[Federal Register Volume 65, Number 134 (Wednesday, July 12, 2000)]
[Proposed Rules]
[Pages 42907-42913]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-17187]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[MA076-7209b, FRL-6731-7]


Approval and Promulgation of Implementation Plans; Massachusetts; 
Nitrogen Oxides Budget and Allowance Trading Program

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: In November 1999, the Commonwealth of Massachusetts (MA) 
submitted a State Implementation Plan (SIP) to reduce air emissions of 
nitrogen oxides (NOX). The submittal responds to the EPA's 
regulation entitled, ``Finding of Significant Contribution and 
Rulemaking for Certain States in the Ozone Transport Assessment Group 
Region for Purposes of Reducing Regional Transport of Ozone,'' 
otherwise known as the ``NOX SIP Call.'' The submittal 
includes a narrative and a regulation that establish a statewide 
NOX budget and a NOX allowance trading program 
for large electricity generating and industrial sources beginning in 
2003.
    The Environmental Protection Agency (EPA) is proposing approval of 
the MA's November 1999 SIP submittal including, MA's NOX 
control regulation, 310 CMR 7.28, ``NOX Allowance Trading 
Program,'' and the SIP narrative materials: ``Background Document and 
Technical Support For Public Hearings on the Proposed Revisions to the 
State Implementation Plan for Ozone,'' July 1999; ``Supplemental 
Background Document For Public Hearings on Modifications to the July, 
1999 Proposal to Revise the State Implementation Plan For Ozone,'' 
September 1999; and ``Summary of Comments and Response To Comments From 
Public Hearings on Proposed Revisions to the State Implementation Plan 
for Ozone, Including Proposed 310 CMR 7.28.'' EPA is also proposing to 
approve changes to regulations 310 CMR 7.19, ``Reasonably Available 
Control Technology (RACT) for Sources of Oxides of Nitrogen 
(NOX),'' and 310 CMR 7.27, ``NOX Allowance 
Program,'' related to emissions monitoring. EPA is proposing to approve 
Massachusetts' submittal for its strengthening effect pursuant to 
section 110 of the Clean Air Act (CAA).

DATES: EPA must receive written comments on or before August 11, 2000.

ADDRESSES: Comments may be mailed to David Conroy, Unit Manager, Air 
Quality Planning, Office of Ecosystem Protection (mail code CAQ), U.S. 
Environmental Protection Agency, Region I, One Congress Street, Suite 
1100, Boston, MA 02114-2023. Copies of the documents relevant to this 
action are available for public inspection during normal business 
hours, by appointment at the Office Ecosystem Protection, U.S. 
Environmental Protection Agency, Region I, One Congress Street, 11th 
floor, Boston, MA 02114, and at the Division of Air Quality Control, 
Department of Environmental Protection, One Winter Street, 8th Floor, 
Boston, MA 02108.

FOR FURTHER INFORMATION CONTACT: Steven A. Rapp, (617) 918-1048 or at 
[email protected].

SUPPLEMENTARY INFORMATION:

Overview

    On November 19, 1999, MA submitted a package of regulatory and 
narrative materials in order to comply with the NOX SIP Call 
and strengthen its ozone SIP. EPA proposes full approval of MA's 
submittal.
    The following table of contents describes the format for this 
SUPPLEMENTARY INFORMATION:
I. EPA's Action
    A. What action is EPA proposing today?
    B. Why is EPA proposing this action?
    C. What are the general NOX SIP Call requirements?
    D. What is EPA's NOX budget and allowance trading 
program?
    E. What is the Compliance Supplement Pool?
    F. What guidance did EPA use to evaluate Massachusetts' 
submittal?
II. Massachusetts' NOX Budget Program
    A. What is Massachusetts' NOX SIP Call submittal?
    B. When did Massachusetts propose and adopt the program?
    C. When did Massachusetts submit the SIP revision to EPA and 
when did EPA find it technically and administratively complete?
    D. What is Massachusetts' NOX Budget Trading Program?
    E. How will Massachusetts and EPA enforce the program?
    F. How does Massachusetts' program protect the environment?
    G. What is the result of EPA's evaluation of Massachusetts' 
program?
    H. Why is EPA considering the NOX SIP Call submittals 
from CT, MA, and RI at the same time?
    I. What other significant items relate to Massachusetts' 
program?
    J. What issues are associated with the Massachusetts 
NOX SIP Call submittal?
III. Proposed Action
IV. Administrative Requirements

    In the following questions and answers, the term ``you'' refers to 
the reader of the notice and ``we'' refers to the EPA.

I. EPA's Action

A. What Action Is EPA Proposing Today?

    EPA is proposing approval of MA's SIP submittal, including MA's 
NOX control regulation, 310 CMR 7.28, ``NOX 
Allowance Trading Program'' and the SIP narrative materials listed 
above. EPA is also proposing to approve changes to regulations 310 CMR 
7.19, ``Reasonably Available Control Technology (RACT) for Sources of 
Oxides of Nitrogen (NOX),'' and 310 CMR 7.27, 
``NOX Allowance Program,'' related to emissions monitoring.
    MA submitted the adopted 310 CMR 7.28 and the SIP narrative, as 
well as the amendments to 310 CMR 7.19 and 310 CMR 7.27, with a request 
to revise the SIP on November 19, 1999. MA submitted the regulation and 
narrative in order to strengthen its one-hour ozone SIP and to comply 
with the NOX SIP Call in each ozone season, i.e., May 1 to 
October 1, beginning in 2003. EPA finds that MA's submittal is fully 
approvable as a SIP strengthening measure for Massachusetts' one-hour 
ground level ozone SIP and it meets the air quality objective of the 
NOX SIP Call requirements that EPA has published to date. 
EPA will take action in a separate future rulemaking on whether 
Massachusetts's submittal meets the applicable NOX SIP Call 
requirements themselves.

B. Why Is EPA Proposing This Action?

    EPA is proposing this action in order to:

     Fulfill MA's and EPA's requirements under the Clean Air 
Act (the Act);
     Make MA's control regulation federally-enforceable and 
available for credit in the SIP;
     Make MA's SIP narrative, including the ozone season 
NOX budget, federally enforceable as part of the MA SIP; 
and
     Give you the opportunity to submit written comments on 
EPA's proposed actions, as discussed in the DATES and ADDRESSES 
sections.

[[Page 42908]]

C. What Are the General NOX SIP Call Requirements?

    On October 27, 1998, EPA published a final rule entitled, ``Finding 
of Significant Contribution and Rulemaking for Certain States in the 
Ozone Transport Assessment Group Region for Purposes of Reducing 
Regional Transport of Ozone,'' otherwise known as the ``NOX 
SIP Call.'' See 63 FR 57356. The NOX SIP Call requires 22 
States and the District of Columbia \1\ to meet statewide 
NOX emission budgets during the five month period between 
May 1 and October 1 in order to reduce the amount of ground level ozone 
that is transported across the eastern United States. The 
NOX SIP Call set out a schedule that required the affected 
states to adopt regulations by September 30, 1999 \2\, and implement 
control strategies by May 1, 2003.
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    \1\ Alabama, Connecticut, District of Columbia, Delaware, 
Georgia, Illinois, Indiana, Kentucky, Massachusetts, Maryland, 
Michigan, Missouri, North Carolina, New Jersey, New York, Ohio, 
Pennsylvania, Rhode Island, South Carolina, Tennessee, Virginia, 
Wisconsin, and West Virginia.
    \2\ On May 25, 1999, the D.C. Circuit issued a partial stay of 
the submission of the SIP revisions required under the 
NOX SIP Call. The NOX SIP Call had required 
submission of the SIP revisions by September 30, 1999. State 
Petitioners challenging the NOX SIP Call moved to stay 
the submission schedule until April 27, 2000. The D.C. Circuit 
issued a stay of the SIP submission deadline pending further order 
of the court. Michigan v. EPA, No. 98-1497 (D.C. Cir. May 25, 1999) 
(order granting stay in part).
    On November 19, 1999, Massachusetts voluntarily submitted this 
revision to EPA for approval notwithstanding the court's stay of the 
SIP submission deadline. On March 3, 2000, the D.C. Circuit ruled on 
Michigan v. EPA, affirming many aspects of the SIP call and 
remanding certain other portions to the Agency. The court's ruling 
does not affect this action because it is being proposed as a SIP-
strengthening measure regardless of the status of the case.
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    The NOX SIP Call allowed states the flexibility to 
decide which source categories to regulate in order to meet the 
statewide budgets. But, the SIP Call notice suggested that imposing 
statewide NOX emissions caps on large fossil-fuel fired 
industrial boilers and electricity generating units would provide a 
highly cost effective means for States to meet their NOX 
budgets. In fact, the state-specific budgets were set assuming an 
emission rate of 0.15 pounds NOX per million British thermal 
units (lb. NOX/mmBtu) at EGUs, multiplied by the projected 
heat input (mmBtu) from burning the quantity of fuel needed to meet the 
2007 forecast for electricity demand. See 63 FR 57407. The calculation 
of the 2007 EGU emissions assumed that an emissions trading program 
would be part of an EGU control program. The NOX SIP Call 
state budgets also assumed on average a 30% NOX reduction 
from cement kilns, a 60% reduction from industrial boilers and 
combustion turbines, and a 90% reduction from internal combustion 
engines. The non-EGU control assumptions were applied at units where 
the heat input capacities were greater than 250 mmBtu per hour, or in 
cases where heat input data were not available or appropriate, at units 
with actual emissions greater than one ton per day.
    To assist the states in their efforts to meet the SIP Call, the 
NOX SIP Call final rulemaking notice included a model 
NOX allowance trading regulation, called ``NOX 
Budget Trading Program for State Implementation Plans,'' (40 CFR Part 
96), that could be used by states to develop their regulations. The 
NOX SIP Call notice explained that if states developed an 
allowance trading regulation consistent with the EPA model rule, they 
could participate in a regional allowance trading program that would be 
administered by the EPA. See 63 FR 57458-57459.

D. What Is EPA's NOX Budget and Allowance Trading Program?

    EPA's model NOX budget and allowance trading rule for 
SIPs, 40 CFR Part 96, sets forth a NOX emissions trading 
program for large electric generating units (EGUs) and non-electric 
generating units (non-EGUs). A state can voluntarily choose to adopt 
EPA's model rule in order to allow sources within its borders to 
participate in regional allowance trading. The October 27, 1998 Federal 
Register notice contains a full description of the EPA's model 
NOX budget trading program. See 63 FR 57514-57538 and 40 CFR 
Part 96.
    In general, air emissions trading uses market forces to reduce the 
overall cost of compliance for pollution sources, such as power plants, 
while maintaining emission reductions and environmental benefits. One 
type of market-based program is an emissions budget and allowance 
trading program, commonly referred to as a ``cap and trade'' program.
    In an emissions budget and allowance trading program, the state or 
EPA sets a regulatory limit, or emissions budget, in mass emissions 
from a specific group of sources. The budget limits the total number of 
allocated allowances during a particular control period. When the 
budget is set at a level lower than the current emissions, the effect 
is to reduce the total amount of emissions during the control period. 
After setting the budget, the state or EPA then assigns, or allocates, 
allowances to the participating entities up to the level of the budget. 
Each allowance authorizes the emission of a quantity of pollutant, 
e.g., one ton of airborne NOX.
    At the end of the control period, each source must demonstrate that 
its actual emissions during the control period were less than or equal 
to the number of available allowances it holds. Sources that reduce 
their emissions below their allocated allowance level may sell their 
extra allowances. Sources that emit more than the amount of their 
allocated allowance level may buy allowances from the sources with 
extra reductions. In this way, the budget is met in the most cost-
effective manner. An example of a budget and allowance trading program 
is EPA's Acid Rain Program for reducing sulfur dioxide emissions.

E. What is the Compliance Supplement Pool?

    To provide additional flexibility for complying with emission 
control requirements associated with the NOX SIP Call, the 
final NOX SIP Call provided each affected state with a 
``compliance supplement pool.'' The compliance supplement pool is a 
quantity of NOX allowances that may be used to cover excess 
emissions from sources that are unable to meet control requirements 
during the 2003 and 2004 ozone seasons. Allowances from the compliance 
supplement pool will not be valid for compliance past the 2004 ozone 
season. Despite disagreeing with commenters' concerns, EPA included 
these voluntary provisions in the NOX SIP Call to address 
commenters' concerns about the possible adverse effect that the control 
requirements might have on the reliability of the electricity supply or 
on other industries required to install controls as the result of a 
state's response to the SIP Call.
    A state may issue some or all of the compliance supplement pool via 
two mechanisms. First, a state may issue some or all of the pool to 
sources with credits from implementing NOX reductions beyond 
all applicable requirements after September 30, 1999 but before May 1, 
2003 (i.e., early reductions). In this way, sources that cannot install 
controls prior to May 1, 2003, can purchase other sources' early 
reduction credits in order to comply. Second, a state may issue some or 
all of the pool to sources that demonstrate a need for an extension of 
the May 1, 2003 compliance deadline due to undue risk to the 
electricity or other industrial sectors and where early reductions are 
not available. See 40 CFR 51.121(e)(3).

F. What Guidance Did EPA Use to Evaluate Massachusetts' Submittal?

    EPA evaluated MA's NOX SIP Call submittal using EPA's 
``NOX SIP Call

[[Page 42909]]

Checklist,'' (the checklist), issued on April 9, 1999. The checklist 
reflects and follows the requirements of the NOX SIP Call 
set forth in 40 CFR Sec. 51.121 and Sec. 51.122. The checklist outlines 
the criteria that the EPA Regional Office used to determine the 
completeness and approvability of MA's submittal.
    As noted in the checklist, the key elements of an approvable 
submittal under the NOX SIP Call are: a budget 
demonstration; enforceable measures for control; legal authority to 
implement and enforce the control measures; compliance dates and 
schedules; monitoring, recordkeeping, and emissions reporting; as well 
as elements that apply to states that choose to adopt an emissions 
trading rule in response to the NOX SIP Call. The checklist 
is available to the public on EPA's website at: http://www.epa.gov/ttn/otag/sip/related.html.
    As described above, the final NOX SIP Call rule included 
a model NOX budget trading program regulation. See 40 CFR 
Part 96. EPA used the model rule to evaluate 310 CMR 7.28. 
Additionally, EPA used the October 1998 final NOX SIP Call 
rulemaking notice, as well as the subsequent technical amendments to 
the NOX SIP Call, published in May 1999 (64 FR 26298) and 
March 2000 (65 FR 11222), to evaluate the approvability of MA's 
submittal. EPA also used Sec. 110 of the CAA, Implementation Plans, to 
evaluate the approvability of MA's submittal as a revision to the SIP.

II. Massachusetts's NOX Budget Program

A. What Is Massachusetts' NOX SIP Call Submittal?

    Massachusetts' September 30, 1999, SIP submittal included the 
following:

     Adopted control regulations which require emission 
reductions beginning in 2003, i.e., 310 CMR 7.28;
     A description of how the state intends to use the 
compliance supplement pool, i.e., as part of the control regulation;
     A baseline inventory of NOX mass emissions 
from EGUs, non-EGUs, area, highway and non-road mobile sources in 
the year 2007 as published in the May 14, 1999, technical amendments 
to the NOX SIP Call, i.e.,  as part of the SIP narrative;
     A 2007 projected inventory (budget) reflecting 
NOX reductions achieved by the state control measures 
contained in the submittal, i.e., as part of the SIP narrative; and
     A commitment to meet the annual, triennial, and 2007 
reporting requirements, i.e., as part of the SIP narrative.
    As described above, in order to reduce NOX emissions 
statewide from 2003 and beyond, MA adopted 310 CMR 7.28. The regulation 
applies to all EGUs with nameplate electricity generating capacities 
greater than 15 megaWatts that sell any amount of electricity as well 
as any non-EGU units that have a heat input capacity equal to or 
greater than 250 mmBtu per hour. Regarding other non-EGUs, MA has no 
cement kilns or internal combustion (IC) engines with emissions large 
enough to exceed the applicability threshold for assumed control 
requirements, i.e., one ton per day. So, MA's SIP submittal does not 
assume any additional reductions from those sources. Furthermore, you 
should note that MA is not relying on any reductions beyond anticipated 
federal measures in the mobile and area sectors.
    Below is a table of the 2007 baseline and budget emission levels 
that Massachusetts has submitted with as part of its SIP narrative.

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                                                                                     2007 NOX
                                                                   2007 Baseline      budget         Projected
                         Source category                           NOX emissions     emissions      reductions
                                                                   (tons/season)   (tons/season)   (tons/season)
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EGUs............................................................          27,708          23,490           4,218
Non-EGU Point
Area Sources....................................................          11,048          11,048               0
Non-Road Mobile.................................................          20,166          20,166               0
Highway Mobile..................................................          28,641          28,641               0
MA Total........................................................          87,563          83,345           4,218
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B. When Did Massachusetts Propose and Adopt the Program?

    In July and September 1999, MA published public notices to announce 
the availability of the proposed 310 CMR 7.28, proposed changes to 310 
CMR 7.19 and 310 CMR 7.27, as well as the SIP narrative materials that 
included the statewide 2007 NOX emission budget. The public 
notices started 30 day public comment periods. Public hearings were 
held on August 4, August 6, and October 28. The final 310 CMR 7.28, as 
well as the amendments to 310 CMR 7.19 and 310 CMR 7.27, were filed 
with the Secretary of State on November 15, 1999. The 310 CMR 7.28 and 
the changes to 310 CMR 7.19 and 310 CMR 7.27 became effective on 
December 10, 1999.

C. When Did Massachusetts Submit the SIP Revision to EPA and When Did 
EPA Find the Submittal Technically and Administratively Complete?

    On November 19, 1999, MA DEP submitted 310 CMR 7.28 and the SIP 
narrative materials, as well as the amendments to 310 CMR 7.27 and 310 
CMR 7.19, to EPA with a request to revise the MA SIP. Subsequently, on 
January 7, 2000, MA submitted copies of the regulations as promulgated 
in the Code of Massachusetts Regulations. On January 25, 2000, EPA sent 
a letter to MA deeming the SIP submittal technically and 
administratively complete.

D. What Is Massachusetts' NOX Budget Trading Program?

    In response to the NOX SIP Call, MA adopted 310 CMR 
7.28, ``Post-2002 Nitrogen Oxides NOX Budget Program.'' With 
310 CMR 7.28, MA established a NOX cap and allowance trading 
program for the ozone seasons of 2003 and beyond. MA developed the 
regulation in order to reduce NOX emissions and allow its 
sources to participate in the kind of interstate NOX 
allowance trading program described in Sec. 51.121(b)(2).
    Under 310 CMR 7.28 Massachusetts allocates NOX 
allowances to its EGUs and large industrial units. Each NOX 
allowance permits a source to emit one ton of NOX during the 
seasonal control period. NOX allowances may be bought or 
sold. Unused NOX allowances may also be banked for future 
use, with certain limitations. For each ton of NOX emitted 
in a control period, EPA will remove one allowance from the source's 
NOX Allowance Tracking System (NATS) account. Once the 
allowance has been retired in this way, no one can ever use the 
allowance again.
    Source owners will monitor their NOX emissions by using 
systems that meet

[[Page 42910]]

the requirements of 40 CFR Part 75, subpart H, and report resulting 
data to EPA electronically. Each budget source complies with the 
program by demonstrating at the end of each control period that actual 
emissions do not exceed the amount of allowances held for that period. 
However, regardless of the number of allowances a source holds, it 
cannot emit at levels that would violate other federal or state limits, 
for example, reasonably available control technology (RACT), new source 
performance standards, or Title IV (the federal Acid Rain program).
    Generally, regulation 310 CMR 7.28 differs from EPA's model 
NOX budget trading rule in three ways. First, 310 CMR 7.28 
is applicable to smaller electric generating sources than the model 
rule. Second, the allocation method in 310 CMR 7.28 is based on useful 
output and results in fewer allocations (i.e., lower NOX 
emissions) than would be allowed by the model rule. Finally, MA's 
allowance trading rule does not provide the 25 ton per season exemption 
set forth in 40 CFR Sec. 96.4(b). These differences make the regulation 
more stringent than 40 CFR Part 96 would be and are allowed under 
Sec. 51.121(p). Therefore, 310 CMR 7.28 can be considered substantively 
identical to 40 CFR Part 96.
    Regulation 310 CMR 7.28 provides for the distribution of 473 early 
reduction allowances to sources that implement NOX 
reductions beyond applicable requirements after September 30, 1999, but 
before May 1, 2003. Under 310 CMR 7.28, MA will only provide early 
reduction credits to those sources holding banked allowances that were 
allocated in 2000, 2001, and 2002, under MA's current NOX 
budget and allowance trading program (i.e., regulation 310 CMR 7.27). 
Regulation 310 CMR 7.27 is MA's SIP approved NOX budget and 
allowance trading program that is part of the Ozone Transport 
Commission's regional NOX cap and allowance trading program 
that began in May 1999. See 64 FR 29567, June 2, 1999.
    The amendments to 310 CMR 7.19 and 310 CMR 7.27 contain changes to 
MA's existing OTC MOU allowance trading program and NOX RACT 
regulations. These minor changes were necessary to provide for a smooth 
transition to 310 CMR 7.28, and to ensure consistency between the 
regulatory requirements of 310 CMR 7.19, 310 CMR 7.27, 310 CMR 7.28, 
and 40 CFR Part 75.
    For additional information regarding EPA's evaluation of MA's 
NOX SIP Call submittal, the reader should refer to the 
document entitled, ``Technical Support Document for Massachusetts's 
NOX SIP Call Submittal,'' dated May 4, 2000. Copies of the 
technical support document (TSD) can be obtained at either of the 
addresses listed in the ADDRESSES section of this notice.

E. How Will Massachusetts and EPA Enforce the Program?

    Once approved into MA's SIP, both MA and EPA will be able to 
enforce the requirements of the NOX budget and allowance 
trading program in 310 CMR 7.28. All of the sources subject to the 
NOX allowance trading program will have federally-
enforceable operating permits that contain source specific 
requirements, such as emissions monitoring or pollution control 
equipment requirements. MA and EPA will be able to enforce the source 
specific requirements of those permits, as well as the requirements of 
310 CMR 7.28, 310 CMR 7.27, and 310 CMR 7.19.
    Additionally, in order to determine compliance with the emission 
requirements of the program, at the end of each ozone season, MA and 
EPA will compare sources' allowance and emission accounts in the 
NOX Allowance Tracking System (NATS). To be in compliance, 
sources must hold a number of available allowances that meets or 
exceeds the number of tons of NOX emitted by that source and 
recorded in the Emissions Tracking System (ETS) for a particular ozone 
season. For sources with excess emissions, penalties include EPA 
deducting three times the unit's excess emissions from the unit's 
allocation for the next control period.

F. How Does Massachusetts' Program Protect the Environment?

    Based on air quality modeling assessments performed for the 
NOX SIP Call, EPA believes that the NOX 
reductions in MA and other states subject to the SIP Call will reduce 
the transport of ozone starting in 2003.
    Decreases of NOX emissions will also help improve the 
environment in several important ways. Decreases in NOX 
emissions will decrease acid deposition, nitrates in drinking water, 
excessive nitrogen loadings to aquatic and terrestrial ecosystems, and 
ambient concentrations of nitrogen dioxide, particulate matter and 
toxics. On a global scale, decreases in NOX emissions reduce 
greenhouse gases and stratospheric ozone depletion.

G. What Is the Result of EPA's Evaluation of Massachusetts' SIP 
Submittal?

    EPA has evaluated MA's November 19, 1999, SIP submittal and finds 
it fully approvable. The submittal will strengthen MA's SIP for 
reducing ground level ozone by providing NOX reductions 
beginning in 2003. The submittal also meets the air quality objectives 
of the NOX SIP Call. EPA finds the NOX control 
measures, 310 CMR 7.28, the SIP narrative that includes MA's 2007 
NOX baseline and controlled budgets, as well as the changes 
to 310 CMR 7.27 and 310 CMR 7.19, fully approvable. EPA finds that the 
submittal contained the information necessary to demonstrate that MA 
has the legal authority to implement and enforce the control measures, 
as well as a description of how the state intends to use the compliance 
supplement pool. Furthermore, EPA finds that the submittal demonstrates 
that the compliance dates and schedules, and the monitoring, record 
keeping and emission reporting requirements will be met.
    EPA finds that MA's control regulation and SIP narrative materials 
are consistent with EPA's guidance and meet the air quality objectives 
of the NOX SIP Call, including, 40 CFR Part 51, Sec. 51.121 
and Sec. 51.122 as well as the general SIP submittal requirements of 
the Act, Sec. 110, 42 U.S.C. 7401 et seq. Regulation 310 CMR 7.28 does 
contain differences from the model rule, including: (1) 310 CMR 7.28 is 
applicable to smaller electric generating sources than the model rule; 
(2) the allocation method in 310 CMR 7.28 is based on useful output but 
results in fewer allocations (i.e., lower NOX emissions) 
than would be allowed by the model rule; and (3) the State's SIP 
trading rule does not provide the 25 ton/season exemption set forth in 
40 CFR Sec. 96.4(b). These differences are allowed under 
Sec. 51.121(p). Therefore, EPA considers 310 CMR 7.28 to be 
substantively identical to 40 CFR Part 96.
    Regarding MA's SIP narrative, EPA finds that the submittal contains 
the required elements, including: The baseline inventory of 
NOX mass emissions from EGUs, non-EGUs, area, highway and 
non-road mobile sources in the year 2007; the 2007 projected inventory 
reflecting NOX reductions achieved by the state control 
measures contained in the submittal; and the commitment to meet the 
annual, triennial, and 2007 state reporting requirements. EPA further 
finds that MA's 2007 projected inventory, reflecting the control 
strategies, is approvable, reflecting the air quality objectives of the 
NOX SIP Call.
    In order to approve MA's 2007 projected inventory as meeting the 
air quality objectives of the NOX SIP Call,

[[Page 42911]]

however, it is necessary to consider the adopted 2007 emission budgets 
and adopted NOX reducing measures in Connecticut (CT) and 
Rhode Island (RI) as well. Comparing the most recent technical 
amendments to the NOX SIP Call budgets to the adopted and 
submitted NOX SIP Call related measures from the three 
states, you can see that the adopted measures in CT, MA, and RI will 
reduce more NOX from the EGU and non-EGU sectors than the 
NOX SIP Call notices have required.
    H. Why Is EPA Considering the NOX SIP Call Submittals 
From CT, MA, and RI at the Same Time?
    In February 1999, CT, MA, RI, and EPA signed a memorandum of 
understanding (i.e., ``the Three State MOU'') agreeing to redistribute 
the EGU portions of the three states' budgets, as well as the 
compliance supplement pool allocations, amongst themselves. Under the 
Three State MOU, the combined 2007 controlled emission level and 
compliance supplement pool did not change for the three states, only 
the individual state EGU allocations and supplement pools were 
redistributed to provide CT with additional flexibility.
    On September 15, 1999, EPA published a Notice of Proposed 
Rulemaking (NPR) to approve the redistribution of the three states' 
allocations as described in the MOU and modified by the EPA's May 1999 
NOX SIP Call technical corrections.\3\ See 64 FR 50036. As 
described in the NPR, the sum of the 2007 budgets and supplement pool 
allocations for the three states after redistribution is identical to 
the sum of the three budgets and supplement pool allocations for the 
states as published in the May 1999 technical corrections Federal 
Register notice. In other words, the total NOX reduction 
expected from the three states due to the SIP Call would be the same 
before and after the redistribution of budgets under the Three State 
MOU. In fact, both the May 1999 technical amendments and the September 
1999 NPR required a NOX reduction of 5,491 tons by the three 
states each ozone season from 2007 onward and provided a combined 
allocation of 961 tons from the compliance supplement pool.
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    \3\ You should note that EPA took comments on the Three State 
MOU NPR and intends to address those comments in a future 
rulemaking. Therefore, we are not seeking comments on the specifics 
of the Three State MOU NPR at this time.
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    On March 2, 2000, EPA published additional technical amendments to 
the NOX SIP Call in the Federal Register (65 FR 11222). As 
can be seen in the tables below, the March 2, 2000 technical 
corrections primarily changed the highway mobile and non-EGU 2007 
baselines and budgets for CT, MA, and RI. However, these changes 
largely cancel each other out, e.g., the 2007 highway sub-inventory 
baselines and budgets increased by the same amounts. The March 2000 
technical corrections, however, did not effect the amount of reduction 
expected from the EGU sector. The tables below compare the 2007 
baselines and budgets for each sub-inventory sector for CT, MA, and RI 
as published in the May 1999 and March 2000 technical amendment Federal 
Register notices.

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                                     5/99 base-   3/00 base-   Change in                              Change in
                CT                      line         line      base-line   5/99 budget  3/00 budget     budget
----------------------------------------------------------------------------------------------------------------
EGU...............................        5,636        5,636            0        2,652        2,652            0
Non-EGU...........................        5,124        5,397          273        4,970        5,216          246
Area..............................        4,821        4,821            0        4,821        4,821            0
Nonroad...........................       10,736       10,736            0       10,736       10,736            0
Highway...........................       19,902       19,424         -478       19,902       19,424         -478
Total.............................       46,220       46,015         -205       43,081       42,849         -232
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                     5/99 base-   3/00 base-   Change in                              Change in
                MA                      line         line      base-line   5/99 budget  3/00 budget     budget
----------------------------------------------------------------------------------------------------------------
EGU...............................       16,479       16,479            0       15,145       15,146            1
Non-EGU...........................       11,229       11,210          -19       10,296       10,298            2
Area..............................       11,048       11,048            0       11,048       11,048            0
Nonroad...........................       20,166       20,166            0       20,166       20,166            0
Highway...........................       28,641       28,190         -451       28,641       28,190         -451
Total.............................       87,563       87,092         -471       85,296       84,848         -448
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                     5/99 base-   3/00 base-   Change in                              Change in
                RI                      line         line       baseline   5/99 budget  3/00 budget     budget
----------------------------------------------------------------------------------------------------------------
EGU...............................        1,082        1,082            0          997          997            0
Non-EGU...........................        2,031        1,635         -396        2,031        1,635         -396
Area..............................          448          448            0          448          448            0
Nonroad...........................        2,455        2,455            0        2,455        2,455            0
Highway...........................        3,879        3,843          -36        3,879        3,843          -36
                                   -----------------------------------------------------------------------------
    Total.........................        9,895        9,463         -432        9,810        9,378         -432
----------------------------------------------------------------------------------------------------------------

    The March 2000 Federal Register listed 2007 ozone season baseline 
emissions from CT, MA, and RI as 46,015 tons, 87,092 tons, and 9,463 
tons, respectively. The March 2000 Federal Register listed the 2007 
ozone season budgets for CT, MA, and RI as 42,849 tons, 84,848 tons, 
and 9,378 tons, and provided the three states with compliance 
supplement pools of 569 tons, 404 tons, and 15 tons, respectively, or a 
total of 988 tons. In total, the March 2000 notice required the three 
states to reduce their NOX emissions by 5,495 tons per ozone 
season beginning in 2007.
    In the Fall of 1999, CT, MA, and RI all adopted and submitted SIP 
packages in response to the NOX SIP Call. All three states 
adopted and submitted NOX control regulations that rely on 
reductions from the EGU and large non-EGU units to achieve their 
emission budgets. The 2007 baseline ozone

[[Page 42912]]

season emissions adopted by the states were 46,219 tons, 87,563 tons, 
and 9,895 tons, respectively, or a three state total of 143,677 tons 
per ozone season. The SIP packages adopted and submitted by CT, MA, and 
RI, included 2007 projected NOX inventories of 44,993 tons, 
83,345 tons, and 9,798 tons, respectively, or a three state total of 
138,136 tons per ozone season. Therefore, the total NOX 
reduction expected from the adopted and submitted SIP packages from CT, 
MA, and RI is 5,541 tons per ozone season.
    As discussed above, EPA signed the Three State MOU between CT, MA, 
and RI. We endorse the concept that states can voluntarily join 
together and redistribute their NOX SIP Call budgets and 
compliance supplement pool allocations, provided that the total after 
the redistribution is less than or equal to before redistribution, and 
provided that the states have formalized such an agreement in an MOU or 
similar device to which EPA also agrees. EPA supports this concept 
because such a redistribution is no different than the effects of 
trading. For a detailed discussion of why EPA supports the concept that 
states can collectively redistribute their NOX SIP Call 
budgets, see the proposed Three State MOU notice, 64 FR 49989, 
September 15, 1999. Given the fact that together the three states' 
regulations achieve at least the same NOX reduction and 
allocate fewer than required compliance supplement pool allocations, 
EPA finds that the NOX SIP Call SIP submittals from the 
three states collectively meet the air quality objectives of the 
NOX SIP Call as published to date. In separate Federal 
Register notices today, EPA is also proposing approval of CT's and RI's 
NOX SIP Call submittals.
    You can find the NOX SIP Call 2007 baselines, budgets, 
and compliance supplement pool allocations from the March 2000 
technical amendments and the state adopted SIPs summarized in the table 
below.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                            SIP Call                                                SIP Call
                                              2007          State       SIP Call        State       Projected       State      Compliance       State
                                            Baseline    adopted 2007   2007 Budget  adopted 2007    reduction     Projected    Supplement      Adopted
                  State                     (tons NOX     baseline     as of 03/00  budget (tons    (tons NOX     Reduction    Pool State    Compliance
                                            per ozone     (tons NOX     (tons NOX      NOX per      per ozone     (tons NOX    Allocations   Supplement
                                           season) as     per ozone     per ozone       ozone      season) as     per ozone    as of 03/00      Pool
                                            of 03/00       season)       season)       season)      of 03/00       season)
--------------------------------------------------------------------------------------------------------------------------------------------------------
CT......................................        46,015        46,219        42,849        44,993        13,166         1,226           569           473
MA......................................        87,092        87,563        84,848        83,345         2,244         4,218           404           473
RI......................................         9,463         9,895         9,378         9,798            85            97            15            15
    Total...............................       142,570       143,677       137,075       138,136         5,495         5,541           988           961
--------------------------------------------------------------------------------------------------------------------------------------------------------

    For additional information regarding EPA's evaluation of MA's 
NOX SIP Call submittal, the reader should refer to the TSD 
available at either of the addresses listed in the ADDRESSES section of 
this notice.

I. What Other Significant Items Relate to Massachusetts' Program?

    In addition to fulfilling the NOX SIP Call obligation, 
310 CMR 7.28 was adopted as part of MA's one hour ozone attainment plan 
for the serious ozone nonattainment area in Western MA. The attainment 
plan relies on the NOX reductions associated with 310 CMR 
7.28 in 2003 and beyond. EPA proposed conditional approval of MA's 
attainment plans for both the serious and severe nonattainment areas on 
December 16, 1999. See 64 FR 70318. Therefore, the approval and 
implementation of 310 CMR 7.28 is also necessary in order for MA to 
fulfill a requirement of its one hour ozone attainment plan.
    Regulation 310 CMR 7.28 is also related to the Ozone Transport 
Commission's (OTC's) ozone season NOX budget program. On 
September 27, 1994, OTC adopted a Memorandum of Understanding (MOU) 
that committed the signatory states, including MA, to the development 
and proposal of a region-wide reduction in NOX emissions. 
The OTC agreement committed the states to one phase of NOX 
reductions by 1999 and another phase of reductions by 2003.
    As a signatory state of the MOU, MA adopted its NOX 
budget and allowance trading regulation, 310 CMR 7.27, on June 5, 1997. 
Regulation 310 CMR 7.27 contained a NOX emissions budget and 
allowance trading system for the ozone seasons of 1999 through 2002, 
the period known as ``OTC Phase II.'' MA's phase II budget is 18,146 
tons per ozone season. EPA approved MA's phase II OTC NOX 
budget regulation on June 2, 1999. See 64 FR 29567.
    Regulation 310 CMR 7.28 contains a new NOX emissions 
budget and allowance trading program for the ozone seasons of 2003 and 
thereafter, the period known as ``OTC phase III.'' Although EPA's 
technical corrections and the Three State MOU described above would 
allow MA an EGU budget of 13,245 tons per season in 2003 and beyond, 
310 CMR 7.28 contains an ozone season EGU (and affected non-EGU) budget 
of 12,861 tons. This is equal to the budget agreed upon by OTC for 
affected sources in MA under phase III of the OTC program. Therefore, 
although the OTC MOU obligations are not federal requirements, 310 CMR 
7.28 can be seen as satisfying the OTC phase III program requirements 
as well.

J. What Issues Are Associated With Massachusetts' NOX SIP 
Call Submittal?

    On March 3, 2000, the D.C. Circuit ruled on Michigan v. EPA, 
affirming many aspects of the NOX SIP Call and remanding 
certain other portions to the Agency (e.g., the definition of an EGU 
and the control assumptions for internal combustion engines). Due to 
the Court's remanding of the EGU definition and IC engine control 
assumptions, EPA must now recalculate the final 2007 baseline, 2007 
budget, and compliance supplement allocation for each state subject to 
the NOX SIP Call, including MA. Those recalculated budgets 
are expected to be published in the next few months. However, this 
means that MA may be required to revisit its NOX SIP Call 
program due to potential forthcoming changes to the NOX SIP 
Call requirements. At such time as EPA publishes new emission budget 
requirements, MA and other NOX SIP Call subject states will 
be informed as to what, if any, changes are needed.
    Additionally, as described above, the March 2, 2000 technical 
corrections changed the 2007 baselines and budgets for the highway and 
non-EGU sub-inventories in CT, MA, and RI. Therefore, when those states 
make the changes needed due to the remanded portions of the 
NOX SIP Call, they will need to adopt changes to the highway 
and non-EGU 2007 baselines and budgets as well.

III. Proposed Action

    EPA has reviewed MA's November 19, 1999, SIP submittal using the 
NOX SIP Call rulemaking notices and checklist. EPA has 
reviewed MA's

[[Page 42913]]

control measures and projected reductions and finds them approvable. 
Therefore, EPA is proposing to approve 310 CMR 7.28 and MA's 
NOX SIP Call narrative into the MA SIP at this time.
    MA's November 19, 1999, submittal also contained amendments to 310 
CMR 7.19 and 310 CMR 7.27. These amendments consisted of minor changes 
to the regulations to ensure consistent requirements and a smooth 
transition to the program under 310 CMR 7.28 in 2003. EPA has reviewed 
the amendments and is proposing to approve them into the MA SIP at this 
time.
    EPA is soliciting public comments on the issues discussed in this 
proposal or on other relevant matters. These comments will be 
considered before EPA takes final action. Interested parties may 
participate in the Federal rulemaking procedure by submitting written 
comments to the EPA Regional office listed in the ADDRESSES section of 
this action.
    Nothing in this action should be construed as permitting or 
allowing or establishing a precedent for any future request for 
revision to any State implementation plan. Each request for revision to 
the State implementation plan shall be considered separately in light 
of specific technical, economic, and environmental factors and in 
relation to relevant statutory and regulatory requirements.

IV. Administrative Requirements

    Under Executive Order 12866 (58 FR 51735, October 4, 1993), this 
action is not a ``significant regulatory action'' and therefore is not 
subject to review by the Office of Management and Budget. This action 
merely approves state law as meeting federal requirements and imposes 
no additional requirements beyond those imposed by state law. 
Accordingly, the Regional Administrator certifies that this rule will 
not have a significant economic impact on a substantial number of small 
entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). 
Because this rule approves pre-existing requirements under state law 
and does not impose any additional enforceable duty beyond that 
required by state law, it does not contain any unfunded mandate or 
significantly or uniquely affect small governments, as described in the 
Unfunded Mandates Reform Act of 1995 (Public Law 104-4). For the same 
reason, this rule also does not significantly or uniquely affect the 
communities of tribal governments, as specified by Executive Order 
13084 (63 FR 27655, May 10, 1998). This rule will not have substantial 
direct effects on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government, as specified 
in Executive Order 13132 (64 FR 43255, August 10, 1999), because it 
merely approves a state rule implementing a federal standard, and does 
not alter the relationship or the distribution of power and 
responsibilities established in the Clean Air Act. This rule also is 
not subject to Executive Order 13045 (62 FR 19885, April 23, 1997), 
because it is not economically significant.
    In reviewing SIP submissions, EPA's role is to approve state 
choices, provided that they meet the criteria of the Clean Air Act. In 
this context, in the absence of a prior existing requirement for the 
State to use voluntary consensus standards (VCS), EPA has no authority 
to disapprove a SIP submission for failure to use VCS. It would thus be 
inconsistent with applicable law for EPA, when it reviews a SIP 
submission, to use VCS in place of a SIP submission that otherwise 
satisfies the provisions of the Clean Air Act. Thus, the requirements 
of section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (15 U.S.C. 272 note) do not apply. As required by section 3 
of Executive Order 12988 (61 FR 4729, February 7, 1996), in issuing 
this rule, EPA has taken the necessary steps to eliminate drafting 
errors and ambiguity, minimize potential litigation, and provide a 
clear legal standard for affected conduct. EPA has complied with 
Executive Order 12630 (53 FR 8859, March 15, 1988) by examining the 
takings implications of the rule in accordance with the ``Attorney 
General's Supplemental Guidelines for the Evaluation of Risk and 
Avoidance of Unanticipated Takings'' issued under the executive order. 
This rule does not impose an information collection burden under the 
provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et 
seq.).

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Incorporation by 
reference, Intergovernmental relations, Nitrogen dioxide, Ozone, 
Particulate matter, Reporting and recordkeeping requirements.

    Authority:  42 U.S.C. 7401 et seq.

    Dated: June 21, 2000.
Mindy S. Lubber,
Regional Administrator, EPA--New England.
[FR Doc. 00-17187 Filed 7-11-00; 8:45 am]
BILLING CODE 6560-50-U