[Federal Register Volume 69, Number 14 (Thursday, January 22, 2004)]
[Rules and Regulations]
[Pages 3015-3018]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-1231]


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

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[TN-238, 255-200406; FRL-7612-2]


Approval and Promulgation of Implementation Plans: Tennessee: 
Nitrogen Oxides Budget and Allowance Trading Program

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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

SUMMARY: EPA is approving a State Implementation Plan (SIP) revision 
submitted by the State of Tennessee on July 29, 2003. The revision 
corrects a deficiency identified by EPA in its August 14, 2002, 
conditional approval of Tennessee's Phase I NOX SIP call 
submittal (67 FR 52913). With this deficiency corrected, EPA is fully 
approving Tennessee's NOX Reduction and Trading Program 
because it meets the requirements of Phase I of the NOX SIP 
Call that will significantly reduce ozone transport in the eastern 
United States.
    EPA proposed to approve Tennessee's NOX Reduction and 
Trading Program, with one exception, in the August 14, 2002 (67 FR 
52913), action. The exception was Tennessee's rule that allowed for the 
allocation, to NOX budget units, of additional allowances 
that have been generated through NOX emission reductions 
from industrial, mobile, and area source sectors. However, Tennessee's 
rule provided for approval of the allocation of additional allowances 
solely by the permitting authority, without approval by EPA. Tennessee 
corrected this deficiency in the revision submitted on July 29, 2003, 
by requiring EPA approval of any additional allocations generated 
through NOX emissions reductions from industrial, mobile, 
and area sources. Therefore, EPA is approving Tennessee's 
NOX Reduction and Trading Program.

EFFECTIVE DATE: This final rule is effective January 22, 2004.

ADDRESSES: Copies of documents relative to this action are available at 
the following addresses for inspection during normal business hours:
Environmental Protection Agency, Region 4, Air Planning Branch, 61 
Forsyth Street, SW., Atlanta, Georgia 30303-8960.
Tennessee Department of Environment and Conservation, L&C Annex, 401 
Church Street, Nashville, Tennessee 37243.

FOR FURTHER INFORMATION CONTACT: Anne Marie Hoffman, Regulatory 
Development Section, Air Planning Branch, Air, Pesticides and Toxics 
Management Division, Region 4, Environmental Protection Agency, Atlanta 
Federal Center, 61 Forsyth Street, SW., Atlanta, Georgia 30303-8960. 
The telephone number is (404) 562-9074. Ms. Hoffman can also be reached 
via electronic mail at [email protected].

SUPPLEMENTARY INFORMATION: On November 7, 2000, the Tennessee 
Department of Environment and Conservation (TDEC) submitted a draft 
NOX emission control rule to the EPA for pre-adoption 
review, requesting parallel processing of the development of the rule 
at the State level and included a schedule for development and adoption 
of the rule by the State. On January 11, 2001, TDEC submitted adopted 
revisions to its SIP to meet the requirements of the Phase I 
NOX SIP Call. Tennessee submitted State-effective rule 
revisions on October 4, 2001. The revisions complied with the 
requirements of the Phase I NOX SIP Call with one exception 
regarding deficiencies in section 96.40 State trading program budget. 
Tennessee corrected this deficiency in the revision submitted on July 
29, 2003. Included in this document are new rules 1200-3-27-.04 
Standards for Cement Kilns and 1200-3-27-.06 NOX Budget 
Trading Program for State Implementation Plans (40 CFR 96). The 
information in this final rule is organized as follows:

I. EPA's Action
    A. What action is EPA approving today?
    B. Why is EPA approving this action?
    C. What are the NOX SIP Call general requirements?
    D. What is EPA's NOX budget and allowance trading 
program?
    E. What guidance did EPA use to evaluate Tennessee's submittal?
    F. What is the result of EPA's evaluation of Tennessee's 
program?
II. Tennessee's Control of NOX Emissions
    A. When did Tennessee submit the SIP revision to EPA in response 
to the NOX SIP Call?
    B. What is the Tennessee NOX Budget Trading Program?
    C. What is the Compliance Supplement Pool?
    D. What is the New Source Set-Aside program?
III. Final Action
IV. Statutory and Executive Order Reviews

I. EPA's Action

A. What Action Is EPA Approving Today?

    EPA is approving revisions to Tennessee's SIP concerning the 
adoption of its NOX Reduction and Trading Program, submitted 
for parallel processing on November 7, 2000, with additional material 
submitted on January 11, 2001, and State-effective rules submitted on 
October 4, 2001, and July 29, 2003.

B. Why Is EPA Approving This Action?

    EPA is approving this action because Tennessee's NOX 
Reduction and Trading Program regulations meet the requirements of 
Phase I of the NOX SIP Call. EPA proposed to approve 
Tennessee's NOX Reduction and

[[Page 3016]]

Trading Program, with one exception, in the August 14, 2002 (67 FR 
52913), action. The exception was Tennessee's rule that allowed for the 
allocation, to NOX budget units, of additional allowances 
that have been generated through NOX emission reductions 
from industrial, mobile, and area source sectors. However, Tennessee's 
rule provided for approval of the allocation of additional allowances 
solely by the permitting authority, without approval by EPA. In a 
letter dated June 25, 2002, EPA informed Tennessee of this deficiency 
and how the State could correct the deficiency. In the letter EPA also 
required the State to commit to correct the deficiency within 12 
months. Tennessee corrected this deficiency in the revision submitted 
on July 29, 2003. Therefore, EPA is approving Tennessee's 
NOX Reduction and Trading Program, including a rule for 
cement kilns.

C. What Are the NOX SIP Call General Requirements?

    On October 27, 1998, EPA published a final rule entitled, ``Finding 
of Significant Contribution and Rulemaking for Certain States in the 
Ozone Transport Assessment Group Region for Purposes of Reducing 
Regional Transport of Ozone,'' otherwise known as the ``NOX 
SIP Call.'' See 63 FR 57356. For detailed information refer to the 
proposal document (67 FR 52913).

D. What Is EPA's NOX Budget and Allowance 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. For detailed information refer to the proposal 
document (67 FR 52913).

E. What Guidance Did EPA Use To Evaluate Tennessee's Submittal?

    The final NOX SIP Call rule included a model 
NOX budget trading program regulation. See 40 CFR part 96. 
EPA used the model rule and 40 CFR 51.121-51.122 to evaluate 
Tennessee's NOX reduction and trading program.

F. What Is the Result of EPA's Evaluation of Tennessee's Program?

    EPA has evaluated Tennessee's July 29, 2003, SIP submittal and 
finds it approvable. The Tennessee NOX reduction and trading 
program is consistent with EPA's guidance and meets the requirements of 
the Phase I NOX SIP Call. EPA finds the NOX 
control measures in Tennessee's NOX reduction and trading 
program, including the cement kiln rule, approvable. The July 29, 2003, 
submittal will strengthen Tennessee's SIP for reducing ground level 
ozone by providing NOX reductions beginning in 2004. Also, 
EPA finds that the submittal contained the information necessary to 
demonstrate that Tennessee has the legal authority to implement and 
enforce the control measures, and to demonstrate appropriate 
distribution of the compliance supplement pool. Furthermore, EPA finds 
that the submittal demonstrates that the compliance dates and 
schedules, and the monitoring, recordkeeping and emission reporting 
requirements will be met.

II. Tennessee's Control of NOX Emissions

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

    On November 7, 2000, the Tennessee Department of Environment and 
Conservation submitted a draft NOX emission control rule to 
the EPA for pre-adoption review, requesting parallel processing of the 
development of the rule at the State level and included a schedule for 
development and adoption of the rule by the State. On January 11, 2001, 
TDEC submitted adopted revisions to its SIP to meet the requirements of 
the Phase I NOX SIP Call. Tennessee submitted State-
effective rule revisions on October 4, 2001, and July 29, 2003.

B. What Is the Tennessee NOX Budget Trading Program?

    Tennessee's rule, as in the model rule, allows the large EGUs and 
non-EGUs to participate in the multi-state cap and trade program. For 
detailed information refer to the proposal document (67 FR 52913).
    Tennessee chose to revise the provisions in section 96.40 (State 
trading program budget) of the model rule by adding a provision at 
1200-3-27-.06(1)(f) to allow for the allocation of additional 
allowances for NOX emission reductions from industrial, 
mobile, and area source sectors. The provision states that Tennessee 
``may'' allocate, to NOX budget units, additional allowances 
generated through NOX emission reductions from industrial, 
mobile, and area source sectors if the reductions are permanent, 
enforceable, quantifiable, and surplus as determined by and approved by 
EPA and Tennessee. The provision does not give Tennessee any authority 
to make such additional allocations unless and until EPA approves the 
use of NOX emission reductions from sources in these sectors 
to generate allowances. Any program for such use of these emission 
reductions that is submitted by Tennessee will be reviewed by EPA, as a 
revision to the SIP, to assure that, before receiving approval, the 
program will meet the requirements that only emission reductions that 
are permanent, enforceable, quantifiable, and surplus may be credited 
for allowances. In order to meet these requirements, the program must, 
among other things, prevent the crediting for allowances of emissions 
that may be shifted from sources in the program to sources not covered 
by the program.
    Tennessee's Rule 1200-3-27-.04 Standards for Cement Kilns 
establishes requirements for cement manufacturing facilities. These 
sources are subject to NOX reduction requirements but do not 
participate in the NOX trading program. Cement kilns are not 
included in the trading program, but will be required to install low 
NOX burners, mid-kiln system firings or technology.
    Tennessee's submittal demonstrates that the Phase I NOX 
emission budgets established by EPA will be met as follows:

------------------------------------------------------------------------
                                                         Tennessee 2007
                                        EPA 2007 NOX       NOX budget
           Source category            budget emissions  emissions  (tons/
                                        (tons/season)        season)
------------------------------------------------------------------------
EGUs................................            25,814            25,814
Non-EGUs............................             5,519             5,519
Area Sources........................            13,333            13,333
Non-road Sources....................            52,920            52,920
Highway Sources.....................            66,342            66,342
                                     -----------------------------------
    Total...........................           163,928           163,928
------------------------------------------------------------------------


[[Page 3017]]

C. What Is the Compliance Supplement Pool?

    To provide additional flexibility for complying with emission 
control requirements associated with the NOX SIP Call, the 
final NOX SIP Call rule provided each affected State with a 
``compliance supplement pool.'' For detailed information refer to the 
proposal document (67 FR 52913).

D. What Is the New Source Set-Aside Program?

    Part 96 requires that new sources hold allowances to cover their 
emissions. For detailed information refer to the proposal document.

III. Final Action

    EPA has determined that today's rule falls under the ``good cause'' 
exemption in section 553(d)(3) of the Administrative Procedures Act 
(APA), which allows an agency to make a rule effective immediately. 
Because the NOX SIP Call Compliance date is May 31, 2004, 
EPA believes it is necessary that sources be allowed to begin immediate 
population of their accounts thereby enabling them prepare for the 
ozone control season and compliance with their allocations. Thus, in 
today's rule EPA finds there is good cause to have this rule take 
effect immediately.
    EPA is approving the Tennessee's SIP revision consisting of its 
draft NOX Budget Trading Program, which was submitted on 
November 7, 2000, with additional material submitted on January 11, 
2001, and State-effective rules submitted on October 4, 2001, and July 
29, 2003. EPA finds that Tennessee's submittal is approvable because it 
meets the requirements of the Phase I NOX SIP Call.
    EPA originally proposed to approve Tennessee's NOX 
Reduction and Trading Program, with one exception, in an August 14, 
2002 (67 FR 52913), action. The exception referred to section 96.40 
State trading program budget. Tennessee's rule allowed for the 
allocation of additional allowances that have been generated through 
NOX emission reductions from industrial, mobile, and area 
source sectors, as described above in section II.B. However, 
Tennessee's rule provided for approval of the allocation of additional 
allowances solely by the permitting authority, without approval by EPA. 
Tennessee corrected this deficiency in the revision submitted on July 
29, 2003, by requiring EPA approval of any additional allocations 
generated through NOX emission reductions from industrial, 
mobile, and area sources. Therefore, EPA is approving Tennessee's 
NOX Reduction and Trading Program.

IV. Statutory and Executive Order Reviews

    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 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.).
    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 
prior to 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. 
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 March 22, 2004. 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, Nitrogen dioxide, 
Ozone, Reporting and recordkeeping requirements.

    Dated: January 8, 2004.
A. Stanley Meiburg,
Acting Regional Administrator, Region 4.

0
Chapter I, title 40, Code of Federal Regulations, is amended as 
follows:

[[Page 3018]]

PART 52--[AMENDED]

0
1. The authority citation for part 52 continues to read as follows:

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

Subpart RR--Tennessee

0
2. In Sec.  52.2220(c) Table 1 is amended by adding in numerical order 
new entries for ``Section 1200-3-27-.04'' and ``Section 1200-3-27-.06'' 
to read as follows:


Sec.  52.2220  Identification of plan.

* * * * *
    (c) * * *

                                  Table 1.--EPA-Approved Tennessee Regulations
----------------------------------------------------------------------------------------------------------------
                                                                                               Federal Register
         State citation              Title/subject       Adoption date     EPA approval date        notice
----------------------------------------------------------------------------------------------------------------
                                                  * * * * * * *
Section 1200-3-27-.04...........  Standards for       July 27, 2003.....  January 22, 2004..  [Insert FR Page
                                   Cement Kilns.                                               citation of
                                                                                               publication]
Section 1200-3-27-.06...........  NOX Trading Budget  July 27, 2003.....  January 22, 2004..  [Insert FR Page
                                   for State                                                   citation of
                                   Implementation                                              publication]
                                   Plans.
                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------

* * * * *
[FR Doc. 04-1231 Filed 1-21-04; 8:45 am]
BILLING CODE 6560-50-P