[Federal Register Volume 63, Number 187 (Monday, September 28, 1998)]
[Rules and Regulations]
[Pages 51706-51766]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-25317]


      

[[Page 51705]]

_______________________________________________________________________

Part IV





Environmental Protection Agency





_______________________________________________________________________



40 CFR Part 73



Acid Rain Program: 1998 Reallocation of Allowances; Final Rule

  Federal Register / Vol. 63, No. 187 / Monday, September 28, 1998 / 
Rules and Regulations  

[[Page 51706]]



ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 73

[FRL -6164-1]
RIN 2060-AG86


Acid Rain Program: 1998 Reallocation of Allowances

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: Title IV of the Clean Air Act, as amended by the 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 reduce 
significantly emissions of sulfur dioxide and nitrogen oxides from 
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, the Agency promulgated a final rule 
(``1993 rule'') allocating allowances to utility units. That rule 
provided the methodology for revising the allocation of allowances for 
utility units in 1998, as required by Title IV. On December 27, 1996, 
the Agency proposed changes (``1996 proposal'') to unadjusted 
allowances for certain units. These changes were proposed to respond 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. On January 7, 1998, the Agency proposed 
(``1998 proposal'') to revise allowance allocations using the 
methodology in the 1993 rule. Today's rule implements the revision 
methodology in the 1993 rule, based on the 1998 proposal, and 
incorporates final changes to unadjusted allowances based on the 1996 
proposal.

DATES: This rule is effective October 28, 1998.

ADDRESSES: Docket. Docket No. A-97-24, containing supporting 
information used to develop the rule 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 (6102), Waterside 
Mall, Room M1500, 1st Floor, 401 M Street S.W., Washington, D.C. 20460. 
Information on the allowance revisions in the 1996 proposal, which are 
reflected in this rule, is in Docket No. A-95-56. A reasonable fee may 
be charged for copying.

FOR FURTHER INFORMATION CONTACT: Kathy Barylski at (202) 564-9074 or 
Dwight Alpern at (202) 564-9151, Acid Rain Division (6204J), U.S. 
Environmental Protection Agency, 401 M Street S.W., Washington, D.C. 
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. These documents 
are also available in the Docket listed above.

SUPPLEMENTARY INFORMATION:

Judicial Review

    Under section 307(b)(1) of the Act, judicial review of this rule is 
available only by filing a petition for review in the U.S. Court of 
Appeals for the District of Columbia Circuit within 60 days of today's 
publication of these final rule revisions. Under section 307(b)(2) of 
the Act, the requirements that are the subject of today's document may 
not be challenged in civil or criminal proceedings brought by the EPA 
to enforce these requirements.

I. Affected Entities

II. Background

III. Part 73: Allowances

A. Method for Revision
B. Units under Section 405(i)(2)
C. Surrender of Allowances and Return and Distribution of Allowance 
Auction Proceeds
D. Revision of the Repowering Reserve
E. Treatment of Allocations to Certain Units under Table B
F. Revised Tables
G. Miscellaneous

IV. National Allowance Data Base

V. Administrative Requirements

A. Executive Order 12866
B. Unfunded Mandates Act, Executive Orders 12875 and 13084
C. Paperwork Reduction Act
D. Regulatory Flexibility
E. Children's Health Protection
F. National Technology Transfer and Advancement Act
G. Submission to Congress and the General Accounting Office

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:

------------------------------------------------------------------------
                                                Examples of regulated
                 Category                             entities
------------------------------------------------------------------------
Industry..................................  Electric service
                                            providers.
------------------------------------------------------------------------

    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, 72.8 and 72.14 of title 40 of the Code of Federal 
Regulations. 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 the large, higher emitting plants regulated in Phase 
I and also sets restrictions on other 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 
formulas specified in the Act. Affected

[[Page 51707]]

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 the 1993 rule (58 FR 
15634, March 23, 1993). 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 1993 rule established the methodology for the 1998 
revision of allowance allocations, which is codified at 40 CFR 
Sec. 73.11. This rulemaking implements the revision methodology.

III. Part 73: Allowances

A. Method for Revision

    In order to facilitate consideration of the many issues, EPA has 
chosen to prepare the 1998 revision of allowance allocations in a 
staged approach. The 1996 proposal (61 FR 68349) 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. The issues raised in the 1996 proposal are discussed primarily in 
this subsection and subsections B and C below, regarding units under 
section 405(i)(2) of the Act and surrender of allowances and return and 
distribution of allowance auction proceeds.
    The second stage was the 1998 proposal (63 FR 0714). EPA proposed 
to follow the 1993 reallocation methodology set forth in the existing 
Secs. 73.11 and 73.12 and apply it to the data in NADB version 2.2, 
which is discussed below. The technical support document explaining in 
detail the application of the 1998 reallocation methodology is included 
in the docket. Docket Item A-97-24 IV-A-02, Technical Documentation for 
the 1998 Reallocation of Allowances (hereinafter, ``Technical 
Documentation''). The comment period ran from January 7, 1998 through 
March 9, 1998. The issues raised in the 1998 proposal are discussed in 
subsections B, C, D, and E below, regarding units under section 
405(i)(2) of the Act, surrender of allowances and return and 
distribution of allowance auction proceeds, 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 
consolidated into a single, simplified table.
    Changes proposed in the first stage (the 1996 proposal) and the 
second stage (the 1998 proposal) (including the revised allowance 
allocations resulting from the application of the 1993 reallocation 
methodology) are finalized in today's action as one final rule, the 
last stage of the 1998 reallocations. In the 1996 proposal, EPA 
proposed to revise unadjusted allowances for certain units, to include 
certain units on the original allocation tables, and to delete some 
units from the original tables. See 61 FR 68340, 68355-362. The 1996 
proposal included rule language that would implement these allowance-
related revisions by amending specific entries in the original 
allowance tables (Tables 2 and 3 of Sec. 73.10). These proposed 
revisions were supported by all commenters that addressed them during 
the comment period on the 1996 proposal. The proposal to revise the 
number of unadjusted basic allowances for Rodemacher unit 2 was made 
final in Sec. 73.10(b)(3) on October 24, 1997. All the other proposed 
revisions were left to be addressed in today's final rule. 62 FR 55460, 
55471 and 55486, October 24, 1997.
    However, unlike the 1996 proposal which would have amended the 
original Tables 2 and 3 of Sec. 73.10, the 1998 proposal would 
consolidate those tables into one new Table 2 and republish the entire 
table. Comments on the 1998 proposal supported consolidation and 
republishing Table 2. EPA is herein adopting that approach and is, for 
the reasons stated in the 1996 proposal, including in the new table all 
the allowance-related revisions proposed in 1996. Consequently, the 
proposed rule language from the 1996 proposal amending entries in the 
original Tables 2 and 3 is unnecessary and not adopted in today's rule. 
Further, because Rodemacher unit 2's revised unadjusted basic 
allowances that were finalized on October 24, 1997 are incorporated in 
the new Table 2, separate language adopted in the October 1997 rule is 
no longer necessary and is removed by today's rule. EPA emphasizes that 
Rodemacher unit 2 retains its revised unadjusted basic allowances which 
are reflected in the new Table 2 (see the Technical Documentation for 
details), rather than through a special provision amending the original 
Table 2.

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 Sec. 73.19, that the actual 
1997 emission rate be used to determine eligibility for section 
405(i)(2) allowances.
    In the 1996 proposal, EPA proposed to modify Sec. 73.19 to use 1996 
actual SO2 emissions rate data as reported by the unit's 
continuous emissions monitoring system (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 1996 proposal, the owner of one of the affected plants 
requested that the actual emission rate as of January 1, 2000 be used 
for determining eligibility and that, if the unit did not qualify, its 
additional allowances be rescinded and not reallocated. Because the 
comment raised a significant new option, the 1998 proposal reopened the 
issue of which calendar year emission rate EPA should use for the 
determination of eligibility and whether EPA should reallocate any 
unallocated allowances reserved for allocation under section 405(i)(2) 
to other utility units after the 1998 rulemaking.
1. Calendar Year Emission Rate
    In section 405(i)(2)(B) of the Act, one criterion for eligibility 
is that the ``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 concluded that the statutory phrase 
``as of January 1, 2000'' meant that the 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. In the 
1993 rule (58 FR 15710), EPA decided to use calendar year 1997 emission 
rates because 1997 would be the latest year of emissions data prior to 
the required final allocation in 1998.
    In the 1998 proposal, EPA requested comment on three options for 
which calendar year of emissions rate data to use: (1) 1997, as in the 
1993 rule; (2) 1999, as requested in a comment on the 1996 proposal; or 
(3) the first calendar

[[Page 51708]]

year, from 1996 up to 1999, when the unit's emissions are less than the 
required 1.2 lb/mmBtu rate. For all options, emissions data would be 
that reported using the CEMS under 40 CFR part 75.
    Five comments were received on this issue. Two recommended using 
calendar year 1997. Three recommended option three above, the first 
year from 1996 through 1999 that the emissions rate is less than 1.2 
lb/mmBtu. One comment also recommended that the final rule reflect the 
understanding that once a unit achieves an emission rate below 1.2 lb/
mmBtu, it will be eligible for section 405(i)(2) allowances and no 
further demonstrations of eligibility will need to be made.
    EPA believes that the option of using the first calendar year, from 
1996 through 1999, is the best option. In contrast to the other 
options, this option provides an incentive to units potentially 
eligible for allowances under section 405(i)(2) to achieve an emission 
rate of less than 1.2 lb/mmBtu as soon as possible while allowing the 
full statutory timeframe to achieve such a rate. Further, as discussed 
below, Table 2 of Sec. 73.10(b) shows the alternate allowance 
allocations for such units if they qualify or if they fail to qualify 
for section 405(i)(2) allowances. EPA maintains that this approach 
reasonably squares section 405(i)(2) with the requirement that EPA 
finalize allowance allocations in 1998. Allowances calculated for units 
potentially eligible under section 405(i)(2) will be held in the 
Allowance Tracking System and will not be available for use or transfer 
until the units are determined to be eligible for the allowances. If a 
unit becomes eligible during 1996 through 1999 for such allowances, the 
allowances will be made available for use or transfer. EPA review of 
annual CEMS data is generally completed by May following the calendar 
year of that data. Thus, EPA believes that the allowances could be made 
available by June following the year for which the eligible unit first 
has an emission rate of less than 1.2 lb/mmBtu. Also, as requested by 
the commenter, EPA is clarifying that once the unit achieves an 
emission rate of less than 1.2 lb/mmBtu, that unit will not be required 
to make further demonstrations of eligibility.
2. Unallocated Allowances
    EPA also sought comment regarding whether any unallocated 
allowances reserved for allocation under section 405(i)(2) should be 
reallocated to other utility units after the 1998 rulemaking. EPA 
proposed that any allowances reserved for allocation under section 
405(i)(2) that are not actually allocated based on 1996 through 1999 
emissions should not be utilized or otherwise reallocated to other 
utility units. One commenter believed that this option fulfills the 
statutory requirements for finalized allowance allocations 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. In the 1998 proposal, EPA noted that 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).
    A number of other comments were received in this issue. One 
commenter agreed that reallocation was overly burdensome and not 
mandated in the statute. Another considered reallocation to be 
compelled by law but suggested that selling any remaining allowances at 
the annual auction (and distributing the proceeds on a pro rata basis 
to the utility units) would be sufficient. Another commenter 
recommended allocating any remaining allowances to affected 
``industrial units'' that have not received allowance 
allocations.1
---------------------------------------------------------------------------

    \1\ This comment is also addressed in section IV of this 
preamble.
---------------------------------------------------------------------------

    EPA has further analyzed section 405(i)(2) and determined that 
there will, in fact, be no unallocated allowances under section 
405(i)(2). Thus, the question of whether or how to reallocate them is 
moot. Section 405(i)(2) limits the number of allowances available under 
the section to 5000. The only situation in which there could be 
unallocated allowances under section 405(i)(2) would be if the total 
number of allowances for which all units eligible under section 
405(i)(2) qualified was less than 5000. Two units (Anclote 1 and 2) are 
eligible for section 405(i)(2) allowances, based on 1997 CEMS data, and 
would qualify for more than 5000 allowances if there were no limit on 
section 405(i)(2) allowances.2 See Docket Item A-97-24 IV-C-
01 (letter explaining basis for concluding that Anclote 1 and 2 qualify 
for section 405(i)(2) allowances). Thus, even if no other units qualify 
for section 405(i)(2) allowances, all 5000 section 405(i)(2) allowances 
will still be allocated and there will be no allowances remaining to 
reallocate or auction.
---------------------------------------------------------------------------

    \2\ Anclote 1 would qualify for 4038 allowances under section 
405(i)(2), and Anclote 2 would qualify for 4400 allowances, if 
allowances under section 405(i)(2) were not limited to 5000. In 
addition to the allowances for Anclote 1 and 2, Detroit Edison's 
Monroe 1 would be eligible for 571 allowances, Monroe 2 for 1423, 
Monroe 3 for 1280, and Monroe 4 for 2676.
---------------------------------------------------------------------------

3. Allocations in Table 2
    The allowance allocations for all six potentially eligible units in 
Table 2 will reflect section 405(i)(2) allowances calculated on the 
assumption that all six units will in fact be eligible for section 
405(i)(2) allowances. Each unit is allocated its proportionate share of 
the available section 405(i)(2) allowances. Anclote units 1 and 2 have 
already been determined to be eligible for allowances under section 
405(i)(2). As noted above, until units are determined to be eligible 
for allowance allocations under section 405(i)(2), their additional 
allowances from this section will be held in the Allowance Tracking 
System and will not be available for transfer. If the Monroe units are 
not eligible for section 405(i)(2) allowances as of January 1, 2000, 
additional 405(i)(2) allowances will be available to Anclote and are 
shown in footnote 4 of Table 2. Monroe's allowance allocations without 
additional allowances from section 405(i)(2) are also shown in footnote 
4 of Table 2.
    Footnote 4 of Table 2 of Sec. 73.10 of the 1998 proposal did not 
properly reflect the effect of ineligibility by some but not all six 
units. The methodology used by EPA to calculate the allowances 
(provided in Appendix C of the Technical Documentation) correctly 
reflects the effect of ineligibility of units. In today's final rule, 
EPA is correcting footnote 4 of Table 2 to be consistent with this 
methodology.

C. Surrender of Allowances and Return and Distribution of Allowance 
Auction Proceeds

    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 
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 
a few units

[[Page 51709]]

to the Tables. The 1996 proposal stated 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 1996 proposal 
also provided that the Agency would, in a future action, explain how 
the returned proceeds would be redistributed. No comments were received 
on the issues of the allowance surrender and return and redistribution 
of proceeds in the 1996 proposal.
    The 1998 proposal clarified how proceeds from the auction would be 
distributed. In the 1998 proposal, the Agency considered the following 
objectives: minimization of the number of allowances and proceeds to be 
surrendered; minimization of any disruption to the Allowance Tracking 
System; and fair distribution of proceeds. The Agency recognized that 
five auctions had already taken place and proceeds had been distributed 
and that providing 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 rejected 
the option of a complete redistribution of auction proceeds. However, 
the Agency found that providing no redistribution would be unfair for 
the few affected units that had their unadjusted basic allowance 
allocation changed or were found for the first time to be eligible to 
receive allocations, in the 1996 proposal.3 Moreover, EPA 
explained that, as provided in the 1996 proposal, all units deleted 
from the tables of affected units must surrender any allowances and 
return any proceeds received. Very few of the units deleted had 
designated representatives and so were not able to transfer any 
allowances or receive any proceeds.
---------------------------------------------------------------------------

    \3\ 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 section 405(g)(2).
---------------------------------------------------------------------------

    The Agency's 1998 proposal provided, for all auctions completed 
before the finalization of this rulemaking (including the 1998 auction) 
that: (1) units deleted from Table 2 of Sec. 73.10, and units deleted 
from Table 3 and not added to Table 2, would surrender any allowances 
allocated and return any proceeds received; (2) affected units that had 
changes to their unadjusted basic allowance allocation would receive 
proceeds based on the changed allocation; and (3) the proceeds for all 
other units would not be changed. To implement this, the 1998 proposal 
provided a column in Table 2 listing the number of allowances each unit 
has provided for each auction taking place from 1993 through 1998 (with 
modifications from the original Tables 2 and 3 for the 17 units listed 
in footnote 3 above and for units deleted from Tables 2 or 3). 
References in proposed Sec. 73.27 to allowances deducted for auctions 
before June 1, 1998 cited this new column. Five comments were received 
on this issue in the 1998 proposal. One commenter thought the proposal 
was fair. However, another stated that the method results in some 
proceeds from auctions from 1993 through 1998 being retained by the 
Agency, contrary to law. Two options were posed in comments regarding 
how remaining proceeds should be dealt with. One option would be for 
the Agency to redistribute those proceeds on a pro rata basis, although 
the method for such redistribution need not be as rigorous as a full 
redistribution. The other option would allow the Agency to dedicate the 
funds for educational and research activities related to emissions 
trading. While this second option is innovative, the Agency has decided 
not to dedicate the funds to education and research because of the lack 
of express Agency authority to use auction proceeds in this way.
    EPA continues to believe, for the reasons stated in the 1996 
proposal, that the allowance surrender and return of proceeds are 
necessary. However, EPA concludes that a simple pro rata redistribution 
of the proceeds from the allowances meets the requirements of the Act 
and is not overly burdensome. To fairly redistribute all remaining 
proceeds, EPA will use values in Column D of new, final Table 2 (1993-
98 Purchase Year Reserve Deduction), which were included in the 1998 
proposal, to determine each unit's pro rata share of the remaining 
funds. This methodology is set forth in revised Sec. 73.27(b)(4). Each 
unit's designated representative will receive one check for all five 
years of additional auction proceeds.
    Also, as explained in the proposal, existing 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. No comments 
were received concerning the elimination of the paragraphs, which is 
implemented in today's action.
    Finally, today's final rule requires in Sec. 73.10(b)(3) the 
surrender of allowances and return of proceeds. In order to make clear 
which specific units are subject to this requirement, the paragraph 
includes a new table of the units, the number of allowances to be 
surrendered, and the value of proceeds to be returned. This table 
replaces the general provisions in the 1996 proposal (Sec. 73.10(b)(5) 
and (c)(3)) which required allowance surrender and return of proceeds 
without naming the units.
    Today's final rule also requires completion of the allowance 
surrender and return of proceeds no later than 60 days after the 
effective date of this final rule.

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 Phase II repowering extensions under section 409 of the 
Act. See 42 U.S.C. 7651 and 40 CFR 72.44. 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 number on an estimate of 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. In the 1998 proposal, 
the Agency maintained a set aside of 500,000 allowances for repowering 
but stated that it would reduce the set-aside in the final rule to the 
amount necessary to implement all activated approved repowering plans. 
Today's action, therefore, reduces the reserve to 27,124 allowances.
    One commenter pointed out that the 1998 proposal modified the 
method of calculating repowering allowances in Sec. 73.21. EPA has 
reviewed the provision and agrees that the Agency inadvertently changed 
the method of calculating allowances, as opposed to merely correcting a 
reference. The 1993 rule (at Sec. 73.21) provided that a unit's 
repowering allowances equal the number of allowances calculated under 
section 409(c) less the unit's adjusted basic allowances calculated 
under Sec. 73.11. The commenter correctly noted that the 1998 proposal, 
which modified Sec. 73.21 to remove reference Sec. 73.11 and to refer 
instead to proposed Table 2 Column C, had the effect of increasing the 
repowering reserve. Proposed Table 2 Column C actually reflects a 
different and generally lower value than adjusted basic allowances; 
using the lower value in Table 2 Column C increases the calculated 
repowering allowances and, thus, increases the repowering reserve. 
However, the commenter recommended that a unit's repowering allowances 
equal the number of allowances under

[[Page 51710]]

section 409(c) less the unit's unadjusted basic allowances. While this 
would result in a smaller repowering reserve, it is not consistent with 
the 1993 rule.
    As stated in the 1998 proposal, EPA is using the method of 
calculation from the 1993 rule. To implement that method in today's 
final rule, EPA is including, in place of the reference to Sec. 73.11, 
a table listing the units with activated repowering plans and the 
estimated maximum number of adjusted basic allowances for which they 
qualify. See Technical Documentation, Appendix A.
    Of the 16 petitions for repowering that were filed prior to the 
1998 proposal, only two plans have been activated, representing 11 
units. Using the calculation method from the 1993 rule, the maximum 
number of allowances needed for the repowering reserve is 27,124 
allowances. See Docket Item A-97-24 IV-B-01 (explaining calculation of 
maximum number of repowering allowances). While EPA is estimating the 
units' maximum repowering allowances in order to estimate more 
accurately the number of allowances to reserve for repowering, these 
estimates are not final determinations of the allowances to be 
allocated to specific units. The final determinations will be made in 
case-by-case proceedings on each repowering extension plan, and the 
actual allocations may differ from the estimates. The allowances for 
this reserve are provided by deducting one-tenth of the reserve from 
unit allowance allocations for each year from 2000 through 2009. 
Because this reserve is much smaller than that proposed, most units are 
allocated more allowances in today's final Table 2, for years 2000 
through 2009 than in the 1998 proposal. Note that, because repowering 
allowances have not been allocated, the reserve is set at the maximum 
that may be needed to implement the two activated plans. If fewer 
repowering allowances are allocated than provided in the reserve, EPA 
will use the allowance forfeiture and reallocation provisions at 
Sec. 73.21(c) to reallocate any remaining allowances.
    Because the reserve is not evenly divisible over the ten years, EPA 
has had to consider the best method of setting aside allowances for the 
reserve. If EPA were to set aside a smaller number of allowances than 
will be needed for the reserve (2712 each year for ten years) and 
create four additional allowances to complete the reserve, those four 
allowances would be in excess of the 8.9 million cap. As an 
alternative, EPA could set aside more allowances annually (2713) and 
provide a method whereby the excess six allowances (27130 minus 27124) 
would be equitably distributed. EPA believes the second approach better 
reflects the intent of title IV. As mentioned above, any allowances 
remaining in the repowering reserve will be distributed by the 
allowance forfeiture formula in the repowering regulations.
    However, as with setting the reserve, using the existing allowance 
forfeiture equation at Sec. 73.21(c)(2), if the number of allowances to 
be forfeited is not evenly divisible by ten, will result in allowances 
remaining after forfeiture. EPA has reviewed the existing rule and has 
determined that it is not necessary to spread forfeited allowances 
across ten years. To create the repowering reserve, allowances were 
taken from ten years' allowance accounts. However, all allowances in 
the reserve were renumbered to have a use date of 2000. Therefore, EPA 
does not consider it necessary to renumber again any forfeited 
allowances for use years other than 2000. This change also makes it 
unnecessary to address situations where the number of forfeited 
allowances is not divisible by ten.
    In addition, EPA has determined that it is necessary to clarify 
that the allowances to be reallocated are only those allowances from 
the repowering reserve. Under section 405(a)(2) only repowering 
allowances for 2000 are set aside (i.e., are put in the reserve) from 
unit accounts. Allowances for 2001 through 2003 are above the allowance 
cap. Therefore, only allowances forfeited in 2000 will need to be 
reallocated to unit accounts.
    The repowering allowance forfeiture and reallocation provisions at 
Sec. 73.21(c) are revised to reflect these changes.

E. Treatment of Allocations to Certain Units Under Table B

    As explained in the 1998 proposal, most units receive Phase II 
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 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) would receive allowances listed in Table B 
as unadjusted basic allowances. No comments were received concerning 
section 405(g)(2), and for the reasons stated in the proposal, these 
units are allocated allowances as proposed, except for adjustments to 
reflect the reduced repowering reserve, discussed in section III.D. of 
this preamble.

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 
in the 1993 rule were provided to assist unit owners in identifying the 
appropriate units for which additional information was required under 
the rule.
    As noted above, for the 1998 reallocation of allowances, EPA 
proposed in the 1998 proposal to consolidate the tables and 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, EPA proposed that the table include the special 
allowance reserve values for 2000 and 2010. Also, the Agency proposed 
that the table list the repowering reserve values in case any 
repowering allowances are subsequently forfeited due to failure of the 
repowering project under Sec. 72.44(g) or due to overstatement of the 
repowering reserve. Final allocations for 2000 and 2010 were listed. 
Additional information is provided in the Technical Documentation. 
Also, as noted above, the proposed table provided a column listing the 
reserve deductions for the auctions that took place from 1993 through 
1998.
    Two comments were received, both supporting consolidation and 
streamlining of the tables. EPA has adopted that approach here. One 
commenter also noted that two footnotes in the proposed tables 
contained technical errors. The commenter is correct, and the footnotes 
have been corrected for the final rule. In addition, consistent with 
the approach in the proposal, a reference to Table 3 in Sec. 73.21(c) 
has been eliminated.

[[Page 51711]]

G. Miscellaneous

    EPA proposed a number of modifications and corrections to the 
allowance rules to eliminate sections that are no longer necessary and 
to correct references. The proposed modifications and corrections were 
described in the ``Miscellaneous'' section of the preamble to the 1998 
proposal. No comments were received on these issues, and the Agency has 
adopted the proposed changes in this final rule.
    Aside from the foregoing corrections, one commenter noted that 
several proposed provisions continued to refer to the direct sales 
program, which was eliminated by the Agency in 1996 (see 61 FR 28761, 
June 6, 1996). The Agency has reviewed the 1998 proposal and 40 CFR 
part 73 and found references to the direct sales program in 
Secs. 73.27(a)(2), 73.27(b) (2), (3) and (5), 73.27(c) (2), (3) and 
(5), and Sec. 73.70(b). In today's final rule, EPA is eliminating these 
last references to the direct sales program, as requested by the 
commenter. Also, Sec. 73.27(a)(2), establishing the auction reserve, is 
corrected to reflect that the 50,000 allowances formerly in the Direct 
Sale Subaccount are now incorporated into the Auction Subaccount, 
making the annual Auction Subaccount total 250,000 allowances.

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 herein is NADB version 2.2 and is available from the sources 
listed in the FOR FURTHER INFORMATION CONTACT section above.
    As stated in the 1998 proposal, NADB version 2.2 includes new data 
and data corrections discussed in the 1996 proposal. These data and 
corrections are adopted for the reasons stated in the 1996 proposal. 
Consistent with the 1993 rule and the 1996 proposal, EPA has not made 
any other corrections based on alleged errors or any new requests for 
data changes, except for changes in nonsubstantive identifying 
information (e.g., boiler identifiers).
    Only one comment was received on the 1998 proposal concerning the 
NADB. The commenter requested EPA to add information on two units 
(George F. Wheaton Units 1 and 2, which serve generators that provide 
electricity to the owner's manufacturing plant and are required to make 
available electricity for sale to certain utilities) to the NADB for 
purposes of allocating allowances to the units. The commenter suggested 
that the two units are affected utility units under the Acid Rain 
Program. According to the commenter, EPA has recognized that 
``industrial units,'' such as the commenter's units, should have 
received allowance allocations. The only ``industrial units'' 
specifically identified by the commenter as warranting allowance 
allocations were its own units.
    EPA previously rejected, in a final rulemaking notice issued 
October 24, 1997, a request by the commenter that allowances be 
allocated to ``industrial units.'' In today's rulemaking, EPA is not 
reconsidering its rejection of that claim, which the commenter repeated 
here. Moreover, EPA here rejects, for two reasons, the new claim that 
information on the commenter's units be added to the NADB for allowance 
allocation. First, EPA previously decided that no allowances should be 
allocated to the units because the commenter failed to submit a timely 
claim (with supporting information) for allowances. A new, late 
submission obviously cannot cure this deficiency. Second, the 
information in the commenters' late submission is deficient on its 
face.
    In the prior rulemaking, this commenter made the same claim that 
``industrial units'' that do not qualify for an exemption from the Acid 
Rain Program should be allocated allowances.4 Compare 62 FR 
55466 and Docket Item A-97-24 II-D-08, Comments of Zinc Corporation of 
America at 6-7 (March 9, 1998). In the October 24, 1997 notice, EPA 
rejected that claim. Id. As stated in the October 24, 1997 notice, the 
commenter's claim that allowances should be allocated to ``industrial 
units'' ``ignores the fact that EPA has previously specified deadlines 
by which parties claiming an erroneous failure to allocate allowances 
to a unit were required to submit such claims and necessary supporting 
information to EPA.'' 62 FR 55466.
---------------------------------------------------------------------------

    \4\ In fact, in its March 9, 1998 comments in the instant 
proceeding, the commenter incorporated by reference its February 10, 
1997 comments submitted in the prior rulemaking where EPA 
established an exemption from most Acid Rain Program requirements 
for industrial-utility units. The February 10, 1997 comments are 
fully addressed in the preamble of the final rule in the prior 
proceeding. See 62 FR 55460, 55463-66 (1997). To the extent that 
portions of either set of comments address issues concerning the 
industrial-utility units exemption or the applicability of the Acid 
Rain Program to ``industrial units'' or the commenter's units, those 
portions (e.g., the entire section I of the February 10, 1997 
comments) are outside the scope of, and so are not addressed, in 
this rulemaking.
---------------------------------------------------------------------------

    Since the commenter has now, for the first time, submitted 
information on its units for the NADB, EPA is summarizing here the 
notices that established the deadlines and data requirements for NADB 
submissions. In a July 1991 notice, EPA stated that it would allocate 
allowances based on information in the NADB, a version (NADB version 
2.0) of which was made available for public review. EPA also explained 
what information on a unit and supporting data and documentation had to 
be submitted to EPA in order to add information to the NADB for 
purposes of allocating allowances to the unit. 56 FR 33278, 33283 
(1991). A major requirement was that any additional information had to 
be ``well-documented.'' Id. For example, the owner or operator of a 
unit had to submit information on the unit's 1985 SO2 
emissions and, if that value was based on emissions monitoring, the 
underlying monitoring data or independent emissions inventory. If that 
value was calculated based on the fuels burned in 1985, the ``equation 
used, percent sulfur in fuel, ash retention of fuel, and any other data 
used'' had to be provided. 56 FR 33284. Similarly, the other data 
elements needed for allocating allowances (i.e., 1985 SO2 
emission limit, generator summer net dependable capacity, 1985-87 
average annual total heat input) had to be submitted with supporting 
documentation. Id. (listed as data elements 16, 20, and 
23).5 Further, EPA noted that ``[u]nits eligible for 
allowances will not be allocated allowances if the final database does 
not include the information necessary to calculate such allowances.'' 
56 FR 33283.
---------------------------------------------------------------------------

    \5\ If the commenter's units had qualified for allowances, EPA 
would have calculated the annual number of basic allowances (for 
2000 and thereafter) for each unit, under section 405(d)(2) of the 
Act, as the unit's 1985-1987 average total heat input times the 
lesser of the unit's 1985 SO2 emission rate or 1985 
SO2 emission limit. Annual bonus allowances (for 2000 
through 2009) would have been calculated, under section 405(d)(3)(B) 
of the Act, for each unit using generator summer net dependable 
capacity and the lesser of the unit's 1985 SO2 emission 
rate or 1985 SO2 emission limit.
---------------------------------------------------------------------------

    In a July 1992 notice, EPA provided for public review of NADB 
version 2.1, as well as a list (referred to as the ``Adjunct Data 
File'') of units of ``nontraditional utilities'' that were not in NADB 
version 2.1 and that included the commenter's units (albeit listed 
under the commenter's predecessor-company, St. Joseph Minerals 
Corporation). EPA indicated that the units in the Adjunct Data File 
might or might not be affected units and that, in any event, it lacked 
sufficient information on which to base any allowance allocations for 
the listed

[[Page 51712]]

units. Id. Further, EPA gave notice that if ``the data elements 
required for determining allowance allocations'' were not provided 
within the comment period (i.e., by September 8, 1992) for ``a unit 
that may be affected now or in the future'', the unit would not be 
allocated allowances. Id.
    Finally, in a March 1993 notice, EPA stated that those units in the 
Adjunct Data File that were affected units and for which the necessary 
data had been submitted were being included in the NADB (version 2.11) 
and would be allocated the appropriate number of allowances. 58 FR 
15720, 15727 (1993). Believing that it had corrected all timely 
identified errors in the NADB and resulting allocations, EPA issued a 
second March 1993 notice stating that any unit not allocated allowances 
in the notice ``but meeting the applicability requirements [for the 
Acid Rain Program] * * * will not receive allowance allocations [under 
the allowance allocation regulations for the Acid Rain Program] * * *'' 
58 FR 15634, 15641 (1993). Consequently, EPA stated in the 1998 
proposal that, except for the issues discussed in the 1996 proposal, 
EPA would not consider any issues that were addressed in 1992 and 1993 
concerning the NADB or ``any issues that could have been raised in 
connection with NADB versions 2.0 and 2.1.'' 63 FR 718.
    As stated in the October 24, 1997 notice, neither the commenter 
(Zinc Corporation of America) nor its predecessor-company submitted any 
information or supporting data and documentation concerning the units 
by the September 8, 1992 submission deadline. 62 FR 55466. On March 9, 
1998, on the instant proceeding, the commenter submitted, for the first 
time, information on, inter alia, the unit's 1985 SO2 
emissions, 1985 SO2 emission limit, generator summer net 
dependable capacity, and 1985-87 average annual total heat input. The 
fact that the submission is over five years late is alone sufficient 
basis for rejecting the submission. See 62 FR 55466 (explaining basis 
for September 8, 1992 submission deadline) In addition, the submission 
is substantively deficient on its face because the submission included 
only values for these elements and none of the supporting data or 
documentation required by the July 1991 and July 1992 notices. For 
example, the commenter listed the 1985 SO2 emissions but 
provided neither monitoring data nor a formula and data for calculating 
emissions.6 Similarly, the SO2 emission limit, 
generator capacity, and heat input were not documented, whether through 
a State Implementation Plan or permit, State regulatory records, or 
other records. Compare Comments of Zinc Corporation of America, Exhibit 
A (March 9, 1998) and 56 FR 33284.
---------------------------------------------------------------------------

    \6\ The commenter does not state clearly whether the emissions 
data provided in its comments were from continuous emissions 
monitors or were calculated. In either case, supporting 
documentation was required.
---------------------------------------------------------------------------

    EPA notes that, while the commenter suggests in its comments that 
the Acid Rain Program is applicable to its units, EPA has not made a 
determination of whether the units are affected units or whether the 
exemption for industrial-utility units (under Sec. 72.14) applies to 
the units. As stated in the October 24, 1997 notice, assuming arguendo 
that the units are affected units without any applicable exemption, the 
units will be treated like any unit that has not been allocated 
allowances and is or becomes an affected unit, i.e., no allowances will 
be allocated, and the units must obtain allowances through the 
allowance market. 62 FR 55466.
    EPA's approach of imposing deadlines and substantive requirements 
for the submission of information and data for allowance allocation and 
rejecting submissions when the deadline or the substantive requirements 
are not met has been upheld by the courts. See Texas Municipal Power 
Agency v. EPA, 89 F3d. 858, 870 (D.C. Cir. 1996) (upholding EPA's 
discretion to specify the information that must be submitted, and the 
submission deadline, for allowance allocations and to determine how to 
handle a submission that did not meet these requirements). In the 
instant proceeding, the commenter's only submission, which was made 
over five years after the deadline, lacked any of the required 
supporting data and documentation.7 Under these 
circumstances, EPA's rejection of the submission is 
reasonable.8 See id. at 873 (upholding EPA's refusal to 
allocate allowances where the owners of units failed to submit 
necessary information ``until well after the deadlines'' set by EPA 
even though the information was available).
---------------------------------------------------------------------------

    \7\ In contrast, in Texas Municipal, one petitioner provided 
information, but no supporting data, by the submission deadline, and 
EPA therefore used some of the information plus other, verifiable 
information to calculate allowances for the petitioner's units. 89 
F3d. 869.
    \8\ The commenter has never indicated that the information 
concerning its 1985 emissions, 1985 emission limit, capacity, or 
1985-87 heat input were not available in 1992. In light of the 
historical nature of the emission and heat input information and 
since capacity of a unit does not generally change, EPA maintains 
that all this information probably was available and could have been 
submitted prior to the deadline.
---------------------------------------------------------------------------

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, Executive Order 12875 and 13084

    Section 202 of the Unfunded Mandates Reform Act of 1995 (``UMRA'') 
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 UMRA, 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.

[[Page 51713]]

    Under Executive Order 12875, EPA may not issue a regulation that is 
not required by statute and creates a mandate on State, local, or 
tribal governments unless the Federal government providees the funds 
necessary to cover such mandates or consults with representatives of 
affected State, local or tribal governments before promulgation. 
Executive Order 13084 establishes similar requirements regarding 
regulations the significantly or uniquely affect Indian tribal 
governments.
    Because this 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 under UMRA. Today's rule does not create a mandate for 
State, local or tribal governments and does not significantly or 
uniquely affect communities of tribal governments. The rule does not 
impose any enforceable duties on these entities. Accordingly, the 
requirements of section 1(a) of Executive Order 12875 and section 3(b) 
of Executive Order 13084 do not apply to this rule.
    The 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 
final rule, do not have a significant adverse impact. 61 FR 68366. The 
other revisions in today's rule (i.e., the revised qualification 
requirements for allocations under section 405(i)(2), the 
redistribution of auction proceeds, and reduced repowering reserve) 
will also not have a significant impact and, in general, result in 
increased allocations and proceeds receipts for most units.

C. Paperwork Reduction Act

    This action revising the allowance allocations rule will not impose 
any new information collection burden. OMB has previously approved the 
information collection requirements contained in the allowance rules, 
40 CFR part 73, under the provisions of the Paperwork Reduction Act, 44 
U.S.C. 3501, et seq. See EPA ICR Number 1633.10; OMB Control Number 
2060.0258.
    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 previously approved ICR may be obtained from 
Director, Regulatory Information Division; EPA; 401 M. Street S.W. 
(mail code 2137); Washington, D.C. 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 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 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 
revisions 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. For these reasons, EPA has determined that 
this rule will not have a significant, economic impact on a substantial 
number of small entities.

E. Children's Health Protection

    This final rule is not subject to E.O. 13045, entitled Protection 
of Children from Environmental Health Risks and Safety Risks (62 FR 
19885, April 23, 1997), because it does not involve decisions on 
environmental health risks or safety risks that may disproportionately 
affect children.

F. National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (``NTTAA''), Pub. L. No. 104-113, 15 U.S.C. 272 note, 
directs EPA to use voluntary consensus standards in its regulatory 
activities unless to do so would be inconsistent with applicable law or 
otherwise impractical. Voluntary consensus standards are technical 
standards (e.g., materials specification, test methods, sampling 
procedures, business practices, etc.) that are developed or adopted by 
voluntary consensus standards bodies. The NTTAA requires EPA to provide 
Congress, through OMB, explanations when the Agency decides not to use 
available and applicable voluntary consensus standards.
    This final rule does not involve any technical standards that would 
require Agency consideration of voluntary consensus standards pursuant 
to section 12(d) of the NTTAA.

G. Submission to Congress and to the General Accounting Office

    The Congressional Review Act, 5 U.S.C. 801, et seq., as added by 
the Small Business Regulatory Enforcement Fairness Act of 1996, 
generally provides that before a rule may take effect, the agency 
promulgating the rule must submit a rule report, which includes a copy 
of the rule, to each House of the Congress to the Comptroller General 
of the United States. EPA will submit a report containing this action 
and any other required information to the U.S. Senate, the U.S. House 
of Representatives, and the Comptroller General of the General 
Accounting Office prior to publication of this document in the Federal 
Register. This action is not a ``major rule'' as defined in 5 U.S.C. 
804(2).

List of Subjects in 40 CFR Part 73

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


[[Page 51714]]


    Dated: September 15, 1998.
Carol M. Browner,
Administrator.

    For the reasons set forth in the preamble, 40 CFR part 73 is 
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) revising the words ``Table 2 Column E'' to 
read ``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) revising the words ``Table 2 Column I'' to 
read ``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) and paragraph (b)(3) to read 
as follows:


Sec. 73.10  Initial allocations for phase I and phase II.

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

BILLING CODE 6560-50-U

[[Page 51715]]

[GRAPHIC] [TIFF OMITTED] TR28SE98.001



[[Page 51716]]

[GRAPHIC] [TIFF OMITTED] TR28SE98.002



[[Page 51717]]

[GRAPHIC] [TIFF OMITTED] TR28SE98.003



[[Page 51718]]

[GRAPHIC] [TIFF OMITTED] TR28SE98.004



[[Page 51719]]

[GRAPHIC] [TIFF OMITTED] TR28SE98.005



[[Page 51720]]

[GRAPHIC] [TIFF OMITTED] TR28SE98.006



[[Page 51721]]

[GRAPHIC] [TIFF OMITTED] TR28SE98.007



[[Page 51722]]

[GRAPHIC] [TIFF OMITTED] TR28SE98.008



[[Page 51723]]

[GRAPHIC] [TIFF OMITTED] TR28SE98.009



[[Page 51724]]

[GRAPHIC] [TIFF OMITTED] TR28SE98.010



[[Page 51725]]

[GRAPHIC] [TIFF OMITTED] TR28SE98.011



[[Page 51726]]

[GRAPHIC] [TIFF OMITTED] TR28SE98.012



[[Page 51727]]

[GRAPHIC] [TIFF OMITTED] TR28SE98.013



[[Page 51728]]

[GRAPHIC] [TIFF OMITTED] TR28SE98.014



[[Page 51729]]

[GRAPHIC] [TIFF OMITTED] TR28SE98.015



[[Page 51730]]

[GRAPHIC] [TIFF OMITTED] TR28SE98.016



[[Page 51731]]

[GRAPHIC] [TIFF OMITTED] TR28SE98.017



[[Page 51732]]

[GRAPHIC] [TIFF OMITTED] TR28SE98.018



[[Page 51733]]

[GRAPHIC] [TIFF OMITTED] TR28SE98.019



[[Page 51734]]

[GRAPHIC] [TIFF OMITTED] TR28SE98.020



[[Page 51735]]

[GRAPHIC] [TIFF OMITTED] TR28SE98.021



[[Page 51736]]

[GRAPHIC] [TIFF OMITTED] TR28SE98.022



[[Page 51737]]

[GRAPHIC] [TIFF OMITTED] TR28SE98.023



[[Page 51738]]

[GRAPHIC] [TIFF OMITTED] TR28SE98.024



[[Page 51739]]

[GRAPHIC] [TIFF OMITTED] TR28SE98.025



[[Page 51740]]

[GRAPHIC] [TIFF OMITTED] TR28SE98.026



[[Page 51741]]

[GRAPHIC] [TIFF OMITTED] TR28SE98.027



[[Page 51742]]

[GRAPHIC] [TIFF OMITTED] TR28SE98.028



[[Page 51743]]

[GRAPHIC] [TIFF OMITTED] TR28SE98.029



[[Page 51744]]

[GRAPHIC] [TIFF OMITTED] TR28SE98.030



[[Page 51745]]

[GRAPHIC] [TIFF OMITTED] TR28SE98.031



[[Page 51746]]

[GRAPHIC] [TIFF OMITTED] TR28SE98.032



[[Page 51747]]

[GRAPHIC] [TIFF OMITTED] TR28SE98.033



[[Page 51748]]

[GRAPHIC] [TIFF OMITTED] TR28SE98.034



[[Page 51749]]

[GRAPHIC] [TIFF OMITTED] TR28SE98.035



[[Page 51750]]

[GRAPHIC] [TIFF OMITTED] TR28SE98.036



[[Page 51751]]

[GRAPHIC] [TIFF OMITTED] TR28SE98.037



[[Page 51752]]

[GRAPHIC] [TIFF OMITTED] TR28SE98.038



[[Page 51753]]

[GRAPHIC] [TIFF OMITTED] TR28SE98.039



[[Page 51754]]

[GRAPHIC] [TIFF OMITTED] TR28SE98.040



[[Page 51755]]

[GRAPHIC] [TIFF OMITTED] TR28SE98.041



[[Page 51756]]

[GRAPHIC] [TIFF OMITTED] TR28SE98.042



[[Page 51757]]

[GRAPHIC] [TIFF OMITTED] TR28SE98.043



[[Page 51758]]

[GRAPHIC] [TIFF OMITTED] TR28SE98.044



[[Page 51759]]

[GRAPHIC] [TIFF OMITTED] TR28SE98.045



[[Page 51760]]

[GRAPHIC] [TIFF OMITTED] TR28SE98.046



[[Page 51761]]

[GRAPHIC] [TIFF OMITTED] TR28SE98.047



[[Page 51762]]

[GRAPHIC] [TIFF OMITTED] TR28SE98.048



[[Page 51763]]

[GRAPHIC] [TIFF OMITTED] TR28SE98.049



[[Page 51764]]

[GRAPHIC] [TIFF OMITTED] TR28SE98.050



BILLING CODE: 6560-50-C

[[Page 51765]]

    (3) The owner of each unit listed in the following table shall 
surrender, for each allowance listed in Column A or B of such table, an 
allowance of the same or earlier compliance use date and shall return 
to the Administrator any proceeds received from allowances withheld 
from the unit, as listed in Column C of such table. The allowances 
shall be surrendered and the proceeds shall be returned by December 28, 
1998.

----------------------------------------------------------------------------------------------------------------
                                                                  Allowances for  Allowances for
                                                                   2000 through      2010 and
       State              Plant name                Unit            2009 column     thereafter       Proceeds
                                                                        (A)         column (B)
----------------------------------------------------------------------------------------------------------------
CA.................  El Centro...........  2                                 285             272        $2749.48
CO.................  Valmont.............  11                                  4               0            0
FL.................  Lauderdale..........  PFL4                              776             781         7904.74
FL.................  Lauderdale..........  PFL5                              796             802         7904.74
LA.................  R S Nelson..........  1                                  30              34            0
LA.................  R S Nelson..........  2                                  33              32            0
MD.................  R P Smith...........  9                                   0              56          687.37
NM.................  Maddox..............  **3                                85              85          687.37
SD.................  Mobile..............  **2                                17              17            0
VA.................  Chesterfield........  **8B                              409             411         4124.21
WI.................  Blount Street.......  7                                   0              13          343.68
WI.................  Blount Street.......  8                                   0             294         3093.16
WI.................  Blount Street.......  9                                   0             355         3436.84
----------------------------------------------------------------------------------------------------------------

Sec. 73.11  [Removed and Reserved]

    3. Section 73.11 is removed and reserved.


Sec. 73.12  [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 revising the words 
``Secs. 73.16, 73.18,'' to read ``Secs. 73.18,''.


Sec. 73.16  [Removed and Reserved]

    6. Section 73.16 is removed and reserved.
    7. Section 73.19 is amended by revising paragraph (a)(5) and 
removing and reserving paragraph (b) to read as follows:


Sec. 73.19  Certain units with declining SO2 rates.

    (a) * * *
    (5) Its actual SO2 emission rate is less than 1.2 lb/
mmBtu in any one calendar year from 1996 through 1999, as reported 
under part 75 of this chapter;
* * * * *
    8. Section 73.21 is amended by:
    a. In paragraph (a) revising the words ``Sec. 73.11'' to read 
``Sec. 73.10(b)''; and revising the words ``=Unit's Year 2000 Adjusted 
Basic Allowances as calculated at Sec. 73.11(a)(3)'' to read ``are as 
listed in the following table'' and adding a table as set forth below:
    b. In paragraph (b) revising the words ``Sec. 73.11(a) and (b)'' to 
read ``Sec. 73.10(b)'';
    c. In paragraph (c)(1) revising the words ``=Unit's Year 2000 
Adjusted Basic Allowances as calculated at Sec. 73.11(a)(3)'' to read 
``are as listed in the table in paragraph (a) of this section.''; and
    d. Revising paragraph (c)(2) to read as follows:


Sec. 73.21  Phase II repowering allowances.

    (a) * * *

------------------------------------------------------------------------
                                                              Year 2000
                                                               adjusted
                            Unit                                basic
                                                              allowances
------------------------------------------------------------------------
RE Burger 1................................................         1273
RE Burger 2................................................         1245
RE Burger 3................................................         1286
RE Burger 4................................................         1316
RE Burger 5................................................         1336
RE Burger 6................................................         1332
New Castle 1...............................................         1334
New Castle 2...............................................         1485
New Castle 3...............................................         2935
New Castle 4...............................................         2686
New Castle 5...............................................         5481
------------------------------------------------------------------------

    (c)(2) The Administrator will reallocate any allowances forfeited 
in paragraph (c)(1) of this section with a compliance use date of 2000 
or any allowances remaining in the repowering reserve to all Table 2 
units' years 2000 through 2009 subaccounts in the following manner:
[GRAPHIC] [TIFF OMITTED] TR28SE98.051

    9. Section 73.27 is amended by removing paragraph (a)(3) and 
revising paragraphs (a)(2), (b)(2) through (5), and (c)(2) through (5) 
to read as follows:


Sec. 73.27  Special allowance reserve.

    (a) Establishment of reserve. * * *
    (2) The Administrator will allocate 250,000 allowances annually for 
calendar year 2000 and each year thereafter to the Auction Subaccount 
of the Special Allowance Reserve.
    (b) Distribution of proceeds. * * *
    (2) Until June 1, 1998, monetary proceeds from the auctions 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:
[GRAPHIC] [TIFF OMITTED] TR28SE98.052


[[Page 51766]]


    (3) On or after June 1, 1998, monetary proceeds from the auctions 
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:
[GRAPHIC] [TIFF OMITTED] TR28SE98.053

    (4) Monetary proceeds from the auctions of allowances from the 
Special Allowance Reserve (under subpart E of this part) from years of 
purchase from 1993 through 1998, remaining in the U.S. Treasury as a 
result of the surrender of allowances and return of proceeds under 
Sec. 73.10(b)(3), will be distributed to the designated representative 
of each unit listed in Table 2 according to the following equation:
[GRAPHIC] [TIFF OMITTED] TR28SE98.054

    (5) Monetary proceeds from the auctions 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:
[GRAPHIC] [TIFF OMITTED] TR28SE98.055

    (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 (under subpart E of this 
part), will be reallocated to the unit's Allowance Tracking System 
account according to the following equation:
[GRAPHIC] [TIFF OMITTED] TR28SE98.056

    (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 (under subpart E of 
this part), will be reallocated to the unit's Allowance Tracking System 
account according to the following equation:
[GRAPHIC] [TIFF OMITTED] TR28SE98.057

    (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 (under subpart E of this part), will be 
reallocated to the unit's Allowance Tracking System account according 
to the following equation:
[GRAPHIC] [TIFF OMITTED] TR28SE98.058

* * * * *
    10. Paragraph (b) of Sec. 73.70 is revised to read as follows:


Sec. 73.70  Auctions.

* * * * *
    (b) Timing of the auctions. The spot auction and the advance 
auction will be held on the same day, selected each year by the 
Administrator, but no later than March 31 of each year. The 
Administrator will conduct one spot auction and one advance auction in 
each calendar year.
* * * * *
[FR Doc. 98-25317 Filed 9-25-98; 8:45 am]
BILLING CODE 6560-50-U