[Federal Register Volume 72, Number 103 (Wednesday, May 30, 2007)]
[Proposed Rules]
[Pages 29897-29901]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-10317]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R05-OAR-2006-0540; FRL-8319-7]


Approval and Promulgation of Air Quality Implementation Plans; 
Indiana; Oxides of Nitrogen Regulations, Phase II

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: The EPA is proposing to approve Indiana's oxides of nitrogen 
(NOX) rules which satisfy the requirements of EPA's 
NOX SIP Call Phase II Rule (the Phase II Rule). We are 
proposing to approve these rules based on Indiana's demonstration that 
the State will meet the Phase II Rule requirements through rules 
regulating stationary internal combustion (IC) engines. Limiting 
NOX emissions from IC engines will enable the State to meet 
the Phase II budget of 4,244 tons during the ozone season, thereby 
improving air quality and protecting the health of Indiana citizens. We 
are also proposing to approve other changes to Indiana's NOX 
rules. These are minor clerical corrections and changes in definitions 
made by Indiana to conform to EPA's Phase II Rule. Citizens who wish to 
comment on this proposed approval of the Indiana Phase II 
NOX plan are encouraged to do so within the timeframe noted 
below.

DATES: Comments must be received on or before June 29, 2007.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-R05-
OAR-2006-0540, by one of the following methods:
    1. www.regulations.gov: Follow the on-line instructions for 
submitting comments.
    2. E-mail: [email protected].
    3. Fax: (312) 886-5824.
    4. Mail: John M. Mooney, Chief, Criteria Pollutant Section, Air 
Programs Branch (AR-18J), U.S. Environmental Protection Agency, 77 West 
Jackson Boulevard, Chicago, Illinois 60604.
    5. Hand Delivery: John M. Mooney, Chief, Criteria Pollutant 
Section, Air Programs Branch (AR-18J), U.S. Environmental Protection 
Agency, 77 West Jackson Boulevard, Chicago, Illinois 60604. Such 
deliveries are only accepted during the Regional Office normal hours of 
operation, and special arrangements should be made for deliveries of 
boxed information. The Regional Office official hours of business are 
Monday through Friday, 8:30 a.m. to 4:30 p.m. excluding Federal 
holidays.
    Instructions: Direct your comments to Docket ID No. EPA-R05-OAR-
2006-0540. EPA's policy is that all comments received will be included 
in the public docket without change and may be made available online at 
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 www.regulations.gov or e-mail. 
The www.regulations.gov Web site is an ``anonymous access'' system, 
which means EPA will not know your identity or contact information 
unless

[[Page 29898]]

you provide it in the body of your comment. If you send an e-mail 
comment directly to EPA without going through 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. For additional 
instructions on submitting comments, go to Section I of the 
SUPPLEMENTARY INFORMATION section of this document.
    Docket: All documents in the docket are listed in the 
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 www.regulations.gov or in hard copy at the Environmental Protection 
Agency, Region 5, Air and Radiation Division, 77 West Jackson 
Boulevard, Chicago, Illinois 60604. This facility is open from 8:30 
a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. We 
recommend that you telephone John Paskevicz, Engineer, at (312) 886-
6084 before visiting the Region 5 office.

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

SUPPLEMENTARY INFORMATION: Throughout this document whenever ``we,'' 
``us,'' or ``our'' is used, we mean EPA. This SUPPLEMENTARY INFORMATION 
section is arranged as follows:

I. What should I consider as I prepare my comments for EPA?
II. Background
III. Who is affected by the new Phase II rule and the amendments to 
the Phase I rules?
IV. What would approval of this rule accomplish?
V. How are owners and operators expected to comply with the new 
requirement?
VI. What action is EPA taking today?
VII. Statutory and Executive Order Reviews.

I. What should I consider as I prepare my comments for EPA?

    When submitting comments, remember to:
    1. Identify the rulemaking by docket number and other identifying 
information (subject heading, Federal Register date and page number).
    2. Follow directions--The EPA may ask you to respond to specific 
questions or organize comments by referencing a Code of Federal 
Regulations (CFR) part or section number.
    3. Explain why you agree or disagree; suggest alternatives and 
substitute language for your requested changes.
    4. Describe any assumptions and provide any technical information 
and/or data that you used.
    5. If you estimate potential costs or burdens, explain how you 
arrived at your estimate in sufficient detail to allow for it to be 
reproduced.
    6. Provide specific examples to illustrate your concerns, and 
suggest alternatives.
    7. Explain your views as clearly as possible, avoiding the use of 
profanity or personal threats.
    8. Make sure to submit your comments by the comment period deadline 
identified.

II. Background

    On October 27, 1998 (63 FR 57356), EPA issued the NOX 
SIP Call in which it required 22 states, including Indiana, to prepare 
plans to reduce the transport of ozone throughout the eastern part of 
the United States. This was to be accomplished by reducing emissions of 
NOX from selected source categories, primarily major fuel 
burning sources, using available cost-effective measures. The rule 
established a cap on emissions of NOX from each state. 
States had flexibility in determining which fuel burning sources were 
to be included in their rules. For the most part, states targeted 
NOX reductions from electric utilities and other large 
industrial boilers, cement kilns, and IC engines as sources which could 
be controlled in a cost-effective manner. Background information in 
this regard is available from documents prepared by EPA, and can be 
found at http://www.epa.gov/ttn/rto/otag/index.html.
    Some states and industry challenged the rule. In Michigan v. EPA, 
213 F.3d 663 (D.C.Cir. 2000), cert. denied, 121 S. Ct. 1225 (2001), the 
Court largely upheld EPA's rulemaking. It did, however, remand a 
portion of the rule concerning IC engines to EPA for further notice and 
public comment.
    Subsequent to the Court's decision, EPA proceeded initially with 
rules concerning electric generating units (EGU), industrial boilers 
(non-EGU) and cement kilns as Phase I sources. The IC engines fell into 
the Phase II group, to be addressed at a later date. Indiana adopted 
its Phase I rules and submitted them to EPA. We approved the Phase I 
rules on November 8, 2001 (66 FR 56465).
    On April 21, 2004 (69 FR 21603), EPA issued the Phase II Rule. It 
required most States with Phase I budget programs to submit a Phase II 
plan to achieve incremental reductions not addressed by Phase I rules. 
The Phase II Rule also included amendments to the Phase I rules 
affecting definitions for EGUs, and identified the additional 
NOX budget reductions (incremental reductions) that would be 
required by regulating large (greater than one ton per day emissions) 
IC engines. The amount of incremental reductions required resulted from 
the re-calculation of the overall budget to reflect a control level of 
82 percent from natural gas-fired lean-burn IC engines with greater 
than one ton per day NOX emissions. IDEM drafted the new 
rule (326 IAC 10-5, NOX Reduction Program from IC Engines) 
based on guidance from EPA dated September 19, 2004, which contained an 
example model rule. The State also made some clerical changes to 326 
IAC 10-3 and 10-4 as fix-ups to IDEM's existing NOX SIP.
    The public process for the State's IC engine rule started on May 4, 
2005, and ended on October 5, 2005. The Indiana Air Pollution Control 
Board (IAPCB) adopted the rules and they became effective on February 
26, 2006. New rule 326 IAC 10-5 applies to any person who owns or 
operates a large reciprocating stationary IC engine that emits more 
than one ton of NOX per day during the ozone season. At the 
time of the State rulemaking, the only two subject Indiana companies 
were ANR Pipeline and Panhandle Eastern Company, which operate most of 
the gas-fired engines in the State. These companies own a total of 17 
large lean-burn engines and many smaller engines throughout the State 
serving compressor stations located on pipelines that transport natural 
gas to customers.
    The IAPCB also adopted minor changes to its Phase I rules in 326 
IAC 10-3 and 10-4, to conform to changes EPA had made to its rule.
    On March 8, 2006, the Indiana Department of Environmental 
Management (IDEM) submitted its Phase II rules to EPA. IDEM sent 
additional follow-up information addressing the budget demonstration 
for this source category in a June 22, 2006, letter requesting EPA 
approval. IDEM also

[[Page 29899]]

asked in this submittal for EPA to approve the minor changes to the 
Phase I NOX rules. The State's budget demonstration, which 
contains enforceable emission limits for Indiana IC engines, uses the 
information in the source compliance plans to conclude that these 
sources will meet the incremental reduction called for in the Phase II 
Rule.
    The overall NOX budget for Indiana was originally 
calculated using emissions data from base year 1995. This number was 
based on the assumption that IC engines would be controlled at a highly 
cost-effective (90 percent) control level. However, the Court ruled in 
Michigan v. EPA that EPA had failed to provide adequate notice of the 
90 percent control level assumed for IC engines. In the original 
proposed rule, EPA had proposed a range of control levels from 82 to 91 
percent for the IC engine portion of the budget. As a result of the 
Court's decision, EPA set the control level at 82 percent for gas-fired 
lean-burn engines and recalculated the budget. The recalculation 
resulted in an overall budget number which for most states is smaller 
than the budget published by EPA on March 2, 2000. The incremental 
difference is the target reduction which Indiana is required to (and 
expects) to achieve with the Phase II Rule.
    In the Phase II Rule, EPA calculated the 2007 base year emissions 
inventory from which Indiana needed additional reductions of 4,244 tons 
per ozone season, based upon achieving an 82 percent reduction at all 
IC engines in Indiana with greater than one ton per day of 
NOX emissions. EPA allows states flexibility to use company-
wide emissions averaging to achieve the needed emissions reductions. 
(See August 22, 2002 memorandum from Lydia Wegman, Director, Air 
Quality Strategies and Standards Division, Office of Air Quality 
Planning and Standards, to EPA Air Division Directors). EPA's example 
model rule is sufficiently flexible to allow companies with multiple 
affected engines to comply using a specific emission rate limit for 
each engine listed in the source compliance plan. (see http://epa.gov/ttncaaa1/t1/reports/23814qnaasfin.pdf; undated memorandum, Phase II of 
the NOX SIP Call: Q&As and Example Rule). Emission rate 
limits must be reflected in a Federally enforceable permit, the 
enforcement mechanism for the compliance plan, which shows that the 
control measures are adequate to meet the State's Phase II budget 
incremental difference.
    The Indiana rule requires sources to show that the emission 
reductions associated with a source will meet the facility seasonal 
NOX tonnage reduction assigned to the source. Sources are 
required to project 2007 base emissions and then show the emissions 
reductions associated with the control technology or other reduction 
methodology (engine replacement, for example). The Indiana budget 
demonstration shows that sources will meet the required seasonal 
tonnage reductions by reducing emissions from various other engines in 
the inventory, so that the overall reductions are equivalent to 
achieving 82 percent reductions on IC engines with greater than one ton 
per day NOX emissions. Some of the engines use combustion 
modification and some engines have been replaced with newer engines. 
Demonstrated reductions resulting from the replacement of older engines 
with newer engines in some cases exceeds 82 percent. More importantly, 
the compliance plans for the two companies, as noted in the Indiana 
budget demonstration, show that the sources meet the NOX SIP 
Call emission reductions specified for Indiana.

III. Who is affected by the new Phase II rule and the amendments to the 
Phase I rules?

    New rule 326 IAC 10-5 applies to any person who owns or operates a 
large stationary reciprocating IC engine and other smaller stationary 
IC engines that are included in a compliance plan. A large IC engine is 
defined as an engine that emits more than one ton of NOX per 
ozone season day, based on operation during the 1995 ozone season. 
Pipeline energy companies are the major users of large IC engines and 
the State developed its budget demonstration based on control of 
engines used in this energy transport industry.
    The minor amendments to 326 IAC 10-3 and 326 IAC 10-4 clarify 
regulatory language and correct various clerical errors. They also 
incorporate changes applicable to EGUs and non-EGUs, made in accordance 
with EPA's Phase II Rule, including the definitions of ``EGU'' and 
``non-EGU'' as applied to co-generation units.

IV. What would approval of this rule accomplish?

    Approval of rule 326 IAC 10-05 will provide a means by which the 
State of Indiana will meet the required reductions of NOX 
emissions from IC engines during the ozone season. The State rule 
affects NOX SIP Call IC engines as well as any other 
stationary IC engine subject to NOX control in the State's 
rule. The emission reductions for some large engines will be permanent 
and year-round resulting from low emission combustion measures 
retrofitted to existing engines. Low emission combustion measures 
cannot be cycled off once the changes are made to the engine. The 
combustion control technology is a permanent, physical change to the 
design and operation of the engine which, when implemented, is expected 
to reduce emissions of NOX year-round. A source subject to 
these rules may achieve the required reductions through a facility-wide 
or State-wide averaging program approved by Indiana. The State's rules 
include provisions which the sources must follow to demonstrate 
compliance with the rules. The environmental benefits and health 
implications are expected to be permanent.
    The amendments to the plan also make clarifying clerical and 
formatting corrections to previously approved rules 326 IAC 10-3 and 
326 IAC 10-4. They incorporate changes contained in EPA's Phase II Rule 
applicable to EGUs and non-EGUs, including the definitions of ``EGU'' 
and ``non-EGU'' as applied to co-generation units. These amendments 
will bring the originally approved Phase I NOX State rules 
into conformance with the Clean Air Act (CAA) and current EPA 
requirements.

V. How are owners and operators expected to comply with the new 
requirement?

    Owners of large IC engines were required to submit to IDEM, by May 
1, 2006, compliance plans showing how the companies will meet the 
emission reductions in their respective systems. The State's budget 
demonstration shows that the owners of the large NOX SIP 
Call engines will reach the required reductions by reducing emissions 
from all of the engines in their respective systems and not just from 
the large, one-ton-per-day, engines. These reductions shown in the 
budget demonstration are taken from the compliance plans submitted to 
IDEM by the two companies currently subject to the rule, and must be 
achieved by May 1, 2007. The applicable emission rate, along with 
monitoring, record keeping and reporting requirements, must be 
incorporated into Federally enforceable State permits to be issued to 
the companies. As public documents, these permits and compliance 
reports can be viewed by the public to verify compliance with the 
State's plan.
    Known subject sources have met the first increment of compliance by 
submitting to the State of Indiana compliance plans as required by 
rule. The next major increment is completion of the requirements listed 
in the source

[[Page 29900]]

plans which bring the sources into compliance. This step, which 
includes the application of low emission technology (or other controls) 
or source averaging or both, must be completed by May 2007.
    EPA published the incremental budget for affected States, including 
Indiana, in the April 21, 2004, Federal Register (69 FR 21604). The 
State's budget demonstration shows that, through the use of low 
emission combustion technology, installation of new units to replace 
old engines, and the use of averaging NOX emissions system-
wide by the two companies identified above, the State will be able to 
reduce emissions of NOX to meet the Phase II incremental 
difference of 4244 tons of NOX for the ozone season.
    The State rule 326 IAC 10-5-3 includes a requirement that an owner 
or operator of a large IC engine shall not operate an affected engine 
during the ozone period unless there is a compliance plan which meets 
the requirements of the rule. The compliance plan was required to be 
submitted to the State by May 1, 2006, and the rules prohibit operation 
of affected engines after May 1, 2007, if they are not in compliance 
with the requirements. Included in the compliance plan is a requirement 
that the projected NOX emissions from the engine, in grams 
per break horsepower-hour, be included in a Federally enforceable 
permit. This information will enable the State to determine if 
reductions from the covered sources should meet the Phase II budget 
increment. The failure of a source to meet the required NOX 
reductions is a violation of the provisions of the permit. The State of 
Indiana is expected to determine non-compliance with its rules by 
reviewing monitoring and testing information submitted by the owners 
and operators of the affected engines. In addition, because the 
compliance plan will be included in Federally enforceable permits, EPA 
has the authority to enforce the applicable provisions.

VI. What action is EPA taking today?

    EPA is proposing to approve the Phase II NOX rules 
submitted by the State. We are taking this action because we have 
determined that the rules satisfy the requirements of the CAA and the 
Phase II Rule. The State has shown, through its budget demonstration, 
that it can achieve the Phase II budget increment through source 
compliance with the State's rules affecting IC engines and the State's 
permitting program. Meeting the Phase II budget increment and the Phase 
I increment means the State will meet its total overall ozone season 
NOX budget and bring about reductions in ozone 
concentrations in the State and downwind from Indiana. EPA is also 
proposing to approve other changes to Indiana's NOX SIP. 
These other changes are minor clerical corrections and changes in 
definitions to conform to the changes made by EPA in the NOX 
Phase II Rule. Citizens who wish to comment on this proposed approval 
of the Indiana plan are encouraged to do so within the timeframe noted 
in the front of this action.

VI. Statutory and Executive Order Reviews

Executive Order 12866: Regulatory Planning and Review

    Under Executive Order 12866 (58 FR 51735, September 30, 1993), this 
action is not a ``significant regulatory action'' and, therefore, is 
not subject to review by the Office of Management and Budget.

Paperwork Reduction Act

    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.).

Regulatory Flexibility Act

    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.).

Unfunded Mandates Reform Act

    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).

Executive Order 13132: Federalism

    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 CAA.

Executive Order 13175: Consultation and Coordination With Indian Tribal 
Governments

    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).

Executive Order 13045: Protection of Children From Environmental Health 
and Safety Risks

    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 proposes approval of 
a State rule implementing a Federal standard.

Executive Order 13211: Actions That Significantly Affect Energy Supply, 
Distribution, or Use

    Because it is not a ``significant regulatory action'' under 
Executive Order 12866 or a ``significant regulatory action,'' 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).

National Technology Transfer Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (NTTAA), 15 U.S.C. 272, requires Federal agencies to use 
technical standards that are developed or adopted by voluntary 
consensus to carry out policy objectives, so long as such standards are 
not inconsistent with applicable law or otherwise impractical. In 
reviewing SIP submissions, EPA's role is to approve state choices, 
provided that they meet the criteria of the CAA. Absent a prior 
existing requirement for the state to use voluntary consensus 
standards, EPA has no authority to disapprove a SIP submission for 
failure to use such standards, and it would thus be inconsistent with 
applicable law for EPA to use voluntary consensus standards in place of 
a program submission that otherwise satisfies the provisions of the 
CAA. Therefore, the

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requirements of section 12(d) of the NTTAA do not apply.

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Incorporation by 
reference, Intergovernmental relations, Nitrogen dioxide, Ozone, 
Particulate matter, Reporting and recordkeeping requirements.

    Dated: May 18, 2007.
Gary Gulezian,
Acting Regional Administrator, Region 5.
[FR Doc. E7-10317 Filed 5-29-07; 8:45 am]
BILLING CODE 6560-50-P