environmental Protection Agency, 401 M St., 
S.W., Washington, DC 20460; or the Acid Rain Hotline at (202) 564-9620. 
Electronic copies of this rulemaking and technical support documents 
can be accessed through the Acid Rain Division website at www.epa.gov/
acidrain and the EPA's Technology Transfer Network (TTN) electronic 
bulletin board at (919) 541-5742.

SUPPLEMENTARY INFORMATION:

I. Affected Entities
II. Background
III. Part 73: Allowances
    A. Method for Revision
    B. Units under Section 405(i)(2)
    C. Distribution of Proceeds from Annual Allowance Auction
    D. Revision of the Repowering Reserve
    E. Treatment of Allocations to Certain Units under Table B
    F. Revised Tables

[[Page 715]]

    G. Miscellaneous
IV. National Allowance Data Base
V. Administrative Requirements
    A. Executive Order 12866
    B. Unfunded Mandates Act
    C. Paperwork Reduction Act
    D. Regulatory Flexibility

I. Affected Entities

    Entities potentially regulated by this action are fossil-fuel fired 
boilers or turbines that serve generators producing electricity for 
sale. Regulated categories and entities include:

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              Category                  Examples of regulated entities  
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Industry............................  Electric service providers.       
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This table is not intended to be exhaustive, but rather provides a 
guide for readers regarding entities likely to be regulated by this 
action. This table lists the types of entities that EPA is now aware 
could potentially be regulated by this action. Other types of entities 
not listed in the table could also be regulated. To determine whether 
your facility is regulated by this action, you should carefully examine 
the applicability criteria in Sec. 72.6 and the exemptions in 
Secs. 72.7 and 72.8 of title 40 of the Code of Federal Regulations and 
the revised Secs. 72.6, 72.7, 72.8, and 72.14 proposed on December 27, 
1996 (61 FR 68340). If you have questions regarding the applicability 
of this action to a particular entity, consult the persons listed in 
the preceding FOR FURTHER INFORMATION CONTACT section.

II. Background

    The overall goal of the Acid Rain Program is to achieve significant 
environmental benefits through reductions in emissions of sulfur 
dioxide (SO2) and nitrogen oxides (NOX), the 
primary precursors of acid rain. To achieve this goal at the lowest 
cost to society, the program employs both traditional and innovative, 
market-based approaches for controlling air pollution. In addition, the 
program encourages energy efficiency and promotes pollution prevention.
    Title IV of the Clean Air Act sets as a primary goal the reduction 
of annual SO2 emissions by 10 million tons below 1980 
levels. To achieve these SO2 emissions reductions, the law 
requires a two-phase tightening of restrictions placed on fossil fuel-
fired power plants. Phase I began in 1995 and affected 110 mostly coal-
burning electric utility plants located in 21 eastern and midwestern 
states. Phase II, beginning in 2000, tightens the annual emissions 
limits imposed on these large, higher emitting plants and also sets 
restrictions on smaller or cleaner plants fired by coal, oil or gas. 
Title IV also requires certain coal-fired units to reduce their 
emissions of NOX to a level achievable through installation 
of applicable NOX reduction technology. (See 40 CFR part 
76.)
    The centerpiece of the Acid Rain Program is a unique trading system 
in which allowances (each authorizing the emission of up to one ton of 
SO2) may be bought and sold at prices determined by the free 
market. Most existing utility units are allocated allowances based on 
their historic fuel use and emission limitations specified in the Act. 
Affected utility units are required to limit SO2 emissions 
to the number of allowances they hold, but because allowances are 
transferrable, utilities may meet their emissions control requirements 
in the most cost-effective manner.
    This rule concerns the allocation of allowances for Phase II of the 
program. Phase II allowances were allocated by rulemaking on March 23, 
1993 (58 FR 15634). However, section 403(a)(1) of the Act requires EPA 
to publish a revised statement of allowance allocations no later than 
June 1, 1998. That revision must account for units eligible for 
allowances under section 405(g)(4) (units commencing operation from 
1992 through 1995), section 405(i)(2) (units that reduce their 
emissions rates), and section 409 (units with approved repowering 
extensions). The rule establishing the methodology for the 1998 
revision of allowance allocations was published on March 23, 1993 and 
codified at 40 CFR 73.11. This rulemaking implements the revision 
methodology.
    This proposal attempts to provide an accurate, but conservative, 
view of the allowances to be allocated to all units. Several issues 
affecting allowances still require EPA to provide estimates of 
allowance allocations at this time. EPA has made every effort not to 
overstate allowance allocations at this time. Thus, any modification to 
the allocations from this proposal will likely result in an increase in 
allowances for most units upon promulgation of the final rule, except 
as specified below.

III. Part 73: Allowances

A. Method for Revision

    In order to facilitate timely notice on many issues, EPA has chosen 
to prepare the 1998 revision of allowances in a staged approach. The 
1996 proposal was the first stage and included deletion of certain 
unaffected units from Table 2 of Sec. 73.10, changes in unadjusted 
allowances of certain units, and deletion of units from and addition of 
units to Table 3 of Sec. 73.10. The comment period ran from December 
27, 1996 through February 10, 1997. EPA has not yet taken final action 
on the 1996 proposed changes to part 73. Except for the issues raised 
in today's proposed rule concerning Sec. 73.19 (units under section 
405(i)(2) of the Act) and distribution of proceeds from the annual 
auction of allowances, no comments are requested, and none should be 
submitted, concerning any of the proposed changes in the 1996 proposal.
    The second stage is embodied in today's proposal. EPA followed the 
1998 reallocation methodology set forth in the existing Secs. 73.11 and 
73.12 and applied it to the data in NADB version 2.2, which is 
discussed below. The technical documents explaining in detail the 
application of the 1998 reallocation methodology are included in the 
docket. The only issues raised in today's proposal are discussed in 
subsections B, C, D, and E below, regarding units under section 
405(i)(2) of the Act, distribution of proceeds from the annual 
allowance auction, the repowering reserve, and units listed under Table 
B of section 405(g)(2) of the Act. Also, as discussed below, the 
regulatory tables allocating allowances are proposed to be consolidated 
into a single, simplified table.
    Changes proposed in the first stage, the 1996 proposal, and changes 
(including the revised allowance allocations resulting from the 
application of the 1998 reallocation methodology) proposed today are 
together incorporated into the proposed Table 2 and, subject to 
comment, will be finalized in one final rule, the last stage of the 
1998 reallocations. For example, the changes to unadjusted allowances 
in the 1996 proposal affect the ratchet used in today's proposal to 
ensure that total annual Phase II allowances allocations do not exceed 
8.95 million. See 61 FR 68357. Finalizing all allowance changes in a 
single rule, as explained in the 1996 proposal (id.), will enable EPA 
to minimize administrative burden and cost, as well as potential 
confusion over allowance allocations, by reducing the number of times 
allowance allocation tables must be developed and published.

B. Units Under Section 405(i)(2)

    A few units may be eligible for a special allocation method based 
on eligibility requirements (which include, inter alia, a maximum level 
for the unit's actual emission rate) under section 405(i)(2). In the 
1993 rule, EPA preliminarily determined that six units may be eligible 
and listed those units and resulting allowances in Table 4 of 
Sec. 73.10(d). Further, EPA required, in

[[Page 716]]

Sec. 73.19, that the actual 1997 emission rate be used to determine 
eligibility for section 405(i)(2) allowances.
    The 1996 proposal modified Sec. 73.19 to use 1996 actual 
SO2 emissions rate data as reported by the unit's continuous 
emissions monitors (CEMS) under part 75, rather than 1997 emissions 
data collected by the Energy Information Administration (EIA), to 
determine whether the units are eligible. In a comment on the proposal, 
the owner of one of the plants requested that the actual emission rate 
for year 2000 be used for eligibility and that, if the unit did not 
qualify, its additional allowances be rescinded and not reallocated. 
Because the comments raise a new option, EPA is reopening this limited 
issue and requests comment.
    In the statute at section 405(i)(2)(B), one criteria for 
eligibility is that ``actual emissions rate is less than 1.2 lbs/mmBtu 
as of January 1, 2000.'' In the 1992 allowance allocation proposal (57 
FR 29940, 29956, July 7, 1992), EPA assumed that statutory phrase ``as 
of January 1, 2000'' meant that calendar year 1999 emission rate should 
be used. However, in the 1992 proposal, EPA also discussed a perceived 
discrepancy between the use of the 1999 emission rate under section 
405(i)(2)(B) and the mandate under section 403(a)(1) that allowance 
allocations be finalized no later than June 1, 1998. EPA decided to use 
calendar year 1997 emission rates, in the 1993 allowance allocations 
rule (58 FR 15634), because 1997 will be the latest year of emissions 
data prior to the required final allocation.
    The option raised by the commenter is for allocation of additional 
allowances under section 405(i)(2) to be held in abeyance until the 
unit is determined to be eligible based on part 75 emissions data as of 
January 1, 2000 (which, EPA believes, refers to calendar year 1999 
emissions). Any allowances reserved for allocation under section 
405(i)(2) that are not actually allocated based on 1999 emissions would 
not be utilized or otherwise reallocated to other utility units. The 
commenter believes this option fulfills the statutory requirements for 
finalized allowances in 1998 and for using emissions data as of January 
1, 2000. Also, the commenter pointed out that section 403(a)(1) does 
not require EPA to allocate exactly 8.9 million basic allowances, but 
no more than 8.9 million allowances. As the commenter emphasized, the 
allocation under section 405(i)(2) is no more than 5000 allowances, or 
only 0.05 percent of the unadjusted basic allowances.
    Also, the commenter suggested that EPA could require advance 
notification to EPA by the unit's designated representative as to 
whether the utility involved intends to meet the section 405(i)(2) 
requirements. EPA does not presently believe that this notification 
process is necessary, given that only six units, operated by two 
utilities, are likely to be eligible. However, comments on this 
suggestion are requested.
    EPA seeks comments on which calendar year of emissions data to 
utilize in determining eligibility under section 405(i)(2). One option 
is to take the approach in the 1993 rule but to use the 1997 CEMS 
(rather than EIA) emissions data. CEMS data under part 75 is the most 
accurate and timely emissions data. EPA could then prepare the final 
1998 reallocation rule as quickly as possible while ensuring sufficient 
time for the Agency to complete proper quality assurance of the 
emissions data. For the purposes of this proposed rule, this option is 
set out in the rule language. A second option of using 1999 emissions 
data was raised by the commenter on the 1996 proposal. A third option 
would be to use the first calendar year, from 1996 up to 1999, when the 
unit's emissions, determined using CEMS data, are less than the 1.2 lb/
mmBtu rate. Thus, any unit that achieves the 1.2 lb/mmBtu rate early 
would not be delayed in having its allowances allocated. EPA requests 
comment on these and any other options.
    EPA also seeks comment on whether any unallocated allowances 
reserved for allocation under section 405(i)(2) should be reallocated 
to other utility units after the 1998 rulemaking. As emphasized by the 
commenter, the allowances would not exceed 5000 in total. The 
allowances would reduce the ratchet by some small amount and would be 
spread among the units with Phase II allocations in proportion to the 
existing allocations.1 The administrative burden of 
reallocating the allowances would be considerable, due to the need to 
develop allowance software and to recalculate all basic allowances and 
refinalize Table 2 of Sec. 73.10(b). Thus, EPA believes that the burden 
of reallocating outweighs the benefit to any given utility and that 
there should not be any such reallocation.
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    \1\ Thus, every unit would receive an equal percentage increase 
(0.05%) in allowances, rounded to whole allowances. Because of the 
rounding, many units would receive no additional allowances. Please 
refer to EPA's supplementary material regarding section 405(i)(2), 
found in the docket.
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    For purposes of this proposal and, in particular for preparation of 
the proposed revisions of Table 2, EPA is using the first option of 
basing qualification for allowances under section 405(i)(2) on 1997 
CEMS emissions data and is assuming that all six units potentially 
qualifying for the allowances will actually qualify. Note that if any 
of the six units do not qualify for the allowances (including the 
section 405(i)(2) allowances) listed in the body of the proposed Table 
2, the unit will receive allowances as noted in footnote 2 of the 
table.

C. Distribution of Proceeds From Annual Allowance Auction

    As required under section 416 of the Act and subpart E of part 73, 
EPA has facilitated the auction of allowances since 1993. Phase I and 
Phase II allowances are deducted as shown in Tables 1 and 2 of 40 CFR 
Sec. 73.10. Phase II deductions are calculated as a fixed percentage of 
each unit's unadjusted basic allowances, so the total number of 
allowances reserved equals 250,000. Each unit's designated 
representative then receives a portion of the proceeds from the auction 
based on the number of allowances deducted.
    The 1996 proposal changed the unadjusted basic allowances for a few 
units, deleted many units from Tables 2 and 3 of Sec. 73.10, and added 
two units. The proposal made clear that the designated representative 
of each unit to be deleted that has received an allowance allocation 
must surrender the allowances to the Agency and must return any 
proceeds received from the auction. The proposal also stated that the 
Agency will, in a future action, explain how the proceeds will be 
redistributed. No comments were received on the issue of the 
distribution of proceeds.
    At this time, EPA seeks to clarify how proceeds from the auction 
will be distributed. In developing a proposal, the Agency considered 
the following needs: to minimize the number of allowances and proceeds 
to be surrendered, to minimize any disruption to the Allowance Tracking 
System, and to fairly distribute proceeds.
    The Agency recognizes that five auctions have already taken place 
and proceeds distributed. To provide a complete redistribution of 
proceeds based on the 1996 proposal would be extremely burdensome to 
the Agency while providing a minimal benefit to any unit. Therefore, 
the Agency is rejecting the option of redistributing all auction 
proceeds.
    However, the Agency finds that providing no redistribution would be 
unfair for the few affected units that had their unadjusted basic 
allowance allocation changed or were found to be

[[Page 717]]

eligible to receive allocations, in the 1996 proposal.2 
Moreover, EPA continues to believe that, as provided in the 1996 
proposal, all units deleted from the tables of affected units must 
surrender any allowances and proceeds received. The Agency has 
determined that this presents no significant problems because very few 
of the units deleted had designated representatives and, so, few 
transferred any allowances and received any proceeds. Because the 
proceeds were not distributed for these units, the Agency already has 
sufficient proceeds to provide a distribution to units that had changes 
to their unadjusted basic allowances or were found to be eligible for 
allowances.
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    \2\ A total of 17 units are in this category, as explained in 
the 1996 proposal. Nine units have changes due to resolution of 
litigation. Three units have changes due to data errors by the 
Agency. Four units were found to be eligible for allocations. One 
unit, Twin Oak 2, as discussed below, is eligible only for 
allocations under Sec. 405(g)(2).
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    In summary, the Agency's proposal is that, for all auctions 
completed before the finalization of this rulemaking: (1) units deleted 
from Table 2 of Sec. 73.10, and units deleted from Table 3 and not 
added to Table 2, must surrender any allowances allocated and any 
proceeds received; (2) affected units that had changes to their 
unadjusted basic allowance allocation will receive proceeds based on 
the changed amount; and (3) the proceeds for all other units will not 
be changed. To implement this proposal, a column in Table 2 is provided 
that lists the number of allowances each unit has provided for each 
auction taking place from 1993 through 1998. References in Sec. 73.27 
for auctions before June 1, 1998 will refer to this new column. Also, 
the Agency notes that paragraphs (b)(4) and (c)(4) of Sec. 73.27 are 
unnecessary because allowances from calendar years 2010 and thereafter 
are not auctioned before 2003 and, so the paragraphs will be 
eliminated.

D. Revision of the Repowering Reserve

    Finalization of the allowance allocations is also dependent upon a 
reasonably accurate calculation of the number of allowances allocated 
for units with repowering extensions. For the 1993 rule, EPA estimated 
that a set-aside of up to 500,000 allowances could be needed for 
repowering extensions. EPA based this estimate on 10 GW of capacity 
being repowered. To create the set-aside, EPA withheld 50,000 
allowances for each year from 2000 through 2009 from Phase II units' 
basic allowance allocations. 58 FR 15642.
    State and local air permitting authorities received at least 88 
repowering extension plans; however, only 16 petitions for repowering 
have been filed with the Agency. For this proposal, EPA would like to 
set aside more allowances for the repowering reserve than may be 
necessitated by these plans as submitted, in case the number of 
allowances under the plans are adjusted. The Agency believes that 
continuing to provide the existing repowering reserve is appropriate 
for this proposal. Therefore, EPA is continuing to provide a set-aside 
of 500,000 allowances.
    Before issuing a final rule on this rulemaking, EPA will consider 
the status of the existing plans. EPA intends, in the final rule, to 
provide a set-aside limited to the amount necessary to implement all 
nonconditional approved repowering extension plans. This will likely 
result in a somewhat smaller set-aside than that provided in this 
proposal.

E. Treatment of Allocations to Certain Units Under Table B

    For Phase II, most units receive allowance allocations based on 
various formulae specified in the Act. However, eleven units are 
specified in Table B of section 405(g)(2) to receive a fixed number of 
basic allowances. As provided in the 1993 rule, the owner or operator 
of any of these units would receive the Table B allowances unless it 
elected to receive allowances under another section of the Act for 
which the unit is eligible. 57 FR 29955. Only three units (Clover 1 and 
2 and Twin Oak 1) elected to receive allowances under another section 
(in all three cases, section 405(g)(4)) if they were eligible. Clover 1 
and 2 demonstrated eligibility for allowances under section 405(g)(4) 
and are provided their allowance allocations in the proposed Table 2. 
The 1996 proposal stated that Twin Oak 1 did not commence operation in 
time to be eligible for section 405(g)(4) and so would receive 
allowances under section 405(g)(2). As provided in the 1993 rule, all 
other units listed in Table B of section 405(g)(2) will receive 
allowances listed in Table B as unadjusted basic allowances, and the 
Agency is not reopening any issue regarding such units. Comments are 
not requested on Table B units other than Clover 1 and 2.

F. Revised Tables

    The 1993 final allocation of allowances included three allowance 
tables--Table 2 listing most affected units, Table 3 listing units 
expected to be eligible under section 405(g)(4), and Table 4 listing 
units expected to be eligible under section 405(i)(2). Tables 3 and 4 
were provided to assist unit owners identify the appropriate units for 
which additional information was required under the rule.
    For the 1998 reallocation of allowances, EPA does not believe it is 
necessary to continue providing separate Tables 3 and 4. EPA is 
proposing to have only one table, Table 2, for all Phase II allowance 
allocations.
    Also, Table 2 in the 1993 rule provided sufficient information to 
recalculate allowances once the number of allowances under approved 
repowering plans and under section 405(g)(4) and section 405(i)(2) were 
known. The table included three pieces of identifying information and 
nine columns of allowance information. This magnitude of data resulted 
in very small print type.
    EPA is endeavoring to make Table 2 more readable in this 
rulemaking. The Agency proposes to include in Table 2 only the 
information necessary for the operation of the program. To provide for 
distribution of proceeds from the allowance auction and sale, the table 
needs to include the special allowance reserve values for 2000 and 
2010. Also, the repowering reserve values need to be listed in case any 
repowering allowances are subsequently forfeited due to failure of the 
repowering project under Sec. 72.44(g). Of course, final allocations 
for 2000 and 2010 are listed. The other columns provided in 1993--
unadjusted basic allowances for 2000 and 2010, additional basic 
allowances, and total bonus allowances--are eliminated. This 
information is provided in the ``Technical Documentation for the 
Proposed 1998 Reallocation of Allowances,'' available from the sources 
listed in the FOR FURTHER INFORMATION CONTACT section of this preamble. 
Also, as noted above, a column is provided that lists the reserve 
deductions for the auctions that took place from 1993 through 1998.
    A number of plants and units have had name changes since 1993, and 
those changes are reflected in the proposed Table 2 if the designated 
representative for the unit requested such a change. Utilities may 
request plant or unit name changes as comments on today's proposal. 
Name changes received after the comment period will not be reflected in 
the final rule.

G. Miscellaneous

    EPA proposes to remove Sec. 73.16 (regarding Phase I early 
reduction credits), as no longer necessary because such credits have 
already been fully implemented. EPA also proposes to remove Secs. 73.11 
and 73.12(b) (setting forth the 1998 reallocation

[[Page 718]]

methodology), as no longer necessary because the results of applying 
the 1998 reallocation methodology are set forth in proposed Table 2 and 
will be in the final Table 2. References to the removed provisions are 
deleted or replaced by references to the appropriate columns of 
proposed Table 2.
    Today's proposed rule also changes all references to the existing 
Tables 2, 3, and 4 in Sec. 73.10 to be consistent with the proposed 
simplification of those allowance tables. The proposed rule removes or 
corrects provisions that cite allowance tables not in the proposed rule 
or that are otherwise superseded by the proposed Table 2.

IV. National Allowance Database

    Some changes have been made to the National Allowance Data Base 
(NADB) since issuance of the March 23, 1993 notice of availability of 
the NADB. (58 FR 15720, March 23, 1993.) The database used to calculate 
allowances proposed herein is NADB version 2.2 and is available from 
the sources listed in the FOR FURTHER INFORMATION CONTACT section 
above.
    The changes to the NADB are minor. All units listed in NADB version 
2.11 are listed in NADB version 2.2, and no additional units are 
listed. The NADB field for sequence number remains unchanged.
    The only substantive changes included in the NADB version 2.2 are 
the new data and data corrections that are set out in the 1996 
proposal. The basis for these changes was explained in the proposal (61 
FR 68355-62), and no adverse comments on them were received. EPA is not 
reopening consideration of these changes, and no further comment on 
them is requested.
    Most of the changes in the NADB are not substantive in that they do 
not affect allowance allocations and are simply to identification 
fields, such as boiler identifier, ORIS plant code, or operating 
utility. All such changes were initiated by the operating utility and 
accepted by EPA. EPA has decided to treat nonsubstantive identifying 
information in the NADB differently from data used to calculate 
allowances by allowing utilities to request changes to identifying 
information fields. Changing identifying information will make the NADB 
more usable but will not impact allowance allocations.
    Consistent with the approach taken in the March 23, 1993 notice (58 
FR 15720) and the 1996 proposal (61 FR 68357-58), EPA will not address 
any other types of alleged errors and will not consider new requests 
for data changes (except nonsubstantive identifying information 
discussed above), new submissions, or new requests for outage 
adjustments. Except as set forth in the 1996 proposal, EPA will not 
consider any issues that were addressed in the 1992 and 1993 database 
notices (57 FR 30034, July 7, 1992; 58 FR 15720) or any issues that 
could have been raised in connection with NADB versions 2.0 and 2.1. 
EPA is foreclosing any further comment on such matters because ample 
opportunity for comment was provided on the previous versions of the 
NADB. Except as discussed above, further comment on issues in the 1996 
proposal is also foreclosed. However, EPA will accept comments on 
nonsubstantive identifying information. Comments on such information 
received before the close of the comment period will, if accepted by 
the Agency, be incorporated into the final rule.

V. Administrative Requirements

A. Executive Order 12866

    Under Executive Order 12866, 58 FR 51735 (October 4, 1993), the 
Administrator must determine whether the regulatory action is 
``significant'' and therefore subject to Office of Management and 
Budget (OMB) review and the requirements of the Executive Order. The 
Order defines ``significant regulatory action'' as one that is likely 
to result in a rule that may:
    (1) Have an annual effect on the economy of $100 million or more or 
adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or tribal governments or 
communities;
    (2) Create a serious inconsistency or otherwise interfere with an 
action taken or planned by another agency;
    (3) Materially alter the budgetary impact of entitlements, grants, 
user fees, or loan programs or the rights and obligations of recipients 
thereof; or
    (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order.
    Pursuant to the terms of Executive Order 12866, OMB has determined 
that this rule is not a ``significant regulatory action.''

B. Unfunded Mandates Act

    Section 202 of the Unfunded Mandates Reform Act of 1995 (``Unfunded 
Mandates Act'') requires that the Agency prepare a budgetary impact 
statement before promulgating a rule that includes a federal mandate 
that may result in expenditure by State, local, and tribal governments, 
in aggregate, or by the private sector, of $100 million or more in any 
one year. Section 203 requires the Agency to establish a plan for 
obtaining input from and informing, educating, and advising any small 
governments that may be significantly or uniquely affected by the rule.
    Under section 205 of the Unfunded Mandates Act, the Agency must 
identify and consider a reasonable number of regulatory alternatives 
before promulgating a rule for which a budgetary impact statement must 
be prepared. The Agency must select from those alternatives the least 
costly, most cost-effective, or least burdensome alternative that 
achieves the objectives of the rule, unless the Agency explains why 
this alternative is not selected or the selection of this alternative 
is inconsistent with law.
    Because this proposed rule is estimated to result in the 
expenditure by State, local, and tribal governments or the private 
sector of less than $100 million in any one year, the Agency has not 
prepared a budgetary impact statement or specifically addressed the 
selection of the least costly, most cost-effective, or least burdensome 
alternative. Because small governments will not be significantly or 
uniquely affected by this rule, the Agency is not required to develop a 
plan with regard to small governments.
    The proposed revisions to part 73 will not have a significant 
effect on regulated entities or State permitting authorities. Since 
sections 403(a) and 405(a)(3) of the Act set a nationwide cap on annual 
allowance allocations, any reduction of allowances would result in a 
small increase to the annual allocations for other units that receive 
allocations. As discussed in the preamble for the 1996 proposal, the 
revisions explained in the 1996 proposal, and incorporated in today's 
proposal, do not have a significant adverse impact. 61 FR 68366. The 
other revisions in today's proposal (i.e., the treatment of allocations 
under section 405(i)(2)) will also not have a significant impact. Even 
if no units qualified for the 5000 additional allowances available 
under section 405(i)(2) and those allowances were not reallocated to 
other Phase II units, the total annual market value of these allowances 
would amount to about one-half million dollars, and the effect on any 
individual utility would be negligible.

C. Paperwork Reduction Act

    This action proposing revisions to the allowance allocations rule 
would not impose any new information collection burden. OMB has 
previously approved the information collection requirements

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contained in the allowance rules, 40 CFR part 73, under the provisions 
of the Paperwork Reduction Act, 44 U.S.C. 3501, et seq. OMB Control 
Number 2060.0258; EPA ICR Number 1633.10.
    Burden means the total time, effort, or financial resources 
expended by persons to generate, maintain, retain, or disclose or 
provide information to or for a Federal agency. This includes the time 
needed to review instructions; develop, acquire, install, and utilize 
technology and systems for the purposes of collecting, validating, and 
verifying information, processing and maintaining information, and 
disclosing and providing information; adjust the existing ways to 
comply with any previously applicable instructions and requirements; 
train personnel to be able to respond to a collection of information; 
search data sources; complete and review the collection of information; 
and transmit or otherwise disclose the information.
    Copies of the ICR may be obtained from Sandy Farmer, Information 
Policy Branch; EPA; 401 M. St., SW (mail code 2136); Washington, DC 
20460 or by calling (202) 260-2740. Include the ICR and/or OMB number 
in any correspondence.

D. Regulatory Flexibility

    The Regulatory Flexibility Act (RFA) generally requires an agency 
to conduct a regulatory flexibility analysis of any rule subject to 
notice and comment rulemaking requirements unless the agency certifies 
that the rule will not have a significant economic impact on a 
substantial number of small entities. Small entities include small 
businesses, small not-for-profit enterprises, and small governmental 
jurisdictions.
    In the preamble of the January 11, 1993 core rules for the Acid 
Rain Program, the Administrator certified that the rules would not have 
a significant, adverse impact on small entities. 58 FR 3590, 3649. 
Today's proposed revisions do not add any requirements that would 
burden small entities. Moreover, as explained above in this preamble 
and the 1996 proposal (61 FR 68367), the effect of the 1998 allowance 
adjustments on owners and operators of the units is not significant. 
Most units gain allowances. The only units losing allowances are: those 
deemed unaffected units and, therefore, not subject to the requirements 
of the Acid Rain Program; those that have requested to receive all 
fewer basic allowances in order to receive bonus allowances; and those 
that have been determined to be ineligible for certain allocations, 
based on information supplied by the utilities. Thus, the 1998 
allowance adjustments take allowances only from units when the units 
are not eligible to receive them or when the unit's owner or operator 
prefers an alternative allocation. Pursuant to the provisions of 5 
U.S.C. 605(b), I hereby certify that the proposed rule will not have a 
significant economic impact on a substantial number of small entities.

List of Subjects in 40 CFR Part 73

    Environmental protection, Acid rain, Air pollution control, 
Electric utilities, Reporting and recordkeeping requirements, Sulfur 
dioxide.

    Dated: December 30, 1997.
Carol M. Browner,
Administrator.

    For the reasons set forth in the preamble, 40 CFR part 73 is 
proposed to be amended as set forth below.

PART 73--[AMENDED]

    1. The authority citation for part 73 continues to read as follows:

    Authority: 42 U.S.C. 7601 and 7651, et seq.

    2. Section 73.10 is amended by:
    a. In paragraph (b)(1) removing the words ``Table 2 Column E'' and 
adding, in their place, the words ``Table 2 Column C''; and removing 
the words ``, except that units listed in both Table 2 and Table 4 will 
be allocated allowances as specified in Table 4 Column C, multiplied by 
.9011, reduced by 1.3185 times Table 2 Column B, and increased by Table 
2 Columns C and D'';
    b. In paragraph (b)(2) removing the words ``Table 2 Column I'' and 
adding, in their place, the words ``Table 2 Column F''; and removing 
the words ``, except that units listed in both Table 2 and Table 4 will 
be allocated allowances as specified in Table 4 Column F, multiplied by 
.8987, reduced by Table 2 Column G, and increased by Table 2 Column 
H'';
    c. Removing paragraphs (c) and (d) (including Tables 3 and 4); and
    d. Revising Table 2 of paragraph (b) to read as follows:


Sec. 73.10  Initial allocations for phase I and II.

* * * * *
    (b) * * *
    (2) * * *

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    3. Section 73.11 is removed and reserved.
    4. Paragraph (b) of Sec. 73.12 is removed and reserved.


Sec. 73.13  [Amended]

    5. Paragraph (b) of Sec. 73.13 is amended by removing the words 
``Secs. 73.16, 73.18'' and adding, in their place, the words 
``Secs. 73.18,''.
    6. Section 73.16 is removed and reserved.
    7. Section 73.19 is amended by revising paragraph (a)(5) and by 
removing and reserving paragraph (b) to read as follows:


Sec. 73.19  Certain units with declining SO2 rates.

    (a) * * *
    (5) Its 1997 actual SO2 emission rate is less than 1.2 
lb/mmBtu as reported under part 75 of this chapter;
* * * * *


Sec. 73.21  [Amended]

    8. Section 73.21 is amended by:
    a. In paragraph (a) (including the equation) removing the words 
``Sec. 73.11'' wherever they appear and adding, in their place, the 
words ``Sec. 73.10(b)''; removing the words ``Unit's Adjusted Basic 
Allowances'' wherever they appear and adding, in their place, the words 
``Unit's Allowances at Table 2 Column C'';
    b. In paragraph (b) removing the words ``Sec. 73.11(a) and (b)'' 
and adding, in their place, the words ``Sec. 73.10(b)'';
    c. In paragraph (c)(1) (including the equation) removing the words 
``Unit's Adjusted Basic Allowances'' and adding, in their place, the 
words ``Unit's Allowances at Table 2 Column C''; and d. In paragraph 
(c)(2) (including the equation) removing the words ``Unit's Repowering 
Deduction'' and adding, in their place, the words ``Unit's Deduction at 
Table 2 Column B''.
    9. Section 73.27 is amended by revising paragraphs (b)(2) through 
(b)(5) and (c)(2) through (c)(5) to read as follows:


Sec. 73.27  Special allowance reserve.

* * * * *
    (b) Distribution of proceeds.
    (1) * * *
    (2) Until June 1, 1998, monetary proceeds from the auctions and 
sales of allowances from the Special Allowance Reserve (under subpart E 
of this part) for use in calendar years 2000 through 2009 will be 
distributed to the designated representative of each unit listed in 
Table 2 according to the following equation:
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    (3) On or after June 1, 1998, monetary proceeds from the auctions 
and sales of allowances from the Special Allowance Reserve (under 
subpart E of this part) for use in calendar years 2000 through 2009 
will be distributed to the designated representative of each unit 
listed in Table 2 according to the following equation:
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    (4) [Reserved]
    (5) Monetary proceeds from the auctions and sales of allowances 
from the Special Allowance Reserve (under subpart E of this part) for 
use in calendar years 2010 and thereafter will be distributed to the 
designated representative of each unit listed in Table 2 according to 
the following equation:
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    (c) * * *
    (2) Until June 1, 1998, allowances, for use in calendar years 2000 
through 2009, remaining in the Special Allowance Reserve at the end of 
each year, following that year's auction and sale (under subpart E of 
this part), will be reallocated to the unit's Allowance Tracking System 
account according to the following equation:
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    (3) On or after June 1, 1998, allowances, for use in calendar years 
2000 through 2009, remaining in the Special Allowance Reserve at the 
end of each year, following that year's auction and sale (under subpart 
E of this part),

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will be reallocated to the unit's Allowance Tracking System account 
according to the following equation:
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    (4) [Reserved]
    (5) Allowances, for use in calendar years 2010 and thereafter, 
remaining in the Special Allowance Reserve at the end of each year, 
following that year's auction and sale (under subpart E of this part), 
will be reallocated to the unit's Allowance Tracking System account 
according to the following equation:
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* * * * *
[FR Doc. 98-244 Filed 1-6-98; 8:45 am]
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