[Federal Register Volume 65, Number 170 (Thursday, August 31, 2000)]
[Proposed Rules]
[Pages 52967-52978]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-22385]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[IL203-1; FRL-6862-2]


Approval and Promulgation of Air Quality Implementation Plans; 
Illinois; Oxides of Nitrogen Regulations

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: Illinois submitted a proposed rule to control emissions of 
oxides of nitrogen (NOX). The proposed rule is to provide 
NOX emission reductions to support attainment of the 1-hour 
ozone standard in the Metro-East/St. Louis ozone nonattainment area and 
will

[[Page 52968]]

contribute to attainment of the 1-hour ozone standard in the Chicago-
Gary-Lake County ozone nonattainment area. Illinois' rule, which 
focuses on electric generating units, also represents a key portion of 
the State's response to EPA's October 27, 1998 NOX SIP Call. 
EPA expects Illinois to adopt other rules to regulate NOX 
emissions from other source types, and expects Illinois to submit an 
analysis of the adequacy of the full set of rules in conjunction with 
the other rules for addressing the NOX SIP Call. Therefore, 
this EPA rulemaking does not address whether Illinois' rule (with or 
without rules for other source types) limits NOX emissions 
to the extent required under the NOX SIP Call. Through 
parallel processing, EPA is proposing to approve the rule, provided 
Illinois corrects identified deficiencies in its rule consistent with 
this notice. Most significantly, the rule has a provision that defers 
the compliance date of the rule beyond May 1, 2003, if any of certain 
Midwestern States do not have State NOX regulations approved 
by the EPA or do not have effective federally promulgated 
NOX regulations by the end of 2002. EPA proposes to approve 
the State's rule provided Illinois removes this provision from the 
final adopted rule by December 31, 2000. EPA also proposes in the 
alternative to disapprove Illinois' rule if this provision remains in 
the final adopted rule or if Illinois fails to address other 
significant identified deficiencies. Significant changes in the 
NOX control rule from the version included in the State's 
draft rule submittal, other than those changes resulting from 
corrections to deficiencies noted in this proposed rulemaking, will 
result in a new proposal of the rulemaking on Illinois' subsequent 
submittal.

DATES: Written comments must be received on or before October 2, 2000.

ADDRESSES: Written comments should be sent to: Jay Bortzer, Acting 
Chief, Air Programs Branch (AR-18J), U.S. Environmental Protection 
Agency, 77 West Jackson Boulevard, Chicago, Illinois 60604. Copies of 
the State's submittals and materials relevant to this proposed 
rulemaking are available for public inspection during normal business 
hours at the following address: United States Environmental Protection 
Agency, Region 5, Air and Radiation Division, 77 West Jackson 
Boulevard, Chicago, Illinois 60604 (18th floor). (Please telephone John 
Paskevicz at (312) 886-6084 before visiting the Region 5 office.)

FOR FURTHER INFORMATION CONTACT: John Paskevicz, Regulation Development 
Section, Air Programs Branch (AR-18J), U.S. Environmental Protection 
Agency, Region 5, 77 West Jackson Boulevard, Chicago, Illinois 60604, 
Telephone Number: (312) 886-6084, E-Mail Address: 
[email protected].

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Background

A. What Clean Air Act requirements apply to or led to the State's 
submittal of the NOX emission control regulations?
B. What analyses and EPA rulemaking actions support the need for the 
NOX emission control regulations?
C. What have been the Court rulings regarding EPA's NOX 
emission control regulations?

II. Summary of the State Submittal

A. When were the NOX emission control regulations 
submitted to the EPA?
B. What are the basic components of the State's draft rule?
C. Components of the draft regulations.
    1. What geographic regions and sources are affected by the draft 
regulations?
    2. What are the allowable NOX emission rates or 
levels for affected sources?
    3. What are the monitoring, recordkeeping, and reporting 
requirements for affected sources?
    4. What is the compliance/implementation deadline for the 
affected sources?
D. Will the Illinois NOX trading program meet the Federal 
NOX budget?
E. What public review opportunities are/were provided?
F. What requirements are contained in the NOX emission 
control regulations from the standpoints of the Lake Michigan and 
the Metro-East/St. Louis ozone attainment demonstrations?
G. What guidance did EPA use to evaluate Illinois' NOX 
control program?
H. Does the Illinois Part 217 NOX emissions control 
program meet the needs of the ozone attainment demonstrations?
I. Does the Illinois Part 217 NOX emissions control 
program meet all of the Federal NOx SIP Call requirements?
J. What deficiencies were noted in Illinois' NOX 
emissions control regulations, and do any of these deficiencies 
constitute a serious disapprovability issue?

III. Proposed Action

A. What action is EPA proposing today?
B. What happens if Illinois significantly changes the regulations 
during the final adoption process?

IV. Administrative Requirements

A. Executive Order 12866
B. Executive Order 13045
C. Executive Order 13084
D. Executive Order 13132
E. Regulatory Flexibility
F. Unfunded Mandates
    In the following questions and answers, the term ``you'' refers to 
the reader of this proposed rule and ``we,'' ``us,'' or ``our'' refers 
to the EPA.

I. Background

A. What Clean Air Act requirements apply to or led to the State's 
submittal of the NOX emission control regulations?

    The Clean Air Act (Act or CAA) requires the EPA to establish 
National Ambient Air Quality Standards (NAAQS) for certain air 
pollutants that cause or contribute to air pollution that is reasonably 
anticipated to endanger public health or welfare. Clean Air Act 
sections 108 and 109. In 1979, EPA promulgated the 1-hour ground-level 
ozone standard of 0.12 parts per million (ppm) or 120 parts per billion 
(ppb). 44 FR 8202 (February 8, 1979).
    Ground-level ozone is generally not directly emitted by sources. 
Rather, volatile organic compounds (VOC) and NOX, both 
emitted by a wide variety of sources, react in the presence of sunlight 
to form additional pollutants, including ozone. NOX and VOC 
are referred to as precursors of ozone.
    The Act, as amended in 1990, required EPA to designate as 
nonattainment any area that was violating the 1-hour ozone standard, 
generally based on air quality monitoring data from the 1987 through 
1989 period. Clean Air Act section 107(d)(4); 56 FR 56694 (November 6, 
1991). The Act further classified these areas, based on the areas' 
ozone design values, as marginal, moderate, serious, severe, or 
extreme. Marginal areas were suffering the least significant ozone 
nonattainment problems, while the areas classified as severe and 
extreme had the most significant ozone nonattainment problems.
    The control requirements and date by which attainment with the 
ozone NAAQS is to be achieved vary with an area's classification. 
Marginal areas were subject to the fewest mandated control requirements 
and had the earliest attainment date, November 15, 1993. Moderate areas 
were subject to more stringent planning and control requirements but 
were provided more time to attain the ozone standard, until November 
15, 1996. Severe and extreme areas are subject to even more stringent 
planning and control requirements but are also provided more time to 
attain the standard. Severe areas are required to attain the ozone 
NAAQS by November 15, 2005 or November 15, 2007, depending on the 
areas' ozone design values for the 1987 through 1989 period.
    The St. Louis ozone nonattainment area (subsequently also referred 
to as the Metro-East/St. Louis ozone nonattainment area to denote the 
bi-state nature of the area) was classified as moderate, giving it an 
attainment

[[Page 52969]]

deadline of November 15, 1996. The Metro-East/St. Louis ozone 
nonattainment area is defined (40 CFR 81.314 and 81.326) to contain 
Madison, Monroe, and St. Clair Counties in Illinois, and Franklin, 
Jefferson, St. Charles, and St. Louis Counties and St. Louis City in 
Missouri.
    The Chicago-Gary-Lake County ozone nonattainment area was 
classified as severe-17 and its attainment date is November 15, 2007. 
The Chicago-Gary-Lake County ozone nonattainment area is defined (40 
CFR 81.314 and 81.315) to contain Cook, DuPage, Grundy (Aux Sable and 
Goose Lake Townships only), Kane, Kendall (Oswego Township only), Lake, 
McHenry, and Will Counties in Illinois, and Lake and Porter Counties in 
Indiana.
    The Act requires moderate and above ozone nonattainment areas 
(including severe ozone nonattainment areas) to be addressed in ozone 
attainment demonstrations, including adopted emission control 
regulations sufficient to achieve attainment of the ozone NAAQS by the 
applicable ozone attainment dates. The requirements of the Act for 
ozone attainment demonstrations for moderate and above ozone attainment 
areas are determined by considering several sections of the Act. 
Section 172(c)(6) of the Act requires SIPs to include enforceable 
emission limitations, and such other control measures, means or 
techniques as well as schedules and timetables for compliance, as may 
be necessary to provide for attainment by the applicable attainment 
dates. Section 172(c)(1) of the Act requires the implementation of all 
reasonably available control measures (including reasonably available 
control technology [RACT]) and requires the SIP to provide for 
sufficient annual reductions in emissions of VOC and NOX as 
necessary to attain the ozone NAAQS by the applicable attainment dates. 
Section 182(j)(1)(B) requires the use of photochemical grid modeling or 
other methods judged to be at least as effective to demonstrate 
attainment of the ozone NAAQS in multi-state moderate ozone 
nonattainment areas. Sections 182(c)(2) and (d) required SIP revision 
submissions by November 15, 1994 for serious and severe ozone 
nonattainment areas to demonstrate how the areas would attain the 1-
hour standard and how they would achieve rate-of-progress (ROP) 
reductions in VOC emissions of 9 percent for each 3-year period until 
the date of attainment. (In some cases, NOX emission 
reductions can be substituted for the required VOC emission reductions 
to achieve ROP.) Section 182(c)(2)(A) requires the ozone attainment 
demonstrations for serious and above ozone nonattainment areas to be 
based on the use of photochemical grid modeling or on other analytical 
methods determined to be at least as effective. The attainment 
demonstrations based on photochemical grid modeling can address the 
emission impacts of both VOC and NOX. The NOX 
emission control regulations addressed in this proposed rulemaking are, 
in part, intended to meet the requirements for the attainment 
demonstrations for the Metro-East/St. Louis and Chicago-Gary-Lake 
County ozone nonattainment areas.
    On October 27, 1998, the EPA promulgated a NOX SIP call 
for a number of States, including the State of Illinois. The 
NOX SIP call requires the subject States to develop 
NOX emission control regulations sufficient to provide for a 
prescribed NOX emission budget in 2007, and is further 
discussed below. These NOX emission reductions will address 
ozone transport in the area of the country primarily east of the 
Mississippi River. EPA promulgated the NOX SIP call pursuant 
to the requirements of CAA section 110(a)(2)(D) and our authority under 
CAA section 110(k). Section 110(a)(2)(D) applies to all SIPs for each 
pollutant covered by a NAAQS and for all areas regardless of their 
attainment designation. It requires a SIP to contain adequate 
provisions that prohibit any source or type of source or other types of 
emissions within a State from emitting any air pollutants in amounts 
which will contribute significantly to nonattainment in, or interfere 
with maintenance of attainment of a standard by any other State with 
respect to any NAAQS. Section 110(k)(5) authorizes the EPA to find that 
a SIP is substantially inadequate to meet any CAA requirement when 
appropriate, and, based on such finding, to then require the State to 
submit a SIP revision within a specified time to correct such 
inadequacies.

B. What Analyses and EPA Rulemaking Actions Support the Need for the 
NOX Emission Control Regulations?

    The State of Illinois has the primary responsibility under the CAA 
for ensuring that Illinois meets the ozone NAAQS and is required to 
submit a SIP that specifies emission limitations, control measures, and 
other measures necessary for attainment, maintenance, and enforcement 
of the NAAQS within the State. The SIP for ozone must meet the CAA 
requirements discussed above, must be adopted pursuant to notice and 
comment rulemaking, and must be submitted to the EPA for approval. A 
number of analyses and EPA rulemaking actions have affected the SIP 
revisions needed for the Metro-East/St. Louis and Chicago-Gary-Lake 
County ozone nonattainment areas as discussed below.
    The Metro-East/St. Louis and Chicago-Gary-Lake County nonattainment 
areas have not attained and continue to violate the 1-hour ozone 
standard. The States of Illinois and Missouri have worked cooperatively 
to provide the EPA with an ozone attainment demonstration for the 
Metro-East/St. Louis nonattainment area. The States of Illinois, 
Indiana, Wisconsin, and Michigan have worked cooperatively to provide 
the EPA with an ozone attainment demonstration for the Lake Michigan 
area, which includes the Chicago-Gary-Lake County ozone nonattainment 
area. Analyses conducted to support both of these ozone attainment 
demonstrations, as submitted in 1994 and supplemented in April 1998, 
indicate that reductions in upwind NOX emissions are needed 
to reduce the transport of ozone into these nonattainment areas.
    On March 2, 1995, Mary D. Nichols, Assistant Administrator for 
EPA's Air and Radiation Division, published a memorandum titled ``Ozone 
Attainment Demonstrations.'' In this memorandum, the EPA recognized 
that the development of the necessary technical information, as well as 
the emission control measures necessary to achieve the attainment of 
the ozone NAAQS had been difficult for the States affected by 
significant ozone transport. EPA established a two-phase process for 
States with serious and severe nonattainment areas to develop ozone 
attainment SIPs. Under Phase I, States were required to complete 1994 
SIP requirements (with the exception of final ozone attainment 
demonstrations), submit regulations sufficient to meet ROP requirements 
through 1999, and submit initial ozone modeling analyses, including 
preliminary ozone attainment demonstrations based on assumed reductions 
in upwind ozone precursor emissions. Phase II called for a two-year 
consultative process to assess regional strategies to address ozone 
transport in the eastern United States and required submittal of all 
remaining ROP submittals to cover ROP through the attainment dates, 
final attainment demonstrations to address the emission reduction 
requirements resulting from the two-year consultative process and any 
additional rules and emission controls needed to attain the ozone 
standard, and any regional controls needed for attainment by all areas 
in the eastern half of the United States.

[[Page 52970]]

    In response to problem of ozone transport, the Environmental 
Council of States (ECOS) recommended the formation of a national 
workgroup to assess the problem and to develop a consensus approach to 
addressing the transport problem. As a result of ECOS' recommendation 
and in response to the March 2, 1995 EPA memorandum, the Ozone 
Transport Assessment Group (OTAG), a partnership among EPA, the 36 
eastern States and the District of Columbia, and industrial, academic, 
and environmental groups, was formed to conduct regional ozone 
transport analyses and to develop a recommended ozone transport control 
strategy. OTAG was given the responsibility of conducting the two years 
of analyses envisioned in the March 2, 1995 EPA memorandum.
    OTAG conducted a number of regional ozone data analyses and 
regional ozone modeling analyses using photochemical grid modeling. In 
July 1997, OTAG completed its work and made recommendations to the EPA 
concerning the regional emissions reductions needed to reduce 
transported ozone as an obstacle to attainment in downwind areas. OTAG 
recommended a possible range of regional NOX emission 
reductions to support the control of transported ozone. Based on OTAG's 
recommendations and other information, EPA issued the NOX 
SIP call rule on October 27, 1998. 63 FR 57356.
    In the NOX SIP call, EPA determined that sources and 
emitting activities in 23 jurisdictions \1\ emit NOX in 
amounts that ``significantly contribute'' to ozone nonattainment or 
interfere with maintenance of the 1-hour ozone NAAQS in one or more 
downwind areas in violation of CAA section 110(a)(2)(D)(i)(I). EPA 
identified NOX emission reductions by source sector that 
could be achieved using cost-effective measures and set state-wide 
NOX emission budgets for each affected jurisdiction for 2007 
based on the possible cost-effective NOX emission 
reductions. The source sectors include nonroad mobile, highway mobile, 
area, electricity generating units (EGUs) (including stationary boilers 
and turbines, which may generate steam for industrial processes but 
whose primary purpose is to generate electricity for sale to the 
electrical grid), and major non-EGU stationary point sources (process 
stationary boilers or turbines, whose primary purpose is to generate 
steam for industrial processes). EPA established recommended 
NOX emissions caps for large EGUs (serving a generator 
greater than 25 megawatts) and for large non-EGUs (maximum design heat 
input of 250 million British thermal units [Btu] per hour [mmBtu/hr]). 
EPA determined that significant NOX reductions using cost-
effective measures could be obtained as follows: application of a 0.15 
pounds NOX/mmBtu heat input emission rate limit for large 
EGUs; a 60 percent reduction of NOX emissions from large 
non-EGUs; a 30 percent reduction of NOX emissions from large 
cement kilns; and a 90 percent reduction of NOX emissions 
from large stationary internal combustion engines not serving 
electricity generators. The 2007 state-wide NOX emission 
budgets established by jurisdiction were based, in part, by assuming 
these levels of NOX emission controls coupled with 
NOX emissions projected by source sector to 2007.
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    \1\ 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, and Wisconsin.
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    Although the state-wide NOX emission budgets were based 
on the levels of reduction achievable through cost-effective emission 
control measures, the NOX SIP call allows each State to 
determine what measures it will choose to meet the state-wide 
NOX emission budgets. It does not require the States to 
adopt the specific NOX emission rates assumed by the EPA in 
establishing the NOX emission budgets. The NOX 
SIP call merely requires States to submit SIPs, which, when 
implemented, will require controls that meet the NOX state-
wide emission budget. The NOX SIP call encourages the States 
to adopt a NOX cap and trade program for large EGUs and 
large non-EGUs as a cost-effective strategy and provides an interstate 
NOX trading program that the EPA will administer for the 
States. If States choose to participate in the national trading 
program, the States must submit SIPs that conform to the trading 
program requirements in the NOX SIP call.
    As a moderate ozone nonattainment area, the Metro-East/St. Louis 
nonattainment area was not included in the two-phase approach 
established in EPA's March 2, 1995 memorandum. The EPA, however, 
recognizes that some moderate ozone nonattainment areas may also have 
been significantly impacted by ozone transport from upwind areas, 
making attainment of the 1-hour ozone NAAQS difficult through the 
imposition of only local emission control measures. On July 16, 1998, 
EPA established a policy that allowed for a deferral of the attainment 
date for areas significantly impacted by ozone transport and where 
certain conditions are met. The EPA published this policy (Extension 
Policy) in the Federal Register on March 25, 1999. 64 FR 14441.
    Under the Extension Policy, the EPA would defer final findings on 
the attainment status for moderate nonattainment areas and would 
instead allow these areas to submit attainment SIPs that include 
boundary reductions in ozone achieved by controls measures in upwind 
areas. The attainment date for these areas would be the date by which 
the relevant upwind areas will have reduced emissions, reducing the 
transported ozone. Along this line, on March 18, 1999, EPA published a 
proposed rule titled ``Clean Air Reclassification and Notice of 
Potential Eligibility for Attainment Date Extension, Missouri and 
Illinois, St. Louis Nonattainment Area; Ozone.'' In that proposed rule, 
the EPA proposed to defer final action on a proposed finding of 
nonattainment for the Metro-East/St. Louis nonattainment (which would 
have resulted in a bump-up of the area to serious nonattainment for 
ozone) until it could ascertain whether the attainment date should be 
extended for the area based on an application of the Extension Policy.
    In an October 1999 draft supplement to its 1994 attainment 
demonstration for the Metro-East/St. Louis nonattainment area, the 
State of Illinois committed to implementing state-wide NOX 
emission reductions from EGUs. Illinois officially submitted the 
adopted attainment demonstration supplement to the EPA in February 
2000. The final attainment strategy for the Metro-East St. Louis area 
assumed that the 23 jurisdictions affected by the EPA NOX 
SIP call, including the eastern one-third of Missouri would limit 
NOX emissions from large EGUs beginning in May 2003 to an 
emission rate of no more than 0.25 pounds NOX/mmBtu of heat 
input. Large EGUs in the western two-thirds of Missouri would be 
limited to a NOX emission rate of no more than 0.35 pounds 
NOX per mmBtu of heat input. The State's photochemical grid 
modeling supported attainment of the 1-hour ozone NAAQS in the Metro-
East/St. Louis nonattainment area in May 2003 based on these regional 
NOX reductions. The EPA proposed to conditionally approve 
this attainment demonstration on April 17, 2000, contingent, in part, 
on the States of Illinois and Missouri submitting regional (statewide) 
draft NOX rules by June 2000 and completing adoption of 
these rules and submitting them in final form to the EPA by December 
2000. 65 FR 20404.

[[Page 52971]]

    On April 30, 1998, the State of Illinois submitted a major revision 
of the ozone attainment demonstration for the Chicago-Gary-Lake County 
ozone nonattainment area. In that attainment demonstration revision, 
the State demonstrated that significant reductions in transported ozone 
and NOX would be necessary to achieve attainment of the 1-
hour ozone standard in the nonattainment area. Illinois committed to 
complete the ozone attainment demonstration and to adopt sufficient 
local and regional controls as needed to demonstrate attainment of the 
ozone standard and to submit the final attainment demonstration and 
adopted regulations to the EPA by December 2000. The EPA proposed to 
conditionally approve the 1-hour attainment demonstration based, in 
part, on the State's commitment to adopt and submit a final attainment 
demonstration and a post-1999 ROP plan, including the necessary State 
emission control regulations, by December 31, 2000. 64 FR 70496. The 
NOX regulations reviewed in this proposed rule are, in part, 
intended to meet part of the State's commitment to complete the ozone 
attainment demonstration for the Chicago-Gary-Lake County nonattainment 
area.

C. What Have Been the Court Rulings Regarding EPA's NOX 
Emission Control Regulations?

    When the EPA published the NOX SIP call on October 27, 
1998, a number of States and various industry groups filed petitions 
challenging the rulemaking before the United States Court of Appeals 
for the District of Columbia Circuit. See Michigan vs. EPA, 213 F.3d 
663 (D.C. Cir. 2000). The Court, on May 25, 1999, stayed the obligation 
of State's to submit SIPs in response to the NOX SIP call 
rule. Subsequently, on March 3, 2000, the Court upheld most of the 
NOX SIP call rule. The Court, however, vacated the rule as 
it applied to Missouri and Georgia and remanded for further 
consideration the inclusion of portions of Missouri and Georgia in the 
rule. The Court also vacated the rule as it applied to Wisconsin 
because EPA had not made a showing that sources in Wisconsin 
significantly contribute to nonattainment or interfere with maintenance 
of the ozone NAAQS in any other State. Finally, the Court also remanded 
two issues concerning a limited portion of the NOX emission 
budgets. On June 22, 2000, the Court removed the stay of States' 
obligation to submit SIPs in response to the NOX SIP call 
and denied petitioners' motions for rehearing and rehearing en banc. In 
removing the stay, the Court provided that EPA should allow 128 days 
for States to submit SIPs. Thus, SIPs must be submitted to the EPA by 
October 30, 2000.
    The State of Illinois has indicated that the NOX 
regulations reviewed in this proposed rulemaking are intended primarily 
to meet the emission reduction needs of the Metro-East/St. Louis ozone 
attainment demonstration and secondarily to meet a portion of the 
NOX emission budget established in the NOX SIP 
call for Illinois. The State, however, needs to take further action to 
develop a submission in response to the NOX SIP call 
emission budget, and, in this action, we are not reviewing the EGU 
NOX rule for the purposes of determining whether the EGU 
NOX rule is sufficient to allow the State to meet the 
NOX SIP call emission budget.

II. Summary of the State Submittal

A. When Were the NOX Emission Control Regulations Submitted 
to the EPA?

    On June 29, 2000, the Illinois Environmental Protection Agency 
(IEPA) submitted a draft NOX emission control rule to the 
EPA for pre-adoption review.
    On July 18, 2000, EPA received a letter from David J. Kolaz, Chief, 
Bureau of Air, Illinois Environmental Protection Agency, which 
contained a number of documents, including the draft rule submitted on 
June 29, 2000 along with additional documentation for the draft rule. 
The letter included a request from the Bureau Chief to process the 
submittal in parallel (i.e., parallel processing) to the development of 
the rule at the State level and included a schedule for development and 
adoption of the rule by the State.
    Parallel processing allows a State to submit a plan for approval 
prior to actual adoption by the State. 47 FR 27073 (June 23, 1982) A 
submittal for parallel processing must include the following three 
items: a letter from the State requesting parallel processing; a 
schedule for final adoption or issuance of the plan; and a copy of the 
proposed regulation or document. Illinois submitted these three items 
of information in the letter dated July 18, 2000, from the Bureau 
Chief. The Bureau Chief is the authorized representative for the State 
to submit SIP revisions. The letter asks that EPA parallel process the 
submittal, and it includes milestones leading to final adoption of the 
plan. The milestones are acceptable to EPA as a schedule, however the 
end date of final approval (final rule adoption) by the Illinois 
Pollution Control Board (IPCB) cannot precisely be established. 
Finally, enclosed with the letter was a copy of the draft 
NOX rule along with a ``Statement of Reasons'' provided to 
the IPCB by the Legal Counsel of the Illinois Environmental Protection 
Agency to support the adoption of the rule.

B. What Are the Basic Components of the State's Draft Rule?

    The State based the draft rule primarily on EPA's part 96 Trading 
Rule. Many sections of part 96 are incorporated by reference (IBR) into 
the draft rule. In addition to IBR of portions of 40 CFR part 96, 
Illinois' NOX rule also includes IBR of portions of 40 CFR 
parts 60, 72, 75, and 76. Section 217.104 of the Illinois rule 
identifies the CFR parts and sections included in the IBR. Table 1 
identifies the Volume 40 CFR parts and sections included by IBR in 
Illinois' NOX rule.

    Table 1.--40 CFR Parts and Sections Incorporated By Reference In
                         Illinois' EGU NOX Rule
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          40 CFR Part                Section       Section Title/Subject
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60............................  Appendix A.......  Method 7 (The phenol
                                                    disulfonic acid
                                                    method).
72............................  All Sections.....  Permits regulation.
75............................  All Sections.....  Continuous emission
                                                    monitoring.
76............................  All Sections.....  Acid rain nitrogen
                                                    oxides emission
                                                    reduction program.
96............................  Subpart A:
                                96.1.............  Purpose.
                                96.2.............  Definitions.
                                96.3.............  Measurements,
                                                    abbreviations, and
                                                    acronyms.
                                96.5.............  Retired unit
                                                    exemptions.
                                96.6.............  Standard
                                                    requirements.
                                96.7.............  Computation of time.

[[Page 52972]]

 
                                Subpart B:
                                96.10............  Authorization and
                                                    responsibility of
                                                    the NOX authorized
                                                    account
                                                    representative.
                                96.11............  Alternate authorized
                                                    account
                                                    representative.
                                96.12............  Changing the
                                                    authorized account
                                                    representative and
                                                    alternate authorized
                                                    account
                                                    representative.
                                96.13............  Account certificate
                                                    of representation.
                                96.14............  Objections concerning
                                                    authorized account
                                                    representative.
                                Subpart D:
                                96.30............  Compliance
                                                    certification
                                                    report.
                                96.31............  Permitting
                                                    authority's and
                                                    Administrator's
                                                    action on compliance
                                                    certification.
                                Subpart F:
                                96.50............  NOX Allowance
                                                    Tracking System
                                                    accounts.
                                96.51............  Establishment of
                                                    accounts.
                                96.52............  NOX Allowance
                                                    Tracking System
                                                    responsibilities of
                                                    NOX authorized
                                                    account
                                                    representative.
                                96.53............  Recordation of NOX
                                                    allowance
                                                    allocations.
                                96.54............  Compliance.
                                96.55(a).........  Banking.
                                96.55(b).........  Banking.
                                96.56............  Account error.
                                96.57............  Closing of general
                                                    accounts
                                Subpart G:
                                96.60............  NOX allowance
                                                    transfers.
                                96.61............  EPA recordation.
                                96.62............  Notification
                                Subpart H:
                                96.70............  Monitoring and
                                                    reporting, General
                                                    requirements.
                                96.71............  Initial certification
                                                    and recertification
                                                    procedures.
                                96.72............  Out of control
                                                    periods.
                                96.73............  Notifications.
                                96.74............  Recordkeeping and
                                                    reporting.
                                96.75............  Petitions.
                                96.76............  Additional
                                                    requirements to
                                                    provide heat input
                                                    data for allocations
                                                    purposes.
------------------------------------------------------------------------

    In addition to the IBR portion of the rule, the rule contains a 
number of other sections or components. Table 2 lists these sections/
components. Some of these sections/components were derived from federal 
regulations. (Illinois attempted to either revise the federal 
regulations to more abbreviated versions or to revise the federal 
regulations to make them more compatible with existing State 
regulations.) Where appropriate, the final column of Table 2 notes the 
federal regulation(s) from which the State regulation was derived or 
notes the effect of the State regulation relative to related federal 
regulations.

            Table 2.--Non-IBR Portions of Illinois' NOX Rule
------------------------------------------------------------------------
                                                      Comparable federal
         Subpart/Section                 Title          regulation/note
------------------------------------------------------------------------
Subpart B/Section 211...........  Definitions.......  Replace Some IBR
                                                       Definitions
Subpart A.......................  General Provisions
Section 217.100.................  Scope and
                                   organization.
Section 217.101.................  Measurement
                                   Methods.
Section 217.102.................  Abbreviations and   Replaces some
                                   Units.              abbreviations
                                                       included by IBR.
Section 217.104.................  Incorporations by
                                   Reference.
Subpart W.......................  NOX Trading
                                   Program for
                                   Electrical
                                   Generating Units.
Section 217.750.................  Purpose...........
Section 217.752.................  Severability......
Section 217.754.................  Applicability.....  See 40 CFR 96.4.
Section 217.756.................  Compliance
                                   Requirements.
Section 217.756(b)..............  Permit
                                   requirements.
Section 217.756(c)..............  Monitoring
                                   requirements.
Section 217.756(d)..............  NOX requirements..
Section 217.756(e)..............  Recordkeeping and
                                   reporting
                                   requirements.
Section 217.756(f)..............  Liability.........
Section 217.758.................  Permitting
                                   Requirements.
Section 217.758(a)..............  Budget permit       See 40 CFR 96.20
                                   requirements.       and 96.21.
Section 217.758(b)..............  Budget permit       See 40 CFR 96.22
                                   applications.       and 96.23.
Section 217.760.................  NOX Trading Budget  See 40 CFR 96.40,
                                                       96.41, and 96.42.
Section 217.762.................  Methodology for     See 40 CFR 96.42.
                                   Calculating NOX
                                   Allocations for
                                   Budget Electrical
                                   Generating Units.

[[Page 52973]]

 
Section 217.764.................  NOX Allocations     See 40 CFR 96.42.
                                   for Budget EGUs.
Section 217.768.................  New Source Set-
                                   Asides for
                                   ``New'' Budget
                                   EGUs.
Section 217.770.................  Early Reduction     See 40 CFR 96.55.
                                   Credits for
                                   Budget EGUs.
Section 217.774.................  Opt-in Units......
Section 217.776.................  Opt-In Process....  See 40 CFR 96.84.
Section 217.778.................  Budget Opt-in
                                   Units: Withdrawal
                                   from NOX Trading
                                   Program.
Section 217.780.................  Opt-in Units:
                                   Change in
                                   Regulatory Status.
Section 217.782.................  Allowance
                                   Allocations to
                                   Budget Opt-In
                                   Units.
Appendix D......................  Non-Electrical
                                   Generating Units.
Appendix F......................  Allowances for
                                   Electrical
                                   Generating Units.
------------------------------------------------------------------------

    Using information provided by the IEPA to the IPCB in support of 
the adoption of this rule, the following summarizes the various rule 
sections listed in table 2 above.

Subpart B, Section 211

    A number of new definitions would be added to an existing part 211 
of Illinois' air pollution rules. Definitions of the following terms 
would be added: Allowance; Combined Cycle System; Combustion Turbine; 
Common Commercial Operation; Commence Operation; Common Stack; Control 
Period; Excess Emissions; Fossil Fuel; Fossil Fuel-Fired; Generator; 
Heat Input; Heat Input Rate; Nameplate Capacity; Potential Electrical 
Output Capacity; and Repowering. The specifics of these definitions do 
affect the completeness and enforceability of the rule(s) that uses 
them. Therefore, they have been compared to definitions contained in 40 
CFR parts 96 and 97 as part of the review conducted for this proposed 
rulemaking.

Subpart A

Section 217.100  Scope and Organization

    This section specifies the purpose of the State's NOX 
rule and limits its scope to prevent problems with existing rules.

Section 217.101  Measurement Methods

    This section states that the measurement of NOX 
emissions at sources and facilities covered by the rule shall be 
conducted according to: (a) The phenol disulfonic acid method (40 CFR 
part 60, appendix A, Method 7 (1999)); and continuous emissions 
monitoring pursuant to 40 CFR part 75 (1999).

Section 217.102  Abbreviations and Units

    Like definitions of terms, abbreviation definitions can affect the 
completeness and enforceability of a rule, and the abbreviations added 
to this rule have been reviewed from this standpoint. It should be 
noted that part 211 of Illinois' air pollution rules also contains a 
number of defined abbreviations. The abbreviations added in section 
217.102 are specific to the NOX rule and do not necessarily 
apply to other Illinois air pollution control rules.

Section 217.104

    As noted above, the State proposes to amend section 217.104 (to add 
this section to existing Illinois rules) to add portions of 40 CFR part 
96 and 40 CFR parts 72, 75, and 76 (see table 1 above) to the documents 
that have been incorporated into Illinois' rules by reference. IBR 
documents are an integral part of Illinois' rules and are enforceable 
in the same manner as one would enforce any State rule.

Trading Program for Electrical Generating Units

Section 217.754  Applicability

    This section addresses the applicability of the State's proposed 
NOX trading program. Subsection (a) provides that the 
NOX trading rule and emissions cap applies to all fossil 
fuel-fired stationary boilers, combustion turbines or combined cycle 
systems, serving a generator which has a nameplate capacity exceeding 
25 megawatts (MWe) if the generated electricity is sold. This section 
also applies to fossil-fuel fire units with a maximum design heat input 
rate of greater than 250 mmBtu/hour and serving smaller generators 
under certain specified circumstances, including the condition that a 
served generator is larger than 50 percent of a unit's potential 
electrical output capacity (such a unit would also be classified as an 
electrical generating unit subject to the rule and the trading program 
requirements). Subsection (b) of this section provides that units 
meeting the above criteria are subject to the emission limits of the 
NOX Trading Program.
    Subsection (c) provides an exemption for low-emitters, such as 
units that burn natural gas and/or fuel oil exclusively and have 
potential NOX emission rates of 25 tons or less during the 
control period. The owner or operator of such a unit may choose to get 
an operating permit that limits emissions to this lower level through 
federally enforceable conditions as specified in this subsection. 
Owners and operators seeking low emitter status affect the emission 
allowances covered in the NOX Trading Program depending on 
whether the units are existing or new units.

Section 217.756  Compliance Requirements

    This section specifies the compliance requirements for EGUs subject 
to the NOX Trading Program (budget EGUs). Owners or 
operators of each source that has one or more budget EGUs must submit 
an application meeting the requirements of section 217.758 for an 
emissions budget permit from the IEPA. The budget permit must specify 
federally enforceable conditions covering the NOX Trading 
Program and must satisfy all other permitting requirements in Illinois' 
air quality rules. The application for a budget permit is subject to 
specified timing requirements.
    Subject budget EGUs must meet specified monitoring requirements, 
including continuous emissions monitoring. An account representative 
for a subject budget EGU must comply with specified monitoring 
compliance certification and reporting requirements of 40 CFR part 96, 
subpart H. The monitoring results will be used to certify compliance 
with the budget emissions limitations.
    Subsection (d) requires the account representative for a budget EGU 
to hold sufficient emission allowances available for compliance 
deduction in the budget EGU's compliance account to account for the 
source's overdraft account by

[[Page 52974]]

November 30 of each year starting in the compliance year (1 allowance 
equals 1 ton of NOX emissions). Only a certain number of 
allowances will be given to a budget EGU each control period (May 1 
through September 30) based on an established State-wide NOX 
emissions cap and an allowance distribution system devised 
cooperatively by the States and the affected sources. Budget EGUs can 
not use an allowance prior to the control period in which it is 
allocated by the State.
    Subsection (d)(3) contains a provision that defers the compliance 
date for the program beyond May 1, 2003, if any of the neighboring 
States and other States in Region 5 subject to the NOX SIP 
Call do not have fully approved regulations or effective federally 
promulgated regulations by the end of 2002. This raises an unacceptable 
risk that the rule as proposed by Illinois would not require 
NOX emission controls by the time they are needed primarily 
for purposes of attainment in the Metro-East/St. Louis area, by May 1, 
2003, to avoid a bump-up of the area to serious nonattainment of the 1-
hour ozone standard or for purposes of the NOX SIP Call.
    Subsection (e) provides the recordkeeping requirements for the 
budget EGUs. All emission monitoring information must be recorded and 
maintained in accordance with 40 CFR part 96, subpart H. Documents and 
records must be kept and must be made available for inspection upon 
request for 5 years unless a different period is specified elsewhere 
(under other rules).
    Subsection (f) contains the provisions governing liability of 
budget EGUs, their owner and operators, and account representatives. 
The owner and account representative of one budget EGU are not liable 
for any violation of any other budget EGU with which they are not 
affiliated, except with respect to requirements for EGUs with a common 
stack.

Section 217.758  Permitting Requirements

    The budget permit of a budget EGU must contain federally 
enforceable conditions that apply to the unit and provide that the 
budget permit is a complete and segregable portion of the source's 
entire permit.
    Subsection (a) prohibits the issuance of a budget permit and the 
establishment of a NOX emissions allowance until the IEPA 
and the EPA have received a complete ``account certificate of 
representation'' from the budget EGU's account representative, and sets 
forth the timing for submitting a budget permit application where one 
or more of the budget EGUs are subject to the requirements of section 
39.5 of the Illinois Clean Air Act Permit Program. Budget EGUs not 
subject to these requirements are also required to obtain a permit with 
federally enforceable conditions.

Section 217.760  The NOX Trading Budget

    Subsection (a) provides that the total base NOX trading 
budget available statewide for allowance allocations for each control 
period (May 1 through September 30) is 30,701 tons (30,701 allowances). 
This budget may be increased or decreased under various circumstances, 
such as the opt-in of non-subject sources or the opt-out of exempted 
low-emitter sources. This subsection also provides that for the years 
of 2003 through 2005, 5 percent of the 30,701 allowances will be 
allocated to a new source set-aside. For the years 2006 and thereafter, 
the new source set-aside will be reduced to 2 percent of the 30,701 
allowances.
    Subsection (b) authorizes the IEPA to adjust the total EGU trading 
budget available for allocation. This is done to remove allowances for 
low-emitters opting to become exempt from the NOX Trading 
Program.
    Subsection (c) authorizes the IEPA to adjust the total base EGU 
trading budget pro-rata if the EPA subsequently makes adjustments in 
the EGU budget.

Section 217.762  Methodology for Calculating NOX Allocations 
for Budget Electrical Generating Units (EGUs)

    The methodology used to calculate allocations (not the total state-
wide emission cap) is based on the emission rate limit and a unit's 
control period heat input. Appendix F of the rule lists the budget EGUs 
and their associated allowances. For budget EGUs, including opt-ins, 
not listed in appendix F, the limiting emission rate used in the 
calculation of allowances is the more stringent of 0.15 pounds 
NOX/million Btu heat input or the permitted NOX 
emission rate, but never less than 0.055 pounds NOX per 
million Btu heat input.
    Subsection (b) sets forth how the heat input is to be determined 
for the control period. This heat input for each budget EGU is used 
along with the emission limit to determine the NOX allowance 
for the EGU.

Section 217.764  NOX Allocations for Budget EGUs

    This section sets forth, for each control period, the allowance 
allocations for budget EGUs. The allocations involve a ``fixed/flex'' 
approach from 2006 through 2009 and a ``100 percent flex'' approach in 
2010 and thereafter (consult this section of the rule for the details 
of these approaches). The allocations for 2003 through 2005 are 
specified in subsection (a).

Section 217.768  New Source Set-Aside for ``New'' Budget EGUs

    This section sets aside allowances for new sources as noted above. 
During the period of 2003 through 2005, any allowances that are not 
allocated to new sources will be allocated to certain EGUs. After 
January 1, 2003, new budget EGUs that commence commercial operation may 
purchase allowances from the new source set-aside based on a pricing 
structure defined in this section.

Section 217.770  Early Reduction Credits for Budget EGUs

    The IEPA proposes to add this section that allows budget EGUs to 
request early reduction credits (ERCs) if they reduce NOX 
emissions in the 2001 or 2002 control periods. This section sets forth 
the various requirements associated with the generation and recording 
of these ERCs.

C. Components of the Draft Regulations

1. What geographic regions and sources are affected by the draft 
regulations?
    The proposed rules affect all fossil fuel-fired boilers, combustion 
turbines or combined cycle systems in the State of Illinois serving a 
generator with a nameplate capacity greater than 25 MWe (and boilers, 
turbines, and all combined cycle systems in the State of Illinois 
serving smaller generators provided that these units have heat input 
rates exceeding 250 mmBtu/hour and have a potential to provide more 
than 50 percent of their power output to the generators), and any opt-
in sources in the State of Illinois as described in the rule.
2. What are the allowable NOX emission rates or levels for 
affected sources?
    The NOX reductions called for in the proposed State rule 
are based on an NOX emissions cap required for EGUs in the 
State. The target budget established in the State rule is 30,701 tons 
for the control period. The cap is based on an emission rate of 0.15 
pounds/mmBtu heat input for EGUs operating in 1995/1996 applied to 
operating levels expected in 2007. The State believes the rule will 
bring about attainment of the 1-hour ozone standard in the Metro-East/
St. Louis nonattainment area. With regard to the attainment 
demonstration for the Chicago-Gary-Lake County nonattainment area, the 
State can only

[[Page 52975]]

note that its analysis thus far will `` * * * likely demonstrate 
attainment * * * '' of the 1-hour ozone standard. The State will 
complete its air quality modeling and submit its final attainment 
demonstration to EPA in December 2000. Finally, this rule is intended 
to provide the level of control from EGUs that, in conjunction with 
rules establishing similar requirements for other source types, will 
meet Illinois' NOX emission budget under the NOX 
SIP call.
3. What are the monitoring, recordkeeping, and reporting requirements 
for affected sources?
    The IEPA proposes to incorporate by reference the EPA Part 96 
monitoring, Recordkeeping, and reporting requirements for the affected 
sources. However, in section 217.770(a) of the rule, which addresses 
early reduction credits for budget EGUs, the rule provides that `` * * 
* monitoring system availability shall be not less than 80 percent 
during the control period prior to the control period in which the 
NOX emissions reduction is made * * * ''. Also, in the opt-
in process, the State, in section 217.776(b) addresses monitoring 
system availability of `` * * * not less than 80 percent * * * ''. This 
differs with the EPA requirement for monitoring in section 96.84(b) of 
40 CFR part 96, which requires 90 percent availability.
4. What is the compliance/implementation deadline for affected sources?
    The Illinois rule has a compliance date that is contingent upon 
implementation of NOX rules in other States. Section 217.756 
states that sources `` * * * shall be subject to the monitoring and 
[emission control] requirements * * * starting on the later of May 1, 
2003, * * * or [May 1 of the year after] all of the other States 
subject to the provisions of the NOX SIP Call [in Region 5 
or contiguous to Illinois] have adopted regulations to implement 
NOX trading programs and other required reductions of 
NOX emissions pursuant to the NOX SIP Call, and 
such regulations have received final approval by EPA * * * , or a final 
FIP for ozone promulgated by EPA is effective.'' The relevant other 
States are Indiana, Michigan, Ohio, Missouri, and Kentucky. This 
language provides for compliance with relevant requirements by May 1, 
2003, except that a later compliance date will apply if any of these 
five other States does not have adequate NOX regulations 
either as approved State regulations or as effective promulgated 
Federal regulations by the end of 2002.
    This language raises significant concerns. To avoid 
reclassification of the St. Louis area to serious nonattainment, 
Illinois must submit rules that provide adequate NOX 
emission reductions by May 1, 2003. Also, for EPA to approve this rule 
and the expected other related rules as satisfying the NOX 
SIP Call, EPA must conclude that the controls needed to achieve the 
budget will be required by May 1, 2003. The language in Illinois' 
proposed rule would not achieve either of these purposes if problems 
arise in any of the five States, delaying approval of their 
NOX rule until after the end of 2002 or the promulgation of 
an effective FIP after 2002. Of particular concern is the dependence on 
the timetable for Missouri, since, unlike Illinois, the Court remanded 
the NOX SIP Call for Missouri. This will result in Missouri 
submitting NOX SIP call-compliant regulations on a later 
schedule than other NOX SIP call States. The EPA rulemaking 
on such rule may be sufficiently delayed, such that the language of the 
Illinois NOX rule would delay the compliance date for the 
rule beyond the attainment date established in the attainment 
demonstration for the St. Louis area and beyond the required compliance 
date under the NOX SIP call.
    EPA is also concerned about other aspects of this provision of 
Illinois rule. The language in Ilinois' rule makes the compliance date 
contingent on adoption/approval or promulgation of ``regulations to 
implement NOX trading programs [and other required 
reductions].'' While EPA is mandating achievement of specified amounts 
of NOX emissions control, EPA is not mandating that States 
adopt provisions for emissions trading. Therefore, if a relevant State 
opts not to implement trading, Illinois' language suggests a permanent 
compliance date deferral.

D. Will the Illinois NOX Trading Program Meet the Federal 
NOX Budget?

    Illinois' rule on EGUs is a key element of the set of rules 
Illinois is expected to submit to satisfy the reduction requirements 
for NOX emissions that EPA's NOX SIP Call 
mandates for Illinois. In fact, Illinois' EGU rule establishes a cap on 
emissions derived from the NOX emission limit (0.15 pounds 
per million BTUs of heat input) that EPA used in calculating Illinois' 
budget. Nevertheless, this rulemaking does not evaluate the rule on 
EGUs as to whether it is an adequate step toward achieving the 
NOX SIP Call reductions or whether the full set of expected 
rules will achieve the reductions.
    Illinois has not yet submitted a detailed assessment of whether its 
full set of rules will assure achievement of the reductions. EPA 
expects such a submittal in conjunction with the other rules that 
Illinois must still submit. EPA will rulemake on the adequacy of 
Illinois' rules for achieving the State's NOX SIP call 
budget as part of rulemaking on these other submittals.

E. What Public Review Opportunities Are/Were Provided?

    The State reports that early in 1999, the IEPA commenced regular 
meetings with the NOX Technical Committee and with 
representatives of the existing EGUs. The State met with these existing 
sources on numerous occasions. Most of the time was spent developing 
concepts in the flexible portions of the Federal NOX Trading 
Program, i.e., initial allocations, allocation methodology, and the use 
of the Compliance Supplement Pool. The State also met with new EGUs and 
again with existing EGUs for a second time to discuss how allowances 
would be allocated.
    Following the May 25, 1999 stay by the Court of Appeals, the IEPA 
shifted its effort to meet the requirements of the 1-hour standard 
attainment demonstrations. When this stay was lifted on June 22, 2000, 
IEPA again began to formulate a program to comply with the 
NOX SIP Call rule. IEPA again met with the affected sources 
and also with the American Lung Association of Chicago, the Illinois 
Environmental Council, the Environmental Law and Policy Center, and the 
Illinois Environmental Regulatory Group.

F. What Requirements Are Contained in the NOX Emission 
Control Regulations From the Standpoints of the Lake Michigan and the 
Metro-East/St. Louis Ozone Attainment Demonstrations?

    As noted in the December 16, 1999 proposed rulemaking on the 
State's attainment demonstration for the Chicago-Gary-Lake County ozone 
nonattainment area (64 FR 70496), the State did not commit to develop 
regional NOX controls for specific source categories or for 
specific emission control levels. The attainment demonstration, which 
has not been submitted in final form, did note that significant 
reductions in regional NOX emissions would be needed to 
attain the standard in the nonattainment area. The State did assume 
significant future reductions in background (transported) ozone levels 
and upwind NOX emissions to reflect possible impacts from 
EPA's NOX SIP call based on information available prior to 
April 1998. The States (Illinois, Indiana, and

[[Page 52976]]

Wisconsin, and the Lake Michigan Air Directors Consortium) are 
currently modeling the possible impacts of the NOX SIP call 
for inclusion in the final attainment demonstration submittals for the 
Lake Michigan area.
    As noted in the proposed rulemaking for the Metro-East/St. Louis 
ozone nonattainment area (65 FR 20404), the attainment demonstration 
for this nonattainment area relies on NOX emission controls 
from large EGUs in both Illinois and Missouri. As noted above, the 
attainment demonstration assumes that NOX emission rates for 
large EGUs state-wide in Illinois will be limited to a level of 0.25 
pounds NOX/mmBtu of heat input or less. The attainment 
demonstration did not assume additional NOX emission 
controls beyond those required by the Clean Air Act for a moderate 
ozone nonattainment area.

G. What Guidance Did EPA Use to Evaluate Illinois' NOX 
Control Program?

    The State of Illinois asked that the part 217 NOX 
emissions control rule be parallel processed by EPA in order to 
expedite eventual approval of the State's NOX SIP. Guidance 
for parallel processing is found at 47 FR 27073 (June 23, 1982). In 
addition, we used 40 CFR part 96 for review of portions of the 
submittal which apply. The State incorporated by reference a 
significant portion of 40 CFR part 96. The portions incorporated by 
reference are listed elsewhere in this proposal.

H. Does the Illinois Part 217 NOX Emissions Control Program 
Meet the Needs of the Ozone Attainment Demonstrations?

    Aside from the implementation delay problem and other deficiencies 
discussed elsewhere in this document, EPA proposes to find that the 
part 217 NOX emissions control program meets the emission 
reduction needs of the ozone attainment demonstration for Metro-East/
St. Louis ozone nonattainment area which EPA has recently proposed to 
approve. The States of Illinois and Missouri have completed additional 
revisions in the attainment demonstration which will be addressed in a 
separate rulemaking. These additional revisions have not affected the 
emission reduction requirements considered in the attainment 
demonstration addressed in EPA's proposed rule on April 17, 2000 (65 FR 
20404).
    Until Illinois and other Lake Michigan States complete the 
attainment demonstration for the Lake Michigan area, it cannot be 
determined whether the NOX emissions reductions from the 
NOX rule reviewed here will be adequate to lead to a 
demonstration of attainment for the Chicago-Gary-Lake County ozone 
nonattainment area.

I. Does the Illinois Part 217 NOX Emissions Control Program 
Meet All of the Federal NOX SIP Call Requirements?

    No. The part 217 rule only addresses the NOX controls 
for EGUs. Although these reductions are significant, they are not 
sufficient to guarantee that the State will achieve the NOX 
emission budget established in the NOX SIP call. To achieve 
the acceptable NOX emission level of the NOX SIP 
call, the State will have to adopt additional emission control 
regulations or further tighten the emission limits for EGUs. The 
adequacy of the full set of reductions to satisfy the NOX 
SIP Call requirements will be addressed in separate rulemaking. Other 
deficiencies are noted below.

J. What Deficiencies Were Noted in Illinois' NOX Emissions 
Control Regulations, and Do Any of These Deficiencies Constitute a 
Serious Disapprovability Issue?

    EPA reviewed the State's draft part 217 NOX emissions 
control rule and offers the following comments on deficiencies found in 
the draft rule, many of which are minor and should be readily 
correctable in the final rule adoption process. These deficiencies must 
be corrected before the EPA can give final approval to the Illinois 
NOX rule.

Section 217.101

    (a) The reference to Method 7 is questionable. Method 7 is a one 
time stack test. The rule should require Continous Emissions Monitoring 
System (CEMS). Additionally, there is a more recent method than method 
7. It is method 7e.
    (c) Low-emitter status. If a unit receives low emitter status, it 
will not be required to monitor anymore: it will need only to report 
operating hours. Therefore, item D, which requires potential 
NOX emissions to be calculated by either part 75 or by the 
default emissions rate, should require only the use of default 
emissions rates.

Section 217.756

    This section repeats section 96.6 of 40 CFR part 96, which is 
already incorporated by reference. Therefore, section 217.756 could be 
deleted.
    (d)(3) This subsection is discussed in detail in the front of this 
proposal and is the main reason for EPA's proposed disapproval in the 
alternative. Basically, this rule as written will result in potential 
delay regarding implementation of elements of the trading program. This 
section provides opportunity for delay in implementation of the program 
until all States in EPA Region 5, and States on the Illinois border 
have their NOX SIPs approved by EPA or are covered by a FIP 
in full effect. As written, section 217.756(d)(3) is a major deficiency 
in the State's plan.
    (g) Effect on other authorities--Rather than referencing 40 CFR 
96.4(b), the rule should reference 217.754(c).

Section 217.762

    Throughout this section, when the State addresses allocation of 
allowances from the new source set-aside, it uses the phrase ``to 
budget EGUs that have not fully operated for the full 2000 control 
period (italics supplied).'' Read literally, it could authorize an 
existing source that was shut down for part of a control period to 
receive allowances from the new source set-aside. The State should 
clarify, perhaps by replacing the italicised phrase with the phrase 
``commenced commercial operation.'' This latter term is used in section 
217.768. The regulations should use consistent terminology.

Section 217.768

    (i) In this section the State should clarify the phrase `` * * * 
less than one-half of the control period in 2002 * * * ''. Specifics on 
units and criteria are needed to define this phrase.

Section 217.770

    (a) The unit's monitoring data availability should be 90 percent, 
not 80 percent. The phrase, the `` * * * control period prior to the 
control period * * * '' is ambiguous due to the double reference to 
``control period.'' This phrase should be clarified.

Section 217.774  Opt-in Units

    (a)(2) By its terms, the provisions authorize units to opt-in even 
if all of their emissions are not vented to a stack. This provision 
should be revised so that only units that vent all emissions to a stack 
may opt-in. 40 CFR part 96 contains this limit. In addition, part (a) 
of this provision limits opt-ins to stationary boilers, combustion 
turbines, or combined cycle systems--all of which vent to a stack.

Section 217.776

    (b) Monitoring data availability should be 90 percent, not 80 
percent.

Section 217.778

    (b)(3) The rule refers to ``any allowances allocated to that unit 
under section 217.782 of this subpart for the control period * * * 
(emphasis

[[Page 52977]]

added).'' The emphasized term should be revised to read ``the same or 
earlier control period.''

Section 217.780

    Throughout this section, the State refers to a unit which changes 
its regulatory status and becomes a budget opt-in unit. In fact, this 
provision is meant to address units which change their regulatory 
status and become budget units. Throughout this section the phrase `` * 
* * budget opt-in unit * * * '' should be replaced with the phrase `` * 
* * budget EGU * * * ''.

Section 217.782

    (b)(2)(B) This should refer to the year of the control period not 
to the year prior to the year of the control period.

III. Proposed Action

A. What Action Is EPA Proposing Today?

    EPA objects to the provision in Illinois' rule that defers the 
compliance date for the program beyond May 1, 2003, if any of the 
neighboring States and other States in Region 5 subject to the 
NOX SIP Call do not have fully approved regulations or 
effective federally promulgated regulations by the end of 2002. EPA has 
also noted other concerns with the language of this provision and has 
noted other deficiencies in the rule.
    EPA believes that Illinois can adopt a rule that would ensure 
compliance by May 1, 2003. In its current draft form, which creates the 
potential for compliance delays beyond May 1, 2003, the drafted rule is 
unacceptable because it could cause compliance delays beyond the date 
currently established by the State for attainment of the 1-hour ozone 
standard in the St. Louis area. EPA proposes to approve the rule if the 
State adopts a final rule which assures compliance with NOX 
emission controls required by the rule by May 1, 2003 and corrects the 
other deficiencies discussed in this document. In the alternative, EPA 
proposes to disapprove Illinois' rule if the State adopts the rule in 
its current drafted form.

B. What Happens if Illinois Significantly Changes the Regulations 
During the Final Adoption Process?

    Since the EPA is proposing to rulemake on the Illinois 
NOX rule under a parallel process, it must be recognized 
that a possibility exists that the State of Illinois will adopt a final 
version of the rule which differs from the version of the rule reviewed 
in this proposed rule.
    If the State makes significant changes in the rule as a result of 
its own rule public comment and adoption process and based on further 
deliberation and/or on comments other than based on the deficiencies 
noted above, the EPA will re-evaluate the rule through a new proposed 
rule. If, on the other hand, the State only makes changes in the rule 
to correct the deficiencies addressed in this proposed rule consistent 
with the analysis presented here, the EPA will proceed to final 
rulemaking.

IV. Administrative Requirements

A. Executive Order 12866

    The Office of Management and Budget (OMB) has exempted this 
regulatory action from the Executive Order 12866, entitled ``Regulatory 
Planning and Review.''

B. Executive Order 13045

    Protection of Children from Environmental Health Risks and Safety 
Risks (62 FR 19885, April 23, 1997), applies to any rule that: (1) is 
determined to be ``economically significant'' as defined under 
Executive Order 12866, and (2) concerns an environmental health or 
safety risk that EPA has reason to believe may have 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 rule is not subject to Executive Order 13045 because it does 
not involve decisions intended to mitigate environmental health or 
safety risks that may have a disproportionate effect on children.

C. Executive Order 13084

    Under Executive Order 13084, EPA may not issue a regulation that is 
not required by statute, that significantly affects or uniquely affects 
the communities of Indian tribal governments, and that imposes 
substantial direct compliance costs on those communities, unless the 
Federal government provides the funds necessary to pay the direct 
compliance costs incurred by the tribal governments, or EPA consults 
with those governments. If EPA complies by consulting, Executive Order 
13084 requires EPA to 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 officials 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 proposed rule does not significantly or uniquely affect the 
communities of Indian tribal governments. This action does not involve 
or impose any requirements that affect Indian Tribes. Accordingly, the 
requirements of section 3(b) of Executive Order 13084 do not apply to 
this rule.

D. Executive Order 13132

    Federalism (64 FR 43255, August 10, 1999) revokes and replaces 
Executive Orders 12612 (Federalism) and 12875 (Enhancing the 
Intergovernmental Partnership). Executive Order 13132 requires EPA to 
develop an accountable process to ensure ``meaningful and timely input 
by State and local officials in the development of regulatory policies 
that have federalism implications.'' ``Policies that have federalism 
implications'' is defined in the Executive Order to include regulations 
that 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.'' Under Executive Order 13132, EPA may not issue a 
regulation that has federalism implications, that imposes substantial 
direct compliance costs, and that is not required by statute, unless 
the Federal government provides the funds necessary to pay the direct 
compliance costs incurred by State and local governments, or EPA 
consults with State and local officials early in the process of 
developing the proposed regulation. EPA also may not issue a regulation 
that has federalism implications and that preempts State law unless the 
Agency consults with State and local officials early in the process of 
developing the proposed regulation.
    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, because it 
merely approves a state rule implementing a federal standard, and

[[Page 52978]]

does not alter the relationship or the distribution of power and 
responsibilities established in the Clean Air Act. Thus, the 
requirements of section 6 of the Executive Order do not apply to this 
rule.

E. Regulatory Flexibility

    The Regulatory Flexibility Act (RFA) generally requires an agency 
to conduct a regulatory flexibility analysis of any rule subject to 
notice and comment rulemaking requirements unless the agency certifies 
that the rule will not have a significant economic impact on a 
substantial number of small entities. Small entities include small 
businesses, small not-for-profit enterprises, and small governmental 
jurisdictions.
    This rule will not have a significant impact on a substantial 
number of small entities because SIP approvals under section 110 and 
subchapter I, part D of the Clean Air Act do not create any new 
requirements but simply approve requirements that the State is already 
imposing. Therefore, because the Federal SIP approval does not create 
any new requirements, I certify that this action will not have a 
significant economic impact on a substantial number of small entities.
    Moreover, due to the nature of the Federal-State relationship under 
the Clean Air Act, preparation of flexibility analysis would constitute 
Federal inquiry into the economic reasonableness of state action. The 
Clean Air Act forbids EPA to base its actions concerning SIPs on such 
grounds. Union Electric Co., v. U.S. EPA, 427 U.S. 246, 255-66 (1976); 
42 U.S.C. 7410(a)(2).

F. Unfunded Mandates

    Under sections 202 of the Unfunded Mandates Reform Act of 1995 
(``Unfunded Mandates Act''), signed into law on March 22, 1995, EPA 
must prepare a budgetary impact statement to accompany any proposed or 
final rule that includes a Federal mandate that may result in estimated 
costs to State, local, or tribal governments in the aggregate; or to 
the private sector, of $100 million or more. Under section 205, EPA 
must select the most cost-effective and least burdensome alternative 
that achieves the objectives of the rule and is consistent with 
statutory requirements. Section 203 requires EPA to establish a plan 
for informing and advising any small governments that may be 
significantly or uniquely impacted by the rule.
    EPA has determined that the approval action proposed does not 
include a Federal mandate that may result in estimated costs of $100 
million or more to either State, local, or tribal governments in the 
aggregate, or to the private sector. This Federal action proposes to 
approve pre-existing requirements under State or local law, and imposes 
no new requirements. Accordingly, no additional costs to State, local, 
or tribal governments, or to the private sector, result from this 
action.

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Intergovernmental 
relations, Nitrogen oxides, Ozone, Reporting and recordkeeping 
requirements.

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

    Dated: August 24, 2000.
Francis X. Lyons,
Regional Administrator, Region 5.
[FR Doc. 00-22385 Filed 8-30-00; 8:45 am]
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