[Federal Register Volume 71, Number 107 (Monday, June 5, 2006)]
[Proposed Rules]
[Pages 32291-32298]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-8661]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R07-OAR-2006-0467; FRL-8179-8]


Approval and Promulgation of Implementation Plans; State of 
Missouri

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: On November 3, 2005, Missouri submitted a plan to control 
emissions of nitrogen oxides (NOX) for the eastern one-third 
of the state. The plan consists of three rules, a budget demonstration, 
and supporting documentation. The plan will contribute to attainment 
and maintenance of the 8-hour ozone standard in several downwind areas. 
Missouri's plan, which focuses on large electric generating units, 
large industrial boilers, large stationary internal combustion engines, 
and large cement kilns, was developed to meet the requirements of EPA's 
April 21, 2004, Phase II NOX State Implementation Plan (SIP) 
Call. EPA is proposing to approve the plan as a SIP revision fulfilling 
the NOX SIP Call requirements. The initial period for 
compliance under the plan will begin in 2007, and the emission 
monitoring and reporting requirements for sources holding allowances 
under the plan began on May 1, 2006.

DATES: Comments must be received on or before July 5, 2006.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-R07-
OAR-2006-0467, by one of the following methods:
    1. http://www.regulations.gov: Follow the on-line instructions for 
submitting comments.
    2. E-mail: [email protected].
    3. Mail: Michael Jay, Environmental Protection Agency, Air Planning 
and Development Branch, 901 North 5th Street, Kansas City, Kansas 
66101.
    4. Hand Delivery or Courier. Deliver your comments to: Michael Jay, 
Environmental Protection Agency, Air Planning and Development Branch, 
901 North 5th Street, Kansas City, Kansas 66101.
    Instructions: Direct your comments to Docket ID No. EPA-R07-OAR-
2006-0467. EPA's policy is that all comments received will be included 
in the public docket without change and may be made available online at 
http://www.regulations.gov, including any personal information 
provided, unless the comment includes information claimed to be 
Confidential Business Information (CBI) or other information whose 
disclosure is restricted by statute. Do not submit information that you 
consider to be CBI or otherwise protected through http://www.regulations.gov or e-mail. The http://www.regulations.gov Web site 
is an ``anonymous access'' system, which means EPA will not know your 
identity or contact information unless you provide it in the body of 
your comment. If you send an e-mail comment directly to EPA without 
going through http://www.regulations.gov, your e-mail address will be 
automatically captured and included as part of the comment that is 
placed in the public docket and made available on the Internet. If you 
submit an electronic comment, EPA recommends that you include your name 
and other contact information in the body of your comment and with any 
disk or CD-ROM you submit. If EPA cannot read your comment due to 
technical difficulties and cannot contact you for clarification, EPA 
may not be able to consider your comment. Electronic files should avoid 
the use of special characters, any form of encryption, and be free of 
any defects or viruses.
    Docket. All documents in the electronic docket are listed in the 
http://www.regulations.gov index. Although listed in the index, some 
information is not publicly available, e.g., CBI or other information 
whose disclosure is restricted by statute. Certain other material, such 
as copyrighted material, will be publicly available only in hard copy. 
Publicly available docket materials are available either electronically 
in http://www.regulations.gov or in hard copy at the Environmental 
Protection Agency, Air Planning and Development Branch, 901 North 5th 
Street, Kansas City, Kansas. EPA requests that you contact the person 
listed in the FOR FURTHER INFORMATION CONTACT section to schedule your 
inspection. The interested persons wanting to examine these documents 
should make an appointment with the office at least 24 hours in 
advance.

FOR FURTHER INFORMATION CONTACT: Michael Jay at (913) 551-7460 or by e-
mail at [email protected].

SUPPLEMENTARY INFORMATION: Throughout this document whenever ``we,'' 
``us,'' or ``our'' is used, we mean EPA.

I. Background
    A. What Is EPA's NOX SIP Call?
    B. What Was Our Response to Court Decisions on the 
NOX SIP Call That Affected Missouri?
    C. What Requirements Must Missouri Meet?
    D. What Is EPA's NOX Budget Trading Program?
    E. How Does the NOX SIP Call Rule Relate to the 
Existing Statewide NOX Rule?
    F. How Does the NOX SIP Call Rule Relate to the Clean 
Air Interstate Rule?
II. Summary of State Submittal
    A. When Did Missouri Develop and Submit the NOX 
Emission Control Plan to EPA?
    B. What Are the Basic Components of the State's Plan?
    C. What Do the Rules Require?
    1. What Are the Requirements of the EGU and Non-EGU Rule?
    2. What Are the Requirements of the Cement Kiln Rule?
    3. What Are the Requirements of the Large Stationary Internal 
Combustion Engine Rule?
    D. How Does Missouri Address Its NOX SIP Call Budget?
    1. What NOX Budget Did EPA Determine for the State?
    2. What Changes Did the State Request to the NOX 
Budget and Are Those Changes Approvable?
    3. How Does Missouri Demonstrate That It Is Meeting the Budget?
    E. What Guidance Did EPA Use To Evaluate Missouri's 
NOX Control Program?
III. Proposed Action
IV. Statutory and Executive Order Reviews

I. Background

A. What Is EPA's NOX SIP Call?

    By notice dated October 27, 1998 (63 FR 57356), we took final 
action to prohibit specified amounts of emissions of one of the main 
precursors of groundlevel ozone, NOX, in order to reduce 
ozone transport across state boundaries in the eastern half of the 
United States. Based on extensive air quality modeling and analyses, we 
found that sources in 22 states and the District of Columbia (DC) emit 
NOX in amounts that significantly contribute to 
nonattainment of the 1-hour and 8-hour ozone national ambient air 
quality standards (NAAQS) in downwind states. We set forth requirements 
for each of the affected upwind states to submit SIP revisions 
prohibiting those amounts of NOX emissions during the

[[Page 32292]]

five-month period from May 1 through September 30 which significantly 
contribute to downwind air quality problems. We established statewide 
NOX emissions budgets for the affected states. The budgets 
were calculated by assuming the emissions reductions that would be 
achieved by applying available, highly cost-effective controls to 
source categories of NOX, i.e., the amounts of reductions 
determined by EPA for large, fossil-fuel-fired electric generating 
units (EGUs), large, fossil-fuel-fired industrial boilers, combustion 
turbines, and combined cycle systems (non-EGUs), large stationary 
internal combustion (IC) engines, and cement kilns. States have the 
flexibility to adopt the appropriate mix of controls for their state to 
meet the NOX emissions reductions requirements of the 
NOX SIP Call. A number of parties, including certain states 
as well as industry and labor groups, challenged our NOX SIP 
Call rule.

B. What Was Our Response to Court Decisions on the NOX SIP Call That 
Affected Missouri?

    On March 3, 2000, the Court of Appeals for the District of Columbia 
Circuit issued its decision on the NOX SIP Call, ruling in 
our favor on the issues that affected the rulemaking as a whole, but 
ruling against us on several issues. Michigan v. EPA, 213 F.3d 663 (DC 
Cir. 2000). One of the adverse rulings affected our original decision 
to include the entire state of Missouri in the NOX SIP Call. 
Specifically, the Court remanded and vacated the inclusion of Missouri 
in light of the Ozone Transport Assessment Group (OTAG) conclusions 
that emissions from the coarse grid portions of the modeling did not 
merit controls. Because the NOX SIP Call was vacated with 
respect to Missouri, we advised Missouri that it need not submit a 
NOX SIP Call revision until the remanded issue was addressed 
in a future rulemaking.
    In response to the Court's decision that vacated our inclusion of 
the entire state of Missouri, we issued the February 22, 2002, proposed 
rule to include only fine grid parts of Missouri in the NOX 
SIP Call. We explained that the Court in Michigan did not call into 
question our ``proposition that the fine grid portion of each State 
should be considered to make a significant contribution downwind.'' (67 
FR 8413) We further explained that ``because of difficulties and 
uncertainties with accurately dividing emissions between fine and 
coarse grid of individual counties for the purpose of setting overall 
NOX emissions budgets, we believe that the calculation of 
the emissions budgets should be based on all counties which are wholly 
contained within the fine grid.'' (67 FR 8415)
    On April 21, 2004, we finalized our responses to the Court's 
decision in a final rulemaking, ``Interstate Ozone Transport: Response 
to Court Decisions on the NOX SIP Call, NOX SIP 
Call Technical Amendments, and Section 126 Rules,'' also referred to as 
the ``Phase II of the NOX SIP Call'' (69 FR 21604). This 
rulemaking made a number of revisions to the 1998 rule. Most relevant 
to this proposal, it finalized our earlier proposal to include the fine 
grid portions of Missouri as contributing significantly to downwind 
nonattainment. Accordingly, consistent with the Court's finding in 
Michigan, the NOX emissions budget was revised to include 
only the fine grid portion of the state, which constitutes 
approximately the eastern one-third of Missouri. The counties that are 
included in the calculation of the revised budget are listed in Table 
1. The SIP due date was one year from the Phase II rulemaking. The 
requirement for compliance with the NOX SIP Call is May 1, 
2007.

                Table 1.--Fine Grid Counties In Missouri
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Bollinger Co.
Butler Co.
Cape Girardeau Co.
Carter Co.
Clark Co.
Crawford Co.
Dent Co.
Dunklin Co.
Franklin Co.
Gasconade Co.
Iron Co.
Jefferson Co.
Lewis Co.
Lincoln Co.
Madison Co.
Marion Co.
Mississippi Co.
Montgomery Co.
New Madrid Co.
Oregon Co.
Pemiscot Co.
Perry Co.
Pike Co.
Ralls Co.
Reynolds Co.
Ripley Co.
St. Charles Co.
St. Genevieve Co.
St. Francois Co.
St. Louis Co.
St. Louis City
Scott Co.
Shannon Co.
Stoddard Co.
Warren Co.
Washington Co.
Wayne Co.
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C. What Requirements Must Missouri Meet?

    The NOX SIP Call requires that states revise their SIPs 
to assure that sources in the state reduce their NOX 
emissions sufficiently to eliminate the amounts of NOX 
emissions that contribute significantly to ozone nonattainment, or that 
interfere with maintenance, downwind. After prohibiting these 
significant contributions of NOX, the remaining amounts 
emitted by sources in the state will not ``significantly contribute to 
nonattainment, or interfere with maintenance by,'' a downwind state 
under Clean Air Act (CAA) section 110(a)(2)(D)(i)(I), as determined 
under the NOX SIP Call. To determine the ``significant 
amount'', we projected the total amount of NOX emissions 
that large EGUs, large non-EGUs, large IC engines, and cement kilns in 
each covered state would emit, in light of expected growth, in 2007 
taking into account other measures required under the CAA. We then 
projected the total amount of NOX emissions that each of 
those states would emit in 2007 if each such state applied recommended 
highly cost-effective measures to these source categories. The 
difference between the two projections represents the ``significant 
amount'' of NOX emissions that the State's SIP must prohibit 
under the NOX SIP Call.\1\ Missouri must demonstrate that 
its SIP includes sufficient measures to eliminate those emissions. The 
total amount of NOX emissions from all NOX 
sources remaining after the state prohibits the significant amount 
represents the emissions budget for the state.
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    \1\ For the fine grid portion of Missouri, the difference for 
large non-EGUs between projected emissions without highly cost 
effective reductions and projected emissions with highly cost 
effective reductions (as proposed in this action) is 88 tons (i.e., 
147 tons-59 tons).
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    The NOX SIP Call provided states the flexibility to 
decide which source categories to regulate in order to meet the 
emissions budget. In order to provide assistance to the states, we 
suggested imposing a variety of control strategies that provide for a 
highly cost effective means for states to meet their NOX 
emissions budgets. These strategies include imposing NOX 
emissions caps and providing for an allowance trading program for large 
EGUs and large non-EGUs, as well as emission reduction requirements for 
cement kilns and large IC engines. EPA explained that, in order for a 
state to participate in the EPA-administered trading program, the state 
rule would have to include at least the ``core'' group of sources 
specified in the model trading rule, i.e., large EGUs and

[[Page 32293]]

large non-EGUs. While a state could develop a trading program that did 
not include the core applicability provisions of the model trading 
rule, EPA would not administer such a trading program for the state. 
See 63 FR 57461.

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

    EPA's model NOX budget trading rule for SIPs, 40 CFR 
Part 96, Subparts A through I, sets forth a NOX allowance 
trading program for large EGUs and large 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 as a 
way to achieve the required emission reductions. The October 27, 1998, 
Federal Register document contains a full description of the EPA's 
model NOX budget trading program (See 63 FR 57514-57538 and 
40 CFR part 96, subparts A through I). In general, allowance trading 
uses market forces to reduce the overall cost of compliance for 
pollution sources in the program, while maintaining emission reductions 
and environmental benefits. One type of market-based program is an 
emissions budget trading program, commonly referred to as a ``cap and 
trade'' program. A cap and trade program first sets an aggregate cap, 
or maximum limit, on emissions for all covered sources for a specified 
control period. Sources covered by the program then receive 
authorizations to emit in the form of emission allowances, with the 
total amount of allowances limited by the cap. Each source can design 
its own compliance strategy to meet the overall reduction requirement, 
including sale or purchase of allowances, installation of pollution 
controls, or implementation of efficiency measures, among other 
options. Individual control requirements are not specified under a cap 
and trade program, but each emissions source must surrender allowances 
equal to its actual emissions in order to comply. Sources must also 
completely and accurately measure and report all emissions in a timely 
manner to guarantee that the overall cap is not exceeded.

E. How Does the NOX SIP Call Rule Relate to the Existing Statewide NOX 
Rule?

    The current statewide NOX rule, as amended in the SIP on 
September 19, 2005 (70 FR 54840), is designed to achieve emissions 
reductions to improve the air quality in the St. Louis ozone 
nonattainment area. This rule requires emissions reductions in the 
eastern one-third of the state and lesser reductions in the remainder 
of the state for large EGUs. While we approved this rule because it 
helped address the ozone nonattainment issue in St. Louis, we did not 
find that this rule addressed the significant transport of 
NOX to other areas that we have identified in the 
NOX SIP Call. The SIP-approved statewide NOX rule 
achieves less emissions reductions and overall is less stringent than 
the requirements of the NOX SIP Call. The additional rules 
and budget demonstration adopted by Missouri and being proposed for EPA 
approval today as a revision to the SIP are necessary to meet the 
additional requirements set forth by the NOX SIP Call.

F. How Does the NOX SIP Call Rule Relate to the Clean Air Interstate 
Rule?

    Like the NOX SIP Call, the Clean Air Interstate Rule 
(CAIR) rulemaking is based on the ``good neighbor'' provision of CAA 
110(a)(2)(D), which requires states to develop SIP provisions assuring 
that emissions from their sources do not contribute significantly to 
downwind nonattainment, or interfere with maintenance, of the NAAQS (70 
FR 25162). However, this rulemaking focuses exclusively on interstate 
transport of NOX and its impact on downwind ozone 
nonattainment and addresses only NOX SIP Call requirements. 
Also, the NOX SIP Call only affects those counties lying in 
the eastern one-third of the state that are listed in Table 1. In 
contrast, the CAIR regulates NOX and sulfur dioxide 
(SO2), as precursors of PM2.5, in addition to 
regulating NOX as a precursor of ozone, and affects the 
entire state of Missouri. Due to the persistent nature of 
PM2.5 pollution throughout the entire year, the CAIR also 
differs from the NOX SIP Call in that it contains an annual 
control period for NOX and SO2 in addition to an 
ozone season control period for NOX. The rules also contain 
different compliance dates. For Missouri, the NOX SIP Call 
compliance date is May 1, 2007, and for CAIR the first compliance date 
is January 1, 2009, for the NOX ozone season program 
requirements, and January 1, 2010, for the CAIR SO2 annual 
program requirements. It should also be noted that the CAIR 
NOX ozone season trading program, while similar to the 
NOX SIP Call trading program, is different and that Missouri 
would need to adopt the CAIR provisions to participate in that program.

II. Summary of State Submittal

A. When Did Missouri Develop and Submit the NOX Emission Control Plan 
to EPA?

    In response to the Federal NOX SIP Call Rulemaking in 
October 1998, the Missouri Department of Natural Resources (MDNR) began 
the rulemaking process by drafting rules to meet the NOX SIP 
Call reduction requirements. The MDNR subsequently abandoned its 18-
month state rulemaking process when it was notified by EPA that, as a 
result of the Michigan decision, the state was not required to submit a 
SIP. The MDNR had to restart this process in April 2004 when the Phase 
II rule was published. The Missouri Air Conservation Commission adopted 
three rules and a NOX budget demonstration on May 26, 2005, 
and June 30, 2005, respectively, after considering comments at public 
hearing. The rules were published in the state rules publication on 
October 13, 2005, and became effective on October 30, 2005.
    The MDNR submitted the three separate rules, the budget 
demonstration and supporting documentation to EPA as a SIP package on 
August 2, 2005. A complete SIP package, with the necessary 
documentation, was submitted to EPA on November 3, 2005. On November 
18, 2005, EPA sent a letter to MDNR deeming the Missouri SIP submittal 
technically and administratively complete.

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

    The main components of Missouri's plan include three NOX 
rules and a budget demonstration with supporting materials. The rules 
include: 10 CSR 10-6.360, pertaining to large EGUs and large fossil-
fuel-fired industrial boilers (industrial boilers), 10 CSR 10-6.380 for 
cement kilns, and 10 CSR 10-6.390 for large stationary internal 
combustion engines. The purpose of these rules is to prohibit 
NOX emissions as identified in the NOX SIP Call 
that significantly contribute to downwind ozone nonattainment. In the 
NOX SIP Call the required emissions reductions were 
determined based on the implementation of available, highly cost-
effective controls for selected source categories. Therefore, Missouri 
has developed and adopted three rules generally covering the source 
categories (i.e., large EGUs, large industrial boilers, cement kilns, 
and large stationary IC engines) for which EPA found that cost-

[[Page 32294]]

effective controls were available.\2\ EPA has reviewed the three rules 
and has found that, in light of the discussion below concerning the 
applicability provisions of Missouri's trading rule, Missouri's rules 
will achieve the emission reduction requirements of the NOX 
SIP Call and thus eliminate Missouri's significant contribution to 
downwind 8-hour ozone nonattainment. A more detailed description of 
each rule follows under II(C). The purpose of the budget demonstration 
is to provide an accounting mechanism for ensuring that Missouri has 
adopted control measures that prohibit the significant amounts of 
NOX emissions targeted by CAA section 110(a)(2)(D)(i)(I). A 
more detailed discussion of the demonstration is provided below under 
II(D). As part of the supporting materials to the budget demonstration, 
Missouri also provided baseline test data from the cement kiln industry 
in support of its cement kiln rule.
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    \2\ Although in the NOX SIP Call, EPA found generally 
that highly cost effective reductions were achievable at large 
industrial boilers, combustion turbines, and combined cycle systems, 
the fine grid portion of Missouri does not include existing large 
combustion turbines and combined cycle systems. The language of the 
applicability provisions for non-EGUs in Missouri's trading rule 
expressly covers only large non-EGUs that are industrial boilers.
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C. What Do the Rules Require?

1. What Are the Requirements of the EGU and Non-EGU Rule?
    Missouri adopted 10 CSR 10-6.360 ``Control of NOX 
Emissions from Electric Generating Units and Non-Electric Generating 
Boilers.'' The rule effectively adopts the essential elements of EPA's 
NOX Budget Trading model rule set forth in the October 1998 
Federal Register document and described in I(D) above for applicable 
sources found in the eastern one-third of the state covered by the 
NOX SIP Call. The Missouri rule affects large EGUs (in 
general, fossil-fuel fired boilers, combustion turbines, and combined 
cycle systems that serve a generator with a nameplate capacity greater 
than 25 megawatts (MWe) producing electricity for sale) and large 
industrial boilers (generally, industrial fossil-fuel fired boilers 
with a maximum design heat input greater than 250 million British 
thermal units per hour (mmBtu/hr)).\3\
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    \3\ It should be noted that EPA interprets ``nameplate 
capacity'' to be the amount, specified by the manufacturer of the 
generator, as of initial installation and interprets ``maximum 
design heat input'' to be the amount, specified by the manufacturer 
of the unit, as of initial installation based on the physical design 
and physical characteristics of the equipment. Consequently, 
nameplate capacity and maximum design heat input are determined on a 
one-time basis and are not changed by subsequent modification of the 
generator or unit respectively.
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    The emissions cap on large EGUs for the eastern one-third of 
Missouri, as described in the Phase II notice, is set at 13,400 tons 
per ozone season, and was based on a baseline heat input (mmBtu/hr) and 
emissions rate of 0.15 NOX lbs/mmBtu. The EGU emissions 
budget is equivalent to the number of allowances that the state has 
authority to distribute. One percent of this budget, 134 tons, has been 
included in an ``energy efficiency and renewable generation projects 
set-aside.'' The purpose of this set-aside is to provide an incentive 
to save or generate electricity through the implementation of projects 
that reduce the consumption of fossil-fuel. The rule contains a list of 
large EGUs and the number of remaining allowances that will be provided 
for each unit during the control periods beginning in the year 2007.
    The level of reduction for large industrial boilers was based on 
emissions decreases from uncontrolled levels. In accordance with the 
NOX SIP Call, Missouri based the number of NOX 
allowances for each unit on a 60 percent reduction from each unit's 
estimated 2007 levels of emissions, which were adjusted for projected 
growth for large industrial boilers. Missouri identified three existing 
units in the eastern one-third of the state as meeting the 
applicability requirement for large industrial boilers and, based on 
reductions from their uncontrolled emissions adjusted for projected 
growth, established 59 tons as the large industrial boiler portion of 
the trading budget. The rule specifically allocates allowances to these 
three large industrial boilers. The NOX trading budget for 
Missouri is the sum of the large EGU budget (13,400) and the large 
industrial boiler budget (59) and totals 13,459 tons.
    Under 10 CSR 10-6.360, Missouri allocates NOX allowances 
to both its large EGUs and large industrial boilers. Each 
NOX allowance permits a unit to emit one ton of 
NOX during the ozone season control period. NOX 
allowances may be bought or sold. Unused NOX allowances may 
also be banked for future use, with certain limitations. Missouri's 
rule requires each large EGU and large industrial boiler to hold 
allowances to cover its emissions after each control period. For each 
ton of NOX emitted in a control period, EPA will remove one 
allowance from the unit's NOX Allowance Tracking System 
account after the end of the control period. Once the allowance has 
been used for compliance, no unit can use the allowance again. 
Monitoring requirements specify that owners and operators will be 
required to continuously monitor their NOX emissions by 
using systems that meet the requirements of 40 CFR part 75, subpart H. 
The monitoring requirements also include quarterly emission reporting.
    The compliance supplement pool (CSP) is a pool of allowances that 
can be used in the beginning of the program to provide certain 
NOX Budget units additional compliance flexibility. The CSP 
was created to address concerns raised by commenters on the 
NOX SIP Call proposal regarding electric reliability during 
the initial years of the program. Missouri may distribute its 5,630 ton 
allowance pool based on early reductions, a demonstrated need, or both. 
A unit making an application to the CSP based on early reductions must 
demonstrate that reductions were made beyond all applicable 
requirements sometime during the ozone seasons of 2002 through 2006. 
Missouri's CSP may be used to account for emissions during the 2007 and 
2008 control periods.
2. What Are the Requirements of the Cement Kiln Rule?
    Missouri adopted 10 CSR 10-6.380, ``Control of NOX 
Emissions from Portland Cement Kilns.'' The rule effectively adopts the 
NOX SIP Call's recommended approach of obtaining a 30 
percent reduction from uncontrolled levels from large Portland cement 
kilns found in the NOX SIP Call region of the eastern one-
third of the state. The rule applies only to kilns with process rates 
of at least the following:

Long dry kilns--12 tons per hour (TPH).
Long wet kilns--10 TPH.
Preheater kilns--16 TPH.
Precalciner and preheater/precalciner kilns--22 TPH.

    In the NOX SIP Call, EPA cited its peer reviewed 
analysis, ``EPA's Alternative Control Techniques (ACT)'' (EPA-453/R-94-
004, March 1994) as demonstrating that cost-effective controls in the 
form of low-NOX burners and mid-kiln firing are available to 
the cement kiln industry and can achieve a 30 percent reduction from 
uncontrolled levels of emissions. Consistent with EPA's approach in the 
NOX SIP Call, Missouri's rule provides that compliance can 
be achieved by the installation and operation of low-NOX 
burners or mid-kiln firing or by alternative measures that are all 
designed to achieve the 30 percent cost-effective reduction.

[[Page 32295]]

3. What Are the Requirements of the Large Stationary Internal 
Combustion Rule?
    Missouri adopted 10 CSR 10-6.390, ``Control of NOX 
Emissions from Large Stationary Internal Combustion Engines.'' The rule 
effectively adopts the NOX SIP Call's recommended approach 
of the establishment of emissions levels that obtain an 82 percent 
reduction from large natural gas-fired stationary IC engines and a 90 
percent reduction from large diesel and dual fuel stationary IC engines 
found in the NOX SIP Call region of the eastern third of the 
state. Missouri determined that there are no eligible units that meet 
the applicability criteria of ``large'' by being rated equal to or 
greater than the applicable brake horsepower and emitting more than one 
ton per day of NOX. This finding differed from the initial 
inventory review that EPA conducted that identified one eligible unit. 
A more detailed discussion of this and other proposed changes to the 
inventory is provided under II(D)(2), ``What changes did the State 
request to the NOX budget and are those changes 
approvable?''.

D. How Does Missouri Address Its NOX SIP Call Budget?

1. What NOX Budget Did EPA Determine for the State?
    Missouri's budget for the NOX SIP Call was contained in 
the Phase II rulemaking in April 2004. The purpose of providing a 
budget was to offer the states a choice of which mix of measures to 
adopt in order to meet the aggregate amount of required NOX 
emissions reduction identified by EPA as being available for removal by 
highly cost-effective measures. EPA based all state budgets on its 
determination of which measures are highly cost-effective for upwind 
states to implement. However, the states have flexibility to control 
other source categories outside of EPA's recommended approach of 
controlling large EGUs, large non-EGUs, cement kilns, and large IC 
engines that were utilized to determine the size of the 2007 ozone-
season budgets. Based on EPA's approach the NOX SIP Call 
2007 budget for the eastern one-third of Missouri is 61,406 tons per 
ozone season and represents the sum of EGU, Non-EGU Point, Area, Off-
Road and Mobile source emissions.
2. What Changes Did the State Request to the NOX Budget and 
Are Those Changes Approvable?
    The State has proposed changes to the inventory that affect the 
budget demonstration. In its demonstration the state provides 
documentation that due to errors in the NOX SIP Call 
emissions inventory, EPA inadvertently misidentified applicable units 
that led to a miscalculation in the final emissions budget. EPA is 
proposing to approve the necessary changes to correct the inventory and 
to provide clarification on which sources are affected. All 
modifications to the inventory and supporting information are provided 
for by Missouri as part of its budget demonstration document found in 
the docket for this rulemaking.
    The category of large industrial boilers has a number of 
corrections. In EPA's inventory two units were incorrectly classified 
as industrial boilers, and three units were wrongly identified as 
having a maximum design heat input exceeding 250 mmBtu/hr. Doe Run-
Buick Resource Recovery Center (emission point 36) and River Cement 
Company (emission point 94) are process heating devices, and EPA agrees 
that they do not meet the criteria of the source type that EPA 
considered when identifying highly cost-effective controls for non-EGUs 
(including industrial boilers). Boilers at Ashley Street Station units 
2 through 4 do not meet the size requirement of having a maximum design 
heat input exceeding 250 mmBtu/hr. These units have a maximum design 
heat input, as reported to the MDNR by the St. Louis Local Agency, of 
108, 101, and 101 mmBtu/hr., respectively. Therefore, these units are 
not subject to the state's large industrial boiler rule described 
previously in this document. The large industrial boiler portion of 
Missouri's trading budget has been reduced to reflect the exclusion of 
these units from the category of large industrial boilers.\4\
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    \4\ In addition, Missouri believes that the projected 
uncontrolled emissions for large EGUs (including large industrial 
boilers) in the fine grid portion of the state, and thus the 
projected controlled emissions for such units, are lower than the 
amounts originally stated by EPA in the NOX SIP Call. 
Missouri requests that the lower amounts be used. Under these 
circumstances, EPA proposes that these lower amounts be used and 
that the large non-EGU portion of the trading budget be 59 tons, 
rather than the larger amount originally stated by EPA.
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    Missouri has requested and EPA proposes to approve modifications to 
the cement kiln inventory. One of these modifications includes the 
addition of Lone Star Industries, Inc., now referred to as Buzzi Unicem 
Cape. This facility was in operation during the 1995 and 1996 time 
frame and meets the applicability requirements of the state's rule. 
Also, EPA proposes to approve the state's request to remove emission 
point 30 at Continental Cement Company from the list of controlled 
units. EPA inadvertently included emission point 30 as a cement kiln. 
Continental Cement Company only has one kiln at this facility, and that 
kiln is correctly reported as emission point 32. For budget 
demonstration purposes, Missouri continues to include emission point 30 
in the inventory as an uncontrolled unit. The state also has requested 
and EPA proposes to approve the modification of the base year emissions 
that were used to derive the 2007 budgeted emissions for the cement 
kiln class. This modification is necessary in order to correctly 
reflect a level of uncontrolled emissions in the base year inventory 
that were used to determine the reduction targets in 2007. The final 
EPA base year inventory contained actual emissions that were 
representative of controlled emissions for each kiln. Therefore, after 
applying growth estimates, the resulting application of a 30 percent 
cost-effective reduction created an overly strict emissions budget for 
the cement kiln class. In order to make the necessary correction, the 
state has submitted and EPA proposes to accept the use of the stack 
test data, throughput information, and related emissions calculations 
supplied by each individual kiln that were used to calculate the 
uncontrolled cement kiln emissions for 2007 provided for in the state's 
revised budget.
    Missouri has requested and EPA proposes to approve a correction to 
a unit (emission point 002) that was misidentified as a large IC engine 
in the EPA inventory. In the NOX SIP Call, EPA attempted to 
identify large IC units as those that emitted on average greater than 
one ton per ozone season day. EPA identified DePaul Health Center in 
St. Louis as a large source based on data in the EPA inventory that 
indicated emissions of 335 tons per ozone season in the year 1995. 
However, emissions inventory information provided by the state shows 
that the actual emissions in 1995 from this unit were less than one ton 
per ozone season. This facility has not emitted more than 25 tons of 
NOX in any year from 1994 to 2004. Because this unit emits 
less than one ton per ozone season day, EPA agrees that this source 
should be reclassified from an affected large source to a non-affected 
source in the inventory and that this source is not subject to the 
state's IC engine rule.
3. How Does Missouri Demonstrate That It Is Meeting the Budget?
    As explained above and in more detail in the NOX SIP 
Call, the NOX SIP Call requires that states revise their 
SIPs to assure that sources in the state reduce

[[Page 32296]]

their NOX emissions sufficiently to eliminate the amounts of 
NOX emissions that contribute significantly to ozone 
nonattainment, or that interfere with maintenance, downwind. The amount 
of NOX emissions reductions required is the amount of 
emissions reductions that would be achieved by applying available, 
highly cost-effective controls to large EGUs, large non-EGUs, large 
stationary IC engines, and cement kilns. However, EPA structured the 
rule to give the upwind states a choice of which mix of measures to 
adopt in order to eliminate the significant amount of NOX 
emissions. To this end, EPA developed an emissions budget that was 
based on the aforementioned application of highly cost-effective 
controls. The emissions budget represents the amount of NOX 
emissions remaining after the state prohibits the significant amount. 
To demonstrate compliance with the NOX SIP Call, a state 
must adopt and implement control measures that are projected to achieve 
the emissions reductions that would be equal to or greater than those 
predicted to be achieved by EPA's recommended approach.
    Missouri has provided a full budget demonstration that accounts for 
all of the inventory modifications EPA proposes to approve today. All 
of the necessary changes described above led to a change in the overall 
emissions budget. The new budget represents the predicted emissions in 
2007 that are reflective of the state's adoption of cost-effective 
measures recommended by EPA. EPA proposes to accept a new budget of 
60,235 tons of NOX per ozone season for the NOX 
SIP Call affected area of the eastern one-third of Missouri. Table II 
provides a breakdown of each NOX category after all 
corrections have been made.
    With the exception of the trading portion of the budget that 
includes large EGUs and large non-EGUs, the remainder of the source 
categories are not required to remain within the mass emission caps 
described herein. Rather, the NOX SIP Call budgets are an 
accounting mechanism for ensuring that the upwind states have adopted 
and implemented control measures that prohibit the significant amount 
of NOX emissions targeted under CAA 110(a)(2)(D)(i)(I) as 
implemented by the NOX SIP Call.

              Table II.--Corrected NOX Budget for Missouri
------------------------------------------------------------------------
                                                          2007 budget
                   Source category                     emissions  (tpos)
------------------------------------------------------------------------
Large EGUs (>25 MW).................................              13,400
Other EGUs \5\......................................                 241
Other non-EGUs......................................               5,903
Large non-EGUs (including large industrial boilers)                   59
 (>250 MMBtu).......................................
Cement Kilns........................................               7,483
Area................................................               2,199
On-Road Mobile......................................              21,318
Off-Road Mobile.....................................               9,632
                                                     -------------------
    Total...........................................              60,235
------------------------------------------------------------------------

    As elaborated below with regard to large EGUs and large non-EGUs, 
EPA believes that Missouri has demonstrated compliance with the budget 
demonstration, and thus the NOX SIP Call, by adopting 
control measures that are modeled after EPA's recommended approach for 
controlling large EGUs, large non-EGUs, large IC engines, and cement 
kilns, and that implementation of these rules will achieve the 
emissions reductions necessary to eliminate the ``significant 
contribution'' to downwind ozone nonattainment identified under CAA 
110(a)(2)(D)(i)(I) as implemented by the NOX SIP Call.
---------------------------------------------------------------------------

    \5\ The summary table in Missouri's budget demonstration 
excluded the emissions figure for small EGUs, which was included in 
Missouri's supporting documentation. EPA proposes to include this 
figure and to make a parallel increase in the total budget figure 
for Missouri.
---------------------------------------------------------------------------

    As discussed above, under EPA's model trading program for large 
EGUs and large non-EGUs, the size criteria for determining the 
applicability of the trading program are based on a generator's 
``nameplate capacity'' for EGUs and a unit's ``maximum design heat 
input'' for non-EGUs (such as industrial boilers), which parameters are 
determined on a one-time basis as of initial installation by the 
manufacturer.
    The owner of one of the large industrial boilers has informally, 
apart from this rulemaking, raised an issue with respect to whether 
sources could be ``derated'' by physically restricting heat input, in 
order to be exempt from the Missouri rule as it relates to that source 
category. For the reasons stated above, and because this source 
category is included in the budget demonstration, EPA does not believe 
that sources may be ``derated'' to avoid applicability of the rule. 
Exempting large industrial boilers from the rule would require a 
revision to the rule and a revision to the budget demonstration. If 
large non-EGUs (e.g., large industrial boilers) were able to ``derate'' 
themselves out of the trading program and did so, then the Missouri 
state plan would not be achieving emissions reductions from the 
``derating'' units and would have to instead get, from other 
NOX sources in the fine grid portion of the state, the 
reductions projected to be achieved by these units.
    EPA also notes the NOX SIP Call requires that, to the 
extent a state chooses to participate in the NOX Budget 
Trading Program administered by EPA, the applicability provisions of 
the state's trading rule must cover at least the ``core'' source 
categories set forth in the applicability provisions of the model 
trading rule, i.e., large EGUs and large non-EGUs. Missouri's trading 
rule does not expressly cover the entire category of large non-EGUs and 
instead addresses only large industrial boilers, which are the only 
existing large non-EGUs in the state. In order for Missouri to 
participate in the EPA-administered trading program, the applicability 
provisions of Missouri's rule should apply to all large non-EGUs, and 
not just large industrial boilers.
    For several reasons, EPA is proposing to approve Missouri's rule 
despite the omission. First, Missouri recognizes this deficiency and 
has informed EPA that the state intended that the trading rule cover 
all large non-EGUs and will act to ensure that this intent is realized. 
Missouri stated that, while there are no existing large industrial 
combustion turbines or large industrial combined

[[Page 32297]]

cycle systems in Missouri, it will revise the applicability of its 
trading rule to cover explicitly all large non-EGUs. Missouri also 
stated that in the meantime the state will ensure, through its 
permitting process, that any future large fossil-fuel-fired industrial 
combustion turbines and large fossil-fuel-fired industrial combined 
cycle systems will be subject to the requirements of Missouri's trading 
rule.
    Second, EPA also considered that Missouri's program will end after 
the 2008 ozone season because the CAIR provides that, when EPA begins 
to administer the CAIR NOX ozone season trading program in 
2009, EPA will no longer administer the NOX Budget Trading 
Program. Because of the lead time necessary to permit and construct a 
new large industrial combustion turbine or combined cycle system, EPA 
believes that it is unlikely that there will be any such new units 
before 2009. Under these circumstances and in light of Missouri's 
statements, EPA is proposing to approve Missouri's rule.
    Finally, EPA notes that, after EPA stops administering the 
NOX Budget Trading Program, Missouri will need to revise its 
SIP to demonstrate that it is adopting control measures that will 
achieve the reductions attributed in Missouri's current trading rule to 
large industrial boilers (or in a revised Missouri trading rule to 
large non-EGUs). Under CAIR and the CAIR Federal Implementation Plan 
(FIP), one available option will be for Missouri to include, in the 
CAIR NOX ozone season trading program, all large non-EGUs 
covered by the trading program under the NOX SIP Call. If 
Missouri takes this option of expanding the applicability of the CAIR 
NOX ozone season trading program to include any large non-
EGUs in the fine grid portion of Missouri, EPA expects that Missouri 
will include in the CAIR program all existing and new large non-EGUs 
(not just existing and new large industrial boilers) in that portion of 
the state. This will have the practical effect of ensuring that any new 
large industrial combustion turbines and combined cycle systems in the 
fine grid portion of Missouri will be subject to Missouri's large non-
EGU cap consistent with the NOX SIP Call. In addition, if 
Missouri chooses not to take this option for achieving the 
NOX SIP Call emission reductions currently attributed to 
large industrial boilers, EPA expects that Missouri will adopt other 
control measures that will achieve these reductions consistent with 
NOX SIP Call requirements.

E. What Guidance Did EPA Use To Evaluate Missouri's NOX Control 
Program?

    EPA evaluated Missouri's NOX SIP Call submittal using 
the documents in EPA's ``NOX SIP Call Checklist'' (the 
checklist), issued on April 9, 1999. The checklist reflects the 
requirements of the NOX SIP Call set forth in 40 CFR 51.121 
and 51.122. The checklist outlines the criteria for determining the 
completeness and approvability of Missouri's submittal.
    As noted in the checklist, the key elements of an approvable 
submittal under the NOX SIP Call are: A budget 
demonstration; enforceable measures for control; legal authority to 
implement and enforce the control measures; compliance dates and 
schedules; monitoring, recordkeeping, and emissions reporting; and 
elements that apply to states that choose to adopt an emissions trading 
rule in response to the NOX SIP Call. The checklist can be 
found in the docket.
    As described above, the final NOX SIP Call rule included 
a model trading program (See 40 CFR part 96). EPA used the model rule 
to evaluate rule 10 CSR 10-6.360. Additionally, EPA used the October 
1998 final NOX SIP Call rulemaking notice and subsequent 
technical amendments, the October 1998 proposed Federal Implementation 
Plan, and the Phase II NOX SIP Call rulemaking notice of 
April 2004 to evaluate the state's submittal.
    The state submittal has met the public notice requirements for SIP 
submissions in accordance with 40 CFR 51.102. The submittal also 
satisfied the completeness criteria of 40 CFR part 51, appendix V. In 
addition, EPA believes that the revision meets the substantive SIP 
requirements of the CAA, including section 110 and implementing 
regulations.

III. Proposed Action

    EPA has reviewed Missouri's November 3, 2005, SIP submittal using 
the NOX SIP Call rulemaking notices and checklist. EPA has 
reviewed Missouri's control measures and projected reductions and 
believes they are approvable. Therefore, EPA is proposing to approve 
Missouri's rules 10 CSR 10-6.360, 10 CSR 10-6.380, 10 CSR 10-6.390 and 
Missouri's budget demonstration and SIP narrative at this time. EPA's 
proposed approval is premised on Missouri's commitment to include any 
large industrial combustion turbines and large industrial combined 
cycle systems in the Missouri trading rule.

IV. Statutory and Executive Order Reviews

    Under Executive Order 12866 (58 FR 51735, October 4, 1993), this 
proposed 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 
proposed action merely proposes to approve state law as meeting Federal 
requirements and imposes no additional requirements beyond those 
imposed by state law. Accordingly, the Administrator certifies that 
this proposed 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 proposes to approve 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 (Pub. L. 104-4).
    This proposed 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 proposes to approve 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 proposed 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

[[Page 32298]]

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 proposed rule does not impose an information 
collection burden under the provisions of the Paperwork Reduction Act 
of 1995 (44 U.S.C. 3501 et seq.).

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Carbon monoxide, 
Incorporation by reference, Intergovernmental relations, Lead, Nitrogen 
dioxide, Ozone, Particulate matter, Reporting and recordkeeping 
requirements, Sulfur oxides, Volatile organic compounds.

    Dated: May 23, 2006.
Betty J. Berry,
Acting Regional Administrator, Region 7.
 [FR Doc. E6-8661 Filed 6-2-06; 8:45 am]
BILLING CODE 6560-50-P