[Federal Register Volume 66, Number 212 (Thursday, November 1, 2001)]
[Rules and Regulations]
[Pages 55099-55102]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-27376]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[DC 050-2027a; FRL-7094-7]


Approval and Promulgation of Air Quality Implementation Plans; 
District of Columbia; Nitrogen Oxides Budget Trading Program

AGENCY: Environmental Protection Agency (EPA).

ACTION: Direct final rule.

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SUMMARY: EPA is taking direct final action on a revision to the 
District of Columbia (the District) State Implementation Plan (SIP). 
This revision was submitted in response to 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.'' This revision establishes and requires a nitrogen oxides 
(NOX) allowance trading program for large electric 
generating and industrial units, beginning in 2003. The intended effect 
of this action is to approve the District's NOX Budget 
Trading Program because it addresses the requirements of the 
NOX SIP Call. On December 26, 2000, EPA made a finding that 
the District had failed to submit a SIP response to the NOX 
SIP Call, thus starting the 18 and 24 month clocks for the mandatory 
imposition of sanctions and the obligation for EPA to promulgate a 
Federal Implementation Plan (FIP) within 24 months. On May 21, 2001, 
the District of Columbia submitted its NOX Budget Trading 
Program in response to the NOX SIP Call. EPA found that SIP 
submission complete on June 8, 2001, thereby halting the sanctions 
clocks. Upon approval of this SIP revision, both the sanctions clocks 
and EPA's FIP obligation are fully terminated.

DATES: This rule is effective on December 31, 2001 without further 
notice, unless EPA receives adverse written comment by December 3, 
2001. If EPA receives such comments, it will publish a timely 
withdrawal of the direct final rule in the Federal Register and inform 
the public that the rule will not take effect.

ADDRESSES: Written comments should be mailed to David L. Arnold, Chief, 
Air Quality Planning and Information Services Branch, Mailcode 3AP21, 
U.S. Environmental Protection Agency, Region III, 1650 Arch Street, 
Philadelphia, Pennsylvania 19103. Copies of the documents relevant to 
this action are available for public inspection during normal business 
hours at the Air Protection Division, U.S. Environmental Protection 
Agency, Region III, 1650 Arch Street, Philadelphia, Pennsylvania 19103; 
the Air and Radiation Docket and Information Center, U.S. Environmental 
Protection Agency, 401 M Street, SW, Washington, DC 20460; and the 
District of Columbia Department of Public Health, Air Quality Division, 
51 N Street, NE., Washington, DC 20002.

FOR FURTHER INFORMATION CONTACT: Cristina Fernandez, (215) 814-2178, or 
by e-mail at [email protected]. Please note any comments on 
this rule must be submitted, in writing, as provided in the ADDRESSES 
section of this document.

SUPPLEMENTARY INFORMATION: On May 21, 2001, the Government of the 
District of Columbia, Department of Health submitted a revision to its 
SIP to address the requirements of the NOX SIP Call. The 
revision consists of the adoption of Chapter 10--Nitrogen Oxides Budget 
Trading Program. The information in this section of this document is 
organized as follows:

I. EPA's Action
    A. What Action Is EPA Taking In This Final Rulemaking?
    B. What Are the General NOX SIP Call Requirements?
    C. What Is EPA's NOX Budget Trading Program?
    D. What Guidance Did EPA Use to Evaluate the District's 
Submittal?

[[Page 55100]]

II. The District's NOX Budget Trading Program
    A. When Did the District Submit the SIP Revision to EPA in 
Response to the NOX SIP Call?
    B. What Is the District's NOX Budget Trading Program?
    C. What Is the Result of EPA's Evaluation of the District's 
Program?
III. Final Action
IV. Administrative Requirements

I. EPA's Action

A. What Action Is EPA Taking in This Final Rulemaking?

    EPA is taking direct final action to approve the District of 
Columbia NOX Budget Trading Program submitted as a SIP 
revision on May 21, 2001. Upon approval of this SIP revision, both the 
sanctions clocks and EPA's FIP obligation are terminated.

B. What Are the General NOX SIP Call Requirements?

    On October 27, 1998 (63 FR 57356), 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.'' The NOX SIP Call requires 
22 States and the District of Columbia 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. EPA determined state-wide 
NOX emission budgets for each affected jurisdiction to be 
met by the year 2007. EPA identified NOX emission 
reductions, by source category, that could be achieved by using cost-
effective measures. The source categories included were electric 
generating units (EGUs), non-electric generating units (non-EGUs), area 
sources, nonroad mobile sources and highway sources. However, the 
NOX SIP Call allowed states the flexibility to decide which 
source categories to regulate in order to meet the statewide budgets. 
In the NOX SIP Call rule's preamble, EPA 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 (lbs of 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, 
October 27, 1998. 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 percent NOX reduction from cement kilns, a 60 
percent reduction from industrial boilers and combustion turbines, and 
a 90 percent 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 rule 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 rulemaking 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 
EPA. See 63 FR 57458-57459, October 27, 1998.
    EPA conducted several comment periods on various aspects of the 
NOX SIP Call emissions inventories. On March 2, 2000 (65 FR 
11222), EPA published additional technical amendments to the 
NOX SIP Call. The March 2, 2000 final rulemaking established 
the inventories upon which the District of Columbia's final budget is 
based.
    On March 3, 2000, the D.C. Circuit issued its decision on the 
NOX SIP Call ruling in favor of EPA on all of the major 
issues. Michigan v. EPA, 213 F.3d 663 (D.C. Cir. March 3, 2000). The 
Court denied petitioners' requests for rehearing or rehearing en banc 
on July 22, 2000. However, the Court ruled against EPA on four narrow 
issues. The Court remanded certain matters for further rulemaking by 
EPA. EPA expects to publish a proposal that addresses the remanded 
portion of the NOX SIP Call Rule in the near future. Any 
additional emissions reductions required as a result of a final 
rulemaking on that proposal will be reflected in the second phase 
portion (Phase II) of the NOX SIP Call rule. EPA does not 
anticipate that the District of Columbia will have any additional 
reductions requirements pursuant to the Phase II of the NOX 
SIP Call rule.

C. What Is EPA's NOX Budget Trading Program?

    EPA's model NOX budget and allowance trading rule, 40 
CFR part 96, sets forth a NOX emissions trading program for 
large EGUs and 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 final rulemaking 
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.

D. What Guidance Did EPA Use To Evaluate the District's Submittal?

    The final NOX SIP Call rule included a model 
NOX budget trading program regulation at 40 CFR part 96. EPA 
used the model rule and 40 CFR part 51.121-22 to evaluate the 
District's NOX Budget Trading Program.

[[Page 55101]]

II. The District's NOX Budget Trading Program

A. When Did the District Submit the SIP Revision to EPA in Response to 
the NOX SIP Call?

    On May 21, 2001, the Government of the District of Columbia, 
Department of Health submitted a revision to its SIP to address the 
requirements of the NOX SIP Call.

B. What Is the District's NOX Budget Trading Program?

    The District's SIP revision to address the requirements of the 
NOX SIP Call consists of the adoption and submittal of 
Chapter 10--Nitrogen Oxides Budget Trading Program. The District of 
Columbia NOX Budget Trading Program establishes and requires 
a NOX allowance trading program for large electric 
generating and industrial units. Chapter 10--NOX Budget 
Trading Program establishes a NOX cap and allowance trading 
program with a budget of 233 tons of NOX for the ozone 
seasons of 2003 and beyond. The District has adopted, by reference, the 
requirements of the July 1, 2000 edition of 40 CFR part 96, subpart A 
(NOX Budget Trading Program General Provisions), subpart B 
(Authorized Account Representative for NOX Budget Sources), 
subpart C (Permits), subpart D (Compliance Certification), subpart E 
(NOX Allowance Allocations), subpart F (NOX 
Allowance Tracking System), Subpart G (NOX Allowance 
Transfers), Subpart H (Monitoring and Reporting), and subpart I 
(Individual Opt-ins) and 40 CFR part 97, Appendix A (Final Section 126 
Rule: EGU Allocations, 2003-2007), Appendix B (Final Section 126 Rule: 
Non-EGU Allocations 2003-2007), Appendix C (Final Section 126 Rule: 
Trading Budget, 2003-2007), and Appendix D (Final Section 126 Rule: 
State Compliance Supplement Pool for the Section 126 Rule (Tons)). 
Therefore, pursuant to 40 CFR 51.121(p)(1), the District's SIP revision 
is automatically approved as satisfying its portion of NOX 
emission reductions.
    Under the NOX Budget Trading Program, the District 
allocates NOX allowances to the EGUs and non-EGUs units that 
are affected by these requirements. Because the District's 
NOX Budget Trading Program is based upon EPA's model rule, 
the District of Columbia sources are allowed to participate in the 
interstate NOX allowance trading program that EPA will 
administer for the participating states. The NOX trading 
program applies to all fossil fuel fired EGUs with a nameplate capacity 
equal to or greater than 25 MW that sell any amount of electricity to 
the grid as well as any non-EGUs that have a heat input capacity equal 
to or greater than 250 MMBtu per hour. 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. Source owners will monitor their NOX 
emissions by using systems that meet 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).

C. What Is the Result of EPA's Evaluation of the District's Program?

    EPA has evaluated the District's May 21, 2001 SIP submittal and 
finds it approvable. The District of Columbia NOX Budget 
Trading Program is consistent with EPA's guidance and addresses the 
requirements of the NOX SIP Call. EPA finds the 
NOX control measures in the District's NOX Budget 
Trading Program approvable. The May 21, 2001 submittal will strengthen 
the District's SIP for reducing ground level ozone by providing 
NOX reductions beginning in 2003.
    On December 26, 2000 (65 FR 81366), EPA made a finding that the 
District had failed to submit a SIP response to the NOX SIP 
Call, thus starting 18 and 24 month clocks for the mandatory imposition 
of sanctions and the obligation for EPA to promulgate a Federal 
Implementation Plan (FIP) with 24 months. The effective date of that 
finding was January 25, 2001. On
    May 21, 2001, the District submitted a SIP revision to satisfy the 
NOX SIP Call. EPA found that SIP submission complete on June 
8, 2001, thus, halting the sanctions clocks.

III. Final Action

    EPA is approving the District's NOX Budget Trading 
Program, submitted as a SIP revision on May 21, 2001. EPA finds that 
the District's NOX Budget Trading Program is fully 
approvable because it satisfies the requirements of the NOX 
SIP Call. Approval of this SIP revision fully terminates both the 
sanctions clocks and EPA's FIP obligation which officially started on 
January 25, 2001, the effective date of EPA's December 26, 2000 finding 
(FR 65 81366).
    EPA is publishing this rule without prior proposal because the 
Agency views this as a noncontroversial amendment and anticipates no 
adverse comment. However, in the ``Proposed Rules'' section of today's 
Federal Register, EPA is publishing a separate document that will serve 
as the proposal to approve the SIP revision if adverse comments are 
filed. This rule will be effective on December 31, 2001 without further 
notice unless EPA receives adverse comment by December 3, 2001. If EPA 
receives adverse comment, EPA will publish a timely withdrawal in the 
Federal Register informing the public that the rule will not take 
effect. EPA will address all public comments in a subsequent final rule 
based on the proposed rule. EPA will not institute a second comment 
period on this action. Any parties interested in commenting must do so 
at this time. Please note that if EPA receives adverse comment on an 
amendment, paragraph, or section of this rule and if that provision may 
be severed from the remainder of the rule, EPA may adopt as final those 
provisions of the rule that are not the subject of an adverse comment.

IV. Administrative Requirements

A. General 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. For this 
reason, this action is also not subject to Executive Order 13211, 
``Actions Concerning Regulations That Significantly Affect Energy 
Supply, Distribution, or Use'' (66 FR 28355, May 22, 2001). This action 
merely approves state law as meeting Federal requirements and imposes 
no additional requirements beyond those imposed by state law. 
Accordingly, the 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). This rule also does not 
have tribal implications because it will not have a substantial direct 
effect on one or more Indian tribes, on the relationship between the 
Federal

[[Page 55102]]

Government and Indian tribes, or on the distribution of power and 
responsibilities between the Federal Government and Indian tribes, as 
specified by Executive Order 13175 (65 FR 67249, November 9, 2000). 
This action also does not have Federalism implications because it does 
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). 
This action 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 ``Protection of Children 
from Environmental Health Risks and Safety Risks'' (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. 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.).

B. Submission to Congress and the Comptroller General

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

C. Petitions for Judicial Review

    Under section 307(b)(1) of the Clean Air Act, petitions for 
judicial review of this action must be filed in the United States Court 
of Appeals for the appropriate circuit by December 31, 2001. Filing a 
petition for reconsideration by the Administrator of this final rule 
does not affect the finality of this rule for the purposes of judicial 
review nor does it extend the time within which a petition for judicial 
review may be filed, and shall not postpone the effectiveness of such 
rule or action. This action approving the District of Columbia 
NOX Budget Trading Program as satisfying the NOX 
SIP Call may not be challenged later in proceedings to enforce its 
requirements. (See section 307(b)(2).)

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Nitrogen dioxide, 
Ozone, Reporting and recordkeeping requirements.

    Dated: October 24, 2001.
Donald S. Welsh,
Regional Administrator, Region III.

    40 CFR part 52 is amended as follows:

PART 52--[AMENDED]

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

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

Subpart J--District of Columbia

    2. In Sec. 52.470, the table in paragraph (c) is amended by adding 
the entry under Chapter 10 in numerical order for Section 1014 to read 
as follows:


Sec. 52.470  Identification of plan.

* * * * *
    (c) EPA approved regulations.

                            EPA-Approved Regulations in the District of Columbia SIP
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                                                        State effective                           Additional
         State citation              Title/subject           date          EPA approval date      Explanation
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                              Chapter 10--Nitrogen Oxides Emissions Budget Program
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*                  *                  *                  *                  *                  *
                                                        *
Section 1014....................  NOX Budget Trading  May 1, 2001.......  November 1, 2001..
                                   Program For State
                                   Implementation
                                   Plans.
 
*                  *                  *                  *                  *                  *
                                                        *
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[FR Doc. 01-27376 Filed 10-31-01; 8:45 am]
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