[Federal Register Volume 67, Number 188 (Friday, September 27, 2002)]
[Rules and Regulations]
[Pages 60871-60877]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-24638]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[LA-63-2-7569; FRL-7384-6]


Approval and Promulgation of Air Quality State Implementation 
Plans (SIP); Louisiana; Emissions Reduction Credits Banking in 
Nonattainment Areas

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: The EPA is approving the Louisiana emission reduction credit 
(ERC) banking program as a revision to the Louisiana State 
Implementation Plan (SIP). The ERC banking regulation establishes a 
means of enabling stationary sources to identify and preserve or 
acquire emission reductions for New Source Review (NSR) emission 
offsets. The revisions remove the requirement that ERCs in the bank be 
set aside as a contingency measure for the attainment demonstration. 
The revisions also remove the requirement that NSR netting be conducted 
with surplus ERCs from the bank. The revisions clarify the requirement 
that ERCs be surplus to all requirements of the Clean Air Act (the Act) 
when used. The EPA approves these revisions to the ERC banking 
regulation to satisfy the provisions of the Act which relate to the 
permitting of new and modified sources which are located in 
nonattainment areas. The EPA does not approve the revisions as an 
Economic Incentive Program (EIP), nor through this rule alone are we 
allowing the use of ERCs for inter-precursor trading purposes or for 
alternate Reasonably Available Control Technology (RACT) compliance 
purposes. Pursuant to section 553(d) of the Administrative Procedure 
Act, EPA finds good cause to make this action effective immediately.

EFFECTIVE DATE: This rule will be effective on September 27, 2002.

ADDRESSES: Copies of the documents relevant to this action are 
available for public inspection during normal business hours at the 
following locations. Persons interested in examining these documents 
should make an appointment with the appropriate office at least 24 
hours before the visiting day.
    Environmental Protection Agency, Region 6, Air Planning Section 
(6PD-L), 1445 Ross Avenue, Suite 700, Dallas, Texas 75202-2733. 
Louisiana Department of Environmental Quality, 7920 Bluebonnet 
Boulevard, Baton Rouge, Louisiana 70884.

FOR FURTHER INFORMATION CONTACT: Merrit H. Nicewander, Watershed 
Management Section (6WQ-EW), EPA Region 6, 1445 Ross Avenue, Dallas, 
Texas 75202-2733, telephone (214) 665-7519 ([email protected]).

SUPPLEMENTARY INFORMATION: This section is organized as follows:

I. What action is EPA taking?
II. What did EPA propose?
III. What comments did EPA receive, and what are our responses?
IV. Administrative requirements

    Throughout this document ``we'' ``us'' and ``our'' means EPA.

I. What Action is EPA Taking?

    We are granting approval of the Louisiana Department of 
Environmental Quality (LDEQ) ERC banking regulation as a component of 
the Louisiana SIP. The rule is promulgated by the State at LAC 33:III, 
Chapter 6 (Regulations on Control of Emissions Through the Use of 
Emission Reduction Credit Banking), as published in the Louisiana 
Register on February 20, 2002. The Governor of Louisiana submitted this 
rule to the EPA as a SIP revision on March 4, 2002.
    Our approval of the revised ERC bank rule was necessary to reflect 
the rescission of the contingency measures' enforceable process 
contained in section 621 of the rule, to incorporate the ``Surplus When 
Used'' provision in accordance with the Act and our Administrator's 
Order of December 22,

[[Page 60872]]

2000, to remove the requirement that netting reductions for 
nonattainment new source review (NNSR) purposes meet the surplus 
requirement of the emissions bank and to remove section 611 regarding 
mobile sources emission reductions, which we had not previously 
approved as part of the SIP. In addition, the revised rule removed 
section 623, which covered the withdrawal, use and transfer of ERCs, 
and section 625, which covered the application and processing fees. Our 
approval of the revised rule, including the removal of these sections, 
does not constitute a relaxation of the SIP, since any and all relevant 
portions of these sections have been incorporated into the revised 
rule.
    We approved the previous LDEQ Chapter 6 banking rule on July 2, 
1999. That SIP approval did not include section 611, Mobile Source 
Emission Reductions, which the State had promulgated in August 1994, 
but did include sections 621, 623 and 625. Section 623 covered the 
withdrawal, use and transfer of ERCs. Section 625 covered the 
application and processing fees. We are granting approval of the LDEQ 
revised Chapter 6 bank rule to reflect the removal of sections 611, 
621, 623 and 625.
    The purpose of the revised rule is to establish the means of 
enabling stationary sources to identify and preserve or acquire 
emission reductions for New Source Review offsets. This purpose 
provides flexibility to stationary sources when they undergo NNSR, 
allowing sources in need of emissions offsets to identify another 
stationary source that may have surplus emission reductions available 
for purchase as NNSR offsets. Although Section 601 states that the 
purpose of the rule is to ``identify and preserve'' emission reductions 
for NNSR offsets, the revised rule does not itself provide a mechanism 
for ``preserving'' emission reductions until the permitting stage. That 
is, under LAC 33:III.617(C)(2), emission reductions can only be 
preserved after they are identified in the ERC certificate and LDEQ 
determines during the permit review process that they are ``Surplus 
When Used.''
    Section 553(d) of the Administrative Procedure Act generally 
provides that rules may not take effect earlier than 30 days after they 
are published in the Federal Register. If, however, an Agency 
identifies a good cause, section 553(d)(3) allows a rule to take effect 
earlier, provided that the Agency publishes its reasoning in the final 
rule. EPA is making this action effective immediately because this rule 
is related to the Baton Rouge 1-hour ozone Attainment Plan and 
Transport State Implementation Plan, on which the EPA intends to take 
imminent action (see 67 FR 50391, August 2, 2002). In conjunction with 
its August 2, 2002, proposed approval of the attainment demonstration, 
EPA proposed to extend the ozone attainment date for the Baton Rouge 
area to November 15, 2005, while retaining the area's current 
classification as a serious ozone nonattainment area and to withdraw 
EPA's June 24, 2002, rulemaking determining nonattainment and 
reclassification of the BR area (67 FR 42687). The effective date of 
EPA's June 24, 2002, nonattainment determination and reclassification 
is imminent. Furthermore, making this action effective immediately does 
not impose any additional requirements, because the underlying 
regulations are already effective under state law.

II. What Did EPA Propose?

    In spite of the fact that the revised rule is named an Emission 
Reduction Credit Banking regulation, it does not establish an ERC bank, 
and we therefore did not propose approval of the rule as an ERC bank. 
The program established by the revised rule merely functions as a 
bulletin board to facilitate stationary source communications and 
offset purchases before certification and use of ERCs in an NNSR permit 
application. Similarly, the program established by the revised Chapter 
6 rule is not itself a market-based program for achieving air quality 
improvements, and is therefore not an EIP as defined by the EPA. 
Instead, the program may be used to reduce the administrative burden 
experienced by stationary sources obtaining emission reductions as a 
part of New Source Review permitting. Accordingly, we proposed approval 
of the revised Chapter 6 rule with the understanding that the program 
it establishes will be used in conjunction with the revised Chapter 5 
NNSR rule to facilitate stationary source communications and offset 
purchases before certification and use of an ERC in an NNSR permit 
application.
    An emissions banking rule that functions merely to facilitate 
communication between stationary sources is not within the scope of the 
guidance document ``Improving Air Quality with Economic Incentive 
Programs,'' EPA-452/R-01-011 (EPA Office of Air and Radiation, January 
2001) (the EIP Guidance). We therefore did not review the revised rule 
for consistency with the EIP Guidance.
    We proposed approval of the rule as meeting the requirements for 
SIP approval under Title I Part D and section 110 of the Act.

III. What Comments Did EPA Receive and What are EPA's Responses to 
Comments?

    The Steering Committee of the Baton Rouge Ozone Task Force, the 
Leadership Team of the Baton Rouge Ozone Task Force, the Louisiana 
Chemical Association and the Louisiana Mid-Continent Oil and Gas 
Association comments.
    Comment: Each of these parties commented by providing a statement 
of support for our proposed approval of the LDEQ revised ERC 
regulation.
    Response: We have considered these statements of support in making 
our final determination.

Louisiana Generating LLC Comment

    Comment: Louisiana Generating LLC (LaGen) commented that LDEQ's 
proposed Attainment Plan/Transport SIP revisions contain a proposed 
Control Strategy Element, Section 4.2.1 Permitting NOX 
Sources, that could result in the imposition of the equivalent of the 
nonattainment rules in an attainment area without authority of law. 
LaGen stated that the revised LDEQ bank regulation is not approvable to 
the extent that any of the provisions of the regulation could be 
implemented to support requiring offsets of new facilities or major 
modifications in attainment parishes.
    Response: The stated purpose of the LDEQ ERC revised rule in 
section 601 is to establish the means of enabling stationary sources to 
identify and preserve or acquire emission reductions for NSR offsets. 
As noted above, the program established by the revised rule does not 
function as an ERC banking or trading program, but merely as a bulletin 
board to facilitate stationary source communications and offset 
purchases before certification and use of ERCs in an NNSR permit 
application. The revised rule does not contain any provisions that 
could be implemented to support requiring offsets of new facilities or 
major modifications in attainment parishes. We therefore do not find in 
this comment any basis for disapproval of the proposed ERC bank rule.

State of Louisiana Department of Environmental Quality comments

    Comment: LDEQ strongly supported our proposed approval, but 
requested several corrections and clarifications. One comment stated 
that our proposed approval notice at 67 FR 48086 indicated that LDEQ 
defined the term ``Surplus Emission Reductions'' whereas the rule at 
LAC 33:III.605 defines the term ``Surplus'' but not ``Surplus Emission 
Reductions'.

[[Page 60873]]

    Response: We have considered these statements of support in making 
our final determination.
    The LDEQ comment regarding ``Surplus Emission Reductions'' is 
correct. The referenced sentence in our proposed approval notice should 
have read: ``'Surplus'' emission reductions are defined in LAC 
33:III.605 as emission reductions voluntarily created for an emissions 
unit; not required by any local, state or federal law, regulation, 
order, or requirement; and in excess of reductions used to demonstrate 
attainment of federal and state ambient air quality standards.''
    Comment: The second LDEQ comment indicated the appearance of 
missing text at 67 FR 48086.
    Response: LDEQ correctly noted a typographical error in our 
proposed approval notice, although the error consisted of extra text 
(the words ``the voluntary reduction'') rather than missing text. The 
referenced sentence in our proposed approval notice should have read: 
``Emissions reductions below these ``baseline emissions'' are 
considered surplus, and under the rule are calculated by subtracting 
future allowable emissions after the reductions from the baseline 
emissions.''
    Comment: The third LDEQ comment requested clarification that the 
``surplus'' determination is made at the time a permit application that 
relies upon the reductions as offsets is deemed administratively 
complete. Our proposed approval notice at 67 FR 48088 indicated that it 
was at the time of the State's evaluation of the permit application.
    Response: We agree with LDEQ that a ``surplus'' determination is 
made at the time a permit is deemed administratively complete, as is 
apparent from the definition of ``surplus'' in Section 605 of the 
revised Louisiana rule, and from Section 617(a), which says that LDEQ 
will review an application for ERCs when a request is submitted to use 
the ERCs as offsets. Thus, the State's verification that the ERCs are 
surplus must be conducted when they are to be used, not when they are 
acquired (or submitted for certification or purchased). We agree with 
LDEQ that the most appropriate time for LDEQ to make its review and 
determination as to ``surplus'' is after the application is deemed 
administratively complete. (This timing is consistent with EPA policy 
regarding determinations for netting purposes.)
    Comment: LDEQ commented that the State has recently promulgated and 
revised the NOX control regulation in Chapter 22. Our 
proposed approval notice stated that the State has recently revised the 
NOX control regulation in Chapter 22.
    Response: We agree with LDEQ that the State has recently 
promulgated and revised the NOX control regulation.

Tulane Environmental Law Clinic Comments

    Tulane submitted the comments by fax on August 26, 2002. The EPA is 
under no obligation to extend the comment period or to accept late 
comments. We decided to accept comments which were received by our 
office by close-of-business on August 26, 2002. This time frame 
corresponds to the estimated travel time for first class mail for a 
letter mailed and postmarked on the last day of the comment period, 
August 22, 2002.
    Comment: The compliance date for NOX sources is May 1, 
2005. Voluntary NOX reductions before this date could be 
deemed surplus and therefore eligible for use as emission offsets, 
which could allow facilities to offset new VOC emissions by early RACT 
implementation.
    Response: The EPA disagrees with the commenter's interpretation 
that facilities which elect to implement RACT before the compliance 
date required by the rule, May 1, 2005, would generate reductions 
eligible for use as emission offsets.
    Louisiana promulgated its revised NOX rules on February 
20, 2002 (Louisiana Register, Vol. 28, No. 2). On February 27, 2002, 
the State submitted to EPA the revised NOX rules for the 
Baton Rouge area and its Region of Influence. The revised 
NOX rule requires certain affected categories of 
NOX-generating facilities to achieve RACT ``as expeditiously 
as possible, but no later than May 1, 2005.'' This date takes into 
consideration the time affected categories of NOX-generating 
facilities may need to procure, calibrate and implement RACT. On July 
23, 2002, the EPA proposed approval of the SIP revisions to regulate 
emissions of NOX to meet requirements of the CAA (67 FR 
48095). Section 173(c)(2) of the Act states that reductions otherwise 
required by the Act are not creditable as offsets. Although the rule 
permits affected categories of NOX-generating facilities to 
achieve compliance with NOX RACT no later than May 1, 2005, 
the rule became effective when promulgated. Therefore, facilities 
achieving NOX RACT compliance before May 1, 2005, are 
creating emission reductions as required by law. Therefore, such 
facilities will not obtain ERCs and cannot offset VOC emissions by 
early RACT implementation. Furthermore, emissions decreased by a 
voluntary action must be permanent in order to meet the surplus ERC 
criteria. Because the rule provides for compliance no later than May 1, 
2005, reductions made before that date could not be considered 
permanent, and therefore could not be surplus.
    For the above reasons, the comment does not indicate that any 
change to the rule is required.
    Comment: Tulane states, as an example of a ``segmented approach'' 
by which they charge that EPA has avoided addressing how various state 
rules will operate together, that EPA acknowledged at 67 FR 48097 that 
Louisiana will need to develop a two-balance system for tracking 
NOX reductions, but deferred analysis of that issue to a 
``separate Federal Register document'' that has yet to be issued.
    Response: We disagree, both as to the general proposition that a 
``segmented approach'' allowed the EPA to avoid issues, and as to the 
specific charge that EPA failed to present the promised analysis of the 
two-balance NOX reduction system.
    We first note that both our proposed approval of the revised 
Chapter 6 rule and our proposed approval of the revised Section 504 
rule (NNSR) addressed the general topic: ``How Does the State's NSR 
Regulation in Chapter 5 Interact With the NOX Control 
Regulation in Chapter 22 and the Revised Banking Regulation in Chapter 
6.''
    Regarding the ``deferred analysis'' comment, the full sentence from 
which the above quotation was taken reads as follows: ``We will be 
proposing action on Louisiana's ERC accounting in a separate Federal 
Register document.'' That document was our proposed approval notice of 
the LDEQ revised ERC rule, which contained substantial discussion of 
the workings of the two-balance ERC system. See 67 FR 48087-48089. In 
addition, we requested in our proposed approval of the Chapter 5 NNSR 
rule ``that in response to comments on EPA's proposed approval of the 
Chapter 5 and Chapter 6 rules, the State affirm and detail the 
procedures for the determination of NOX surplus ERCs 
resulting from the split emission limitations for the NOX 
RACT rule in Chapter 22''. 67 FR 48089. Additional discussion of this 
issue appears later in this section.
    Comment: VOC increases from the Interpollutant Trading and 
NOX rules will have a disproportionate impact on minority 
communities, contrary to EIP Guidance, especially sections 16.2 and 
16.9.
    Response: The purpose of the revised ERC rule is to establish the 
means of

[[Page 60874]]

enabling stationary sources to identify and preserve or acquire 
emission reductions for New Source Review offsets. Since the rule does 
not by itself directly reduce emissions or improve air quality, and is 
instead intended solely to enable stationary sources to identify and 
acquire NOX and VOC offsets for NNSR purposes, the rule was 
reviewed as a component of the SIP related to the NNSR offsets rule, 
not as an Economic Incentive Program. Thus, the EIP Guidance is not 
applicable to the revised ERC rule.
    The revised rule does not contain any reference to an inter-
precursor trading (that is, the trading of emission reductions of one 
pollutant's precursors for emission reductions of a different precursor 
for that pollutant) program. The purpose of the rule does not include 
inter-precursor, or for that matter, any emissions trading. The new 
source permitting regulation in Chapter 5, on the other hand, refers to 
what we consider inter-precursor trading. Under the revised Chapter 5 
procedure, the State's verification that the ERCs are surplus must be 
conducted when they are to be used, not when they are acquired (or 
submitted for certification or purchased). Thus, inter-precursor trades 
are appropriately reviewed, evaluated and verified under the NSR 
program at the time of use. The comment is therefore not relevant to 
our approval of the proposed ERC bank rule. Further discussion of this 
issue will appear in our final rule regarding the revised NNSR rule, to 
be published in a separate Federal Register document.
    Comment: The ERC bank is broken, is awaiting audit, and is not 
capable of tracking the expanded and more complicated emission offsets 
proposed in Louisiana's NOX and NSR rules. EPA should not 
approve any banking rule until the concerns raised in the public 
petition for an audit of the bank are addressed.
    Response: We disagree that the program established by the revised 
ERC rule is broken. As stated earlier, the purpose of the LDEQ ERC 
revised rule is to establish the means of enabling stationary sources 
to identify and ``preserve'' or acquire emission reductions, the 
acceptability of which is later determined by the LDEQ, in the 
permitting process for NSR offsets. In spite of the fact that the 
revised rule is named an Emission Reduction Credit Banking regulation, 
the State did not adopt, nor did we propose to approve, the revised 
rule to function as an ERC bank or trading program. Rather, the revised 
rule merely provides a bulletin board to facilitate stationary source 
communications and offset purchases before potential certification and 
potential use in an NSR/NNSR permit application. The so-called ``bank'' 
in the revised rule will not itself provide ERCs that may be used for 
NSR/NNSR trading. The State makes a case-by-case determination in each 
individual permit application process about the validity of the ERCs 
relied upon in an application by a source owner/operator.
    The revised ERC bank rule removes the necessity that ERCs be 
tracked to ensure that the bank contains sufficient ERCs for attainment 
demonstration contingency purposes. Our action approves a revision that 
is simplifying the function of the bank, not complicating it as 
indicated by the comment.
    Comment: The deletion in the proposed ERC rule of language clearly 
disqualifying emissions reductions taken pursuant to a compliance order 
or consent decree from use as emissions offsets opens the door to 
illegal offsetting. Section 173(c)(2) prohibits the banking of credits 
for any emission reductions otherwise required by the Act.
    Response: We disagree that the definitions of ``surplus'' and 
``enforceable'' in the revised ERC rule open the door to illegal 
offsetting. As stated above, ``surplus'' emission reductions are 
defined in LAC 33:III.605 as, among other things, emission reductions 
not required by any local, state or federal law, regulation, order, or 
requirement. Compliance orders and consent decrees are orders as well 
as requirements of the Act, and emission reductions required under such 
an order or decree cannot be classified as surplus.
    Comment: By eliminating the requirement that emission reductions be 
creditable under the definition of netting, Louisiana's proposed ERC 
rule violates federal law and must not be approved. Netting is a form 
of emission offsetting. LDEQ is now proposing to allow netting of 
emission reductions that do not qualify as ERCs, in violation of EPA 
policy and the Act. The definition of netting in the ERC rule violates 
section 173(c) of the Act and therefore LDEQ must not adopt the 
proposed rule as written.
    Response: We disagree that netting is a form of emission 
offsetting. The term netting is derived from the NSR definition of 
``net emission increase'' at 40 CFR 51.165 and 40 CFR 52.21. The net 
emission increase due to a specific project is the project emission 
increases plus any creditable, contemporary emission increases and 
decreases at the stationary source. Creditable in this sense refers 
among other things to the emissions not having been relied upon in the 
issuance of a major NSR permit during the contemporaneous period, as 
detailed at 40 CFR 51.165. The contemporaneous period in Louisiana has 
been defined as five years. Netting is the summation of the creditable 
contemporaneous emission increases and decreases at the facility. If 
the project emission increase exceeds the major modification threshold 
but the creditable, contemporaneous emission decreases are large 
enough, the net emission increase may be less than the major 
modification threshold. In this instance, the source would be said to 
``net out'' of major source NSR review.
    Section 173(c) of the Act refers to emission offsets required for 
emission increases resulting from major modifications and major new 
sources. It applies to major emission increases that result after the 
netting has been performed in the determination of the net emission 
increase. By previously requiring that all creditable, contemporaneous 
emission decreases be surplus ERCs from the bank, the LDEQ requirement 
for netting was more stringent than the federal requirement. By 
removing the surplus ERC requirement from the netting determination, 
the LDEQ NSR netting requirement is now equivalent to the federal 
requirement in 40 CFR 51.165 and 40 CFR 52.21.
    Comment: Section 603(A) of the revised ERC rule apparently allows 
for trading of ERCs between five attainment parishes and five parishes 
in the Baton Rouge nonattainment area, in violation of section 
173(c)(1) of the Act. If it is LDEQ's intent to allow such trading, it 
should rescind the rule immediately as contrary to federal law. If it 
is not LDEQ's intent to allow such trading, it should clearly so state 
within the regulation.
    Response: We agree that section 173(c)(1) of the CAA does not 
permit trading of offsets between attainment areas and nonattainment 
areas. We disagree that Section 603(A) of the revised ERC rule permits 
such trading. Instead, Section 603(A) specifically provides that 
``[o]ther sources located in EPA-designated ozone attainment areas may 
not participate in the emissions banking program.'' If the commenter is 
specifically concerned about the reference in Section 603(A) to 
Calcasieu Parish, which states that ``[m]inor stationary sources 
located in ozone nonattainment areas or Calcasieu Parish may submit ERC 
applications for purposes of banking,'' we respond that the reductions 
from Calcasieu Parish sources (or sources in any other attainment area) 
may not be used as

[[Page 60875]]

offsets by sources in nonattainment areas, under Section 504(F)(9) of 
the revised NNSR rule. The reference to Calcasieu in Section 603(A) is 
relevant to sources in Calcasieu Parish that are seeking offsets in 
accordance with LAC 33:III.510.
    In addition, as mentioned previously, the purpose of the LDEQ ERC 
revised rule is to establish the means of enabling stationary sources 
to identify and ``preserve'' or acquire emission reductions, the 
acceptability of which is later determined by the LDEQ, in the 
permitting process for NSR offsets. In spite of the fact that the 
revised rule is named an Emission Reduction Credit Banking regulation, 
the State did not adopt, nor did we propose to approve, the revised 
rule to function as an ERC bank or trading program. Rather, the revised 
rule merely provides a bulletin board to facilitate stationary source 
communications and offset purchases before potential certification and 
potential use in an NSR/NNSR permit application. The so-called ``bank'' 
in the revised rule will not itself provide ERCs that may be used for 
NSR/NNSR trading. The State makes a case-by-case determination in each 
individual permit application process about the validity of the ERCs 
relied upon in an application by a source owner/operator.
    Comment: EPA must not approve the ERC rule revisions because LDEQ 
cannot provide assurance, as required by the Act, that it has adequate 
personnel or funding to maintain the program.
    Response: The purpose of the LDEQ ERC revised rule is to function 
as a bulletin board to facilitate stationary source communications and 
offset purchases before certification and use in an NNSR permit 
application. The ``bank'' established by the revised rule will not 
itself provide ERCs that may be used for trading. The revised rule 
removes the necessity that ERCs be tracked by the State, and the 
requirement that there be sufficient escrowed ERCs for attainment 
demonstration contingency purposes. The state's and our action is 
simplifying the function of the bank.
    Comment: Louisiana's NOX rule providing for seasonally 
fluctuating emission limitations for stationary sources is unworkable, 
introducing unnecessary complication and the potential for abuse, and 
reducing the public's ability to monitor the program.
    Response: Because the revised rule provides for a bulletin board 
rather than a traditional bank, the stationary sources seeking to sell 
or buy ERCs will bear the brunt of whatever additional complication is 
introduced by the seasonal approach contained in the NOX 
rule. LDEQ will not be required to track or monitor a stored balance of 
offsets, but instead primarily to evaluate the validity of ERCs at the 
time it receives application to use them. The simplified function of 
the bank will likewise increase the public's ability to monitor the 
program.
    Comment: EPA has stated that the NOX rule does not 
address the requirement to keep separate documentation for the 
certification, determination, and recordkeeping of NOX ERCs 
during the ozone and non-ozone seasons. EPA proposes to accept promises 
in a letter from Mr. Dale Givens regarding the operation of the bank. 
As of July 23, 2002, the State had not detailed the procedures 
required.
    Response: In our proposed approval of the revised Chapter 6 ERC 
rule, we stated that the Chapter 6 rule (not the Chapter 22 
NOX rule, as the commenter stated) ``does not address the 
requirement to keep separate documentation for the certification, 
determination, and recordkeeping of NOX ERCs during the 
ozone and non-ozone seasons. The identification, certification, 
acquisition, recordkeeping and determination of ``Surplus When Used'' 
emission reduction credits must be for both the ozone season and the 
non-ozone season time periods.''
    We did not condition our approval of the Chapter 6 rule on the 
receipt of additional information from the State. The stated purpose of 
the revised emissions banking rule in Chapter 6 is to enable stationary 
sources to identify and acquire emission reductions for NSR purposes. 
The Chapter 6 rule does not establish a ``bank'' requiring tracking by 
the State of sources' claimed ERCs. The Chapter 6 rule only establishes 
a bulletin board for use by source owners and operators. The LDEQ makes 
the determination whether a source's claimed ERCs are surplus through 
the Chapter 5 nonattainment NSR rules. The identification, 
certification, acquisition, recordkeeping and determination of 
``Surplus When Used'' emission reduction credits must be for the ozone 
season and the non-ozone season time periods. The State indicated by 
letter from Mr. Dale Givens to EPA dated May 3, 2002 that the State 
would implement the rule by operating the Chapter 6 emissions reduction 
credits bulletin board in such a manner. EPA has received information 
from the State supplementing its May 3, 2002, letter and further 
supporting the State's intention to implement the Chapter 5 NSR rule in 
a manner that provides for separate identification, certification, 
acquisition, recordkeeping and determination of ``Surplus When Used'' 
emission reduction credits for the ozone season and for the non-ozone 
season time periods. For these reasons, the comment does not indicate 
that any change to the rule is required.

IV. Administrative Requirements

A. Executive Order 12866

    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).

B. Executive Order 13045

    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 
proposed action is not subject to Executive Order 13045 because this is 
not an economically significant regulatory action as defined by 
Executive Order 12866.

C. Executive Order 13175

    On November 6, 2000, the President issued Executive Order 13175 (65 
FR 67249) entitled, ``Consultation and

[[Page 60876]]

Coordination with Indian Tribal Governments.'' Executive Order 13175 
took effect on January 6, 2001, and revokes Executive Order 13084 
(Tribal Consultation) as of that date. This rulemaking does not affect 
the communities of Indian tribal governments. Accordingly, the 
requirements of Executive Order 13175 do not apply.

D. Executive Order 12898

    Executive Order 12898 requires that each Federal agency make 
achieving environmental justice part of its mission by identifying and 
addressing, as appropriate, disproportionately high and adverse human 
health or environmental effects of its programs, policies, and 
activities on minorities and low-income populations. The EPA believes 
that this rule should not raise environmental justice issues. The 
overall result of the program is regional reductions in ozone. Because 
this program will likely reduce local ozone levels in the air, and 
because there are additional provisions under the CAA to ensure that 
ozone levels are brought into compliance with national ambient air 
quality standards, it appears unlikely that this program would permit 
adverse affects on local populations.

E. Regulatory Flexibility Act

    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.
    The Congressional Review Act, 5 U.S.C. section 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 
before publication of the rule in the Federal Register. A major rule 
cannot take effect until 60 days after it is published in the Federal 
Register. This action is not a ``major rule'' as defined by 5 U.S.C. 
section 804(2).
    Pursuant to 5 U.S.C. 605(b), I certify that today's rule would not 
have a significant impact on a substantial number of small entities 
within the meaning of those terms for RFA purposes.

F. Unfunded Mandates Reform Act

    Under section 202 of the Unfunded Mandates Reform Act of 1995 
(UMRA), 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 annual 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 believes, as discussed above, that because this rule approves 
pre-existing requirements under state law and does not impose any 
additional enforceable duty, it does not constitute a Federal mandate, 
as defined in section 101 of the UMRA.

G. Executive Order 13132

    Executive Order 13132, entitled Federalism (64 FR 43255, August 10, 
1999) 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 action merely approves a state rule implementing a Federal 
standard, and does not alter the relationship of the distribution of 
power and responsibilities established in the CAA. Thus, the 
requirements of section 6 of the Executive Order do not apply to this 
final action.

H. National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (NTTAA), Public Law 104-113, section 12(d) (15 U.S.C. 272 
note) directs EPA to use voluntary consensus standards in its 
regulatory activities unless to do so would be inconsistent with 
applicable law or otherwise impractical. Voluntary consensus standards 
are technical standards (e.g., materials specifications, test methods, 
sampling procedures, and business practices) that are developed or 
adopted by voluntary consensus standards bodies. The NTTAA directs EPA 
to provide Congress, through OMB, explanations when the Agency decides 
not to use available and applicable voluntary consensus standards.
    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.

I. Paperwork Reduction Act

    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.).

J. Congressional Review Act

    The Congressional Review Act, 5 U.S.C. section 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.

[[Page 60877]]

House of Representatives, and the Comptroller General of the United 
States before publication of the rule in the Federal Register. A major 
rule cannot take effect until 60 days after it is published in the 
Federal Register. This action is not a ``major rule'' as defined by 5 
U.S.C. section 804(2).
    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 November 26, 2002. 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 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, Hydrocarbons, 
Intergovernmental relations, Nitrogen dioxide, Ozone, Reporting and 
recordkeeping requirements.

    Dated: September 20, 2002.
Lawrence E. Starfield,
Acting Regional Administrator, Region 6.

    Part 52, chapter I, title 40 of the Code of Federal Regulations 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 T--Louisiana

    2. In Sec.  52.970 the table in paragraph (c) is amended under 
chapter 6 by removing the entries for sections 621, 623, and 625 and 
revising the entries for sections 601, 603, 605, 607, 613, 615, 617, 
and 619 to read as follows:


Sec.  52.970  Identification of plan.

* * * * *
    (c) * * *

                             EPA Approved Louisiana Regulations in the Louisiana SIP
----------------------------------------------------------------------------------------------------------------
      State citation               Title/subject         State approval date     EPA approval date     Comments
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
 
                    Chapter 6--Regulations on Control of Emissions Reduction Credits Banking
Section 601...............  Purpose...................  Feb. 2002, LR 28:301.  September 27, 2002
                                                                                and FR cite.
Section 603...............  Applicability.............  Feb. 2002, LR 28:301.  September 27, 2002
                                                                                and FR cite.
Section 605...............  Definitions...............  Feb. 2002, LR 28:301.  September 27, 2002
                                                                                and FR cite.
Section 607...............  Determination of            Feb. 2002, LR 28:302.  September 27, 2002
                             Creditable Emission                                and FR cite.
                             Reductions.
Section 613...............  ERC Bank Recordkeeping and  Feb. 2002, LR 28:303.  September 27, 2002
                             Reporting Requirements.                            and FR cite.
Section 615...............  Schedule for Submitting     Feb. 2002, LR 28:304.  September 27, 2002
                             Applications.                                      and FR cite.
Section 617...............  Procedures for Review and   Feb. 2002, LR 28:304.  September 27, 2002
                             Approval of ERCs.                                  and FR cite.
Section 619...............  Emission Reduction Credit   Feb. 2002, LR 28:305.  September 27, 2002
                             Bank.                                              and FR cite.
 
                                                  * * * * * * *
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[FR Doc. 02-24638 Filed 9-26-02; 8:45 am]
BILLING CODE 6560-50-P