[Federal Register Volume 63, Number 203 (Wednesday, October 21, 1998)]
[Proposed Rules]
[Pages 56394-56427]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-26431]



[[Page 56393]]

_______________________________________________________________________

Part III





Environmental Protection Agency





_______________________________________________________________________



40 CFR Parts 52 and 98



Federal Implementation Plans To Reduce the Regional Transport of Ozone; 
Proposed Rule

  Federal Register / Vol. 63, No. 203 / Wednesday, October 21, 1998 / 
Proposed Rules  

[[Page 56394]]



ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 52 and 98

[FRL-6170-5]
RIN 2060-AH87


Federal Implementation Plans To Reduce the Regional Transport of 
Ozone

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of proposed rulemaking (NPR).

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

SUMMARY: In accordance with the Clean Air Act (CAA), EPA is proposing 
Federal implementation plans (FIPs) that may be needed if any State 
fails to revise its State implementation plan (SIP) to comply with the 
nitrogen oxides (NOX) SIP call just completed by EPA. The 
NOX SIP call includes emission budgets which are designed to 
eliminate specified amounts of emissions of NOX--one of the 
precursors to ozone (smog) pollution--for the purpose of reducing 
NOX and ozone transport across State boundaries in the 
eastern half of the United States. This notice supplements the shorter 
notice of proposed rulemaking for the FIPs appearing separately in the 
September 29, 1998 Federal Register at 63 FR 52213.

DATES: Comments may be submitted until November 30, 1998, as previously 
announced in a shorter notice of proposed rulemaking published in the 
Federal Register on September 30, 1998.
    Comments must be postmarked by the last day of the comment period 
and sent directly to the Docket Office listed in ADDRESSES (in 
duplicate form if possible). The public hearings for the section 126 
and FIP proposals will be held on October 28 and 29, 1998, as 
previously announced in a shorter notice of proposed rulemaking 
published in the Federal Register on September 30, 1998.

ADDRESSES: Comments may be submitted to the Air and Radiation Docket 
and Information Center (6102), Attention: Docket No. A-97-43 for the 
section 126 proposal and Docket No. A-98-12 for the FIP proposal, U.S. 
Environmental Protection Agency, 401 M Street SW, room M-1500, 
Washington, DC 20460, telephone (202) 260-7548. Comments and data may 
also be submitted electronically by following the instructions under 
SUPPLEMENTARY INFORMATION of this document. No confidential business 
information (CBI) should be submitted through e-mail.
    The public hearing will be held at the EPA Auditorium, 401 M St., 
SW., Washington, DC. Documents relevant to this matter are available 
for inspection at the Air and Radiation Docket and Information Center 
(6102), Attention: Docket No. A-98-12, U.S. Environmental Protection 
Agency, 401 M Street SW, Room M-1500, Washington, DC 20460, telephone 
(202) 260-7548, between 8:00 a.m. and 4:00 p.m., Monday through Friday, 
excluding legal holidays. A reasonable fee may be charged for copying. 
Comments and data may also be submitted electronically by following the 
instructions under SUPPLEMENTARY INFORMATION of this document. No 
Confidential Business Information (CBI) should be submitted through e-
mail.

FOR FURTHER INFORMATION CONTACT: General questions concerning today's 
action should be addressed to Doug Grano, Office of Air Quality 
Planning and Standards, Air Quality Strategies and Standards Division, 
MD-15, Research Triangle Park, NC 27711, telephone (919) 541-3292. 
Please refer to SUPPLEMENTARY INFORMATION below for a list of contacts 
for specific subjects described in today's action.

SUPPLEMENTARY INFORMATION:

Technical Analyses

    The Agency will ensure that all comments and technical analyses 
received on this proposal notice are made publicly available in the 
docket to this rulemaking.

Availability of Related Information

    The official record for this rulemaking, as well as the public 
version, has been established under docket number A-98-12 (including 
comments and data submitted electronically as described below). A 
public version of this record, including printed, paper versions of 
electronic comments, which does not include any information claimed as 
CBI, is available for inspection from 8 a.m. to 4 p.m., Monday through 
Friday, excluding legal holidays. The official rulemaking record is 
located at the address in ADDRESSES at the beginning of this document. 
A copy of today's FIP proposal notice is available at http://
www.epa.gov/ttn/oarpg under ``recent actions'' and ``actions sorted by 
CAA title'' (under title I).
    Electronic comments can be sent directly to EPA at: A-and-R-
D[email protected]. Electronic comments must be submitted as an 
ASCII file avoiding the use of special characters and any form of 
encryption. Comments and data will also be accepted on disks in 
WordPerfect in 5.1 file format or ASCII file format. All comments and 
data in electronic form must be identified by the docket number A-98-
12. Electronic comments on this proposed rule may be filed online at 
many Federal Depository Libraries.
    The EPA has conducted a separate rulemaking action that contains 
actions and information related to this NPR, ``Finding of Significant 
Contribution and Rulemaking for Certain States in the Ozone Transport 
Assessment Group Region for Purposes of Reducing Regional Transport of 
Ozone,'' (see proposals at 62 FR 60318, November 7, 1997; 63 FR 25902, 
May 11, 1998, and final rule just issued). This rulemaking action is 
referred to as the NOX SIP call. Documents related to the 
NOX SIP call rulemaking, including the notice of final 
rulemaking, are available for inspection in Docket No. A-96-56 at the 
address and times given above. In addition, the NOX SIP call 
rulemaking and associated documents are located at http://www.epa.gov/
ttn/oarpg/otagsip.html. The rulemaking docket for the NOX 
SIP call contains information and analyses that are relied upon in 
today's proposal on the NOX FIPs. Therefore, EPA is 
incorporating by reference the entire NOX SIP call record 
for purposes of the NOX FIPs proposed rulemaking. Although 
EPA is incorporating by reference the entire NOX SIP call 
docket, the only portions that form the basis for the FIP rulemaking 
are the portions that address feasibility and cost effectiveness of 
control measures and the projection of emissions reductions that 
various control measures would achieve.
    The EPA is now conducting a separate rulemaking action that 
contains actions and information related to this NPR, ``Finding of 
Significant Contribution and Rulemaking on Section 126 Petitions for 
Purposes of Reducing Interstate Ozone Transport,'' (see advanced notice 
of proposed rulemaking at 63 FR 24058, April 30, 1998, and the proposal 
notice in a separate Federal Register). This rulemaking action is 
hereafter referred to as the section 126 rulemaking. Documents related 
to the section 126 rulemaking, including the proposed rulemaking 
notice, are available for inspection in Docket No. A-97-43 at the 
address and times given above. A copy of the section 126 proposal 
notice is available at http://www.epa.gov/ttn/oarpg under ``recent 
actions'' and ``actions sorted by CAA title'' (under title I).
    Additional information relevant to this NPR concerning the Ozone 
Transport Assessment Group (OTAG) is available on the Agency's Office 
of Air

[[Page 56395]]

Quality Planning and Standards' (OAQPS) Technology Transfer Network 
(TTN) via the web at http://www.epa.gov/ttn/. If assistance is needed 
in accessing the system, call the help desk at (919) 541-5384 in 
Research Triangle Park, NC. Documents related to OTAG can be downloaded 
directly from OTAG's webpage at http://www.epa.gov/ttn/otag. The OTAG's 
technical data are located at http://www.iceis.mcnc.org/OTAGDC.

For Additional Information

    For legal questions, please contact Amey Marrella, United States 
Environmental Protection Agency, Office of General Counsel, 401 M 
Street SW, MC-2344, Washington, DC, 20460, telephone (202) 260-7987. 
For questions concerning the economic analyses, please contact Scott 
Mathias, Office of Air Quality Planning and Standards, Air Quality 
Strategies and Standards Division, MD-15, Research Triangle Park, NC 
27711, telephone (919) 541-5310. For questions concerning the trading 
program, please contact Kevin Culligan, Office of Atmospheric Programs, 
Acid Rain Division, MC-6201J, 401 M Street SW, Washington, DC 20460, 
telephone (202) 564-9172. For questions concerning non-electric utility 
generating units, please contact Doug Grano, Office of Air Quality 
Planning and Standards, Air Quality Strategies and Standards Division, 
MD-15, Research Triangle Park, NC 27711, telephone (919) 541-3292.

Outline

I. Summary
II. Background
    A. History
    B. Ozone Impacts
    C. New Ozone NAAQS
    D. Section 126 Petitions
    E. NOX SIP Call
III. FIP Process
    A. Legal Framework
    B. Timing of FIP Action
    C. FIP Control Measures
    D. Authority To Order the State To Implement Specific Measures
    E. Section 105 Grants
    F. Findings of Failure
    G. Sanctions
    H. Transitional Areas
IV. Emissions Decreases To Meet the NOX SIP Call
    A. General Approach for Calculating Budgets
    B. Electric Generating Units (EGUs)
    C. Industrial Boilers and Turbines
    D. Stationary Internal Combustion Engines
    E. Cement Manufacturing
    F. Other Point Source Categories
    G. Area, Mobile, and Nonroad Sources
    H. State-by-State Emissions Budgets
    1. EGUs
    2. Non-EGU Point Sources
    3. Mobile and Area Sources
    4. Statewide Budgets
V. Emissions Reporting
VI. Federal NOX Budget Trading Program
    A. Program Summary
    1. Purpose of the Federal NOX Budget Trading Program
    2. Relationship of Trading Program under FIP to Trading Program 
Under Section 126 Petitions and NOX SIP Call
    B. Federal NOX Budget Trading Program
    1. Program Overview
    2. Elements of Federal NOX Budget Trading Program 
That Are the Same as the State NOX Budget Trading Program 
for SIPs
    a. General Provisions
    b. Authorized Account Representative
    c. Permits
    d. Compliance Certification
    e. NOX Allowance Tracking System
    f. Banking
    g. NOX Allowance Transfers
    h. Audits
    3. Elements of the Federal NOX Budget Trading Program 
that Differ from the State NOX Budget Trading Program
    a. General Provisions
    b. Compliance Certification
    c. Aggregate NOX Emissions Levels and Allowance 
Allocations
    1. State-by-State Emissions Levels
    2. Development of State Trading Program Budget
    3. Timing Provisions
    4. NOX Allowance Allocation Methodology
    (a) EGUs
    (b) Non-EGUs
    (c) Treatment of New Sources
    d. Compliance Supplement Pool
    1. Size of the Compliance Supplement Pool
    2. Distribution of the Compliance Supplement Pool to Sources
    e. Emissions Monitoring and Reporting
    f. Opt-Ins
    g. Program Administration
    C. New Source Review (NSR)
VII. Non-Trading Sources Emissions Limits
    A. Introduction
    B. Permits
    C. Stationary Internal Combustion Engines
    1. Rule Requirements
    2. Background
    D. Cement Manufacturing
    1. Rule Requirements
    2. Background
    a. Mid-Kiln Firing
    b. Low-NOX Burner
    c. Selective Noncatalytic Reduction
VIII. Administrative Requirements
    A. Regulatory Impact Analysis
    B. Impact on Small Entities
    1. Regulatory Flexibility Act
    2. Outreach to Small Entity Representatives
    3. Potentially Affected Small Entities
    4. Panel Findings and EPA Actions
    a. Exemptions
    b. Continuous Emissions Monitoring Systems
    c. Trading Program Opt-In
    d. Cement Kilns
    e. EGUs
    f. Industrial Boilers
    g. EPA Guidance to States on Small Entities
    C. Unfunded Mandates Reform Act
    D. Paperwork Reduction Act
    1. Statewide Emissions Budgets
    2. Trading Program
    3. Non-Trading Sources Regulated
    E. Executive Order 13045: Protection of Children from 
Environmental Health Risks and Safety Risks
    1. Applicability
    2. Children's Health Protection
    F. Executive Order 12898 Environmental Justice
    G. Executive Order 12875: Enhancing the Intergovernmental 
Partnership
    H. Executive Order 13084: Consultation and Coordination with 
Indian Tribal Governments
    I. National Technology Transfer and Advancement Act

I. Summary

    In accordance with the CAA, EPA today proposes FIPs that may be 
needed if any State fails to revise its SIP to comply with the 
NOX SIP call just promulgated by EPA. The NOX SIP 
call final rulemaking notice and support material in that docket should 
be reviewed for background information relevant to this FIP action. The 
NOX SIP call includes emission budgets which are designed to 
eliminate specified amounts of emissions of NOX--one of the 
precursors to ozone (smog) pollution--for the purpose of reducing 
NOX and ozone transport across State boundaries in the 
eastern half of the United States.
    Today's action is a proposed FIP under section 110(c) intending to 
meet requirements imposed by the NOX SIP call final rule 
under section 110(a)(2)(D) and section 110(k)(5) for the 1-hour ozone 
NAAQS, coupled with a requirement under section 110(a)(1) for 
submission of SIP provisions meeting the requirements of section 
110(a)(2)(D) for the 8-hour ozone NAAQS. In the NOX SIP 
call, EPA has found that emissions from 23 jurisdictions contribute 
significantly to ozone nonattainment problems downwind and has required 
those jurisdictions to submit SIP provisions that eliminate those 
emissions through any combination of control measures. If EPA finds 
that a State has not submitted the required plan revision, EPA is 
required to promulgate a FIP in accordance with section 110(c).
    Ozone has long been recognized, in both clinical and 
epidemiological research, to affect public health. There is a wide 
range of ozone-induced health effects, including decreased lung 
function (primarily in children active outdoors), increased respiratory 
symptoms (particularly in highly sensitive individuals), increased

[[Page 56396]]

hospital admissions and emergency room visits for respiratory causes 
(among children and adults with pre-existing respiratory disease such 
as asthma), increased inflammation of the lung, and possible long-term 
damage to the lungs.
    Today's action to propose FIPs includes proposed rule language 
establishing the emissions requirements for certain stationary source 
categories and the cost analyses supporting the proposal. The FIP 
requirements for stationary sources include use of a Federal 
NOX Budget Trading Program proposed in a separate Federal 
Register concerning petitions under section 126 of the CAA. The FIP 
proposal is intended to achieve the NOX emissions reductions 
required by the NOX SIP call rulemaking in the 23 
jurisdictions, a portion of whose emissions are found to significantly 
contribute to nonattainment of the ozone NAAQS, or interfere with 
maintenance of the NAAQS, in downwind States. The NOX SIP 
call final rule explains EPA's basis for determining significant 
contribution to downwind nonattainment or maintenance problems. 
Specifically, the 23 jurisdictions with sources whose emissions have 
been found to make a significant contribution to downwind nonattainment 
for both the 1-hour and 8-hour NAAQS and interfere with maintenance of 
the 8-hour NAAQS, and are, therefore, the subject of this FIP proposal, 
are:

Alabama
Connecticut
Delaware
District of Columbia
Georgia
Illinois
Indiana
Kentucky
Maryland
Massachusetts
Michigan
Missouri
New Jersey
New York
North Carolina
Ohio
Pennsylvania
Rhode Island
South Carolina
Tennessee
Virginia
West Virginia
Wisconsin

    For large boilers and turbines, EPA proposes to promulgate a 
Federal NOX Budget Trading Program, proposed in a separate 
Federal Register concerning petitions under section 126 of the CAA, to 
achieve emissions decreases in a very cost-effective manner. The 
proposed trading program will allow the owners of boilers and turbines 
the flexibility to develop their own compliance approach in order to 
achieve the needed ozone season emissions reductions. The FIP proposal 
also includes regulations to decrease ozone season NOX 
emissions from stationary internal combustion engines and cement 
manufacturing. These emissions reductions requirements are to be 
achieved by May 1, 2003.
    In order to meet the requirements of section 110(c), this notice 
proposes a FIP for each of the 23 jurisdictions required by the 
NOX SIP call to reduce emissions of NOX. The 
proposed FIP requirements for each of the 23 jurisdictions are 
identical. Thus, the term ``FIP'' or ``FIPs'' as used in this notice 
refers to one set of requirements that is proposed for each of 23 
jurisdictions. Final rulemaking on the proposed FIPs may address only 
one State or may address several of the 23 jurisdictions, depending on 
how the 23 jurisdictions respond to the NOX SIP call.
    The FIP rulemaking does not invite comments on issues covered in 
the NOX SIP call, including sections II, EPA's Analytical 
Approach; III, Determination of Budgets; IV, Air Quality Assessment; 
and V, NOX Control Implementation and Budget Achievement 
Dates, except for the portions of those sections that address the 
feasibility and cost effectiveness of control measures and the 
projections of the emissions reductions that various control measures 
would achieve. The reader is referred to the NOX SIP call 
for explanation of the issues.
    If a State adopts and submits to EPA an approvable SIP revision in 
response to the NOX SIP call by September 1999, EPA would 
not promulgate this Federal program for that State at that time. 
However, if a State fails to respond to the NOX SIP call by 
adopting and submitting to EPA a complete revised SIP by September 
1999, EPA intends to take final rulemaking action on the FIP 
immediately thereafter. In addition, if a State submits a SIP that EPA 
does not find approvable, EPA intends to promulgate a FIP concurrently 
with finalization of its disapproval of the SIP. For more information 
on the rationale for and requirements of the NOX SIP call 
final rule, see the final remaking notice as well as the proposal 
notices and support documents contained in the docket for that rule and 
section II, Background, of this notice.
    Today's notice provides background information in section II, 
covering relevant portions of the CAA and the NOX SIP call 
final rule. Section III explains EPA's duty to develop the FIPs, the 
timing of the FIP process, and how the FIPs interface with sanction 
provisions in the CAA, as well as with EPA's ``transitional areas'' 
policy under the new 8-hour ozone standard. In section IV, EPA 
describes how the rule requirements contained in the FIP proposal are 
designed to meet the emissions decreases required by the NOX 
SIP call. Emissions reporting requirements are described in section V. 
The Federal NOX Budget Trading Program is addressed in 
section VI. Regulations covering stationary sources not in the trading 
program are outlined in section VII. Section VIII covers several 
administrative requirements, including the Regulatory Impact Analyses 
associated with the FIP. Finally, the rule contains proposed 
regulations which are designed to meet the emissions decreases required 
by the NOX SIP call.

II. Background

A. History

    For almost 30 years, Congress has focused major efforts on curbing 
ground-level (tropospheric) ozone. In 1990, Congress amended the CAA to 
better address, among other things, continued nonattainment of the 1-
hour ozone NAAQS, the requirements that would apply if EPA revised the 
1-hour standard, and transport of air pollutants across State 
boundaries.
    The 1990 Amendments reflect general awareness by Congress that 
ozone is a regional, and not merely a local, problem. Ozone and its 
precursors may be transported long distances across State lines to 
combine with ozone and precursors downwind, thereby worsening the ozone 
problems downwind. This transport phenomenon is a major reason for the 
persistence of the ozone problem, notwithstanding the imposition of 
numerous controls, both Federal and State, across the country.
    Section 110(a)(2)(D) provides one of the most important tools for 
addressing the problem of transport. This provision, which applies by 
its terms to all SIPs for each pollutant covered by a NAAQS, and for 
all areas regardless of their attainment designation, provides that a 
SIP must contain provisions prohibiting its sources from contributing 
significantly to nonattainment problems in or interfering with 
maintenance by downwind States. Section 110(k)(5) authorizes EPA to 
find that a SIP is substantially inadequate to meet any CAA 
requirement. It further authorizes EPA to require a State with such a 
SIP to submit, within a specified period, any SIP revision necessary to 
correct the inadequacy.

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    The CAA further addresses interstate transport of pollution in 
section 126, which Congress clarified in 1990. Subparagraph (b) of that 
provision authorizes each State (or political subdivision) to petition 
EPA for a finding that emissions from ``any major source or group of 
stationary sources'' in an upwind State contribute significantly to 
nonattainment in, or interfere with maintenance by, the downwind State.
    In addition, in 1995, the Environmental Council of States (ECOS) 
and EPA organized the OTAG. The OTAG was a partnership among EPA, the 
37 easternmost States and the District of Columbia, industry 
representatives and environmental groups. This effort created an 
opportunity for the development of an Eastern United States ozone 
strategy to address transport and to assist in attainment of the 1-hour 
ambient ozone standard. The EPA believes that the OTAG process has been 
invaluable in demonstrating the types of regional ozone precursor 
reductions that are needed to enable areas in the Eastern United States 
to attain and maintain the ambient air quality standards for ozone.
    Shortly after OTAG began its work, EPA began to indicate that it 
intended to issue a NOX SIP call to require States to 
implement the reductions necessary to address the ozone transport 
problem. On January 10, 1997 (62 FR 1420), EPA published a Notice of 
Intent that articulated this goal and indicated that before taking 
final action, EPA would carefully consider the technical work and any 
recommendations of OTAG. The EPA just completed final rulemaking on the 
NOX SIP call and established emissions budgets for 
NOX that each of the identified States must meet through 
enforceable SIP measures. The NOX SIP call is summarized 
later in section II.E of this notice.

B. Ozone Impacts

    Ground-level ozone, the main harmful ingredient in smog, is 
produced in complex chemical reactions when its precursors, volatile 
organic compounds (VOC) and NOX, react in the presence of 
sunlight. The chemical reactions that create ozone take place while the 
pollutants are being blown through the air by the wind, which means 
that ozone can be more severe many miles away from the source of 
emissions than it is at the source. At ground level, ozone can cause a 
variety of ill effects to human health, crops and trees. Specifically, 
ground-level ozone induces the following health effects:

     Decreased lung function, primarily in children active 
outdoors,
     Increased respiratory symptoms, particularly in highly 
sensitive individuals,
     Hospital admissions and emergency room visits for 
respiratory causes, among children and adults with pre-existing 
respiratory disease such as asthma,
     Inflammation of the lung,
     Possible long-term damage to the lungs or even death.

    Detailed information on the benefits and costs of changes in 
NOX emissions is contained in the Regulatory Impact Analysis 
(RIA) contained in the NOX SIP call docket, which also 
serves as the RIA for the FIP proposal. In addition to helping attain 
public health standards for ozone, decreases in emissions of 
NOX are helpful in reducing acid deposition, greenhouse 
gases, nitrates in drinking water, stratospheric ozone depletion, 
excessive nitrogen loadings to aquatic and terrestrial ecosystems, and 
ambient concentrations of nitrogen dioxide, particulate matter and 
toxics (see ``Nitrogen Oxides: Impacts on Public Health and the 
Environment,'' EPA-452/R-97-002, August 1997.)

C. New Ozone NAAQS

    On July 18, 1997 (62 FR 38856), EPA issued its final action to 
revise the NAAQS for ozone. The EPA's decision to revise the standard 
was based on the Agency's review of the available scientific evidence 
linking exposures to ambient ozone to adverse health and welfare 
effects at levels allowed by the pre-existing 1-hour ozone standards. 
The 1-hour primary standard was replaced by an 8-hour standard at a 
level of 0.08 parts per million (ppm), with a form based on the 3-year 
average of the annual fourth-highest daily maximum 8-hour average ozone 
concentration measured at each monitor within an area. The new primary 
standard will provide increased protection to the public, especially 
children and other at-risk populations, against a wide range of ozone-
induced health effects. The EPA retained the applicability of the 1-
hour NAAQS for existing nonattainment areas until such time as EPA 
determines that an area has attained the 1-hour NAAQS (40 CFR 50.9). 
The new standard results in more areas and larger areas with monitoring 
data indicating nonattainment. Thus, it will be even more critical to 
implement regional control strategies which will eliminate specified 
amounts of emissions of NOX which would otherwise be 
transported across State boundaries into areas in violation of the new 
standard.

D. Section 126 Petitions

    On August 14-15, 1997, EPA received eight section 126 petitions 
submitted individually by eight Northeastern States. The petitioning 
States are Connecticut, Maine, Massachusetts, New Hampshire, New York, 
Pennsylvania, Rhode Island, and Vermont. Each petition requests EPA to 
make a finding that sources in certain categories of stationary sources 
in upwind States emit or would emit NOX in violation of the 
prohibition in section 110(a)(2)(D)(i) on emissions that contribute 
significantly to nonattainment, or interfere with maintenance, in the 
petitioning State. All of the petitions seek a finding and relief under 
the 1-hour standard; Massachusetts, Pennsylvania, and Vermont also seek 
a finding and relief with respect to the 8-hour standard.
    The petitions vary as to the type and geographic location of the 
source categories identified as significant contributors. All the 
petitions identified source categories; some petitions also provided 
lists of sources within the specified categories. The source categories 
include electric generating plants, fossil fuel-fired boilers and other 
indirect heat exchangers, and certain other related stationary sources 
that emit NOX. All the petitions target sources in the 
Midwest; some also target sources in the South and Northeast.
    In a separate rulemaking, EPA is proposing to make a technical 
determination that certain major stationary source categories 
identified in the section 126 petitions are significantly contributing 
to nonattainment in, or interfering with maintenance by, one or more 
petitioning State (hereafter referred to as a positive or affirmative 
technical determination). On the basis of the proposed affirmative 
technical determination, EPA is proposing that the petitions naming 
these sources and source categories be granted or denied, at certain 
later dates, pending certain actions by the States and EPA regarding 
State submittals and FIPs in response to the final NOX SIP 
call. The schedule and conditions under which the applicable final 
findings on the petitions would be triggered are discussed in that 
proposal notice. For information on the interaction of the section 126, 
FIP, and NOX SIP call actions, see the section 126 proposal 
notice, section II.A.2.

E. NOX SIP Call

    The EPA proposed the NOX SIP call on November 7, 1997 
(62 FR 60318), issued a supplemental notice on May 11, 1998 (63 FR 
25902), and just issued a final rulemaking. In that action, EPA 
determined that NOX emissions from sources and emitting 
activities in 23 jurisdictions significantly contribute to

[[Page 56398]]

nonattainment of the 1-hour and 8-hour ozone NAAQS, or interfere with 
maintenance of the 8-hour NAAQS, in one or more downwind States 
throughout the Eastern United States. The EPA based these proposals on 
data generated by OTAG, public comments, and other relevant 
information.
    The NOX SIP call requires that the 23 jurisdictions 
adopt and submit by September 24, 1999, remedial SIP revisions. The 23 
jurisdictions are: Alabama, Connecticut, Delaware, District of 
Columbia, Georgia, Illinois, Indiana, Kentucky, Massachusetts, 
Maryland, Michigan, Missouri, North Carolina, New Jersey, New York, 
Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee, Virginia, 
West Virginia, and Wisconsin. The SIP revisions must contain measures 
that will assure that sources in the State reduce their NOX 
emissions sufficiently to eliminate the amounts of NOX 
emissions that contribute significantly to nonattainment, or that 
interfere with maintenance, downwind. By eliminating these amounts of 
NOX emissions, the control measures will assure that the 
remaining NOX emissions will not exceed the level that EPA 
identifies in the NOX SIP call as the State's NOX 
emissions budget. After prohibiting the significant amounts of 
NOX, the remaining amounts emitted by sources in the covered 
States will not ``significantly contribute to nonattainment, or 
interfere with maintenance by,'' a downwind State, under section 
110(a)(2)(D)(i)(I).
    For purposes of the FIP rulemaking, the reader is encouraged to 
review the NOX SIP call final rulemaking, which is organized 
as follows: section II.C, Weight-of-Evidence Determination of Covered 
States, describes how EPA determined which States include sources that 
emit NOX in amounts of concern (the ``covered'' States); 
sections II.D, Cost Effectiveness of Emission Reductions; II.E, 
Comparison of Upwind and Downwind Costs; and III, Determination of 
Budgets, describe how EPA determined the significant amounts of 
emissions and the resulting statewide emissions budgets for the States 
identified above. Section IV, Air Quality Assessment, discusses air 
quality analyses conducted by EPA to help confirm the decisions and 
requirements set forth in this rulemaking. Section V, NOX 
Control Implementation and Budget Achievement Dates, primarily 
discusses the dates by which (1) the States must submit SIP revisions 
in response to today's action, (2) the sources must implement the 
required SIP controls, and (3) the States must achieve the required 
budget levels. Section VI, SIP Criteria and Emissions Reporting 
Requirements, describes the SIP requirements themselves.
    The SIP requirements permit each State to determine what measures 
to adopt to prohibit the significant amounts and, hence, meet the 
necessary emissions budget. Consistent with OTAG's recommendations to 
achieve NOX emissions decreases primarily from large 
stationary sources in a trading program, EPA encourages States to 
consider electric generating and non-electric generating boiler and 
turbine controls under a cap-and-trade program as a highly cost-
effective strategy. The recommended cap-and-trade program is described 
in more detail in section VII, NOX Trading program. Section 
VIII, Interaction with Title IV NOX Rule, describes the 
relationship between this rulemaking and the title IV NOX 
rule. The remaining parts of the NOX SIP call include 
section IX, Nonozone Benefits of NOX Reductions, and section 
X, Administrative Requirements.

III. FIP Process

A. Legal Framework

    The Administrator is required to promulgate a FIP within 2 years 
of: (1) Finding that a State has failed to make a required submittal, 
(2) finding that a submittal received does not satisfy the minimum 
completeness criteria established under section 110(k)(1)(A), or (3) 
disapproving a SIP submittal in whole or in part. Section 110(c)(1) 
mandates EPA promulgation of a FIP unless EPA has approved, within the 
2-year time period, a SIP revision that corrects the deficiency 
identified by EPA in its NOX SIP call.
    The 1990 Amendments make explicit a principle that was implicit in 
the preceding Act--that a FIP corrects or fills a void in a deficient 
State plan. The amended CAA defines a FIP as a plan to fill a gap or 
``correct all or a portion of an inadequacy in a State implementation 
plan.'' (42 U.S.C. 7602(y) (Supp. II. l990) (emphasis added).) When 
forced by a State planning delinquency to promulgate a FIP, EPA has 
wide-ranging authority under section 110(c) to fill the gaps left by 
the State failure. The EPA's authority to prescribe FIP measures is of 
three types. First, EPA may promulgate any measure which it is 
expressly permitted to issue under any circumstances pursuant to pre-
existing independent statutory authority--for example, explicit 
provisions of title II. That is, EPA may promulgate any measure which 
it has authority to issue in a non-FIP context, without reliance on 
section 110(c). Second, EPA may invoke section 110(c)'s general FIP 
authority and act to cure a planning inadequacy in any way not clearly 
prohibited by statute. Third, under section 110(c), the courts have 
held that EPA may exercise all authority that the State may exercise 
under the Act.
    The second type of authority, EPA's general authority under section 
110(c), is essentially remedial, and EPA has broad power under that 
section to cure a defective State plan. Thus, in promulgating a FIP, 
EPA may exercise its own, independent regulatory authority under the 
CAA in any way not clearly prohibited by an explicit provision of the 
Act. When EPA has promulgated a FIP, courts have not required explicit 
authority for specific measures: ``We are inclined to construe 
Congress'' broad grant of power to the EPA as including all enforcement 
devices reasonably necessary to the achievement and maintenance of the 
goals established by the legislation.'' (South Terminal Corp. v. EPA, 
504 F.2d 646, 669. (1st Cir. 1974)). See also City of Santa Rosa v. 
EPA, 534 F.2d 150, 153-154 (9th Cir. 1976) (upholding the 
Administrator's authority to promulgate a FIP imposing gas-rationing in 
Los Angeles on a massive scale). ``The authority to regulate pollution 
carries with it the power to do so in a manner reasonably calculated to 
reach that end.'' Id. at 155.
    In addition, when a State's failure to discharge the primary 
responsibility to protect its air quality compels EPA to assume this 
task, the powers of the defaulting State accrue to EPA. As the Ninth 
Circuit recently held, when EPA acts in place of the State pursuant to 
a FIP under section 110(c), EPA ``stands in the shoes of the defaulting 
State, and all of the rights and duties that would otherwise fall to 
the State accrue instead to EPA,'' Central Arizona Water Conservation 
District v. EPA, 990 F.2d 1531, at 1541 9th Cir. 1993). The First 
Circuit, in an early FIP case, agreed:

the Administrator must promulgate promptly regulations setting forth 
an implementation plan for a State should the State itself fail to 
propose a satisfactory one. The statutory scheme would be unworkable 
were it read as giving to EPA when promulgating an implementation 
plan for a State, less than those necessary measures allowed by 
Congress to a State to accomplish Federal clean air goals. We do not 
adopt any such crippling interpretation.

South Terminal Corporation v. EPA, 504 F.2d 668 (1st Cir. 1974).

B. Timing of FIP Action

    As described in the NOX SIP call final rulemaking and 
summarized in section II.E of this notice, EPA is requiring

[[Page 56399]]

specific States to develop, adopt and submit revisions to their SIPs by 
September 1999. As part of the NOX SIP call rulemaking, EPA 
received a few comments supporting the position that EPA should propose 
FIPs at the same time as taking final action on the NOX SIP 
call rulemaking. The Agency also received a few comments suggesting it 
was more appropriate to delay the FIP proposal until some time after 
the States have had time to respond to the NOX SIP call 
rulemaking. As described in that final notice, EPA agreed with certain 
commenters that the timing of the FIP proposal should allow for 
promulgation in time to require NOX emissions reductions by 
sources at about the same time, both in States that comply with the 
NOX SIP call and States that do not. Under a delayed FIP 
proposal approach, industry in the non-complying States might 
experience an unfair competitive advantage over industry in States 
which elected to reduce their NOX emissions and reduce 
interstate transport of ozone and ozone precursors in an earlier 
timeframe, consistent with the requirements of the NOX SIP 
call rulemaking. More importantly, delaying the FIP proposal would 
delay reductions of ozone pollution and NOX emissions in the 
non-complying States which would unnecessarily jeopardize public 
health. Therefore, proposing a FIP today will ensure that EPA can 
promulgate a FIP soon after the time the SIPs are due, in the event of 
any State's failure to comply.
    The EPA views seriously its responsibility to address the issue of 
regional transport of ozone and ozone precursor emissions. Decreases in 
NOX emissions are needed in the States named in the 
NOX SIP call rulemaking to enable the downwind States to 
develop and implement plans to achieve the NAAQS in order to achieve 
clean air for their citizens. Thus, although the CAA allows EPA up to 2 
years to promulgate a FIP after a finding of a State's failure to 
submit a complete, approvable plan, EPA intends to expedite the FIP 
promulgation to help assure that the downwind States realize the air 
quality benefits of regional NOX reductions as soon as 
practicable. This is consistent with Congress' intent that attainment 
occur in these downwind nonattainment areas ``as expeditiously as 
practicable'' (sections 181(a), 172(a)). Therefore, EPA is proposing 
FIPs today in conjunction with final action on the NOX SIP 
call. Furthermore, EPA intends to make a finding and promulgate a FIP 
immediately after the SIP submittal due date for each upwind State that 
fails to submit a complete SIP that meets the terms of the 
NOX SIP call. The EPA also intends to approve expeditiously 
SIP revisions that meet the NOX SIP call rulemaking 
requirements. For States that fail to make the required submittal or 
fail to submit a complete SIP revision response, EPA would promulgate a 
FIP as described in the above section. Where the SIP is complete but 
EPA disapproves it, EPA would also promulgate a FIP. The EPA intends to 
move quickly to promulgate a FIP where necessary.
    In order to meet the requirements of section 110(c), this notice 
proposes a FIP for each of the 23 jurisdictions required by the 
NOX SIP call to reduce emissions of NOX. The 
proposed FIP requirements for each of the 23 jurisdiction are 
identical. Final rulemaking on the proposed FIPs may address only one 
State or may address several of the 23 jurisdictions, depending on how 
the 23 jurisdictions respond to the NOX SIP call.

C. FIP Control Measures

    In contrast to the SIP process--where selection and implementation 
of control measures is the primary responsibility of the State--in the 
case of a FIP, it is EPA's responsibility to select the control 
measures for each source sector and assure compliance with those 
measures. Thus, while the FIP would be designed by EPA to achieve the 
same total statewide emissions decrease as that described in the 
NOX SIP call, the specific control measures assigned in the 
FIP could be different from what a State might choose.
    In selecting the specific control measures for the FIP, EPA used 
the same method used in the NOX SIP call for calculating the 
required emissions reductions. As in the NOX SIP call, the 
FIP rules proposed in this notice require the same amount of emissions 
reduction from the source categories to which highly cost-effective 
measures can be applied. See the discussion in section III, 
Determination of Budgets, of the NOX SIP call. The EPA is 
incorporating by reference the technical basis and supporting rationale 
for EPA's conclusions as to the highly cost-effective strategy 
developed for the NOX SIP call budgets.

D. Authority To Order the State To Implement Specific Measures

    The EPA's authority to promulgate measures in a FIP which require 
the State to enact legislation or expend State funds may be somewhat 
limited under prior case law. In general, EPA may require the State to 
implement FIP measures, including requirements for legislation and 
expenditure of funds, if the measures affect the pollution-creating 
activities of the State. However, in Brown v. EPA, 521 F.2d 827 (9th 
Cir. 1975), vacated on other grounds, 431 U.S. 99 (1977) (Brown), the 
court held that section 113 of the CAA did not provide statutory 
authority for EPA to bring an enforcement action against the State (or 
other municipal authority) for failing to implement a motor vehicle 
inspection and maintenance program. The court reasoned that the CAA 
authorized Federal enforcement if the State did not implement 
regulations to control its own pollution creating activities, ``but not 
against a State that chooses not to govern polluters as the 
Administrator directs.'' Id. at 832. In a subsequent decision, the 
court rejected EPA's argument that ownership of the roads and highways 
made the State responsible for the pollution created from their use 
(Brown v. EPA, 566 F.2d 665 (9th Cir. 1977), vacated on other grounds, 
431 U.S. 99 (1977)).
    The same court, however, held in City of Santa Rosa v. EPA, 534 
F.2d 150 (9th Cir. 1976), that the EPA may require gas rationing under 
its FIP authority. The court found that the Administrator of EPA has 
authority to limit gas delivery to retail outlets and may require the 
citizens of the State to curtail their gas usage. The FIP measure in 
City of Santa Rosa did not require the State to implement the gas 
rationing scheme, and the court distinguished Brown because the 
petitioners had challenged the effect of gas rationing, not EPA's 
authority to order rationing. Id. at 155.
    The Brown holding was similarly distinguished and limited by the 
Sixth Circuit Court of Appeals in United States v. Ohio Department of 
Highway Safety, 635 F.2d 1195 (6th Cir. 1980). The court upheld EPA's 
enforcement against the State under section 113 of the CAA for 
registering motor vehicles which did not pass an inspection and 
maintenance program promulgated by EPA. The court held that the State 
was interfering with EPA's implementation of a measure that had been 
promulgated under its Federal authority. See also Pennsylvania v. EPA, 
500 F.2d 246 (3d Cir. 1974).
    The court in Brown did not reach constitutional issues raised under 
the commerce clause. It is unclear, but unlikely, that requiring the 
State to implement FIP measures which mandate legislation and 
expenditure of funds would be struck down under the commerce clause. 
See Garcia v. San Antonio Metropolitan Transit Authority, 469 U.S. 528 
(1985) (holding that the Federal government may require States to pay 
minimum wages and overtime

[[Page 56400]]

pursuant to the Fair Labor Standards Act). However, even assuming that 
the commerce clause poses no such obstacle, nothing in the enactment of 
the 1990 Amendments casts doubt on the continued vitality of the Brown 
holdings with respect to the statutory limits on EPA's FIP authority. 
Thus, the constraints discussed above still apply. In short, EPA may 
require the State to legislate or expend funds that affect the State's 
own pollution creating activities. Although EPA may not require the 
State to legislate or spend money to govern the pollution creating 
activities of others, EPA may promulgate and implement such measures 
directly in a FIP, and the State may not interfere with EPA's 
enforcement of those measures.
    While EPA may not have the authority to require States to enact 
legislation or expend State funds to implement control measures, beyond 
those required to reduce emissions generated by the State itself, EPA 
believes that title V of the CAA requires a State to include all 
applicable requirements, including requirements of a FIP, in the title 
V permit. The regulations governing State permitting under title V 
define an ``applicable requirement,'' which must be reflected in a 
title V operating permit, as including ``[a]ny standard or other 
requirement provided for in the applicable implementation plan approved 
or promulgated by EPA through rulemaking under title I of the CAA that 
implements the relevant requirements of the Act, including any 
revisions to the plan promulgated in part 52 of this chapter'' (40 CFR 
70.2). Since today's proposed rule is being promulgated under title I 
(i.e., under section 110), both the requirements of the Federal trading 
program (part 97) and the rules governing stationary internal 
combustion engines and cement plants (part 98) are applicable 
requirements under 40 CFR 70.2 and must be reflected in the title V 
operating permit of any sources affected by this rulemaking that are 
required to have such a permit.

E. Section 105 Grants

    The EPA provides annual funding to States under section 105 of the 
CAA to carry out Act-related programs. Where a State fails to 
adequately respond to the NOX SIP call, EPA must adopt and 
implement a FIP. In such cases, the Agency will withhold all or a 
portion of the State's section 105 allotment to the extent necessary to 
implement the FIP provisions promulgated by EPA and in accordance with 
the procedural requirements of section 105.

F. Findings of Failure

    As noted in section III.A. of this notice, EPA is required to 
promulgate a FIP after finding that a State has failed to adequately 
respond to a NOX SIP call. If EPA makes such a finding, it 
would be a final Agency action but would not be subject to the notice-
and-comment requirements of the Administrative Procedure Act (APA), 5 
U.S.C. 553(b). The EPA believes that because of the limited time 
provided to make findings of failure to submit and findings of 
incompleteness regarding SIP submissions or elements of SIP submission 
requirements, Congress did not intend such findings to be subject to 
notice-and-comment rulemaking. However, to the extent such findings are 
subject to notice-and-comment rulemaking, EPA intends, consistent with 
past practice (for example, 61 FR 36294), to invoke the good cause 
exception pursuant to the APA, 5 U.S.C. 553(b)(3)(B). Notice and 
comment are unnecessary because no significant EPA judgment is involved 
in making a nonsubstantive finding of failure to submit elements of SIP 
submissions required by the CAA. Furthermore, providing notice and 
comment would be impracticable because of the limited time provided 
under the statute for making such determinations. Finally, notice and 
comment would be contrary to the public interest because it would 
divert agency resources from the critical substantive review of 
complete SIPs. See 58 FR 51270, 51272, (October 1, 1993); 59 FR 39832, 
39853 (August 4, 1994).

G. Sanctions

    If a State fails to submit the required SIP provisions, the CAA 
provides for EPA to issue a finding of State failure under section 
179(a). (EPA is using the phrase ``failure to submit'' to cover both 
the situation where a State makes no submission and the situation where 
the State makes a submission that EPA finds is incomplete in accordance 
with section 110(k)(1)(B) and 40 CFR part 51, Appendix V.) Such a 
finding starts an 18-month sanctions clock; if the State fails to make 
the required submittal which EPA determines is complete within that 
period, one of two sanctions will apply. If 6 months after the sanction 
is imposed, the State still has not made a complete submittal, the 
second sanction will apply. The two sanctions are: a requirement that 
new or modified sources subject to a section 173 new source review 
program obtain reductions in existing emissions in a 2:1 ratio to 
offset their new emissions and withholding of certain Federal highway 
funds, (section 179(b)). These requirements are in addition to EPA's 
FIP obligation described above.

H. Transitional Areas

    As described in the November 7, 1997 NOX SIP call 
proposal notice, the Presidential Directive includes goals of early 
attainment of the health-based ozone standards while minimizing 
planning and regulatory burdens for State and local governments and 
businesses where air quality problems are regional in nature. To 
achieve these goals, the implementation plan includes a policy for 
areas that attain the 1-hour standard but not the new 8-hour standard 
in which EPA will follow a flexible implementation approach that 
encourages cleaner air sooner, responds to the fact that ozone is a 
regional as well as local problem, and eliminates unnecessary planning 
and regulatory burdens for State and local governments.
    A primary element of the policy will be the establishment under 
section 172(a)(1) of the CAA of a special ``transitional'' 
classification both for areas that participate in the NOX 
regional strategy proposed in this rulemaking and for those that opt to 
submit early plans addressing the new 8-hour standard. See the 
NOX SIP call NPR (November 7, 1997) and the Presidential 
Directive for detailed discussions about the transitional 
classification. On August 18, 1998, EPA issued proposed guidance for 
public comment to explain the implementation policy in further detail 
and to provide details on SIP requirements for transitional areas 
(Federal Register Notice of Availability published August 24, 1998, 63 
FR 45060). The EPA expects to finalize the August 1998 draft guidance, 
as well as guidance for areas other than transitional, by December 
1998.1
---------------------------------------------------------------------------

    \1\ For a complete listing of the guidance and other actions EPA 
plans to issue to implement the revised ozone and PM NAAQS, see a 
table on EPA's implementation website: http://ttnwww.rtpnc.epa.gov/
implement/actions.htm.
---------------------------------------------------------------------------

    It should be noted, however, that under EPA's intended approach, 
promulgation by EPA of a FIP under this rulemaking would not allow the 
area to be eligible for the transitional area classification. Such 
areas in States that fail to comply with the NOX SIP call 
would not be eligible for the transitional classification.

[[Page 56401]]

IV. Emissions Decreases to Meet the NOX SIP Call

A. General Approach for Calculating Budgets

    In the final NOX SIP call, EPA determined that 
NOX emissions from sources in the 23 jurisdictions 
contribute significantly to nonattainment problems and interfere with 
maintenance in downwind areas in the OTAG region. Accordingly, EPA 
established a NOX budget for each of these jurisdictions. 
The budgets reflect the aggregate amount of NOX emissions 
that will remain when the States eliminate the specific amount of 
NOX emissions that contribute significantly to nonattainment 
problems and interfere with maintenance in downwind areas. These 
budgets cover all NOX emissions from a State, including 
area, nonroad, stationary, and mobile sources. More detail on the State 
budgets can be found in the NOX SIP call final rulemaking 
notice and support material. The FIP is designed to achieve the same 
State emissions budgets on the same schedule as that established in the 
NOX SIP call final rule, with the same highly cost-effective 
measures forming the basis for the budgets. Therefore, the FIP rules 
use the same source cutoff levels, categories, and control levels as 
were used to develop the final NOX SIP call budgets and 
require that the emissions decreases be implemented by May 1, 2003. 
Because this FIP rulemaking does not establish the State emissions 
budgets, but instead proposes the way EPA would ensure that the budgets 
are achieved, EPA is not requesting comment on establishment of the 
budgets or the schedule for implementing the emissions reductions. For 
the FIP rulemaking, EPA invites comment specifically on the feasibility 
and cost effectiveness of control measures and the projection of 
emissions reductions that various control measures would achieve as 
outlined in the FIP and described in detail in the NOX SIP 
call rulemaking. The EPA summarizes below the conclusions from the 
relevant parts of the NOX SIP call rulemaking.

B. Electric Generating Units (EGUs)

    The control level for this category of NOX sources was 
determined by applying a uniform NOX emission rate of 0.15 
lb/mmBtu regionwide for EGUs greater than 25 MWe or 250 mmBtu/hr. The 
cost effectiveness for each control level was determined using the 
Integrated Planning Model. Details regarding the methodologies used can 
be found in the NOX SIP call rulemaking and support 
materials.

C. Industrial Boilers and Turbines

    The EPA examined the category of large (greater than 250 mmBtu/hr) 
industrial boilers and turbines to determine the most emissions 
reductions from controls that would cost less than $2,000 per ton on 
average. For this source category, EPA determined that controls are 
available that would achieve a 60 percent reduction from uncontrolled 
levels at average costs less than $2,000 per ton. For those sources 
that participate in the trading program, EPA believes that the costs 
would be further reduced. Details regarding the methodologies used can 
be found in the NOX SIP call rulemaking and support 
materials.

D. Stationary Internal Combustion Engines

    The EPA examined the category of large (emitting more than one ton 
per day) stationary internal combustion engines to determine the most 
emissions reductions from controls that would cost less than $2,000 per 
ton on average. For this source category, EPA determined that controls 
are available that would achieve a 90 percent reduction from 
uncontrolled levels at average costs less than $2,000 per ton. Details 
regarding the methodologies used can be found in the NOX SIP 
call rulemaking and support materials.

E. Cement Manufacturing

    The EPA examined the category of large (emitting more than one ton 
per day) cement manufacturing plants to determine the most emissions 
reductions from controls that would cost less than $2,000 per ton on 
average. For this source category, EPA determined that controls are 
available at all types of cement manufacturing facilities that would 
achieve a 30 percent reduction from uncontrolled levels at average 
costs less than $2,000 per ton. Details regarding the methodologies 
used can be found in the NOX SIP call rulemaking and support 
materials.

F. Other Point Source Categories

    As described in the NOX SIP call rulemaking and support 
materials, EPA reviewed the emissions and control cost information for 
several non-EGU source categories. The EPA's analysis determined that, 
for large sources (emitting more than one ton per day), the following 
non-EGU source categories appeared to have controls available only at 
cost-effectiveness levels above $2,000 per ton: glass manufacturing, 
process heaters, and commercial and industrial incinerators. Therefore, 
EPA did not calculate emissions budget decreases nor is the Agency 
proposing FIP rules for these source categories.
    For other non-EGU source categories, NOX controls may be 
available for large sources at costs less than $2,000 per ton. However, 
as described in the NOX SIP call rulemaking and support 
materials, each of these source categories include a relatively small 
number of sources with a small amount of emissions. The EPA believes 
that controlling these sources for purposes of achieving State budgets 
would be inefficient because of the relatively high administrative 
costs of developing regulations for these source categories. As 
described in the NOX SIP call rulemaking, there are many 
sources in the emissions inventory which lack information EPA would 
need to determine potentially applicable control techniques (63 FR 
25909). This group of sources is diverse and does not fit within the 
categories set out by EPA, but total emissions are low for this group. 
Therefore, for purposes of today's action, EPA is not proposing FIP 
rules to decrease emissions for these sources.
    In addition, EPA determined in the NOX SIP call final 
rulemaking that municipal waste combustors should not be required to 
reduce emissions beyond that already required by the maximum available 
control technology (MACT) rules for NOX required under 
sections 111 and 129 of the CAA. Therefore, EPA is not proposing 
additional emissions decreases and FIP rules for municipal waste 
combustors.
    Thus, for non-EGU sources the FIP proposes rules only for boilers 
and turbines (60 percent decrease), stationary internal combustion 
engines (90 percent decrease), and cement plants (30 percent decrease). 
The EPA's analysis determined that these source categories have 
controls available at cost-effectiveness levels below an average of 
$2,000 per ton and total emissions from each of these source categories 
are high relative to other non-EGU source categories.

G. Area, Mobile, and Nonroad Sources

    As described in the NOX SIP call final rulemaking, EPA 
did not identify additional controls beyond those in the 2007 baseline 
case for the area, mobile and nonroad source categories at average 
costs less than $2,000 per ton. Therefore, EPA did not calculate 
additional emissions budget decreases nor propose FIP rules for these 
source categories.

[[Page 56402]]

H. Projection That Proposed FIP Measures Would Achieve State-by-State 
Emissions Budgets

    Consistent with 40 CFR 51.121(b) and (g), the control measures 
described above and contained in the FIP rules are designed to achieve 
the State emissions budgets established in the NOX SIP call. 
The tables below result from application of the FIP measures and 
demonstrate compliance of the FIP with the NOX SIP call 
budgets.
1. EGU
    As described in section III.B.3. of the NOX SIP call, 
the EGU budget component is calculated based on applying a 0.15 lb/
mmBtu emission limit to sources greater than 25 MWe. This limit is 
applied uniformly across all States that are covered by this 
NOX SIP call. The higher of 1995 or 1996 heat input, grown 
to 2007, is used to calculate the budget component. The final percent 
reduction from the 2007 base case to the budget is shown in Table III-4 
of the NOX SIP call, which is reproduced below.

        Table III-4.--Final NOX Budget Components and Percent Reduction for Electricity Generating Units
                                                  [Tons/season]
----------------------------------------------------------------------------------------------------------------
                                                                                                      Percent
                              State                                 Final base     Final budget      reduction
----------------------------------------------------------------------------------------------------------------
Alabama.........................................................          76,900          29,051              62
Connecticut.....................................................           5,600           2,583              54
Delaware........................................................           5,800           3,523              39
District of Columbia............................................              *0             207              NA
Georgia.........................................................          86,500          30,255              65
Illinois........................................................         119,300          32,045              73
Indiana.........................................................         136,800          49,020              64
Kentucky........................................................         107,800          36,753              66
Maryland........................................................          32,600          14,807              55
Massachusetts...................................................          16,500          15,033               9
Michigan........................................................          86,600          28,165              67
Missouri........................................................          82,100          23,923              71
New Jersey......................................................          18,400          10,863              41
New York........................................................          39,200          30,273              23
North Carolina..................................................          84,800          31,394              63
Ohio............................................................         163,100          48,468              70
Pennsylvania....................................................         123,100          52,000              58
Rhode Island....................................................           1,100           1,118              -2
South Carolina..................................................          36,300          16,290              55
Tennessee.......................................................          70,900          25,386              64
Virginia........................................................          40,900          18,258              55
West Virginia...................................................         115,500          26,439              77
Wisconsin.......................................................          52,000          17,972              65
                                                                 -----------------------------------------------
    Total.......................................................       1,501,800         543,825              64
----------------------------------------------------------------------------------------------------------------
* The base case for DC is actually projected to be 30 tons per season. The base case values in this table are
  rounded to the nearest 100 tons.

2. Non-EGU Point Sources
    As described in the NOX SIP call, the following 
emissions decreases from uncontrolled levels were assumed:
    i. Non-EGU boilers and turbines--60 percent decrease.
    ii. Stationary internal combustion engines--90 percent decrease.
    iii. Cement manufacturing plants--30 percent decrease.
    These controls result in an overall reduction in emissions from all 
large non-EGU point sources of almost 40 percent (187,800 tons per 
season decrease). These resulting budget components are shown in Table 
III-6 in the NOX SIP call, and are reproduced below.

  Table III-6.--Final NOX Budget Components and Percent Reduction for Non-Electricity Generating Point Sources
                                                  [Tons/season]
----------------------------------------------------------------------------------------------------------------
                                                                                                      Percent
                                                                    Final base     Final budget      reduction
----------------------------------------------------------------------------------------------------------------
Alabama.........................................................          49,781          37,696              24
Connecticut.....................................................           5,273           5,056               4
Delaware........................................................           1,781           1,645               8
District of Columbia............................................             310             292               6
Georgia.........................................................          33,939          27,026              20
Illinois........................................................          55,721          42,011              25
Indiana.........................................................          71,270          44,881              37
Kentucky........................................................          18,956          14,705              22
Maryland........................................................          10,982           7,593              31
Massachusetts...................................................           9,943           9,763               2
Michigan........................................................          79,034          48,627              38
Missouri........................................................          13,433          11,054              18
New Jersey......................................................          22,228          19,804              11

[[Page 56403]]

New York........................................................          25,791          24,128               6
North Carolina..................................................          34,027          25,984              24
Ohio............................................................          53,241          35,145              34
Pennsylvania....................................................          73,748          65,510              11
Rhode Island....................................................             327             327               0
South Carolina..................................................          34,740          25,469              27
Tennessee.......................................................          60,004          35,568              41
Virginia........................................................          39,765          27,076              32
West Virginia...................................................          40,192          31,286              22
Wisconsin.......................................................          22,796          17,973              21
                                                                 -----------------------------------------------
    Total.......................................................         757,281         558,618              26
----------------------------------------------------------------------------------------------------------------

3. Mobile and Area Sources
    As discussed in the NOX SIP call rulemaking, EPA's 
highway budget components are based on projected highway vehicle 
emissions in 2007 from a base year of 1990, assuming implementation of 
those measures incorporated in existing SIPs, such as inspection and 
maintenance programs and reformulated fuels, measures already 
implemented federally, and those additional measures expected to be 
implemented federally by 2007. Similarly, as discussed in the 
NOX SIP call rulemaking, EPA's nonroad mobile source budget 
components are based on projected nonroad mobile source emissions in 
2007 from a base year of 1990 and assume implementation of those 
measures incorporated in existing SIPs, measures already implemented 
federally, and those additional measures expected to be implemented 
federally. For area sources, no highly cost-effective control measures 
were identified in the NOX SIP call rulemaking. Thus, EPA is 
not proposing any FIP measures in these categories. These resulting 
budget components are shown in Tables III-7,8 & 9 in the NOX 
SIP call NFR, and are reproduced below:

                      Table III-7. Final NOX Budget Components for Stationary Area Sources
                                                  [Tons/season]
----------------------------------------------------------------------------------------------------------------
                                                                     Proposed
                                                                      budget       Final budget   Percent change
----------------------------------------------------------------------------------------------------------------
Alabama.........................................................          25,229          25,225               0
Connecticut.....................................................           4,587           4,588               0
Delaware........................................................           1,035             963              -7
District of Columbia............................................             741             741               0
Georgia.........................................................          11,901          11,902               0
Illinois........................................................           7,270           7,822               8
Indiana.........................................................          25,545          25,544               0
Kentucky........................................................          38,801          38,773               0
Maryland........................................................           8,123           4,105             -49
Massachusetts...................................................          10,297          10,090              -2
Michigan........................................................          28,126          28,128               0
Missouri........................................................           6,626           6,603               0
New Jersey......................................................          11,388          11,098              -3
New York........................................................          15,585          15,587               0
North Carolina..................................................           9,193          10,651              16
Ohio............................................................          19,446          19,425               0
Pennsylvania....................................................          17,103          17,103               0
Rhode Island....................................................             420             420               0
South Carolina..................................................           8,420           8,359              -1
Tennessee.......................................................          11,991          11,990               0
Virginia........................................................          25,261          18,622             -26
West Virginia...................................................           4,901           4,790              -2
Wisconsin.......................................................          10,361           8,160             -21
                                                                 -----------------------------------------------
    Total.......................................................         302,350         290,689              -4
----------------------------------------------------------------------------------------------------------------


               Table III-8.--Final NOX Budget Components and Percent Reduction for Nonroad Sources
                                                  [Tons/season]
----------------------------------------------------------------------------------------------------------------
                                                                     Proposed
                                                                      budget       Final budget   Percent change
----------------------------------------------------------------------------------------------------------------
Alabama.........................................................          18,727          16,594             -11
Connecticut.....................................................           9,581           9,584               0

[[Page 56404]]

Delaware........................................................           4,262           4,261               0
District of Columbia............................................           3,582           3,470              -3
Georgia.........................................................          22,714          21,588              -5
Illinois........................................................          56,429          47,035             -17
Indiana.........................................................          27,112          22,445             -17
Kentucky........................................................          22,530          19,627             -13
Maryland........................................................          18,062          17,249              -4
Massachusetts...................................................          19,305          18,911              -2
Michigan........................................................          24,245          23,495              -3
Missouri........................................................          19,102          17,723              -7
New Jersey......................................................          21,723          21,163              -3
New York........................................................          30,018          29,260              -3
North Carolina..................................................          18,898          17,799              -6
Ohio............................................................          42,032          37,781             -10
Pennsylvania....................................................          29,176          25,554             -12
Rhode Island....................................................           2,074           2,073               0
South Carolina..................................................          12,831          11,903              -7
Tennessee.......................................................          47,065          44,567              -5
Virginia........................................................          25,357          21,551             -15
West Virginia...................................................          10,048          10,220               2
Wisconsin.......................................................          15,145          12,965             -14
                                                                 -----------------------------------------------
    Total.......................................................         500,018         456,818              -9
----------------------------------------------------------------------------------------------------------------


              Table III-9.--Final NOX Budget Components and Percent Reduction for Highway Vehicles
                                                  [Tons/season]
----------------------------------------------------------------------------------------------------------------
                                                                     Proposed
                                                                      budget       Final budget   Percent change
----------------------------------------------------------------------------------------------------------------
Alabama.........................................................          56,601          50,111             -11
Connecticut.....................................................          17,392          18,762               8
Delaware........................................................           8,449           8,131              -4
District of Columbia............................................           2,267           2,082              -8
Georgia.........................................................          77,660          86,611              12
Illinois........................................................          77,690          81,297               5
Indiana.........................................................          66,684          60,694              -9
Kentucky........................................................          46,258          45,841              -1
Maryland........................................................          28,620          27,634              -3
Massachusetts...................................................          23,116          24,371               5
Michigan........................................................          81,453          83,784               3
Missouri........................................................          55,056          55,230               0
New Jersey......................................................          39,376          34,106             -13
New York........................................................          94,068          80,521             -14
North Carolina..................................................          73,056          66,019             -10
Ohio............................................................          92,549          99,079               7
Pennsylvania....................................................          73,176          92,280              26
Rhode Island....................................................           5,701           4,375             -23
South Carolina..................................................          49,503          47,404              -4
Tennessee.......................................................          67,662          64,965              -4
Virginia........................................................          79,848          70,212             -12
West Virginia...................................................          21,641          20,185              -7
Wisconsin.......................................................          41,651          49,470              19
                                                                 -----------------------------------------------
    Total.......................................................       1,179,477       1,173,163              -1
----------------------------------------------------------------------------------------------------------------

4. Statewide Budgets
    The statewide budgets are shown in Table III-10 of the 
NOX SIP call final rulemaking are reproduced below.

[[Page 56405]]



                                  Table III-10.--Revised Statewide NOX Budgets
                                                  [Tons/season]
----------------------------------------------------------------------------------------------------------------
                                                                                                      Percent
                              State                                    Base           Budget         reduction
----------------------------------------------------------------------------------------------------------------
Alabama.........................................................         218,610         158,677              27
Connecticut.....................................................          43,807          40,573               7
Delaware........................................................          20,936          18,523              12
District of Columbia............................................           6,603           6,792              -3
Georgia.........................................................         240,540         177,381              26
Illinois........................................................         311,174         210,210              32
Indiana.........................................................         316,753         202,584              36
Kentucky........................................................         230,997         155,698              33
Maryland........................................................          92,570          71,388              23
Massachusetts...................................................          79,815          78,168               2
Michigan........................................................         301,042         212,199              30
Missouri........................................................         175,089         114,532              35
New Jersey......................................................         106,995          97,034               9
New York........................................................         190,358         179,769               6
North Carolina..................................................         213,296         151,847              29
Ohio............................................................         372,626         239,898              36
Pennsylvania....................................................         331,785         252,447              24
Rhode Island....................................................           8,295           8,313               0
South Carolina..................................................         138,706         109,425              21
Tennessee.......................................................         252,426         182,476              28
Virginia........................................................         191,050         155,718              18
West Virginia...................................................         190,887          92,920              51
Wisconsin.......................................................         145,391         106,540              27
                                                                 -----------------------------------------------
    Total.......................................................       4,179,751       3,023,113              28
----------------------------------------------------------------------------------------------------------------

V. Emissions Reporting

    The EPA believes it is essential that compliance with the regional 
control strategy be verified. Tracking emissions is the principal 
mechanism to ensure compliance with the budget and to assure the 
downwind States and EPA that the ozone transport problem is being 
mitigated. The new emissions control requirements for stationary 
sources proposed in the FIP include requirements that the affected 
sources directly report emissions data to EPA. This includes data used 
for determining compliance with the requirements of the Federal 
NOX Budget Trading Program and specific reporting 
requirements for stationary internal combustion engines and cement 
manufacturing facilities. Therefore, under the FIP, EPA will already be 
collecting the data that can be used to determine compliance with the 
emissions decreases required by the proposed FIP. For each FIP, EPA 
will use that data as well as other analyses in order to determine 
compliance with the Statewide NOX emissions budget.

VI. Federal NOX Budget Trading Program

A. Program Summary

1. Purpose of the Federal NOX Budget Trading Program
    In today's FIP notice, EPA proposes to regulate any fossil fuel-
fired unit (boiler, turbine, or combined cycle) that serves a generator 
with a nameplate capacity greater than 25 MWe, and any fossil fuel-
fired unit (boiler, turbine, or combined cycle) that has a maximum 
design heat input of greater than 250 mmBtu/hr, using a capped market-
based program. This type of program is a proven method for achieving 
the highly cost-effective emissions reductions described above while 
providing sources compliance flexibility. (See 63 FR 25918-19, 
discussing OTAG's conclusions concerning advantages of market-based 
systems.)
    The Federal NOX Budget Trading Program is proposed in a 
new part 97 in title 40 of the Code of Federal Regulations. The 
regulatory text of part 97 is proposed in the rulemaking on the section 
126 action. Participation in the NOX Budget Trading Program 
would be mandatory for all soources covered by the finalization of this 
proposed FIP, except IC engines and cement kilns. It would also be 
mandatory for any sources affected by a triggering of the section 126 
remedy.
    Because EPA is proposing to implement the Federal NOX 
Budget Trading Program, both if a FIP is appropriate and in response to 
the section 126 petitions, EPA intends to finalize part 97 in whichever 
of these actions is finalized first. (The EPA expects part 97 will be 
finalized in the section 126 rulemaking because it is on a tighter 
timeframe.) In finalizing part 97, EPA intends to respond to the 
comments it receives on both rulemaking actions regarding part 97. 
Therefore, commenters who have identical comments in both rulemakings 
may submit their comments to one docket and merely reference such 
comments in their submission to the other docket. However, to the 
extent comments on part 97 are solely related to how it would be 
applied through a FIP, commenters should be sure to submit such 
comments in the docket for this FIP NPR.
    The EPA requests comment on whether it is appropriate to use a 
common trading program for both the FIP and the section 126 remedy, as 
well as for purposes of the NOX SIP call. If not, EPA 
requests specific comment on what should be different and why.
2. Relationship of Trading Program Under FIP to Trading Program Under 
Section 126 Petitions and NOX SIP Call
    The sources that EPA is proposing to include in the Federal 
NOX Budget Trading Program in today's FIP are the same 
sources included in the State NOX Budget Trading Program 
(part 96) that EPA promulgated as a model trading rule which States may 
elect to use in responding to the final NOX SIP call. The 
sources identified in this FIP are the sources for which EPA assumed 
emissions reductions in calculating the budgets for States in the 
NOX SIP call. The NOX SIP call established an 
emissions budget for all sources of NOX

[[Page 56406]]

emissions in all States determined by EPA to significantly contribute 
to nonattainment or interfere with maintenance of the ozone NAAQS in 
any other jurisdiction. The FIP sets specific stationary source rules 
to decrease NOX emissions sufficiently to achieve the 
NOX SIP call budget. The section 126 proposed action, on the 
other hand, is limited to major sources or groups of stationary sources 
that are named in the section 126 petitions, and that EPA finds emit or 
would emit in violation of the prohibition in section 110(a)(2)(D) 
relative to a petitioning State. Despite this difference in the scope 
of the proposed section 126 action and the final NOX SIP 
call or proposed FIP, all 3 actions are aimed at reducing the transport 
of ozone by controlling emissions from sources in a given State that 
are found to be contributing to nonattainment or maintenance problems 
in another State.
    The EPA believes that the State NOX Budget Trading 
Program--if selected by States to meet their NOX SIP call 
obligations--could be coordinated and integrated with a Federal 
NOX Budget Trading Program promulgated in a final FIP or in 
a final section 126 rulemaking. Integration is possible because, as 
noted above, the NOX SIP call, the corresponding FIP, and 
the section 126 petitions all seek to mitigate the ozone transport 
problem by reducing emissions from upwind sources that hinder 
attainment or maintenance of the ozone NAAQS downwind. Further, the 
sources covered in the model cap-and-trade program in the 
NOX SIP call include a majority of the sources named by 
petitioning States in the section 126 action, and are identical in size 
and categorization to sources for which EPA proposes to issue rules in 
the section 126 and FIP proposed actions.
    In order to be eligible to participate in a cap-and-trade program, 
the EPA believes that there are two principal criteria that sources 
must meet, as stated in the supplemental notice for the proposed 
NOX SIP call (62 FR 25923). The first criterion requires 
that sources be able to account accurately and consistently for all of 
their emissions to ensure the trading program goal of maintaining 
emissions within a cap. The second criterion for participation in a 
trading program is the ability to identify a responsible party for each 
regulated source who would be accountable for demonstrating and 
ensuring compliance with the program's provisions. Assuming that these 
criteria are met, and consistent control levels are used in setting 
emissions requirements for the covered sources, EPA supports the 
establishment of a common trading program.
    The resulting multistate trading program could include all sources 
in States found to be significantly contributing to nonattainment or 
interfering with maintenance of the ozone standard in another State. 
Under this common trading program, sources subject to the Federal 
program under the FIP or the section 126 rulemaking, and sources in 
States choosing to participate in the State NOX Budget 
Trading Program in response to the NOX SIP call, could trade 
with one another under a NOX cap across participating 
States. The EPA's analyses in conjunction with the NOX SIP 
call demonstrate that implementation of a single trading program with a 
uniform control level results in no significant changes in location of 
emissions reductions as compared to a non-trading scenario. Therefore, 
the common trading program meeting the requirements of either part 96 
or part 97 will achieve the intended emissions reductions while 
providing flexibility and cost savings to the covered sources.
    Integration of the trading programs reduces the possibility of 
inconsistent or conflicting deadlines or requirements, increases the 
potential cost savings for sources, and streamlines program 
administration. Inconsistency could hamper the sources' ability to plan 
and achieve the needed reductions as cost effectively as possible. In 
addition, if a State subsequently elects to submit a SIP including a 
trading program after EPA has already established a Federal program 
under a FIP or section 126, disruptions to sources that would shift 
from regulation under a FIP or section 126 to regulation under a SIP 
would be minimized.
    The sources included in the trading program for purposes of the 
NOX SIP call or a FIP may vary from sources included for 
purposes of the section 126 remedy. The EPA does not foresee this to be 
problematic since sources would face consistent control requirements 
regardless of which rulemaking includes the sources in the common 
trading program. That the requirements would be consistent follows from 
the similar nature of the rulemakings and the comparable level of 
control which EPA has determined to be cost effective for each source 
category across all three actions.
    The EPA proposes, in part 97, to establish the geographic 
boundaries of the common trading program as those States submitting 
SIPs in response to the final NOX SIP call or subject to 
FIPs, and/or the sources in States for which EPA makes a finding for 
the section 126 petitions. The EPA would administer this common trading 
program in collaboration with affected States.
    The EPA is proposing a Federal NOX Budget Trading 
Program as part of the FIP or section 126 remedy which mirrors, to the 
extent feasible, the State NOX Budget Trading Program (set 
forth in part 96) which is the model trading program that is available 
for States to adopt in response to the NOX SIP call. While 
EPA is proposing to keep the programs as similar as possible, there are 
several differences which are more fully described below. These 
differences arise primarily from the need for Federal implementation of 
the program rather than State implementation. For example, EPA must 
determine the NOX allowance allocations for each unit in the 
Federal NOX Budget Trading Program, rather than simply 
provide a recommended methodology for States to use to determine 
allocations in the State NOX Budget Trading Program.

B. Federal NOX Budget Trading Program

1. Program Overview
    In part 97, EPA proposes a cap-and-trade program as a means of 
controlling NOX mass emissions from any fossil fuel-fired 
unit (boiler, turbine, or combined cycle) that serves a generator with 
a nameplate capacity greater than 25 MWe, and any fossil fuel-fired 
unit (boiler, turbine, or combined cycle) that has a maximum design 
heat input of greater than 250 mmBtu/hr, in a State for which a FIP is 
promulgated.
    The EPA requests comment as to whether additional stationary 
sources that are not included in the core applicability of the Federal 
NOX Budget Trading Program, but emit to a stack, can monitor 
NOX mass emissions using the protocols in part 75, and are 
located in a State where EPA promulgates a FIP, should be able to 
voluntarily opt in to the trading program. In today's notice, EPA 
proposes providing these individual stationary sources the opportunity 
to opt in to enable further cost savings from the Federal 
NOX Budget Trading Program. These opt-in provisions would be 
very similar to the opt-in provisions allowed under the model trading 
program in part 96 (see section VI.B.3.e of this FIP notice for further 
explanation).
    The NOX allowances--each allowance representing a 
limited authorization to emit one ton of NOX--would be the 
currency used in the trading program. A fixed number of NOX 
allowances would be allocated to sources for each ozone season equal to 
the total amount of a State's trading program budget under the FIP. The 
EPA has included in

[[Page 56407]]

today's proposal several alternative methodologies that EPA could use 
to allocate NOX allowances to units. Appendices A and B of 
the section 126 rulemaking set forth the allocation for each unit based 
on the first 2 of the 3 proposed methodologies, explained in section 
VI.B.3.c.4 of this preamble. Allocations resulting from the third 
methodology can be found in the docket to this rulemaking.
    The control period for the trading program (i.e., the period during 
which a source must hold sufficient NOX allowances to cover 
emissions) would extend from May 1 through September 30, which is the 
same as the control period under the NOX SIP call and the 
section 126 proposal. The EPA's proposed trading program is based on 
the application of a uniform control level to the covered universe of 
sources. Based on analyses done in connection with the proposed 
NOX SIP call (63 FR 25921) and the final NOX SIP 
call, EPA maintains that trading could occur across States included in 
a NOX Budget Trading Program without restrictions, other 
than the requirement to comply with emission limits under title I and 
title IV of the CAA, as well as any other State limitations.
    Under part 97 as proposed, sources in the Federal NOX 
Budget Trading Program would be required to monitor and report their 
emissions in accordance with relevant portions of 40 CFR part 75. The 
EPA has promulgated revisions to part 75 that establish NOX 
mass monitoring requirements and provide greater flexibility to 
regulated sources. Consistent and accurate monitoring of emissions is 
necessary for accountability regarding compliance with the requirement 
to hold NOX allowances and to ensure that a ton of emissions 
attributed to one source in one State is equivalent to a ton attributed 
to another source in the same or another State.
    Under part 97 as proposed, EPA would be responsible for all aspects 
of program implementation, with the exception of permitting. As further 
explained in section VI.B.2.c., the State and local agencies would be 
the permitting authorities for the majority of NOX Budget 
sources with title V permits, for which the trading program 
requirements would be applicable requirements. If a source does not 
have a federally enforceable permit, the requirements of the 
NOX Budget Trading Program rule would be federally 
enforceable of its own accord.
    As discussed herein, EPA proposes to make the Federal and State 
NOX Budget Trading Programs as similar as possible and has 
modeled proposed part 97 after part 96 just finalized. The EPA notes 
that discussion of the evolution of the NOX Budget Trading 
Program is set forth in the supplemental notice of the proposed 
NOX SIP call rule at 63 FR 25921-23 and in the final 
NOX SIP call rule.
2. Elements of the Federal NOX Budget Trading Program That 
Are the Same as the State NOX Budget Trading Program
    Under part 97, as proposed, the following sections would be 
virtually identical to the corresponding sections in part 96, which 
sets forth the State NOX Budget Trading Program. The EPA 
proposes to retain and rely on the analyses and considerations 
undertaken in the NOX SIP call process to determine these 
program elements. Moreover, the provisions in part 97 would be numbered 
in the same sequence as the corresponding provisions in part 96, so 
that, for example, Sec. 97.2 and Sec. 96.2 or Sec. 97.81 and Sec. 96.81 
would address the same subject matter. The major differences between 
the part 97 sections listed below and their corresponding part 96 
sections would be the renumbering of cross references to other 
regulatory provisions so that a section in part 97 would reference the 
appropriate section in that part, as opposed to the section in part 96. 
More detailed information on the rationale for the part 96 provisions 
themselves can be found in the preamble accompanying the proposed part 
96 (63 FR 25917-43) and the final part 96.

Subpart A--Federal NOX Budget Trading Program General 
Provisions

Sec.
97.3  Measurements, abbreviations, and acronyms.
97.5  Retired unit exemption.
97.7  Computation of time.

Subpart B--Authorized Account Representative for NOX Budget 
Sources

97.10  Authorization and responsibilities of the NOX 
authorized account representative.
97.11  Alternate NOX authorized account representative.
97.12  Changing the NOX authorized account representative 
and alternate NOX authorized account representative; 
changes in the owners and operators.
97.13  Account certificate of representation.
97.14  Objections concerning the NOX authorized account 
representative.

Subpart C--Permits

97.20  General NOX Budget permit requirements.
97.21  Submission of NOX Budget permit applications.
97.22  Information requirements for NOX Budget permit 
applications.
97.23  NOX Budget permit contents.
97.24  Effective date of initial NOX Budget permit.
97.25  NOX Budget permit revisions.

Subpart D--Compliance Certification

97.30  Compliance certification report.

Subpart F--NOX Allowance Tracking System

97.50  NOX Allowance Tracking System accounts.
97.51  Establishment of accounts.
97.52  NOX Allowance Tracking System responsibilities of 
NOX authorized account representative.
97.53  Recordation of NOX allowance allocations.
97.54  Compliance.
97.55  Banking.
97.56  Account error.
97.57  Closing of general accounts.

Subpart G--NOX Allowance Transfers

97.60  Scope and submission of NOX allowance transfers.
97.61  EPA recordation.
97.62  Notification.

    The EPA requests comment on whether any of the part 97 provisions 
listed above should differ substantively from the corresponding 
provisions in part 96. If a commenter believes substantive differences 
in the rules are appropriate, the commenter should describe the favored 
changes and explain why these changes are appropriate. The EPA is 
proposing these part 97 provisions for the reasons set forth both in 
the proposed NOX SIP call and final NOX SIP call 
and in order to minimize differences between the Federal and State 
NOX Budget Trading Programs.
    a. General Provisions. Under part 97, EPA is proposing to use the 
same measurements, abbreviations, and acronyms, the same retired unit 
exemption, and the same provisions for computation of time as those 
that apply in part 96, with cross references to the appropriate 
sections in part 97, rather than to sections in part 96 (63 FR 25923-
27).
    b. Authorized Account Representative. The NOX Authorized 
Account Representative (NOX AAR) is the individual who is 
authorized to represent the owners and operators of each NOX 
budget unit at a NOX budget source in matters pertaining to 
the NOX Budget Trading Program. Subpart B of part 97 
addresses, among other things, the process for designating and changing 
the NOX AAR and the responsibilities of the NOX 
AAR and alternate NOX AAR. These provisions are the same as 
those in part 96, with cross references to the appropriate sections of 
part 97 (63 FR 25927).
    c. Permits. The regulations governing State permitting under title 
V define an

[[Page 56408]]

``applicable requirement,'' which must be reflected in a title V 
operating permit, as including ``[a]ny standard or other requirement 
provided for in the applicable implementation plan approved or 
promulgated by EPA through rulemaking under title I of the CAA that 
implements the relevant requirements of the Act, including any 
revisions to that plan promulgated in part 52 of this chapter'' (40 CFR 
70.2). Since today's proposed rule is being promulgated under title I 
(i.e., under section 110), the requirements of this rule would be 
applicable requirements under Sec. 70.2 and would be reflected in the 
title V operating permit of NOX budget sources required to 
have such a permit. The EPA believes that the majority of 
NOX budget sources will be required to have a title V 
permit. Further, all State and local air permitting authorities 
currently have EPA-approved title V operating permits programs. These 
State and local agencies would be the permitting authorities for the 
majority of NOX budget sources with title V permits, for 
which the trading program requirements would be applicable 
requirements. For any sources that do not have a title V permit, such a 
permit is not required. If a source does not have a federally 
enforceable permit, the requirements of the Federal NOX 
Budget Trading Program rule would be federally enforceable of its own 
accord.
    Subpart C of part 97 addresses, among other things, the 
administration of a permit, permit applications, permit contents, 
effective date, and permit revisions. These provisions are the same as 
those in part 96, with cross references to the appropriate sections in 
part 97 (63 FR 25927-29).
    d. Compliance Certification. The NOX AAR must certify at 
the end of each control period that the unit was in compliance with the 
emissions limitation and other requirements of the Federal 
NOX Budget Trading Program. Proposed Sec. 97.30 sets forth 
the same provisions for compliance certification reports as those in 
part 96, with cross references to the appropriate sections in part 97 
(63 FR 25929).
    e. NOX Allowance Tracking System. The NOX 
Allowance Tracking System is an automated system used to track 
NOX allowances held by NOX budget units under the 
NOX Budget Trading Program, as well as those allowances held 
by other organizations and individuals. Subpart F of part 97 addresses, 
among other things, NOX allowance tracking system accounts, 
the account responsibilities of the NOX AAR, the recordation 
of NOX allowance allocations, the compliance process, 
account error, and account closing. These provisions are the same as 
those in part 96, with cross references to the appropriate sections in 
part 97 (63 FR 25933-37).
    f. Banking. The EPA proposes to include banking as a feature in the 
Federal NOX Budget Trading Program for the reasons set forth 
in the final NOX SIP call. Proposed Sec. 97.55 sets forth 
the same provisions for banking and the management of banked allowances 
as specified in part 96. In accordance with these provisions, 
NOX allowances held by units subject to the Federal 
NOX Budget Trading Program may be banked for future use 
starting in 2003 (except as noted in section VI.B.3.e.ii. of this 
preamble). However, as in the State NOX Budget Trading 
Program, the Federal NOX Budget Trading Program contains a 
flow control mechanism to limit the variability associated with 
banking. This mechanism allows unlimited banking by units subject to 
the Federal NOX Budget Trading Program, but discourages the 
``excessive'' use of banked allowances by establishing a discount rate 
on the use of banked allowances over a certain level. Proposed 
Sec. 97.55 establishes a flow control mechanism which applies a 2-for-1 
discount ratio to the use of banked allowances above a certain level 
when the total number of banked allowances in the program exceeds 10 
percent of the allowable NOX emissions for all sources 
covered by the Federal trading program (63 FR 25934-37).
    g. NOX Allowance Transfers. Subpart G of part 97 
addresses, among other things, submission, recordation, and 
notification of transfers of NOX allowances under the 
NOX Budget Trading Program. These provisions are the same as 
those in part 96, with cross references to the appropriate sections in 
part 97 (63 FR 25937-38).
    h. Audits. While program audits are not explicitly required by 
today's rule, EPA intends to perform the same types of audits discussed 
concerning the proposed NOX SIP call (63 FR 25942) and the 
final NOX SIP call.
3. Elements of the Federal NOX Budget Trading Program that 
Differ from the State NOX Budget Trading Program
    The EPA proposes that the following sections in part 97 incorporate 
certain differences from the corresponding sections in part 96 to 
provide for Federal implementation of the NOX Budget Trading 
Program.

Subpart A--Federal NOX Budget Trading Program General 
Provisions

Sec.
97.1  Purpose.
97.2  Definitions.
97.4  Applicability.
97.6  Standard Requirements.

Subpart D--Compliance Certification

97.31  Administrator's action on compliance certifications.

Subpart E--NOX Allowance Allocations

97.40  Trading program budget.
97.41  Timing requirements for NOX allowance allocations.
97.42  NOX allowance allocations.

Subpart H--Monitoring and Reporting

97.70  General requirements.
97.71  Initial certification and recertification procedures.
97.72  Out of control periods.
97.73  Notifications.
97.74  Recordkeeping and reporting.
97.75  Petitions.
97.76  Additional requirements to provide data for allocations 
purposes.

Subpart I--Individual Unit Opt-Ins

97.80  Applicability.
97.81  General.
97.82  NOX authorized account representative.
97.83  Applying for NOX Budget opt-in permit.
97.84  Opt-in process.
97.85  NOX Budget opt-in permit contents.
97.86  Withdrawal from NOX Budget Trading Program.
97.87  Change in regulatory status.
97.88  NOX allowance allocations to opt-in units.

    a. General Provisions. Proposed Sec. 97.1 explains that proposed 
part 97 sets forth the provisions for the Federal NOX Budget 
Trading Program addressing interstate transport of ozone and 
NOX. As discussed above, this program would be activated 
either under section 126 or under a FIP.
    For part 97, EPA is proposing to use the same definitions as those 
that apply in part 96, with cross references to the appropriate 
sections in part 97, with three exceptions. First, the definition of 
the term ``NOX Budget Trading Program'' would be altered to 
reflect the fact that the Federal trading program is established 
pursuant to part 52, as opposed to part 51.121, as is the case with the 
State NOX Budget Trading Program under part 96. Secondly, 
the definition for the term ``State'' would be altered to reference 
only those States that would be covered by any final section 126 or FIP 
action, and to reflect the fact that the Federal trading program would 
be promulgated for a State, as opposed to adopted by the State as is 
the case with the State NOX Budget Trading Program. Last, 
the term ``State trading program budget'' would be replaced with the 
term ``trading program budget.'' For purposes of the FIP, the trading 
program budget would be the aggregated budget for all sources

[[Page 56409]]

affected by the requirements to participate in the trading program in a 
given State under the FIP. For purposes of the section 126 action, the 
trading program budget would be the ``126 trading program budget for 
the State.'' The term ``126 trading program budget for the State'' is 
used to clarify the fact that the budget for the Federal NOX 
Budget Trading Program is not aggregated to a State level for the 
purposes of the section 126 action except for the allocation 
calculation, since the focus in the remedy is sources rather than 
States.
    The following example illustrates the approach taken concerning the 
unchanged definitions: the term ``NOX Budget Unit'' is 
defined under part 97 as ``a unit that is subject to the NOX 
Budget Trading Program emissions limitation under Sec. 97.4 and 
Sec. 97.80,'' while that term has the same definition under part 96 
except that appropriate sections in part 96 are referenced (63 FR 
25923).
    The EPA proposes in part 97 that the Federal NOX Budget 
Trading Program under the FIP would apply to any fossil fuel-fired unit 
(boiler, combustion turbine, or combined cycle) that serves a generator 
with a nameplate capacity greater than 25 MWe, and any fossil fuel-
fired unit (boiler, combustion turbine, or combined cycle) that has a 
maximum design heat input of greater than 250 mmBtu/hr. This 
applicability is identical to the core group applicability in the model 
trading program for SIPs.
    In the NOX SIP call, EPA offered States the option of 
allowing units with a very low federally enforceable permit limitation 
(i.e., 25 tons per season) to be exempt from the trading program, even 
though they were above the applicability threshold (63 FR 25926). The 
EPA proposes in part 97 to include this provision in the Federal 
NOX Budget Trading Program and seeks comment on the 
appropriateness of such inclusion.
    Under the Federal NOX Budget Trading Program, the 
NOX budget units and their owners, operators, and 
NOX AARs must meet certain standard requirements that 
incorporate the full range of program requirements by referencing other 
sections of the Federal NOX Budget Trading Program rule. 
These provisions are the same as the related provisions in part 96, 
with cross references to the appropriate sections of part 97, except 
that the Administrator, rather than the permitting authority, would 
allocate NOX allowances under the Federal NOX 
Budget Trading Program. This reflects the fact that the Federal 
NOX Budget Trading Program would be federally run, rather 
than run by the State as under the NOX SIP call.
    b. Compliance Certification. Proposed Sec. 97.31 is the same as 
Sec. 96.31 except that the Administrator has the sole responsibility 
for reviewing and auditing compliance certifications and other 
submissions under the Federal NOX Budget Trading Program. 
This reflects the fact that the part 97 program would be federally run 
rather than run by the State as under the NOX SIP call. The 
EPA is proposing these part 97 provisions for the reasons set forth 
both in the proposed NOX SIP call (63 FR 25929) and the 
final NOX SIP call and in order to minimize differences 
between the Federal and State NOX Budget Trading Programs.
    c. Aggregate NOX Emissions Levels and Allowance 
Allocations. This section discusses the calculation of State-specific 
aggregate emission levels and the methodology and timing for issuance 
of NOX budget unit allocations.
    1. State-by-State Emissions Levels. The EPA calculated the State 
specific aggregate emission levels that would remain after the 
application of reasonable and highly cost-effective NOX 
controls to upwind sources which contribute significantly to 
nonattainment or maintenance problems in downwind States. The level of 
control that was determined to be reasonable and cost effective is 
identical to the level used in the NOX SIP call for purposes 
of calculating the State budgets. The determination of reasonable and 
highly cost-effective NOX controls for the source categories 
covered by the trading program is discussed more fully in the 
NOX SIP call.
    For reasons explained in the final NOX SIP call, EPA has 
calculated each State's summer season large EGU emissions level using a 
specific NOX emission rate and the projected summer season 
utilization of the year 2007. Specifically, EPA calculated each State's 
large EGU NOX emissions level by multiplying: Each State's 
summer activity level in mmBtu (EPA selected the higher of each State's 
overall 1995 or 1996 summer utilization), by each State's projected 
growth between 1996 and 2007 (using the IPM model), by a NOX 
rate of 0.15 lb/mmBtu. The resulting figure, in lbs, was divided by 
2000 (lbs per ton) to determine tons.
    The EPA incorporated growth in industrial activity when determining 
the large EGU emissions level, and thus accommodates new sources into 
the FIP. Specifically, EPA projected each State's change in utilization 
from current levels to the year 2007 and set an emissions level based 
on that future year's utilization. This was the approach taken in the 
final NOX SIP call in determining various State emissions 
levels.
    For reasons also explained in the final NOX SIP call, 
EPA is proposing to calculate each State's summer season large non-EGU 
emissions level by reducing each State's uncontrolled non-EGU 
NOX emissions levels (in tons) by 60 percent and assuming 
growth through the year 2007. Appendix C of the section 126 rulemaking 
includes the State aggregate emission levels for both EGUs and non-
EGUs.
    2. Development of State trading program budget. Proposed Sec. 97.40 
provides that the trading program budget in each State would equal the 
sum of the aggregate emission levels for large EGUs and large non-EGUs 
in each State, calculated as discussed in section VI.B.3.c.1 of this 
preamble and listed in Appendix C of the section 126 rulemaking. In the 
Federal NOX Budget Trading Program being proposed under the 
part 97, NOX ``emission limitations'' take the form of 
NOX ``allowance allocations'' and are assigned based on the 
aggregate emission levels for the subcategories in the trading program. 
The approach to issuing allocations under part 97 is similar to that 
under the NOX SIP call, with the exception that under 
Sec. 96.40, the State permitting authority, rather than the 
Administrator, determines, through the SIP, the total amount of 
allowable NOX emissions apportioned to NOX budget 
units.
    3. Timing Provisions. Proposed Sec. 97.41 sets forth the provisions 
for when the Administrator will issue allocations of NOX 
allowances to NOX budget units. Under the Federal trading 
program, the Administrator (rather than the State permitting authority) 
determines the NOX allowance allocations and records them in 
the NOX Allowance Tracking System. Thus, proposed Sec. 97.41 
does not provide, or set deadlines, for the permitting authority's 
submission of allocations to EPA. However, as discussed in the final 
NOX SIP call, EPA believes it is important to issue the 
allocations at least a couple years into the future to provide some 
predictability for sources in their control planning and to build 
confidence in the market. Therefore, under part 97, the Administrator 
will issue NOX allowances in EPA's NOX Allowance 
Tracking System (NATS) by April 1 of every year for the control period 
that is 3 years later. For example, EPA would issue the allocations for 
the 2003 control period by April 1, 2000 and EPA would issue the 
allocations for the 2004 control period by April 1, 2001; thus, the 
allocations are always known 3 years in advance. These

[[Page 56410]]

provisions are consistent with the minimum timing requirements 
specified in the final NOX SIP call rulemaking.
    As stated in the previous paragraph, EPA will issue allocations in 
the NATS on an annual basis 3 years prior to the relevant control 
period. However, EPA proposes to use the same allocations for the first 
3 years of the program (based upon one of the proposed methodologies 
described below), unless a State replaces the FIP with its own 
allocations in an approved SIP. The EPA proposes constant allocations 
for the first three control periods to provide more consistency and 
certainty and to build market confidence during the start-up phase of 
the program. Therefore, while the Agency will not record the 
allocations in unit accounts until April 1 of the year 3 years 
preceding each relevant control period, the allocations for 2004 and 
2005 will be the same as the allocations for the 2003 control period. 
However, if a State, as part of an approved SIP, submits allocations 
for the 2004 control period to EPA prior to April 1, 2001, or for the 
2005 control period prior to April 1, 2002, the State's allocations 
will replace the allocations EPA planned to issue for the relevant 
control season. By issuing allocations into accounts 1 year at a time, 
EPA is providing States the ability to replace a FIP with an approved 
SIP while still ensuring that sources receive allocations at least 3 
years prior to the relevant control season.
    After the initial 3 year period, EPA may update its allocations on 
an annual basis 3 years prior to the relevant control season. As 
discussed in the final NOX SIP call, updating allocations on 
an annual basis (3 years ahead) is intended to allow the allocation 
system to accommodate changes in market conditions.
    4. NOX Allowance Allocation Methodology. The EPA 
proposes that part 97 include the methodology that the Administrator 
will use for allocating NOX allowances to NOX 
budget units. While, in part 96, the Agency lays out an optional 
allocation methodology that may be used by a State permitting authority 
for issuing allocations, part 97 will prescribe the methodology that 
the Administrator would use.
    a EGUs. The EPA requests comment on three separate methodologies 
that the Administrator could use for the initial allocation period (the 
control periods in 2003 through 2005) for EGUs. In whichever of these 
methodologies the Agency finalizes, the total number of allowances 
issued would equal the portion of the trading program budget in the 
State attributed to large EGUs (calculated as described in section 
VI.B.3.c.1. of this preamble by multiplying a specified emission rate 
by a State's summer activity level projected to 2007). The first option 
is to allocate allowances based on the product of an emission rate in 
pounds of NOX/mmBtu and the mmBtus of energy utilized for 
all units in the Federal NOX Budget Trading Program; the 
proposed part 97 describes this approach. The second option is to 
allocate allowances to fossil fuel-fired EGUs in the Federal 
NOX Budget Trading Program based on the product of an 
emission rate in pounds of NOX/kwh and the kwh of 
electricity generated. A third option considered by EPA would allocate 
allowances to all large EGUs, regardless of fuel type, in the States 
affected by the FIP rulemaking based on their electricity generated. 
For the second and third options, EPA would use a surrogate for 
electricity generation data where electricity generation data are not 
available. The EPA solicits comment on these three methodologies.
    With regard to the allocation methodology to be used by the 
Administrator for the control periods starting in 2006, EPA requests 
comment on the same three general methodologies mentioned in the 
previous paragraph. To facilitate the use of the second and third 
approaches for the control periods in 2006 and thereafter, EPA proposes 
to work with stakeholders to design a system based on electricity 
generation that could be used after the initial allocation period. The 
EPA plans to propose an allocation system based on electricity 
generation in 1999 and finalize the approach in 2000. Appropriate data 
could then be measured and collected at NOX budget units 
during the control periods in the years 2001 and 2002. When it becomes 
available, this approach could be incorporated into part 97 if the 
Agency decides to allocate allowances based on electricity generation.
    For whichever of these three allocation methods the Agency selects, 
EPA proposes to use the average of the data for the two highest control 
periods for the years 1995, 1996, and 1997 in determining an EGU's 
allocation for the control periods in 2003, 2004, and 2005. This 
approach using data from 1995, 1996, and 1997 differs slightly from the 
way the aggregate emission level was calculated for the EGU 
subcategory. As explained in section VI.B.3.c.1. of this preamble, EPA 
calculated the aggregate emission level based upon the greater of the 
State heat input data from 1995 or 1996. However, the Agency believes 
it is useful to base the first 3 years of allocations to individual 
units on operating data reflecting the average of the highest of 2 out 
of the 3 most recent years. In this way, the initial allocations better 
represent the operation of particular units.
    Once several years of allocations have been built into the system, 
the Agency believes it is possible to move to an annually updating 
allocation system that calculates allocations based on operating data 
from a single year. Using data from a single year as a basis for 
allocations enables the Agency to develop an updating allocation system 
that can reflect changes in utilization or electricity generation. By 
this time, the trading market should be more established and companies 
will have several years of experience with the program. Therefore, 
companies will better be able to accommodate variations in single year 
allocations through the trading market and company-wide compliance 
strategies. Thus, after the initial period of allocations, EPA would 
use data measured during the control period of the year that is 4 years 
before the year for which allocations are being calculated.
    Furthermore, for reasons discussed in the final NOX SIP 
call, EPA proposes in part 97 the establishment of an allocation set-
aside account, to be used in whichever allocation methodology EPA 
adopts, equaling 5 percent of the State trading program budget in 2003, 
2004, and 2005 for new units (units that commence operation during or 
after the period on which general NOX allowance allocations 
are based) and 2 percent of the trading program budget in the State in 
the subsequent years. The Agency believes that if a new source set-
aside is employed, it should be large enough to provide allocations to 
all new units entering the Federal trading program. Based on analyses 
EPA conducted using the Integrated Planning Model (IPM) and on the 
Agency's proposal to reallocate by April 1, 2003 for the control period 
in 2006, 5 percent appears to be a reasonable portion of NOX 
allowances to set-aside for new units in the initial 3 years of the 
program and 2 percent for the subsequent years.
    However, while 5 percent (and 2 percent) may be an appropriate 
regionwide average, an individual State may experience either more or 
less growth in new sources during the relevant time period. The EPA 
calculated the State-specific aggregate emission levels for each 
subcategory using State-specific growth rates (see rulemaking docket). 
Therefore, EPA solicits comment on using State-specific growth rates to 
determine the appropriate size of a State new source

[[Page 56411]]

set-aside. Additionally, the 5 percent (and 2 percent) numbers were 
calculated based upon estimated growth in utilization by new sources 
and, therefore, may be more appropriate when the first proposed 
allocation methodology is employed. The EPA solicits comment on the use 
of a different percentage for the set-aside if the Agency adopts an 
electricity generation-based allocation system.
    Using each of the three allocation methodologies on which EPA 
solicits comment, the Agency has calculated unit specific allocations. 
The allocations for each unit, based on the first two proposed 
methodologies, are in Appendices A and B of part 97. The allocations 
resulting from the third methodology can be found in the docket to this 
rulemaking. The EPA is providing these unit specific allocations to 
solicit comment on the underlying data used in these allocations and 
the methodologies employed in determining the allocations. The Agency 
will select and describe a set of allocations in the final notice. The 
EPA would issue the finalized set of the 2003 control period 
allocations in the NATS by April 1, 2000 for those units that are 
subject to a FIP.
    For the first allocation approach in part 97, EPA determined 
initial unadjusted allocations to existing electric generating 
NOX budget units by multiplying a NOX emission 
rate of 0.15 lb/mmBtu by the units' historical heat input calculated by 
taking the average of the heat input for the two highest control 
periods for the years 1995, 1996, and 1997. The Agency used the heat 
input data reported to EPA in quarterly reports during the ozone season 
for utilities affected under the Acid Rain Program. For non-utility 
electricity generators, EPA used heat input information reported to 
Energy Information Administration (EIA) on EIA Form 867.
    After determining the initial unadjusted unit allocations, EPA 
adjusted the allocation for each unit upward or downward to match the 
portion of the trading program budget in the State attributed to large 
EGUs. Then, the Agency adjusted the allocation for each unit in the 
State proportionately so that the total allocations equaled 95 percent 
of the portion of the trading program budget in the State attributed to 
large EGUs. This created a new source set-aside of 5 percent.
    For the second allocation approach, EPA multiplied the unit heat 
input in mmBtu and the generator heat rate 2 associated with 
the generation for that unit, in Btu/kWh, to determine each unit's 
associated historical electrical generation in kWh.3 For 
non-utility electricity generators, EPA used heat input from OTAG's 
database (1995 data) and the average heat rate values found below in 
Table 1. The Agency used this indirect approach to calculate electrical 
output because EPA did not have access to unit-specific generation data 
for non-utility electricity generators. The EPA used average heat rate 
values for generators for which heat rates were not publicly available, 
as shown in the table below.
---------------------------------------------------------------------------

    \2\ Utilities report their generator-specific heat rates to EIA 
on EIA Form 860.
    \3\ The EPA used the average generation for the ozone season 
during the highest two of the years from 1995 through 1997, similar 
to the approach with heat input.

             Table 1.--Average Utility Generator Heat Rates
------------------------------------------------------------------------
                                          Generator size   Average heat
           Unit and fuel type                  (MW)       rate (Btu/kWh)
------------------------------------------------------------------------
Combustion Turbine (gas or No. 2 fuel
 oil/diesel)............................   50
                                                     >50          14,250
                                                                  13,200
Combined Cycle Turbine (gas or No. 2
 fuel oil/diesel).......................  100
                                                    >100          11,100
                                                                   8,500
Oil- or Gas-fired Steam Boiler..........  400
                                                   1>400          10,600
                                                                  10,000
Coal-fired Boiler.......................  500
                                                    >500          10,400
                                                                   9,800
------------------------------------------------------------------------

    Some units are cogenerators, which are electrical generators that 
divert part of their steam to provide steam output, rather than to 
generate electricity. The Agency calculated output from cogenerating 
units as described in the previous paragraph. That approach assumes 
that heat input is converted into electricity at a particular 
efficiency. The EPA's proposed approach does not account for the fact 
that steam generation is generally more efficient than electricity 
generation. The EPA encourages commenters to provide the Agency 
electrical output data and steam output data to determine the 
efficiency of cogenerating units.
    To determine the individual unit allocations, EPA determined the 
total electricity generation from all affected EGUs within each State, 
as estimated in the previous paragraphs, and calculated each unit's 
share of the total State electricity generation. Each unit was then 
assigned an allocation based upon its share of electricity generation. 
For example, if the Agency calculated that a unit contributed 0.4 
percent of a State's total electricity generation, then it would 
receive 0.4 percent of the trading program budget in the State 
attributed to large fossil-fuel-fired EGUs. After determining the 
initial unadjusted allocation, the Agency adjusted the allocation for 
each unit proportionately so that the total allocation equaled 95 
percent of the portion of the trading program budget in the State 
attributed to large fossil-fuel-fired EGUs (to create the new source 
set-aside).
    The EPA is also proposing a third allocation approach which would 
provide allowances to all electricity generators in the 23-jurisdiction 
region regardless of the energy source. For fossil fuel-fired power 
plants, EPA used the approach described above in determining the 
electrical generation from individual combustion units. For nuclear 
power plants and hydroelectric plants, EPA used electrical generation 
reported by utilities to EIA on EIA Form 759. The Agency was unable to 
find data for all plants. The Agency solicits comment on these methods 
for determining electricity generation data. The EPA also requests 
comment on the data and solicits any additional information for the 
plants for which EPA has not found data.
    The Agency determined the initial unadjusted allocations in the 
same manner as described for the electricity generation-based 
allocations to fossil-fuel-fired units only. That is, the Agency 
determined the total electricity generation within each State, 
calculated each unit's share of the total electricity generation, and 
calculated an allocation

[[Page 56412]]

based upon that share of the trading program budget in the State 
attributed to large EGUs. The Agency then adjusted the allocation for 
each unit proportionately so that the total allocation equaled 95 
percent of the portion of the trading program budget in the State 
attributed to large EGUs.
    For each of these three allocation methodologies, the Agency 
solicits comment on the data used to determine the allocations. 
Electricity generators, and utilities in particular, already report 
many of these data to Federal or State government agencies. The 
necessary data and their sources include:
     For each plant:

--Plant name as reported to U.S. EPA and EIA; if not currently 
reporting to Federal government, then as reported to the State 
environmental agency
--ORISPL number, if available (or other unique identification number 
for the plant, if no ORISPL number exists) as reported to U.S. EPA and 
EIA; if not currently reporting to Federal government, then as reported 
to the State environmental agency
--State postal abbreviation and county FIPS code as reported to U.S. 
EPA and EIA; if not currently reporting to Federal government, then as 
reported to the State environmental agency
--Monitoring locations at the plant (e.g., stacks or fuel pipes where 
monitoring equipment would be located) for existing monitoring 
equipment, as reported to U.S. EPA, or to the State environmental 
agency.

     For each unit (boiler or combustion turbine) at the plant:

--An identification designation (e.g., 1, CT2) as reported to U.S. EPA 
and EIA; if not currently reporting to Federal government, then as 
reported to the State environmental agency
--A description of each unit (e.g., combustion turbine, coal-fired wet-
bottom boiler) as reported to U.S. EPA and EIA; if not currently 
reporting to Federal government, then as reported to the State 
environmental agency or State utility commission
--Fuel or energy source used as reported to the EIA or to the State 
utility commission
--Heat input (mmBtu) in May 1 through September 30 of 1995, 1996 and 
1997 as reported to U.S. EPA and EIA;
--Estimated historical NOX mass emissions in May 1 through 
September 30 of 1995, 1996 and 1997 (as reported to the U.S. EPA or the 
State environmental agency).

     For each electrical generator at the plant:

--Generation identification designation as reported to U.S. EPA and 
EIA; if not currently reporting to Federal government, then as reported 
to the State utility commission
--Nameplate capacity in MWe as reported to U.S. EPA and EIA; if not 
currently reporting to Federal government, then as reported to the 
State utility commission
--Electrical generation (MWh)in May 1 through September 30 of 1995, 
1996 and 1997 as reported to EIA.
     For each steam turbine at the plant that is used to 
generate steam output instead or in addition to electricity:

--An identification designation
--Capacity, in mmBtu/hr output rate
--Steam output (mmBtu) (not used for electrical generation) in May 1 
through September 30 of 1995, 1996 and 1997.

    The Agency believes these data are needed both to determine the 
output of each source and to establish a unique identity for each 
source and its units. The EPA requests comment on the specific data as 
well as the type of data supporting the proposed allocations under part 
97.
    b Non-EGUs. For any allocation methodology adopted, the total 
number of allocations issued to non-EGUs would equal the portion (less 
the 5 percent set-aside discussed below) of the trading program budget 
in the State attributed to large non-EGUs (calculated as described in 
section VI.B.3.c.1. of this preamble by reducing each State's 
uncontrolled non-EGU NOX emissions level by 60 percent and 
assuming activity growth through 2007). At this time, the Agency 
proposes in part 97 to use heat input as the basis for determining 
allocations for large non-EGUs in the Federal NOX Budget 
Trading Program. The EPA proposes this basis for both the initial 
allocation period of 2003 through 2005 and for subsequent years of the 
program. This differs from the method used to determine the aggregate 
emission level for non-EGUs (a percentage reduction from historical 
emissions) because at the time the aggregate level was determined 
(during the NOX SIP call proposal process), heat input data 
for individual units were not available. Distributing allocations on a 
heat-input basis provides a fuel-neutral method of allocating to the 
units in the trading program similar to the allocation approaches 
proposed for the EGUs. Heat-input-based allocations also allow for 
reallocating in the future (to accommodate new units) whereas 
allocations based upon a specific percentage reduction do not. Heat 
input data are now available for use in developing allocations, and the 
Agency solicits comment on the data as well as the use of heat input in 
developing allocations.
    At this time, the Agency is not aware of any databases on steam 
output information for industrial boilers. Therefore, for combustion 
sources other than electrical generators, EPA finds that it is most 
appropriate to base allocations upon heat input. However, EPA requests 
comment on any methods for distributing allowances on an output basis 
to non-EGUs. Comments should address the availability, quality, and 
appropriateness of the data for regulatory purposes and/or methods to 
obtain such data.
    For the non-EGUs subject to the Federal trading program, EPA 
proposes in part 97 to use 1995 heat input data in the allocation 
calculation for the control periods in 2003, 2004, and 2005; 1995 data 
are the most recent data the Agency knows are currently available for 
non-EGUs. After this initial period of allocations, as with the EGUs, 
the Agency will use data measured during the control period of the 
year, that is, 4 years before the year for which allocations are being 
calculated.
    As was done for EGUs, the Agency has calculated unit specific 
allocations for large non-EGUs. These unit specific allocations are 
provided in Appendices A and B of part 97. The EPA solicits comment on 
the underlying data used in these allocations and the methodology 
employed in determining the allocations. The EPA will determine the 
final allocations for the control period in 2003 and place them in the 
NATS by April 1, 2000 for those units that are subject to a FIP.
    For the non-EGU allocations proposed in today's notice, EPA 
determined initial unadjusted allocations to existing non-electric 
generating NOX budget units by multiplying a NOX 
emission rate of 0.17 lb/mmBtu (the average emission rate for existing 
non-electricity generating budget units after controls are in place) by 
the units' historical heat input (described above as 1995 control 
season data).
    After determining the initial unadjusted unit allocations, EPA 
adjusted the allocation for each unit upward or downward to match the 
portion of the trading program budget in the State attributed to large 
non-EGUs. Then, the Agency adjusted the allocation for each unit in the 
State proportionately so that the total allocations equaled 95 percent 
of the portion of the trading program budget in the State attributed to 
large non-EGUs.
    The Agency proposes in part 97 to set-aside 5 percent of the non-
EGU allocations to be consistent with the

[[Page 56413]]

allocation for EGUs. The EPA solicits comment on this approach and the 
proposed size of the set-aside.
    c. Treatment of New Sources. As discussed in previous sections, the 
Agency has proposed in part 97 a set-aside for new sources consistent 
with the provisions of part 96. New EGUs and non-EGUs required to 
participate in the Federal NOX Budget Trading Program will 
have access to this set-aside. In 2003, 2004, and 2005, each State set-
aside would initially hold NOX allowances equal to 5 percent 
of the NOX allowances in the trading program budget in the 
State. Starting in 2006, each State set-aside would originally hold 2 
percent of the NOX allowances in the trading program budget 
in the State. At the end of each relevant control period, EPA will 
return any allowances remaining in the account on a pro-rata basis to 
the units that had received an original allocation that had been 
adjusted to create the new source set-aside in the State.
    The NOX allowances in the allocation set-aside would be 
available to any unit that would otherwise be eligible for an 
allocation in a control period but did not receive one because the unit 
commenced operation during or after the period on which the 
NOX allowance allocations for existing units were based. To 
receive NOX allowances from the allocation set-aside, the 
NOX Authorized Account Representative for a unit would 
submit a NOX allowance request to the Administrator. The 
request could be for no more than 5 consecutive control periods, 
starting with the control period during which the unit is projected to 
commence operation and ending with the control period preceding the 
control period for which it has sufficient data to receive an 
allocation with existing budget units. For the 6th year or later (and 
possibly earlier), there would be sufficient operating data for the 
unit to be incorporated into the NOX allowance allocations 
with existing budget units. The NOX allowance request would 
need to be submitted prior to May 1 of the first control period for 
which NOX allowances are requested and after the date on 
which the State issues a permit to construct the new unit.
    Consistent with part 96, the allowances would be issued to new 
units on a first-come, first-served basis. For the first allocation 
approach proposed for EGUs, allowances to new electric generation units 
would be issued at a rate of 0.15 lb/mmBtu multiplied by the unit's 
maximum design heat input. Following each control period, the unit 
would be subject to a reduced utilization calculation. The EPA would 
deduct NOX allowances following each control period based on 
the unit's actual utilization. Because the allocation for a new unit 
from the set-aside is based on maximum design heat input, this 
procedure adjusts the allocation by actual heat input for the control 
period of the allocation. This adjustment is a surrogate for the use of 
actual utilization in a prior baseline period which is the approach 
used for allocating NOX allowances to existing units.
    For new non-EGUs, allowances would be issued at the average 
emission rate (e.g., .17 lbs/mmBtu) for existing budget units (after 
controls are in place) multiplied by the budget unit's maximum design 
heat input. Following each control period, the source would be subject 
to a reduced utilization calculation similar to that described above 
for EGUs.
    For the second and third allocation approaches proposed for EGUs, 
allowances to new EGUs would be issued at the average emission rate (in 
lbs/kwh) for existing budget units (after controls are put in place) 
multiplied by the maximum design electrical generation derived from 
operation of the new budget unit. Following each control period, the 
budget unit would be subject to a reduced utilization calculation 
similar to that described above under the first approach.
    d. Compliance Supplement Pool. This notice proposes to establish 
Federal emissions limits for sources found to significantly contribute 
to ozone nonattainment problems in a petitioning State. These sources 
would be required to comply with the emissions limits by May 1, 2003. 
As discussed in the final NOX SIP call and the technical 
support document ``Feasibility of Installing NOX Control 
Technologies By May 2003,'' EPA believes that this compliance date is a 
feasible and reasonable deadline. However, EPA received comments for 
the NOX SIP call expressing concern that some sources may 
encounter unexpected problems installing controls by this deadline 
that, in turn, could cause unacceptable risk for a source and its 
associated industry. Commenters explicitly expressed concern related to 
the electricity industry, stating that the deadline could adversely 
impact the reliability of the electricity supply.
    In the NOX SIP call, EPA addressed these compliance 
concerns by providing additional flexibility for sources to comply with 
the requirements. The EPA is proposing that similar flexibility 
mechanisms be provided in part 97. First, EPA is proposing that part 97 
include banking provisions as discussed in section III.B.2.h. Second, 
EPA is proposing that part 97 include a compliance supplement pool that 
may be used by sources to cover excess emissions during the 2003 and 
2004 ozone seasons that are unable to meet the compliance deadline. The 
proposed part 97 includes a separate compliance supplement pool that 
would be available to the sources in each State identified in this 
proposal.
    1. Size of the Compliance Supplement Pool. The EPA proposes to use 
the same compliance supplement pools on a State-by-State basis as were 
included in the final NOX SIP call. The justification for 
the size of the State pools is included in the final NOX SIP 
call. Table 2 shows the compliance supplement pool that would be 
available to sources in each State identified in this proposal.

                  Table 2.--Compliance Supplement Pools
                              [Tons of NOX]
------------------------------------------------------------------------
                                                              Compliance
                           State                              supplement
                                                                 pool
------------------------------------------------------------------------
Alabama....................................................       10,361
Connecticut................................................          559
Delaware...................................................          417
District of Columbia.......................................            0
Georgia....................................................       10,919
Illinois...................................................       17,455
Indiana....................................................       19,738
Kentucky...................................................       13,018
Maryland...................................................        3,662
Massachusetts..............................................          285
Michigan...................................................       15,359
Missouri...................................................       10,469
New Jersey.................................................        1,722
New York...................................................        1,831
North Carolina.............................................       10,624
Ohio.......................................................       22,947
Pennsylvania...............................................       13,716
Rhode Island...............................................            0
South Carolina.............................................        5,062
Tennessee..................................................       12,093
Virginia...................................................        6,108
West Virginia..............................................       16,937
Wisconsin..................................................        6,717
------------------------------------------------------------------------

    2. Distribution of the Compliance Supplement Pool to Sources. In 
the final NOX SIP call, EPA provides States with two options 
for distributing the pool to sources. One option is for a State to 
distribute some or all of the pool to sources that generate early 
reductions during ozone seasons prior to May 1, 2003. The second option 
is for a State to run a public process to provide tons to sources that 
demonstrate a need for a compliance extension. Tons that are not 
distributed by a State prior to May 1, 2003 will be retired by EPA. A 
State wishing to use the compliance supplement pool under the 
NOX SIP call may divide the pool and make some of

[[Page 56414]]

it available to sources through both options, or may use only one of 
the options for distributing the pool to sources prior to May 1, 2003. 
Based on these options, EPA is soliciting comment on a number of 
approaches for distributing the pool to sources under part 97.
    First, EPA solicits comment as to whether the compliance supplement 
pool should be distributed by EPA to sources or distributed by EPA to 
the States that have sources included in this proposal. If the pools 
were distributed to States, the States would then be able to distribute 
the pool to sources. Part 97 is primarily designed to be implemented 
and administered directly by EPA. For this reason, it may be most 
efficient for EPA to retain the responsibility of distributing the pool 
to sources. However, it may be possible to provide more flexibility in 
the use of the pool for different sources if States were provided the 
distribution responsibility.
    Second, provided that EPA decides to retain the responsibility of 
distributing the pool to sources, EPA solicits comment on two options 
for distribution. First, EPA solicits comment on distributing the 
compliance supplement pool only for early reductions. Under this 
option, the Agency would distribute allowances from the compliance 
supplement pool based upon the optional methodology the Agency laid out 
in the final NOX SIP call. Using that methodology, the 
Agency could issue early reduction credits for the 2001 and 2002 ozone 
season to units that have installed part 75 monitoring by the 2000 
control season, have reduced their emission rate in 2001 or 2002 
relative to their rate in 2000 by at least 20 percent, and are 
operating in the year(s) in which they are applying for early reduction 
credits at an emission rate below .25 lb/mmBtu. Provided it meets all 
of these criteria, a unit could request early reduction credits equal 
to the difference between .25 lb/mmBtu and the unit's actual emissions 
rate multiplied by the unit's actual heat input for the applicable 
control period. The Agency laid out the reasons for adopting each of 
these criteria for early reduction credits in the final NOX 
SIP call. Part 97 currently describes this option.
    Under this option, if the tons of NOX in the State's 
compliance supplement pool exceed the number of valid early reduction 
credit requests in that State, the Agency would issue one allowance for 
each ton of early reduction credit requested. Any allowances remaining 
in the compliance supplement pool after all valid requests have been 
granted would be retired by the Agency. If, however, the amount of 
valid requests are more than the size of the State's pool, the Agency 
would reduce the amount in the credit requests on a pro-rata basis so 
that the requests equal the size of the State's pool. After the 
requests have been reduced, the Agency would then issue allowances 
based on the remaining size of each credit request.
    With this option, sources in States in the Ozone Transport 
Commission (OTC) that are subject to this rulemaking would be allowed 
to bring their banked allowances into the Federal NOX Budget 
Trading Program as early reduction credits provided the sum of the 
banked allowances in any State does not exceed the size of the State's 
compliance supplement pool. As is the case under this option for States 
outside of the OTC, any remaining credits in the compliance supplement 
pool would be retired. If the NOX budget units in an OTC 
State hold banked allowances from the OTC program in excess of the 
amount of credits in the State's pool, the Agency would reduce the 
amount of allowances eligible for early reduction credit on a pro-rata 
basis.
    The Agency solicits comment on the methodology for issuing early 
reduction credits in this option as well as the approach that limits 
the use of the compliance supplement pool for early reduction credits. 
Specifically, the Agency solicits comment on alternative methods for 
calculating early reduction credits. In addition, EPA solicits comment 
on the approach specified for integration with the OTC program.
    The Agency also solicits comment on a second option for 
distribution of the compliance supplement pool. Under this second 
option, the Agency proposes that a portion of the compliance supplement 
pool be given out as early reduction credits and the remaining portion 
be reserved for sources that demonstrate a need for the compliance 
supplement. As described in the preamble to the final NOX 
SIP call, sources would be responsible for demonstrating to the Agency 
and the public that achieving compliance by May 1, 2003 would create 
undue risk either to its own operation or associated industry. The 
administrator of the compliance supplement pool would provide the 
public an opportunity to comment on the validity of the need for this 
``direct distribution'' of the compliance supplement.
    Under this option, the Agency would grant early reduction credits 
using the method described in the first option (or some variation of 
that approach) before allowing sources access to the direct 
distribution credits from the compliance supplement pool. The Agency 
proposes to address OTC banked allowances held by sources subject to 
this rulemaking as suggested in the first option. To ensure that the 
compliance supplement is only provided to sources that truly need a 
compliance extension, the remaining credits in the compliance 
supplement pool would be given out to an owner or operator of a source 
that demonstrates the following:

     The process of achieving compliance by May 1, 2003 
would create undue risk for the source or its associated industry. 
For electric generating units, the demonstration should show that 
installing controls would create unacceptable risks for the 
reliability of the electricity supply during the time of 
installation. This demonstration would include a showing that it was 
not feasible to import electricity from other systems during the 
time of installation. Non-electric generating sources may also be 
eligible for the compliance supplement based on a demonstration of 
risk comparable to that described for the electricity industry.
     It was not possible to compensate for delayed 
compliance by generating early reduction credits at the source or by 
acquiring credits generated by other sources.
     It was not possible to acquire allowances or credits 
for the 2003 ozone season from sources that will make reductions 
beyond required levels during the 2003 ozone season.

    The Agency solicits comment on this option that distributes the 
compliance supplement pool both through early reduction credits as well 
as direct distribution. Specifically, the Agency requests comment on 
the number of credits to reserve for direct distribution, the 
methodology used for direct distribution, and options for public review 
of the direct distribution. The Agency also solicits comment on the 
appropriate administrator of the direct distribution.
    Under any of the options described above, the Agency proposes that 
NOX allowances issued from the compliance supplement pool 
would only be available for sources to use for compliance in the 2003 
or 2004 control periods. Any NOX allowances issued from the 
compliance supplement pool that is not used for compliance in 2003, 
would be considered to be ``banked'' for the 2004 control period. The 
Agency proposes to retire any NOX allowance issued from the 
compliance supplement pool that is not used in either the 2003 or 2004 
control period at the end of the 2004 true-up period for the reasons 
cited in the preamble to the final NOX SIP call.
    e. Emissions Monitoring and Reporting. Subpart H of part 97 
addresses monitoring and reporting requirements including, among other 
things, general requirements, initial

[[Page 56415]]

certification and recertification procedures, out of control periods, 
notifications, recordkeeping and reporting, and petitions. These 
provisions are essentially the same as the monitoring-related 
provisions of part 96, with cross references to the appropriate 
sections of part 97. The differences between the provisions reflect the 
fact that administration of the monitoring requirements is overseen by 
EPA, rather than by EPA and the permitting authority in the model state 
trading program. As a result, for example, monitoring certification 
applications are submitted to the Administrator and the appropriate EPA 
Regional Office in addition to the permitting authority, and the 
Administrator, not the permitting authority, will act on the 
applications. Further, the Administrator handles all audit 
decertifications and all petitions for alternatives to the monitoring 
requirements.
    Another difference is that in the State NOX Budget 
Trading Program, EPA included heat input monitoring requirements that 
States might choose to adopt if they were basing their allocation 
methodologies on heat input. The proposed Federal NOX Budget 
Trading Program bases its allocation approach on heat input. Therefore, 
EPA has included the heat input monitoring and reporting requirements 
in proposed part 97. Note that as explained in section III.3.c.5 of the 
section 126 proposal, EPA is taking comment on three different 
allocation methodologies. Depending on the methodology chosen, 
monitoring and reporting requirements would vary.
    The EPA is proposing these part 97 provisions for the reasons set 
forth both in the proposed NOX SIP call (63 FR 25938-40) and 
the final NOX SIP call and in order to minimize differences 
between the Federal and State NOX Budget Trading Programs.
    In particular, for the reasons set forth in the NOX SIP 
call, EPA proposes that NOX budget units be required to meet 
the monitoring and reporting requirements in a new subpart H of 40 CFR 
part 75, the Acid Rain Program regulations (63 FR 25938-40). The EPA 
has promulgated these revisions to part 75 to establish NOX 
mass monitoring requirements and provide greater flexibility to 
regulated sources in conjunction with the final NOX SIP call 
rule.
    f. Opt-Ins. Subpart I of part 97 addresses the opt-in process and 
procedures applicable to operating units that are not NOX 
budget units under Sec. 97.4, but are located in a State that is 
included in the Federal NOX Budget Trading Program and wish 
to voluntarily enter (i.e., opt-in to) the trading program. The opt-in 
provisions can further reduce the cost of achieving NOX 
reductions by allowing these units to join the NOX Budget 
Trading Program and make incremental, lower cost reductions, freeing 
NOX allowances for use by other NOX budget units. 
There are potentially individual sources not included in the trading 
program that may emit significant amounts of NOX and are 
able to achieve cost-effective reductions; allowing these sources to 
join the program would reduce the overall cost of compliance for the 
program. The EPA proposes in subpart I to allow individual combustion 
sources that vent to a stack the opportunity to opt-in to the program 
for purposes of the FIP. The EPA solicits comment on the 
appropriateness of these opt-in provisions.
    Subpart I addresses, among other things, the applicability 
requirements, allocations, procedures for applying for a NOX 
budget opt-in permit, the process of reviewing and approving or denying 
the permit, contents of the permit, procedures for withdrawing as a 
NOX budget opt-in source, and changes in regulatory status. 
The provisions of this subpart are similar to the opt-in provisions in 
part 96, with cross references to the appropriate sections in part 97, 
though the Administrator plays a greater role than in part 96 with 
regard to actions on opt-in permits, allocations, and other related 
opt-in submissions. For example, under the Federal trading program, 
opt-in permit applications are submitted to both the Administrator and 
the permitting authority, but only the Administrator may determine 
whether the unit qualifies as a NOX budget opt-in source. 
Furthermore the Administrator, rather than the permitting authority, 
allocates allowances to sources in the Federal NOX Budget 
Trading Program. The EPA is proposing these part 97 provisions for the 
reasons set forth both in the proposed NOX SIP call (63 FR 
25940-42) and the final NOX SIP call, and in order to 
minimize differences between the Federal and State NOX 
Budget Trading Programs.
    g. Program Administration. As discussed above, the Federal 
NOX Budget Trading Program would be run by EPA. The EPA 
would identify the units covered by the program, determine and record 
the NOX allowance allocations, receive and review monitoring 
plans and monitoring certification applications, and take the lead in 
enforcement. As discussed above, States would still be responsible for 
permitting.

C. New Source Review (NSR)

    As discussed in the proposed and final NOX SIP call, EPA 
believes that nonattainment NSR offset requirements of the CAA can be 
met using the mechanism of the State NOX Budget Trading 
Program under part 96. However, because the Agency is continuing to 
evaluate a number of complex issues involved with integrating NSR and 
the trading program, it will not be providing guidance at this time. 
The EPA intends to provide such guidance as soon as possible. At that 
time, the EPA will also address whether EPA should integrate NSR with 
the trading program under part 97.

VII. Non-Trading Sources Emissions Limits

A. Introduction

    In this section of the notice, EPA summarizes information used in 
establishing the proposed regulations for the non-trading source 
categories. The regulations themselves appear at the end of the notice. 
The EPA encourages readers to provide information and regulatory 
suggestions to allow EPA to improve the proposed rules' clarity and 
provide for least-cost compliance approaches. In many cases, affected 
sources are already subject to existing State and local emissions 
reduction requirements, and the responsible State and local agencies 
may be developing further regulatory initiatives as part of their 
ongoing SIP efforts. The EPA invites comment on approaches to craft the 
FIP rules in a manner which, to the extent possible, matches the format 
of State or local regulations and minimizes conflict between the 
Federal regulatory regime and current or proposed State and local 
requirements. However, it is important that the projected emissions 
decreases from the FIP rules are adequate to achieve the emissions 
budget assigned in the NOX SIP call final rulemaking.

B. Permits

    As mentioned earlier, the regulations governing State permitting 
under title V define an ``applicable requirement,'' which must be 
reflected in a title V operating permit, as including any standard or 
other requirement provided for in the applicable implementation plan 
approved or promulgated by EPA, through rulemaking under title I of the 
CAA, that implements the relevant requirements of the CAA, including 
any revisions to that plan promulgated in part 52 of this chapter (40 
CFR 70.2). Since today's proposed rule is being promulgated under title 
I, the

[[Page 56416]]

requirements of this rule are applicable requirements under Sec. 70.2 
and must be reflected in the title V operating permit of sources 
subject to the FIP that are required to have such a permit. The EPA 
believes that the large stationary internal combustion engines and 
cement kilns subject to the FIP are required to have a title V permit. 
Further, all State and local air permitting authorities currently have 
EPA-approved title V operating permits programs. Consequently, these 
State and local agencies would be the permitting authorities for the 
sources subject to the FIP.

C. Stationary Internal Combustion Engines

1. Rule Requirements
    As described in the NOX SIP call, EPA's budget 
calculation includes a 90 percent decrease from uncontrolled levels for 
the large sources in this category. The FIP rules proposed today are 
designed to achieve that 90 percent emissions decrease, averaged over a 
rolling 30-day period, using control technologies that are estimated to 
be less than $2,000 per ton of NOX removed on average. The 
requirements are contained in the regulatory section of this notice. To 
ensure that the rules apply only to large sources, the regulation 
includes a size cutoff of between 2,400 and 4,400 brake horsepower, 
depending on the fuel.
2. Background
    The control level selected for spark ignited rich-burn engines is a 
limit of 110 parts per million by volume (ppmv) NOX at 15 
percent oxygen (O2) for engines that are 2400 brake 
horsepower (hp) or larger. This represents non-selective catalytic 
reduction (NSCR) control. The NSCR provides the greatest NOX 
reduction of all technologies considered in the Alternative Control 
Techniques (ACT) document for ``NOX emissions from 
Stationary Reciprocating Internal Combustion Engines'' (EPA-453/R-93-
032) and is capable of providing a 90 to 98 percent reduction in 
NOX emissions. The range of controlled NOX is 
reported to be 0.3 to 1.6 grams per brake horsepower-hour (g/hp-hr), or 
20 to 110 ppmv (at 15 percent O2) in the ACT document. The 
lower end of the range represents 98 percent control and the upper end 
represents 90 percent control. According to the ACT document, one NSCR 
supplier guarantees 98 percent reduction. However, an alternative 
limitation of 90 percent reduction was selected because 98 percent 
reduction is based on a single supplier's guarantee. Engines that are 
2400 hp or larger have the potential to emit 1 ton of NOX 
per day.
    The control level selected for spark ignited lean-burn engines is a 
limit of 125 ppmv NOX at 15 percent O2 for 
engines that are 2400 hp or larger. This represents selective catalytic 
reduction (SCR) control. The SCR provides the greatest NOX 
reduction of all technologies considered in the ACT document for lean-
burn engines and is capable of providing a 90 percent reduction in 
NOX emissions. Engines that are 2400 hp or larger have the 
potential to emit 1 ton or more of NOX per day.
    The control level selected for diesel engines is a limit of 175 
ppmv NOX at 15 percent O2 for engines that are 
3100 hp or larger. This represents SCR control. The SCR provides the 
greatest NOX reduction of all technologies considered in the 
ACT document for diesel engines and is capable of providing a 90 
percent reduction in NOX emissions. Engines that are 3100 hp 
or larger have the potential to emit 1 ton or more of NOX 
per day.
    The control level selected for dual fuel engines is a limit of 125 
ppmv NOX at 15 percent O2 for engines that are 
4400 hp or larger. This represents SCR control which provides the 
greatest NOX reduction of all technologies considered in the 
ACT document for dual fuel engines. The SCR is capable of providing a 
90 percent reduction in NOX emissions from dual fuel 
engines. Dual fuel engines that are 4400 hp or larger have the 
potential to emit 1 ton of NOX per day.
    To ensure compliance with these post-combustion controls, EPA is 
proposing requiring affected sources to install continuous emissions 
monitoring systems (CEMS). The CEMS must meet the requirements of 40 
CFR part 60. The EPA is proposing the part 60 requirements rather than 
the part 75 requirements because the rule does not regulate mass 
emissions, but instead regulates on a volumetric (parts per million) 
basis.
    The EPA invites comment on alternative approaches to monitoring 
emissions, including CEMS meeting the requirements of 40 CFR part 75. 
The EPA specifically requests comments on the use of predictive 
emissions monitoring systems (PEMS). The EPA will give greater 
consideration to comments that provide data demonstrating the accuracy 
of alternative methods such as PEMS, particularly if the data provide a 
comparison of the alternative method to simultaneous data gathered 
using either a CEM or using EPA reference method testing. More 
consideration will also be given to data that provide complete 
information about the range of unit operating parameters that the 
method was tested over. If commenters do not have these data available, 
EPA requests comments explaining why the alternative methods would be 
valid over the range of operating conditions that the unit could be 
expected to be operating.

D. Cement Manufacturing

1. Rule Requirements
    As described in the NOX SIP call, EPA's budget 
calculation includes a 30 percent decrease from uncontrolled levels for 
the large sources in this category. The FIP rules proposed today are 
designed to achieve that 30 percent emissions decrease using control 
technologies that are estimated to be less than $2,000 per ton of 
NOX removed. The requirements are to install and operate 
low-NOX burners, mid-kiln firing, or alternative control 
techniques, subject to EPA approval, that achieve at least the same 
emissions decreases as low-NOX burners or mid-kiln firing. 
These requirements are contained in the regulatory section of this 
notice. To ensure that the rules apply only to large sources, the rule 
applies only to kilns with process rates of at least the following:

Long dry kilns--12 tons per hour (TPH)
Long wet kilns--10 TPH
Preheater kilns--16 TPH
Precalciner and preheater/precalciner kilns--22 TPH

    For the purpose of determining alternative control techniques that 
EPA would consider, it should be noted that EPA expects the following 
emissions limits can be met by low-NOX burners or mid-kiln 
firing:
    (i) For any long wet kiln, 6.0 lbs/ton of clinker produced when 
averaged over any 30 consecutive days.
    (ii) For any long dry kiln, 5.1 lbs/ton of clinker produced when 
averaged over any 30 consecutive days.
    (iii) For any preheater kiln, 3.8 lbs/ton of clinker produced when 
averaged over any 30 consecutive days.
    (iv) For any preheater/precalciner or precalciner kiln, 2.8 lbs/ton 
of clinker produced when averaged over any 30 consecutive days.
2. Background
    There are 4 types of cement kilns: long wet, long dry, preheater, 
and precalciner, as described in the ACT document for ``NOX 
emissions from Cement Manufacturing'' (EPA-453/R-94-004). For purposes 
of developing this rule, EPA is using the average of the standard EPA 
emission factor (see

[[Page 56417]]

Volume I: ``Stationary Point and Area Sources,'' Chapter 11, ``Mineral 
Products Industry Compilation of Air Pollutant Emission Factors,'' AP-
42, Fifth Edition, EPA) and ACT document uncontrolled emission factors. 
Available NOX controls with cost effectiveness less than 
$2,000/ton (expressed in 1992 dollars) and which achieved the most 
reductions are:
    a. Mid-Kiln firing. Cost effectiveness of $430-610/ton. Applicable 
for long wet and long dry kilns. Ten long kilns have been modified for 
mid-kiln firing. Two emission tests show NOX reductions of 
18 and 36 percent.
    b. Low-NOX burner. Cost effectiveness of $830-1,330/ton. 
Applicable for all kilns. Experimental tests show NOX 
reductions of 20-30 percent. Subsequent to the ACT document, one test 
at an indirect fired-coal system with a low-NOX burner shows 
reduction of 28 percent.
    c. Selective noncatalytic reduction. Cost effectiveness of $440-
1,240/ton. Applicable for preheater and precalciner kilns. Two 
experimental tests--NOX reductions of 27-40 percent.
    The definitions in the proposed rule are generally from the cement 
ACT document and the Mojave Desert, California rule for portland cement 
(AQMD Rule 1161). The compliance determination, monitoring and 
recordkeeping requirements, exemptions, and test method sections are 
adapted primarily from the Mojave Desert rule. In addition, cement 
rules from the following areas were examined: Santa Barbara County 
(California), States of Florida, New Hampshire, Maine, Massachusetts, 
Northeast States for Coordinated Air Use Management and Sacramento 
Metropolitan (California).
    To ensure compliance with these requirements and to determine the 
emissions reductions, EPA is proposing requiring affected sources to 
complete an initial performance test and subsequent annual testing. The 
EPA is proposing this approach rather than requiring CEMS because EPA 
is not requiring these sources to meet an emission limit, either on a 
rate basis as IC engines are, or on a mass basis as units subject to 
the trading program are. Rather, cement kilns are required to 
demonstrate that controls have been installed and are being properly 
operated. The proposed combustion controls, once installed and 
operating, are expected to be effective over the ozone season and are 
not subject to as much uncertainty as some post-combustion controls, 
where, for example, the amount of reagent injected by the operator on a 
daily or hourly basis is critical. Any cement manufacturing units that 
choose to opt-in to the trading program would need to install and 
operate CEMS consistent with the requirements of 40 CFR part 75. The 
part 75 requirements are necessary in a trading program because 
consistent and accurate monitoring of emissions is necessary for 
accountability regarding compliance with the requirement to hold 
NOX allowances and to ensure that a ton of emissions 
attributed to one source in one State is equivalent to a ton attributed 
to another source in the same or another State.
    The EPA invites comment on alternative approaches to monitoring 
emissions for this industry, including CEMS meeting the requirements of 
40 CFR part 60 or part 75. The EPA specifically requests comments on 
the use of PEMS. The EPA will give greater consideration to comments 
that provide data demonstrating the accuracy of alternative methods 
such as PEMS, particularly if the data provide a comparison of the 
alternative method to simultaneous data gathered using either a CEM or 
using EPA reference method testing.

VIII. Administrative Requirements

A. Regulatory Impact Analysis

    Under Executive Order 12866 (58 FR 51735, October 4, 1993), the 
Agency 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.
    The EPA believes that this action is a ``significant regulatory 
action'' because it would have an annual effect on the economy of 
approximately $1.7 billion. The EPA has estimated benefits from this 
proposal in the range of $1.1-4.2 billion, with EPA's best estimate 
being $3.4 billion. Therefore, the NPR was submitted to OMB for review. 
Any written comments from OMB to EPA and any written EPA response to 
those comments are included in the docket. The docket is available for 
public inspection at the EPA's Air Docket Section, which is listed in 
the ADDRESSES section of this preamble. Detailed information on the 
benefits and costs of changes in NOX emissions is contained 
in the RIA in the NOX SIP call docket, which also serves as 
the RIA for the FIP proposal.
    The EPA is proposing to regulate NOX emissions from 
stationary sources in the following catgegories located in 22 States 
and the District of Columbia: electric power generating units, 
industrial boilers and turbines, cement manufacturing and internal 
combustion engines. This will lead to the placement of NOX 
controls on operating units in these categories. Therefore, EPA has 
estimated the NOX emissions reductions and costs resulting 
from this proposal.
    Analytical limitations prevented EPA from estimating the costs of a 
single, State-specific cap-and-trade program for the large EGUs and 
non-EGU point sources. Therefore, the Agency estimated the impacts of a 
regional cap-and-trade program only for the EGUs at this time. For non-
EGUs in the core trading program, EPA assumed a least-cost analysis as 
described in the NOX SIP call. Finally, EPA assumed 
emissions decreases from large cement plants and stationary internal 
combustion engines using a command-and-control type approach since 
trading may not be immediately available as an option for these 
sources.

B. Impact on Small Entities

1. Regulatory Flexibility Act
    The Regulatory Flexibility Act (RFA), as amended by the Small 
Business Regulatory Enforcement Fairness Act (SBREFA), provides that 
whenever an agency is required to publish a general notice of proposed 
rulemaking, it must prepare and make available an initial regulatory 
flexibility analysis, unless it certifies that the proposed rule, if 
promulgated, will not have ``a significant economic impact on a 
substantial number of small entities.''
    In the process of developing this rulemaking, EPA worked with the 
Small Business Administration (SBA) and the Office of Management and 
Budget (OMB) and obtained input from small businesses, small 
governmental jurisdictions, and small organizations. On June 23, 1998, 
EPA's Small Business

[[Page 56418]]

Advocacy chairperson convened a Small Business Advocacy Review Panel 
under section 609(b) of the RFA as amended by SBREFA. For this 
proposal, in addition to its chairperson, the Panel consisted of EPA's 
Deputy Director of the Office of Air Quality Planning and Standards 
within the Office of Air and Radiation, the Administrator of the Office 
of Information and Regulatory Affairs within the OMB, and the Chief 
Counsel for Advocacy of the SBA.
    As described below, this Panel conducted an outreach effort and 
completed a report on the FIP proposal. The report provides background 
information on the proposed rule being developed and the types of small 
entities that would be subject to the proposed rule, describes efforts 
to obtain the advice and recommendations of representatives of those 
small entities, summarizes the comments that have been received to date 
from those representatives, and presents the findings and 
recommendations of the Panel; the completed report, comments of the 
small entity representatives, and other information are contained in 
the docket for this rulemaking.
    It is important to note that the Panel's findings and discussion 
are based on the information available at the time this report was 
drafted. The EPA is continuing to conduct analyses relevant to the 
proposed rule, and additional information may be developed or obtained 
during the remainder of the rule development process. The Panel makes 
its report at a preliminary stage of rule development and its report 
should be considered in that light. At the same time, the report 
provides the Panel and the Agency with an opportunity to identify and 
explore potential ways of shaping the proposed rule to minimize the 
burden of the rule on small entities while achieving the rule's 
statutory purposes. Any options the Panel identifies for reducing the 
rule's regulatory impact on small entities may require further analysis 
and/or data collection to ensure that the options are practicable, 
enforceable, environmentally sound and consistent with the statute 
authorizing the proposed rule.
2. Outreach to Small Entity Representatives
    In consultation with the SBA, EPA invited 36 small entity 
representatives to participate in its outreach efforts on this 
proposal. The EPA, OMB, and SBA held an initial outreach meeting with a 
group of small-entity representatives in Washington, DC on April 14, 
1998. The purpose of this meeting was to familiarize the small-entity 
representatives with the substance of the rulemaking and the kinds of 
sources being considered for regulation, and to solicit comment on 
these topics. Subsequent to the meeting, the representatives submitted 
follow-up comments in writing. The primary outreach was accomplished by 
a meeting with the small-entity representatives in Washington, D.C. on 
August 4, 1998. The purpose of this meeting was to present the results 
of EPA's analysis on small-entity impacts, and to solicit comment on 
this analysis and on suggestions for impact mitigation. Subsequent to 
the meeting, the representatives submitted follow up comments in 
writing.
    To define small entities, EPA used the SBA industry-specific 
criteria published in 13 CFR section 121. The SBA size standards have 
been established for each type of economic activity under the Standard 
Industrial Classification (SIC) System. Due to their NOX-
emitting properties, the following industries have the potential to be 
affected by the NOX FIP rulemaking:
SIC Codes in Division D: Manufacturing
2611--Pulp mills
2819--Industrial Inorganic Materials
2821--Plastics Materials, Synthetic Resins, and Nonvulcanizable 
Elastomers
2869--Industrial Organic Chemicals
3211--Flat Glass
3221--Glass Containers
3229--Pressed and Blown Glass and Glassware
3241--Cement, Hydraulic
3312--Steel Works, Blast Furnaces, and Rolling Mills
3511--Steam, Gas, and Hydraulic Turbines
3519--Stationary Internal Combustion Engines
3585--Air-Conditioning and Warm-Air Heating Equipment and Commercial 
and Industrial Refrigeration Equipment
SIC Codes in Division E: Transportation, Communications, Electric, Gas, 
and Sanitary Services
    SIC Major Group 49: Electric, Gas, and Sanitary Services, 
including:

4911--Electric Utilities
4922--Natural Gas Transmission
4931--Electric and other Gas Services
4961--Steam and Air Conditioning Supply
3. Potentially Affected Small Entities
    The primary topic of the Panel discussion was the applicability of 
the FIP to the various categories of NOX-emitting sources, 
the costs the rule would impose, and the possibility of further 
reducing rule applicability. Secondary topics included emissions 
monitoring and other potentially duplicative Federal rules. These 
discussions are summarized below.
    The FIP rulemaking is potentially applicable to all stationary-
source, NOX-emitting entities in the 23-jurisdiction area 
covered by the FIP. The EPA estimates that the total number of such 
entities is approximately 5300, of which about 1200 are small entities. 
Based primarily on considerations of overall cost effectiveness and 
administrative efficiency, EPA is considering reducing this 
applicability based on several factors including input from this Panel. 
Specifically, EPA is proposing to exempt (i.e., not regulate) a number 
of source categories from being subject to this regulation based on 
factors such as low relative emissions and lack of an identified 
NOX control technology. Additional categories of sources are 
being considered for exemption because they may not be highly cost 
effective to control, with EPA considering an average cost 
effectiveness of $2000 per ton of NOX removed as the upper 
limit for highly cost-effective reductions. These factors are discussed 
in detail in section IV.F, Other Point Source Categories, of this 
notice.
    If EPA takes final action as proposed today with this reduced-
applicability approach, the FIP will apply only to the following types 
of sources: EGUs, industrial boilers and combustion turbines, and 
internal combustion engines and cement manufacturers. The stringency 
levels of control EPA currently intends to propose for these types of 
sources is as follows: for EGUs, an emission rate of 0.15 pounds of 
NOX per million BTU; for industrial boilers and combustion 
turbines, an emission reduction of 60 percent; for internal combustion 
engines, an emission reduction of 90 percent; and for cement 
manufacturers, an emission reduction of 30 percent. At these stringency 
levels, the estimated number of small entities that would be affected 
is as follows:
     Electric Generating Units--114 small entities.
     Industrial Boilers and/or Combustion Turbines--31 small 
entities.
     Internal Combustion Engines and Cement Manufacturers--8 
small entities.
    EPA has further estimated that, of these affected small entities, 
the following would experience compliance costs equal or greater to 1 
percent of their revenues:
     Electric Generating Units--32 small entities.
     Industrial Boilers and Combustion Turbines--7 small 
entities.
     Internal Combustion Engines and Cement Manufacturers--3 
small entities.

[[Page 56419]]

    Of these, EPA estimates that about 18 small entities with EGUs and 
4 small entities with industrial boilers or turbines would see costs 
greater than 3 percent of revenues, and that no IC engines or cement 
manufacturers would see costs above 3 percent of revenues.
    Focusing the rule on these categories would constitute a reduction 
of over 85 percent in the number of small entities affected by the 
rule: out of 1200 potentially-affected small entities, over 1000 would 
be exempted, with only 153 small entities remaining. The Panel received 
written comments from three small-entity representatives strongly 
endorsing these exemptions.
4. Panel Findings and EPA Actions
    a. Exemptions. The Panel agreed with the general approach EPA is 
proposing to define the scope of the rule. The Panel recommended that 
the categorical exemptions noted above be included in the proposal, and 
further recommended that the applicability of EPA's proposed rule be 
limited to the categories shown in that section. As discussed in 
section IV of this notice, EPA is proposing to limit applicability as 
recommended by the Panel. Furthermore, as described below, the Panel 
considered it appropriate to explore additional options for reducing 
the impact of the rule.
    Several of the small entity representatives suggested that EPA 
exempt all small entities from this rulemaking. Although EPA does not 
feel that a blanket, across-the-board exemption could be supported, EPA 
is receptive to proposals for further exemptions, up to and including 
exempting all small entities if that could be shown to be appropriate. 
As recommended by the Panel, EPA solicits comment on additional types 
of small-entity exemptions and the rational bases on which such 
exemptions could be made, such as disproportionate ability to bear 
costs and administrative burden. Further, where such exemptions are 
recommended, EPA solicits comment on specific approaches to achieving 
the total emissions reductions proposed in the FIP since additional 
types of small-entity exemptions would create an emissions shortfall; 
approaches could include tighter limits on certain sources affected by 
the FIP or revision of the NOX SIP call budget.
    b. Continuous Emissions Monitoring Systems. The Panel received both 
written and oral comments to the effect that CEMS would be 
prohibitively costly for many industrial boilers, representing a 
significant part of the cost of the rule. The EPA believes that to 
enhance the enforceability of the emission limitation in the FIP (as 
required by section 110(a)(2)(A)), it is necessary for all sources in 
the trading program to be subject to accurate and consistent monitoring 
requirements designed to demonstrate compliance with a mass emission 
limitation, and, therefore, intends to require all large units to 
monitor NOX mass emissions using CEMS (including units 
opting-in to the trading program). The EPA is currently considering 
whether to require CEMS for both trading and non-trading sources in 
this rule. However, EPA does believe that it is appropriate to provide 
lower-cost monitoring options for units with low-NOX mass 
emissions, and, therefore, intends to allow non-CEMS alternatives for 
units that have emissions of less than 50 tons per year of 
NOX. This cutoff will provide relief for boilers large 
enough to be covered by the rule, but that run for a smaller number of 
hours each year, including any such boilers owned by small entities.
    The OMB and SBA share the commenters' concern for the potentially 
high cost of CEMS requirements. Consistent with this concern, EPA 
solicits comment on alternative monitoring options for non-trading 
sources, such as parametric monitoring or monitoring as currently 
required by the new source performance standards (NSPS) program.
    c. Trading Program Opt-In. The Panel recommended that EPA encourage 
non-trading sources to opt-in to the emissions trading program. In the 
Panel's view, allowing these sources to opt-in to the trading program 
provides an incentive to develop alternative cost-effective control 
options that will allow sources to improve overall emissions reduction 
cost savings. The EPA solicits comment on effective ways to accomplish 
this while still maintaining the integrity of the trading system.
    d. Cement Kilns. Consistent with SBREFA's goal of reducing small-
entity impacts, the Panel also proposed a number of specific ideas for 
exempting or reducing burden on particular categories of small 
entities. Many of these ideas were generated from comments made by 
small entity advisors to this Panel. The first category the Panel 
explored was cement kilns, where commenters had raised questions 
regarding EPA's analyses of control efficiency and cost. The first 
option explored was to propose exempting cement kilns as a source 
category if it could be shown that EPA's assumed 30 percent reduction 
of NOX emissions is not feasible, and that the achievable 
reductions were such that it would not be cost effective to require 
controls on these sources. As recommended by the Panel, EPA solicits 
comment on rational bases on which small-entity-owned cement kilns 
could be exempted if further analysis shows this to be appropriate. 
Examples of the kinds of factors that might be considered rational 
bases for exemption are disproportionate ability to bear costs and 
administrative burdens, and contributing only de minimis amounts of 
emissions.
    The second option considered by the Panel was to retain 
applicability to cement kilns, but to grant relief if, after installing 
available controls, they proved to be unable to achieve the mandated 30 
percent reduction in NOX emissions. This concept was 
conceived in this case due to commenters' claims that cement kilns are 
highly idiosyncratic, and that the available cost-effective 
technologies (such as mid-kiln firing) may produce greatly varying 
results from unit to unit. The model concept considered was that of an 
Alternative Emission Limit (AEL) similar to the one used in the acid 
rain NOX reduction program (59 FR 13538, March 22, 1994), 
whereby a source can apply for and receive a less stringent reduction 
requirement if it can be shown that this lesser reduction is the most 
that can be achieved at that particular unit. To implement this 
concept, the Panel recommended that EPA solicit comment on whether 
small-entity-owned cement kilns unable to achieve the mandated 
reduction should be given the opportunity to apply for an AEL to be set 
at a level demonstrated to be achievable at the unit in question. The 
EPA solicits comment on the appropriateness and workability of this 
option, particularly information that would support it.
    e. Electric Generating Units. The next area considered by the Panel 
was EGUs. The EPA's analysis shows that slightly more than 30 EGUs may 
experience costs above 1 percent of revenues, and that 18 of these 
might exceed 3 percent. From comments made by small utilities, the 
Panel suspects that many of these high-cost-to-revenue situations may 
involve peaking units, which run only a small percentage of the time 
and thus may be inefficient to control. To address this problem, the 
Panel recommended that EPA solicit comment on whether to allow EGUs to 
obtain a federally enforceable NOX emissions tonnage limit 
(e.g., 25 tons during the ozone season) and thereby obtain an exemption 
from FIP applicability. The EPA solicits comment on the necessity for 
and appropriateness of such an option.

[[Page 56420]]

    f. Industrial Boilers. Individual Panel members conceived of other 
potential ways to mitigate impact on small entities, such as raising 
the size cutoff for small entities and/or lessening the required 
percentage reduction in NOX emissions required from small 
entities. The SBA encouraged the Agency to conduct analyses to 
determine the impact of 40 percent reduction being applied solely to 
small entities and 60 percent solely to large entities, and the 
resulting effect on control levels for sources regulated in the FIP 
proposal. The EPA solicits comment on whether requirements should be 
reduced on small-entity-owned industrial boilers by some combination of 
raising the size cutoff and/or lessening the required reduction; which, 
if any, of these options is preferable; the necessity and 
appropriateness of any such option; the appropriate level (e.g., 40 
percent reduction instead of 60 percent); and information to support 
any comments submitted.
    g. EPA Guidance to States on Small Entities. Finally, the Panel 
noted that several small entity representatives expressed concern that 
regardless of the sensitivity to small-entity concerns EPA shows in the 
FIP (or section 126) rulemaking, the States may nevertheless see fit to 
target small entities in their SIPs. To help address this problem, the 
Panel recommended that, subsequent to the FIP and 126 proposals, EPA 
issue guidance that conveys to the States the kinds of options and 
alternatives EPA has considered in addressing small-entity concerns, 
explains the rationale behind these kinds of options, and recommended 
that the States consider adopting similar alternatives in their SIPs. 
The EPA intends to address this issue as it develops implementation 
guidance for the States to use in developing SIPs.

C. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Pub. 
L. 104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and tribal 
governments and the private sector. Under section 202 of the UMRA, 2 
U.S.C. 1532, EPA generally must prepare a written statement, including 
a cost-benefit analysis, for any proposed or final rule that ``includes 
any Federal mandate that may result in the expenditure by State, local, 
and tribal governments, in the aggregate, or by the private sector, of 
$100,000,000 or more * * * in any one year.'' A ``Federal mandate'' is 
defined under section 421(6), 2 U.S.C. 658(6), to include a ``Federal 
intergovernmental mandate'' and a ``Federal private sector mandate.'' A 
``Federal intergovernmental mandate,'' in turn, is defined to include a 
regulation that ``would impose an enforceable duty upon State, local, 
or tribal governments,'' section 421(5)(A)(i), 2 U.S.C. 658(5)(A)(i), 
except for, among other things, a duty that is ``a condition of Federal 
assistance,'' section 421(5)(A)(i)(I). A ``Federal private sector 
mandate'' includes a regulation that ``would impose an enforceable duty 
upon the private sector,'' with certain exceptions, section 421(7)(A), 
2 U.S.C. 658(7)(A).
    The EPA is taking the position that the requirements of UMRA apply 
because this action could result in the establishment of enforceable 
mandates directly applicable to sources (including sources owned by 
State and local governments) that could result in costs greater than 
$100 million in any one year. The UMRA generally requires EPA to 
identify and consider a reasonable number of regulatory alternatives 
and adopt the least-costly, most cost-effective or least-burdensome 
alternative that achieves the objectives of the rule. The EPA's 
analysis, ``Unfunded Mandates Reform Act Analysis For the Proposed 
Federal Implementation Plan Rule Under the Clean Air Act Amendments 
Title I,'' is in the docket for this action and examines the impacts of 
the proposed FIP on EGUs and non-EGUs owned by State, local, and tribal 
governments, as well as those sources owned by private entities. This 
proposal potentially affects 78 EGUs that are owned by two States and 
24 municipalities (Massachusetts and South Carolina own 19 units, and 
the municipalities own the remaining 59 units). In addition, 7 non-EGUs 
owned by 2 States and 5 municipalities are potentially affected. The 
EPA has not identified any units on Tribal lands that would be subject 
to the proposed requirements. The overall costs are dominated by the 78 
EGUs and range from 3.2 to 3.9 percent of the total costs for all of 
the EGUs potentially affected by the FIP. These State and municipality-
owned units produce approximately 2.6 percent of the electricity in the 
region, which suggests that their cost impacts are only slightly higher 
than their production share, in comparison to all units in the region.
    Under section 203 of UMRA, 2 U.S.C. 1533, before EPA establishes 
any regulatory requirements ``that might significantly or uniquely 
affect small governments,'' EPA must have developed a small government 
agency plan. The plan must provide for notifying potentially affected 
small governments; enabling officials of affected small governments to 
have meaningful and timely input in the development of EPA regulatory 
proposals with significant Federal intergovernmental mandates; and 
informing, educating, and advising small governments on compliance with 
the regulatory requirements. The proposed requirements do not 
distinguish EGUs based on ownership, either for those units that are 
included within the scope of the proposed rule or for those units that 
are exempted by the generating capacity cut-off. Consequently, the 
proposed rule has no requirements that uniquely affect small 
governments that own or operate EGUs within the SIP call region. With 
respect to the significance of the rule's provisions, EPA's UMRA 
analysis (cited above) demonstrates that the economic impact of the 
rule will not significantly affect State or municipal EGUs or non-EGUs, 
either in terms of total cost incurred and the impact of the costs on 
revenue, or increased cost of electricity to consumers. Therefore, 
development of a small government plan under section 203 of the Act is 
not required.
    Under section 204 of UMRA, 2 U.S.C. 1534, if an agency proposes a 
rule that contains a ``significant Federal intergovernmental mandate'', 
the agency must develop a process to permit elected officials of State, 
local, and tribal governments to provide input into the development of 
the proposal.'' In order to fulfill UMRA requirements that publicly-
elected officials be given meaningful and timely input in the process 
of regulatory development, EPA has sent letters to five national 
associations whose members include elected officials. The letters 
provide background information, request the associations to notify 
their membership of the proposed rulemaking, and encourage interested 
parties to comment on the proposed actions by sending comments during 
the public comment period and presenting testimony at the public 
hearing on the proposal. Any comments will be taken into consideration 
as the action moves toward final rulemaking.
    In addition, during the NOX SIP call, EPA provided 
direct notification to potentially affected State and municipally-owned 
utilities as part of the public comment and hearing process attendant 
to proposal of the NOX SIP call and supplemental notice of 
proposed rulemaking. These procedures helped ensure that small 
governments had an opportunity to give timely input and obtain 
information on compliance. EPA provided the 26 State and municipality-
owned utilities and appropriate elected officials with a brief

[[Page 56421]]

summary of the proposal and the estimated impacts. The public 
rulemaking also elicited numerous comments from State and municipal 
utilities and groups representing utility interests.

D. Paperwork Reduction Act

    The information collection requirements in this proposed rule have 
been submitted for approval to the OMB under the Paperwork Reduction 
Act, 44 U.S.C. 3501 et seq. An Information Collection Request (ICR) 
document has been prepared by EPA (ICR No. 1883.01) and a copy may be 
obtained from Sandy Farmer, by mail at OP Regulatory Information 
Division, US Environmental Protection Agency (2137), 401 M St., SW, 
Washington, DC 20460, by email at [email protected], or by 
calling (202) 260-2740. A copy may also be downloaded off the internet 
at http://www.epa.gov/icr.
    The EPA believes that it is essential that compliance with the 
regional control strategy be verified. Tracking emissions is the 
principal mechanism to ensure compliance with the budget and to assure 
the downwind affected States and EPA that the ozone transport problem 
is being addressed. The reporting requirements can be divided into 
three categories: statewide emissions budgets, trading program, and 
other stationary source categories regulated.
1. Statewide Emissions Budgets
    The reporting and recordkeeping burden (to be incurred by EPA) for 
this collection of information is described in the final NOX 
SIP call rulemaking and is summarized below:
    Respondents/Affected Entities: States, along with the District of 
Columbia, which are included in the NOX SIP call.
    Number of Respondents: 23.
    Frequency of Response: annually, triennially.
    Estimated Annual Hour Burden per Respondent: 282.
    Estimated Annual Cost per Respondent: $7,942.68.
    Estimated Total Annual Hour Burden: 6,486.
    Estimated Total Annualized Cost: $182,682.00.
2. Trading Program
    Respondents/Affected Entities: Large fossil fuel boilers, turbines 
and combined cycle units which are included in the NOX FIP.
    Number of Respondents: 2313.
    Frequency of Response:

--Emissions reports quarterly for some units, twice during ozone season 
for others
--Test notifications and allowance transfers on an infrequent basis
--Compliance certifications on an annual basis

    Estimated Annual Hour Burden per Respondent: 107.
    Estimated Annual Cost per Respondent: $6,888.
    Estimated Total Annual Hour Burden: 249,150.
    Estimated Total Annualized Cost: $15,931,033.
    Note that these are an average estimate for the first three years 
of the program. EPA estimates lower costs in the first two years of the 
program because less units will be participating at that time. The 
units that will be participating at that time are units that are 
applying for early reduction credits. EPA also estimates that the 
highest compliance costs will occur in 2002, when the majority of the 
units that have to install and certify new monitors to comply with the 
program will do so. EPA believes that the year 2003 will be more 
representative of the actual ongoing costs of the program. At that time 
EPA estimates a burden of 179 hours per source and a cost of $27,670 
per source.
3. Non-Trading Sources Regulated
    Respondents/Affected Entities: Large stationary internal combustion 
engines and cement manufacturing which are included in the 
NOX FIP.
    Number of Respondents: 363.
    Frequency of Response:

--emissions reports either quarterly during the ozone season or 
annually

    Estimated Annual Hour Burden per Respondent: 464.
    Estimated Annual Cost per Respondent: $33,303.
    Estimated Total Annual Hour Burden: 168,390.
    Estimated Total Annualized Cost: $12,089,000.
    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.
    An agency may not conduct or sponsor, and a person is not required 
to respond to a collection of information unless it displays a 
currently valid OMB control number. The OMB control numbers for EPA's 
regulations are listed in 40 CFR part 9 and 48 CFR chapter 15.
    Comments are requested on the Agency's need for this information, 
the accuracy of the provided burden estimates, and any suggested 
methods for minimizing respondent burden, including through the use of 
automated collection techniques to the Director, Office of Policy, 
Regulatory Information Division, US Environmental Protection Agency 
(2137), 401 M St., SW, Washington, DC 20460; and to the Office of 
Information and Regulatory Affairs, Office of Management and Budget, 
725 17th St., NW, Washington, DC 20503, marked ``Attention: Desk 
Officer for EPA.'' Include the ICR number in any correspondence. Since 
OMB is required to make a decision concerning the ICR between 30 and 60 
days after October 21, 1998, a comment to OMB is best assured of having 
its full effect if OMB receives it by November 20, 1998. The final rule 
will respond to any OMB or public comments on the information 
collection requirements contained in this proposal.

E. Executive Order 13045 : Protection of Children from Environmental 
Health Risks and Safety Risks

1. Applicability
    The Executive Order 13045 applies to any rule that EPA determines 
is (i) ``economically significant'' as defined under Executive Order 
12866, and (ii) the environmental health or safety risk addressed by 
the rule has a disproportionate effect on children. If the regulatory 
action meets both criteria, the Agency must evaluate the environmental 
health or safety effects of the planned rule on children; and explain 
why the planned regulation is preferable to other potentially effective 
and reasonably feasible alternatives considered by the Agency. This 
proposed rule is not subject to Executive Order 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.
2. Children's Health Protection
    In accordance with section 5(501), the Agency has evaluated the 
environmental health or safety effects of the rule on children, and 
found that the rule does not separately address any age

[[Page 56422]]

groups. However, the Agency has conducted a general analysis of the 
potential changes in ozone and particulate matter levels experienced by 
children as a result of the NOX SIP call; these findings are 
presented in the RIA. The findings include projected ozone 
concentrations for every hour of the day, and projected annual average 
and daily peak particulate matter nominally 10m and less 
(PM10) and particulate matter nominally 15m and less 
(PM2.5) concentrations in every grid cell in the modeling 
domain. The EPA has mapped these concentrations to the census-derived 
population projections for these cells to arrive at a population-
weighted exposure characterization. The census data for each cell have 
been broken down by age, race, and socioeconomic status.

F. Executive Order 12898 Environmental Justice

    Executive Order 12898 requires that each Federal agency make 
achieving environmental justice part of its mission by identifying and 
addressing, as appropriate, disproportionately high and adverse human 
health or environmental effects of its programs, policies, and 
activities on minorities and low-income populations. The Agency has 
conducted a general analysis of the potential changes in ozone and PM 
levels experienced by minorities and low-income populations as a result 
of the NOX SIP call; these findings are presented in the 
RIA. The findings include projected ozone concentrations for every hour 
of the day, and projected annual average and daily peak PM10 
and PM2.5 concentrations in every grid cell in the modeling 
domain. The EPA has mapped these concentrations to the census-derived 
population projections for these cells to arrive at a population-
weighted exposure characterization. The census data for each cell has 
been broken down by age, race, and socioeconomic status.

G. Executive Order 12875: Enhancing the Intergovernmental Partnership

    Under Executive Order 12875, EPA may not issue a regulation that is 
not required by statute and that creates a mandate upon a State, local 
or tribal government, unless the Federal government provides the funds 
necessary to pay the direct compliance costs incurred by those 
governments or EPA consults with those governments. If the mandate is 
unfunded, EPA must provide to the Office of Management and Budget a 
description of the extent of EPA's prior consultation with 
representatives of affected State, local and tribal governments, the 
nature of their concerns, copies of any written communications from the 
governments, and a statement supporting the need to issue the 
regulation. In addition, Executive Order 12875 requires EPA to develop 
an effective process permitting elected officials and other 
representatives of State, local and tribal governments ``to provide 
meaningful and timely input in the development of regulatory proposals 
containing significant unfunded mandates.''
    The EPA has concluded that this rule may create a mandate on State 
and local governments and that the Federal government will not provide 
the funds necessary to pay the direct costs incurred by the State and 
local governments in complying with the mandate. In order to provide 
meaningful and timely input in the development of this regulatory 
action, EPA has sent letters to five national associations whose 
members include elected officials. The letters provide background 
information, request the associations to notify their membership of the 
proposed rulemaking, and encourage interested parties to comment on the 
proposed actions by sending comments during the public comment period 
and presenting testimony at the public hearing on the proposal. Any 
comments will be taken into consideration as the action moves toward 
final rulemaking.
    In addition, during the NOX SIP call, EPA provided 
direct notification to potentially affected State and municipally-owned 
utilities as part of the public comment and hearing process attendant 
to proposal of the NOX SIP call and supplemental notice of 
proposed rulemaking. These procedures helped ensure that small 
governments had an opportunity to give timely input and obtain 
information on compliance. EPA provided the 26 State and municipality-
owned utilities and appropriate elected officials with a brief summary 
of the proposal and the estimated impacts. The public rulemaking also 
elicited numerous comments from State and municipal utilities and 
groups representing utility interests.

H. Executive Order 13084: Consultation and Coordination With Indian 
Tribal Governments

    Under Executive Order 13084, EPA may not issue a regulation that is 
not required by statute, that significantly or uniquely affects the 
communities of Indian tribal governments, and that imposes substantial 
direct compliance costs on those communities, unless the government 
provides the funds necessary to pay the direct compliance costs 
incurred by the tribal governments. If the mandate is unfunded, EPA 
must provide to the office of Management and Budget, in a separately 
identified section of the preamble to the rule, a description of the 
extent of EPA's prior consultation with representatives of affected 
tribal governments, a summary of the nature of their concerns, and a 
statement supporting the need to issue the regulation. In addition, 
Executive Order 13084 requires EPA to develop an effective process 
permitting elected and other representatives of Indian tribal 
governments ``to provide meaningful and timely input in the development 
of regulatory policies on matters that significantly or uniquely affect 
their communities.''
    Today's rule does not significantly or uniquely affect the 
communities of Indian tribal governments and, in any event, will not 
impose substantial direct compliance costs on such communities. The EPA 
is not aware of sources located on tribal lands that could be subject 
to the requirements EPA is proposing in this notice. Accordingly, the 
requirements of section 3(b) of Executive Order 13084 do not apply.

I. National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (NTTAA), Public Law. 104-113, section 12(d) (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 specifications, test methods, 
sampling procedures, and business practices) that are developed or 
adopted by voluntary consensus standards bodies. The NTTAA directs EPA 
to provide Congress, through OMB, explanations when the Agency decides 
not to use available and applicable voluntary consensus standards.
    This proposed rulemaking would require all sources that participate 
in the trading program under proposed part 97 to meet the applicable 
monitoring requirements of part 75. Part 75 already incorporates a 
number of voluntary consensus standards. In addition, EPA's proposed 
revisions to part 75 proposed to add two more voluntary consensus 
standards to the rule (see 63 FR at 28116-17, discussing ASTM D5373-93 
``Standard Methods for Instrumental Determination of Carbon, Hydrogen 
and Nitrogen in laboratory samples of Coal and Coke,'' and API section 
2 ``Conventional Pipe Provers'' from Chapter 4 of the Manual of 
Petroleum

[[Page 56423]]

Measurement Standards, October 1988 edition). EPA's proposed part 75 
revisions also requested comments on the inclusion of additional 
voluntary consensus standards. EPA has recently finalized revisions to 
part 75 addressing some of the topics raised in EPA's proposed 
revisions to part 75. As part of this rule finalization, EPA 
incorporated two new voluntary consensus standards, in response to 
comments submitted on the proposed part 75 revisions related to other 
issues:
    (i) American Petroleum Institute (API) Petroleum Measurement 
Standards, Chapter 3, Tank Gauging: section 1A, Standard Practice for 
the Manual Gauging of Petroleum and Petroleum Products, December 1994; 
section 1B, Standard Practice for Level Measurement of Liquid 
Hydrocarbons in Stationary Tanks by Automatic Tank Gauging, April 1992 
(reaffirmed January 1997); section 2, Standard Practice for Gauging 
Petroleum and Petroleum Products in Tank Cars, September 1995; section 
3, Standard Practice for Level Measurement of Liquid Hydrocarbons in 
Stationary Pressurized Storage Tanks by Automatic Tank Gauging, June 
1996; section 4, Standard Practice for Level Measurement of Liquid 
Hydrocarbons on Marine Vessels by Automatic Tank Gauging, April 1995; 
and section 5, Standard Practice for Level Measurement of Light 
Hydrocarbon Liquids Onboard Marine Vessels by Automatic Tank Gauging, 
March 1997; and
    (ii) Shop Testing of Automatic Liquid Level Gages, Bulletin 2509 B, 
December 1961 (Reaffirmed October 1992), for Sec. 75.19.
    The EPA intends to finalize other revisions to part 75 in the near 
future and address comments related to the proposed voluntary consensus 
standards and to additional voluntary consensus standards at that time.
    This proposed rulemaking would require the owners and operators of 
cement kilns and stationary internal combustion engines to demonstrate 
compliance with the requirements set forth in part 98 using monitoring 
provisions set forth in part 60. Part 60 incorporates a number of 
voluntary consensus standards. At this time, EPA is not proposing any 
revisions to part 60, however EPA does periodically revise the test 
procedures set forth in part 60. When EPA does revise the test 
procedures set forth in part 60, EPA will address the use of any new 
voluntary consensus standards that are equivalent.
    This proposed rulemaking involves environmental monitoring or 
measurement. Sources that participate in the trading program would be 
required to meet the monitoring requirements under part 75. Consistent 
with the Agency's Performance Based Measurement System (PBMS), part 75 
sets forth performance criteria that allow the use of alternative 
methods to the ones set forth in part 75. The PBMS approach is intended 
to be more flexible and cost-effective for the regulated community; it 
is also intended to encourage innovation in analytical technology and 
improved data quality. EPA is not precluding the use of any method, 
whether it constitutes a voluntary consensus standard or not, as long 
as it meets the performance criteria specified, however any alternative 
methods must be approved in advance before they may be used under part 
75.
    The EPA welcomes comments on this aspect of the proposed rulemaking 
and, specifically, invites the public to identify potentially-
applicable voluntary consensus standards and to explain why such 
standards should be used in this regulation. As part of a larger 
effort, EPA is undertaking a project to cross-reference existing 
voluntary consensus standards on testing, sampling, and analysis, with 
current and future EPA test methods. When completed, this project will 
assist EPA in identifying potentially-applicable voluntary consensus 
standards which can then be evaluated for equivalency and applicability 
in determining compliance with future regulations.

List of Subjects

40 CFR Part 52

    Environmental protection, Acid rain program, Air pollution control, 
Nitrogen dioxide, Reporting and recordkeeping requirements.

40 CFR Part 98

    Environmental protection, Administrative practice and procedure, 
Air pollution control, Nitrogen dioxide, Reporting and recordkeeping 
requirements.

    Dated: September 24, 1998.
Carol M. Browner,
Administrator.

    For the reasons set forth in the preamble, parts 52 and 98 of 
chapter 1 of title 40 of the Code of Federal Regulations are proposed 
to be amended as follows:

PART 52--APPROVAL AND PROMULGATION OF IMPLEMENTATION PLANS

    1. The authority citation for part 52 continues to read as follows:

    Authority: 42 U.S.C. 7401-7671q.

Subpart A--General Provisions

    2. Subpart A is amended to add Sec. 52.35 to read as follows:


Sec. 52.35  Requirements of Federal implementation plan relating to 
budgets for emissions of nitrogen oxides.

    (a) Failure. The provisions of this section are applicable to 
sources of emissions of nitrogen oxides (NOX) located within 
any State that is listed in 40 CFR 51.121(c) and for which EPA has 
found that the State has:
    (1) Failed to submit the State implementation plan revision 
required by 40 CFR 51.121;
    (2) Failed to submit such a plan revision meeting the minimum 
criteria in 40 CFR 51.103 and Appendix V of part 51; or
    (3) Submitted a plan revision that EPA has disapproved as not 
meeting the requirements of 40 CFR 51.121.
    (b) FIP Regulations. The provisions of parts 97 and 98 of this 
chapter constitute the Federal implementation plan provisions for each 
State described in paragraph (a) of this section. These provisions do 
not invalidate or otherwise affect the obligations of States, emissions 
sources or other persons with respect to all portions of plans approved 
or promulgated under this part, nor the obligations of States under the 
requirements of 40 CFR 51.121 and 51.122.

Subpart B--Alabama

    3. Subpart B is amended to add Sec. 52.64 to read as follows:


Sec. 52.64  Interstate pollutant transport provisions; requirements for 
decreases in emissions of nitrogen oxides.

    FIP Regulations. The owner or operator of each NOX 
source located within the State of Alabama and for which requirements 
are set forth in parts 97 or 98 of this chapter must comply with such 
applicable requirements.

Subpart H--Connecticut

    4. Subpart H is amended to add Sec. 52.377 to read as follows:


Sec. 52.377  Interstate pollutant transport provisions; requirements 
for decreases in emissions of nitrogen oxides.

    FIP Regulations. The owner or operator of each NOX 
source located within the State of Connecticut and for which 
requirements are set forth in parts 97 or 98 of this chapter must 
comply with such applicable requirements.

[[Page 56424]]

Subpart I--Delaware

    5. Subpart I is amended to add Sec. 52.425 to read as follows:


Sec. 52.425  Interstate pollutant transport provisions; requirements 
for decreases in emissions of nitrogen oxides.

    FIP Regulations. The owner or operator of each NOX 
source located within the State of Delaware and for which requirements 
are set forth in parts 97 or 98 of this chapter must comply with such 
applicable requirements.
    6. Subpart J is amended to add Sec. 52.475 to read as follows:


Sec. 52.475  Interstate pollutant transport provisions; requirements 
for decreases in emissions of nitrogen oxides.

    FIP Regulations. The owner or operator of each NOX 
source located within the District of Columbia and for which 
requirements are set forth in parts 97 or 98 of this chapter must 
comply with such applicable requirements.

Subpart L--Georgia

    6a. Subpart L is amended to add Sec. 52.584 to read as follows:


Sec. 52.584  Interstate pollutant transport provisions; requirements 
for decreases in emissions of nitrogen oxides.

    FIP Regulations. The owner or operator of each NOX 
source located within the State of Georgia and for which requirements 
are set forth in parts 97 or 98 of this chapter must comply with such 
applicable requirements.

Subpart O--Illinois

    7. Subpart O is amended to add Sec. 52.723 to read as follows:


Sec. 52.723  Interstate pollutant transport provisions; requirements 
for decreases in emissions of nitrogen oxides.

    FIP Regulations. The owner or operator of each NOX 
source located within the State of Illinois and for which requirements 
are set forth in parts 97 or 98 of this chapter must comply with such 
applicable requirements.

Subpart P--Indiana

    8. Subpart P is amended to add Sec. 52.774 to read as follows:


Sec. 52.774  Interstate pollutant transport provisions; requirements 
for decreases in emissions of nitrogen oxides.

    FIP Regulations. The owner or operator of each NOX 
source located within the State of Indiana and for which requirements 
are set forth in parts 97 or 98 of this chapter must comply with such 
applicable requirements.

Subpart S--Kentucky

    9. Subpart S is amended to add Sec. 52.939 to read as follows:


Sec. 52.939  Interstate pollutant transport provisions; requirements 
for decreases in emissions of nitrogen oxides.

    FIP Regulations. The owner or operator of each NOX 
source located within the State of Kentucky and for which requirements 
are set forth in parts 97 or 98 of this chapter must comply with such 
applicable requirements.

Subpart V--Maryland

    10. Subpart V is amended to add Sec. 52.1078 to read as follows:


Sec. 52.1078  Interstate pollutant transport provisions; requirements 
for decreases in emissions of nitrogen oxides.

    FIP Regulations. The owner or operator of each NOX 
source located within the State of Maryland and for which requirements 
are set forth in parts 97 or 98 of this chapter must comply with such 
applicable requirements.

Subpart W--Massachusetts

    11. Subpart W is amended to add Sec. 52.1166 to read as follows:


Sec. 52.1166  Interstate pollutant transport provisions; requirements 
for decreases in emissions of nitrogen oxides.

    FIP Regulations. The owner or operator of each NOX 
source located within the State of Massachusetts and for which 
requirements are set forth in parts 97 or 98 of this chapter must 
comply with such applicable requirements.

Subpart X--Michigan

    12. Subpart X is amended to add Sec. 52.1179 to read as follows:


Sec. 52.1179  Interstate pollutant transport provisions; requirements 
for decreases in emissions of nitrogen oxides.

    FIP Regulations. The owner or operator of each NOX 
source located within the State of Michigan and for which requirements 
are set forth in parts 97 or 98 of this chapter must comply with such 
applicable requirements.

Subpart AA--Missouri

    13. Subpart AA is amended to add Sec. 52.1326 to read as follows:


Sec. 52.1326  Interstate pollutant transport provisions; requirements 
for decreases in emissions of nitrogen oxides.

    FIP Regulations. The owner or operator of each NOX 
source located within the State of Missouri and for which requirements 
are set forth in parts 97 or 98 of this chapter must comply with such 
applicable requirements.

Subpart FF--New Jersey

    14. Subpart FF is amended to add Sec. 52.1582 to read as follows:


Sec. 52.1582  Interstate pollutant transport provisions; requirements 
for decreases in emissions of nitrogen oxides.

    FIP Regulations. The owner or operator of each NOX 
source located within the State of New Jersey and for which 
requirements are set forth in parts 97 or 98 of this chapter must 
comply with such applicable requirements.

Subpart HH--New York

    15. Subpart HH is amended to add Sec. 52.1684 to read as follows:


Sec. 52.1684  Interstate pollutant transport provisions; requirements 
for decreases in emissions of nitrogen oxides.

    FIP Regulations. The owner or operator of each NOX 
source located within the State of New York and for which requirements 
are set forth in parts 97 or 98 of this chapter must comply with such 
applicable requirements.

Subpart II--North Carolina

    16. Subpart II is amended to add Sec. 52.1779 to read as follows:


Sec. 52.1779  Interstate pollutant transport provisions; requirements 
for decreases in emissions of nitrogen oxides.

    FIP Regulations. The owner or operator of each NOX 
source located within the State of North Carolina and for which 
requirements are set forth in parts 97 or 98 of this chapter must 
comply with such applicable requirements.

Subpart KK--Ohio

    17. Subpart KK is amended to add Sec. 52.1874 to read as follows:


Sec. 52.1874  Interstate pollutant transport provisions; requirements 
for decreases in emissions of nitrogen oxides.

    FIP Regulations. The owner or operator of each NOX 
source located within the State of Ohio and for which requirements are 
set forth in parts 97 or 98 of this chapter must comply with such 
applicable requirements.

[[Page 56425]]

Subpart NN--Pennsylvania

    18. Subpart NN is amended to add Sec. 52.2031 to read as follows:


Sec. 52.2031  Interstate pollutant transport provisions; requirements 
for decreases in emissions of nitrogen oxides.

    FIP Regulations. The owner or operator of each NOX 
source located within the State of Pennsylvania and for which 
requirements are set forth in parts 97 or 98 of this chapter must 
comply with such applicable requirements.

Subpart OO--Rhode Island

    19. Subpart OO is amended to add Sec. 52.2082 to read as follows:


Sec. 52.2082  Interstate pollutant transport provisions; requirements 
for decreases in emissions of nitrogen oxides.

    FIP Regulations. The owner or operator of each NOX 
source located within the State of Rhode Island and for which 
requirements are set forth in parts 97 or 98 of this chapter must 
comply with such applicable requirements.

Subpart PP--South Carolina

    20. Subpart PP is amended to add Sec. 52.2135 to read as follows:


Sec. 52.2135  Interstate pollutant transport provisions; requirements 
for decreases in emissions of nitrogen oxides.

    FIP Regulations. The owner or operator of each NOX 
source located within the State of South Carolina and for which 
requirements are set forth in parts 97 or 98 of this chapter must 
comply with such applicable requirements.

Subpart RR--Tennessee

    21. Subpart RR is amended to add Sec. 52.2232 to read as follows:


Sec. 52.2232  Interstate pollutant transport provisions; requirements 
for decreases in emissions of nitrogen oxides.

    FIP Regulations. The owner or operator of each NOX 
source located within the State of Tennessee and for which requirements 
are set forth in parts 97 or 98 of this chapter must comply with such 
applicable requirements.

Subpart VV--Virginia

    22. Subpart VV is amended to add Sec. 52.2429 to read as follows:


Sec. 52.2429  Interstate pollutant transport provisions; requirements 
for decreases in emissions of nitrogen oxides.

    FIP Regulations. The owner or operator of each NOX 
source located within the State of Virginia and for which requirements 
are set forth in parts 97 or 98 of this chapter must comply with such 
applicable requirements.

Subpart XX--West Virginia

    23. Subpart XX is amended to add Sec. 52.2529 to read as follows:


Sec. 52.2529  Interstate pollutant transport provisions; requirements 
for decreases in emissions of nitrogen oxides.

    FIP Regulations. The owner or operator of each NOX 
source located within the State of West Virginia and for which 
requirements are set forth in parts 97 or 98 of this chapter must 
comply with such applicable requirements.

Subpart YY--Wisconsin

    24. Subpart YY is amended to add Sec. 52.2576 to read as follows:


Sec. 52.2576  Interstate pollutant transport provisions; requirements 
for decreases in emissions of nitrogen oxides.

    FIP Regulations. The owner or operator of each NOX 
source located within the State of Wisconsin and for which requirements 
are set forth in parts 97 or 98 of this chapter must comply with such 
applicable requirements.
    25. Part 98 is added to read as follows:

PART 98--NITROGEN OXIDES (NOX) BUDGET PROGRAM 
REQUIREMENTS FOR STATIONARY SOURCES NOT IN THE TRADING PROGRAM

Subpart A--Emissions of NOX From Stationary Reciprocating 
Internal Combustion Engines

Sec.
98.1  Applicability.
98.2  Definitions.
98.3  Standard requirements.
98.4  Compliance determination.
98.5  Reporting, monitoring and recordkeeping.
98.6  Exemptions.

Subpart B--Emissions of NOX From Cement Manufacturing.

98.41  Applicability.
98.42  Definitions.
98.43  Standard requirements.
98.44  Reporting, monitoring and recordkeeping.
98.45  Exemptions.

    Authority: 42 U.S.C. 7401-7671q.

Subpart A--Emissions of NOX From Stationary 
Reciprocating Internal Combustion Engines


Sec. 98.1  Applicability.

    (a) Any owner or operator of a rich burn stationary internal 
combustion engine rated at equal to or greater than 2,400 brake 
horsepower shall comply with the applicable requirements of this 
section and Secs. 98.2 through 97.6.
    (b) Any owner or operator of a lean burn stationary internal 
combustion engine rated at equal to or greater than 2,400 brake 
horsepower shall comply with the applicable requirements of this 
section and Secs. 98.2 through 98.6.
    (c) Any owner or operator of a diesel stationary internal 
combustion engine rated at equal to or greater than 3,000 brake 
horsepower shall comply with the applicable requirements of this 
section and Sec. 98.2 through 98.6.
    (d) Any owner or operator of a dual fuel stationary internal 
combustion engine rated at equal to or greater than 4,400 brake 
horsepower shall comply with the applicable requirements of this 
section and Sec. 98.2 through 98.6.


Sec. 98.2  Definitions.

    For the purposes of this subpart, the following definitions shall 
apply.
    (a) Diesel engine means a compression ignited two- or four-stroke 
engine in which liquid fuel injected into the combustion chamber 
ignites when the air charge has been compressed to a temperature 
sufficiently high for auto-ignition.
    (b) Dual fuel engine means a compression ignited stationary 
internal combustion engine that is burning liquid fuel and gaseous fuel 
simultaneously.
    (c) Emergency standby engine means an internal combustion engine 
used only when normal power line or natural gas service fails, or for 
the emergency pumping of water for either fire protection or flood 
relief. An emergency standby engine may not be operated to supplement a 
primary power source when the load capacity or rating of the primary 
power source has been either reached or exceeded.
    (d) Engine rating means the output of an engine as determined by 
the engine manufacturer and listed on the nameplate of the unit, 
regardless of any derating.
    (e) Higher heating value (HHV) means the total heat liberated per 
mass of fuel burned (Btu per pound), when fuel and dry air at standard 
conditions undergo complete combustion and all resultant products are 
brought to their standard States at standard conditions. If 
certification of the HHV is not provided by the third party fuel 
supplier, it shall be determined by one of the following test methods: 
ASTM D2015-85 for solid fuels; ASTM D240-87 or ASTM D2382-88 for liquid 
hydrocarbon fuels; or ASTM D1826-88 or ASTM D1945-81 in conjunction 
with ASTM D3588-89 for

[[Page 56426]]

gaseous fuels. These methods are all incorporated by reference as 
specified at 40 CFR 52.3002.
    (f) Lean-burn engine means any two-or four-stroke spark-ignited 
engine that is not a rich-burn engine.
    (g) Maintenance operation means the use of an emergency standby 
engine and fuel system during testing, repair and routine maintenance 
to verify its readiness for emergency standby use.
    (h) Malfunction means any sudden and unavoidable failure of air 
pollution control equipment or process equipment or of a process to 
operate in a normal or usual manner. Failures that are caused entirely 
or in part by poor maintenance, careless operation, or any other 
preventable upset condition or preventable equipment breakdown shall 
not be considered malfunctions.
    (i) Output means the shaft work output from an engine plus the 
energy reclaimed by any useful heat recovery system.
    (j) Peak load means the maximum instantaneous operating load.
    (k) Permitted capacity factor means the annual permitted fuel use 
divided by the manufacturers specified maximum fuel consumption times 
8,760 hours per year.
    (l) Rich-burn engine means a two- or four-stroke spark-ignited 
engine where the manufacturers original recommended operating air/fuel 
ratio divided by the stoichiometric air/fuel ratio is less than or 
equal to 1.1.
    (m) Shutdown means the period of time a unit is cooled from its 
normal operating temperature to cold or ambient temperature.
    (n) Startup means the period of time a unit is heated from cold or 
ambient temperature to its normal operating temperature as specified by 
the manufacturer.
    (o) Stationary internal combustion engine means any internal 
combustion engine of the reciprocating type that is either attached to 
a foundation at a facility or is designed to be capable of being 
carried or moved from one location to another and remains at a single 
site at a building, structure, facility, or installation for more than 
12 consecutive months. Any engine (or engines) that replaces an engine 
at a site that is intended to perform the same or similar function as 
the engine replaced is included in calculating the consecutive time 
period. Nonroad engines and engines used solely for competition are not 
stationary internal combustion engines.
    (p) Stoichiometric air/fuel ratio means the air/fuel ratio where 
all fuel and all oxygen in the air/fuel mixture will be consumed.
    (q) Unit means any diesel, lean-burn, or rich-burn stationary 
internal combustion engine as defined in paragraph (o) of this section.


Sec. 98.3  Standard requirements.

    After May 1, 2003, an owner or operator of a unit subject to the 
standards of this subpart shall not operate the unit May 1 through 
September 30 of 2003, and any subsequent year unless the owner or 
operator complies with the requirements of paragraph (a) of this 
section during May 1 through September 30 of each year.
    (a) No owner or operator of a stationary internal combustion engine 
shall cause to be discharged into the atmosphere any gases that contain 
NOX in excess of the following applicable limit, expressed 
as NO2 corrected to 15 percent parts per million by volume 
(ppmv) stack gas O2 on a dry basis, averaged over a rolling 
30-day period:

(1) Rich-burn,  2400 bhp: 110 ppmv
(2) Lean-burn,  2400 bhp: 125 ppmv
(3) Diesel,  3000 bhp: 175 ppmv
(4) Dual fuel,  4400 bhp: 125 ppmv

    (b) Each emission limit expressed in paragraphs (a)(1) through (4) 
of this section may be multiplied by X, where X equals the engine 
efficiency (E) divided by a reference efficiency of 30 percent. Engine 
efficiency (E) shall be determined using one of the methods specified 
in paragraph (b)(1) or (2) of this section, whichever provides a higher 
value. However, engine efficiency (E) shall not be less than 30 
percent. An engine with an efficiency lower than 30 percent shall be 
assigned an efficiency of 30 percent.
    (1)
    [GRAPHIC] [TIFF OMITTED] TP21OC98.005
    
where energy input is determined by a fuel measuring device accurate to 
5 percent and is based on the higher heating value (HHV) of 
the fuel. Percent efficiency (E) shall be averaged over 15 consecutive 
minutes and measured at peak load for the applicable engine.
    (2)
    [GRAPHIC] [TIFF OMITTED] TP21OC98.006
    
Where
LHV = the lower heating value of the fuel; and
HHV = the higher heating value of the fuel


Sec. 98.4  Compliance determination.

    Any owner or operator of a unit subject to the requirements of 
Sec. 98.3 shall determine compliance using a continuous emissions 
monitoring system (CEMS) which meets the applicable requirements of 
Appendices B and F of 40 CFR part 60, excluding data obtained during 
periods specified in Sec. 98.6.


Sec. 98.5  Reporting, monitoring, and recordkeeping.

    (a) Reporting requirements. Any owner or operator subject to the 
requirements of Sec. 98.3 shall comply with the following requirements:
    (1) By May 1, 2003, submit to the Administrator the identification 
number and type of each unit subject to the section, the name and 
address of the plant where the unit is located, and the name and 
telephone number of the person responsible for demonstrating compliance 
with the section.
    (2) Submit a report documenting for that unit the total 
NOX emissions from May 1 through September 30 of each year 
to the Administrator by October 31 of each year, beginning in 2003.
    (3) Each owner or operator of a unit subject to this rule and 
operating a CEMS shall submit an excess emissions and monitoring 
systems performance report, in accordance with the requirements of 40 
CFR 60.7(c) and 60.13.
    (b) Monitoring requirements. (1) Any owner or operator subject to 
the requirements of Sec. 98.3 shall not operate such equipment unless 
it is equipped with one of the following:
    (i) A CEMS which meets the applicable requirements of 40 CFR part 
60, subpart A, and appendix B, and complies with the quality assurance 
procedures specified in 40 CFR part 60, appendix F. The CEMS shall be 
used to demonstrate compliance with the applicable emission limit.
    (ii) An alternate calculational and recordkeeping procedure based 
upon actual emissions testing and correlations with operating 
parameters. The installation, implementation and use of such an 
alternate calculational and recordkeeping procedure must be approved by 
EPA in writing prior to implementation.
    (2) The CEMS or approved alternate recordkeeping procedure shall be 
operated and maintained in accordance with an on-site CEMS operating 
plan approved by EPA.
    (c) Recordkeeping requirements.
    (1) Any owner or operator of a unit subject to this subpart shall 
maintain all records necessary to demonstrate compliance with the 
section for a period of 2 calendar years at the plant at which the 
subject unit is located. The records shall be made available to the

[[Page 56427]]

Administrator upon request. The owner or operator shall maintain 
records of the following information for each day the unit is operated:
    (i) Identification and location of each engine subject to the 
requirements of this section.
    (ii) Calendar date of record.
    (iii) The number of hours the unit is operated during each day 
including startups, shutdowns, malfunctions, and the type and duration 
of maintenance and repairs.
    (iv) Date and results of each emissions inspection.
    (v) A summary of any emissions corrective maintenance taken.
    (vi) The results of all compliance tests.
    (vii) If a unit is equipped with a CEMS:
    (A) Identification of time periods during which NOX 
standards are exceeded, the reason for the exceedance, and action taken 
to correct the exceedance and to prevent similar future exceedances.
    (B) Identification of the time periods for which operating 
conditions and pollutant data were not obtained including reasons for 
not obtaining sufficient data and a description of corrective actions 
taken.
    (2) [Reserved]


Sec. 98.6  Exemptions.

    (a) The requirements of Secs. 98.3, 98.4, and 98.5 shall not apply 
to the following periods of operation:
    (1) Start-up and shut-down periods and periods of malfunction, not 
to exceed 36 consecutive hours;
    (2) Regularly scheduled maintenance activities.

Subpart B--Emissions of NOX From Cement Manufacturing


Sec. 98.41  Applicability.

    The requirements of this subpart apply only to kilns with process 
rates of at least the following: long dry kilns--12 tons per hour 
(TPH); long wet kilns--10 TPH; preheater kilns--16 TPH; precalciner and 
preheater/precalciner kilns--22 TPH.


Sec. 98.42  Definitions.

    (a) Clinker means the product of a Portland cement kiln from which 
finished cement is manufactured by milling and grinding.
    (b) Long dry kiln means a kiln 14 feet or larger in diameter, 400 
feet or greater in length, which employs no preheating of the feed. The 
inlet feed to the kiln is dry.
    (c) Long wet kiln means a kiln 14 feet or larger in diameter, 400 
feet or greater in length, which employs no preheating of the feed. The 
inlet feed to the kiln is a slurry.
    (d) Low-NOX burners means combustion equipment designed 
to reduce flame turbulence, delay fuel/air mixing, and establish fuel-
rich zones for initial combustion.
    (e) Malfunction means any sudden, infrequent, and not reasonably 
preventable failure of air pollution control equipment, process 
equipment, or a process to operate in a normal or usual manner. 
Failures that are caused in part by poor maintenance or careless 
operation are not malfunctions.
    (f) Mid-kiln firing means the secondary firing in kilns by 
injecting solid fuel at an intermediate point in the kiln using a 
specially designed feed injection mechanism for the purpose of 
decreasing NOX emissions through:
    (1) Burning part of the fuel at a lower temperature; and
    (2) Reducing conditions at the solid waste injection point that may 
destroy some of the NOX formed upstream in the kiln burning 
zone.
    (g) Portland cement means a hydraulic cement produced by 
pulverizing clinker consisting essentially of hydraulic calcium 
silicates, usually containing one or more of the forms of calcium 
sulfate as an interground addition.
    (h) Portland cement kiln means a system, including any solid, 
gaseous or liquid fuel combustion equipment, used to calcine and fuse 
raw materials, including limestone and clay, to produce Portland cement 
clinker.
    (i) Precalciner kiln means a kiln where the feed to the kiln system 
is preheated in cyclone chambers and utilize a second burner to calcine 
material in a separate vessel attached to the preheater prior to the 
final fusion in a kiln which forms clinker.
    (j) Preheater kiln means a kiln where the feed to the kiln system 
is preheated in cyclone chambers prior to the final fusion in a kiln 
which forms clinker.
    (k) Shutdown means the cessation of operation of a Portland cement 
kiln for any purpose.
    (l) Startup means the setting in operation of a Portland cement 
kiln for any purpose.


Sec. 98.43  Standard requirements.

    After May 1, 2003, an owner or operator of any Portland cement kiln 
subject to this rule shall not operate the kiln during May 1 through 
September 30 unless the kiln has installed and operates during May 1 to 
September 30 with low-NOX burners, mid-kiln firing, or 
alternative control techniques, subject to EPA approval, that achieve 
at least the same emissions decreases as low-NOX burners or 
mid-kiln firing.


Sec. 98.44  Reporting, monitoring and recordkeeping.

    (a) Reporting requirements. Any owner or operator subject to the 
requirements of Sec. 98.43 shall comply with the following 
requirements:
    (1) By May 1, 2003, submit to the Administrator the identification 
number and type of each unit subject to the section, the name and 
address of the plant where the unit is located, and the name and 
telephone number of the person responsible for demonstrating compliance 
with the section.
    (2) Submit a report documenting for that unit the total 
NOX emissions from May 1 through September 30 of each year 
to the Administrator by October 31 of each year, beginning in 2003.
    (b) Monitoring requirements. Any owner or operator of a unit 
subject to this subpart shall complete an initial performance test and 
subsequent annual testing consistent with the requirements of 40 CFR 
part 60, appendix A, Method 7, 7A ,7C, 7D, or 7E.
    (c) Recordkeeping Requirements. Any owner or operator of a unit 
subject to this subpart shall produce and maintain records which shall 
include, but are not limited to:
    (1) The emissions, in pounds of NOX per ton of clinker 
produced from each affected Portland cement kiln.
    (2) The date, time and duration of any startup, shutdown or 
malfunction in the operation of any of the cement kilns or the 
emissions monitoring equipment.
    (3) The results of any performance testing.
    (4) Daily cement kiln production records.
    (5) All records required to be produced or maintained shall be 
retained on site for a minimum of 2 years and be made available to the 
EPA or State or local agency upon request.


Sec. 98.45  Exemptions.

    The requirements of Secs. 98.43 and 98.44 shall not apply to the 
following periods of operation:
    (a) Start-up and shut-down periods and periods of malfunction, not 
to exceed 36 consecutive hours;
    (b) Regularly scheduled maintenance activities.

[FR Doc. 98-26431 Filed 10-20-98; 8:45 am]
BILLING CODE 6560-01-P