[Federal Register Volume 72, Number 133 (Thursday, July 12, 2007)]
[Proposed Rules]
[Pages 38045-38050]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-13543]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R04-OAR-2007-0359-200716; FRL-8338-8]


Approval of Implementation Plans of Alabama: Clean Air Interstate 
Rule

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: EPA is proposing to approve a revision to the Alabama State 
Implementation Plan (SIP) submitted on March 7, 2007. This revision 
addresses the requirements of EPA's Clean Air Interstate Rule (CAIR), 
promulgated on May 12, 2005, and subsequently revised on April 28, 
2006, and December 13, 2006. The Alabama Department of Environmental 
Management (ADEM) also previously submitted a final submittal dated 
June 16, 2006, which was subsequently updated in a prehearing request 
for parallel processing on November 16, 2006, to comply with EPA's 
revisions to the

[[Page 38046]]

model rule. Alabama's final March 7, 2007, submittal replaces the 
State's June 16, 2006, and November 16, 2006, submittals. EPA is 
proposing to determine that the SIP revision fully implements the CAIR 
requirements for Alabama. Therefore, as a consequence of the SIP 
approval, EPA will also withdraw the CAIR Federal Implementation Plans 
(CAIR FIPs) concerning sulfur dioxide (SO2), nitrogen oxides 
(NOX) annual and NOX ozone season emissions for 
Alabama. The CAIR FIPs for all states in the CAIR region were 
promulgated on April 28, 2006, and subsequently revised on December 13, 
2006.
    CAIR requires states to reduce emissions of SO2 and 
NOX that significantly contribute to nonattainment of, and 
interfere with maintenance of, the national ambient air quality 
standards (NAAQS) for fine particulates and/or ozone in any downwind 
state. CAIR establishes state budgets for SO2 and 
NOX and requires states to submit SIP revisions that 
implement these budgets in states that EPA concluded did contribute to 
nonattainment in downwind states. States have the flexibility to choose 
which control measures to adopt to achieve the budgets, including 
participating in the EPA-administered cap-and-trade programs. In the 
SIP revision that EPA is proposing to approve, Alabama would meet CAIR 
requirements by participating in the EPA-administered cap-and-trade 
programs addressing SO2, NOX annual, and 
NOX ozone season emissions.

DATES: Comments must be received on or before August 13, 2007.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-R04-
OAR-2007-0359, 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: 404-562-9019.
    4. Mail: ``EPA-R04-OAR-2007-0359,'' Regulatory Development Section, 
Air Planning Branch, Air, Pesticides and Toxics Management Division, 
U.S. Environmental Protection Agency, Region 4, 61 Forsyth Street, SW., 
Atlanta, Georgia 30303-8960.
    5. Hand Delivery or Courier: Ms. Stacy Harder, Regulatory 
Development Section, Air Planning Branch, Air, Pesticides and Toxics 
Management Division, U.S. Environmental Protection Agency, Region 4, 61 
Forsyth Street, SW., Atlanta, Georgia 30303-8960. Such deliveries are 
only accepted during the Regional Office's normal hours of operation. 
The Regional Office's 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-R04-OAR-
2007-0359.'' 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 through 
www.regulations.gov or e-mail, information that you consider to be CBI 
or otherwise protected. The 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 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 and any form of encryption and should be 
free of any defects or viruses. For additional information about EPA's 
public docket visit the EPA Docket Center homepage at http://www.epa.gov/epahome/dockets.htm.
    Docket: All documents in the electronic docket are listed in the 
www.regulations.gov index. Although listed in the index, some 
information is not publicly available, i.e., CBI or other information 
whose disclosure is restricted by statute. Certain other material, such 
as copyrighted material, is not placed on the Internet and will be 
publicly available only in hard copy form. Publicly available docket 
materials are available either electronically in www.regulations.gov or 
in hard copy at the Regulatory Development Section, Air Planning 
Branch, Air, Pesticides and Toxics Management Division, U.S. 
Environmental Protection Agency, Region 4, 61 Forsyth Street, SW., 
Atlanta, Georgia 30303-8960. EPA requests that if at all possible, you 
contact the person listed in the FOR FURTHER INFORMATION CONTACT 
section to schedule your inspection. The Regional Office's official 
hours of business are Monday through Friday, 8:30 a.m. to 4:30 p.m., 
excluding federal holidays.

FOR FURTHER INFORMATION CONTACT: Ms. Stacy Harder, Regulatory 
Development Section, Air Planning Branch, Air, Pesticides and Toxics 
Management Division, U.S. Environmental Protection Agency, Region 4, 61 
Forsyth Street, SW., Atlanta, Georgia 30303-8960. The telephone number 
is (404) 562-9042. Ms. Harder can also be reached via electronic mail 
at [email protected].

SUPPLEMENTARY INFORMATION: 

Table of Contents

I. What Actions Is EPA Proposing to Take?
II. What Is the Regulatory History of CAIR and the CAIR FIPs?
III. What Are the General Requirements of CAIR and the CAIR FIPs?
IV. What Are the Types of CAIR SIP Submittals?
V. Analysis of Alabama's CAIR SIP Submittal
    A. State Budgets for Allowance Allocations
    B. CAIR Cap-and-Trade Programs
    C. Applicability Provisions for non-EGU NOX SIP Call 
Sources
    D. NOX Allowance Allocations
    E. Allocation of NOX Allowances From Compliance 
Supplement Pool
    F. Individual Opt-in Units
VI. Proposed Actions
VII. Statutory and Executive Order Reviews

I. What Action Is EPA Proposing to Take?

    EPA is proposing to approve a revision to Alabama's SIP, submitted 
on March 7, 2007. In its SIP revision, Alabama would meet CAIR 
requirements by requiring certain electric generating units (EGUs) to 
participate in the EPA-administered State CAIR cap-and-trade programs 
addressing SO2, NOX annual, and NOX 
ozone season emissions. EPA is proposing to determine that the SIP, as 
revised, will meet the applicable requirements of CAIR. Any final 
action approving the SIP will be taken by the Regional Administrator 
for Region 4. As a consequence of the SIP approval, the Administrator 
of EPA will also issue a final rule to withdraw the FIPs concerning 
SO2, NOX annual, and NOX ozone season 
emissions for Alabama. This action will delete and reserve 40 CFR 52.54 
and 40 CFR 52.55. The withdrawal of the CAIR FIPs for Alabama is a 
conforming amendment that must be made once the SIP is approved because 
EPA's authority to issue the FIPs was premised on a deficiency in the 
SIP for Alabama. Once the SIP is fully approved, EPA no longer

[[Page 38047]]

has authority for the FIPs. Thus, EPA will not have the option of 
maintaining the FIPs following the full SIP approval. Accordingly, EPA 
does not intend to offer an opportunity for a public hearing or an 
additional opportunity for written public comment on the withdrawal of 
the FIPs. EPA will take action in a separate rulemaking regarding 
revisions to Chapters 335-3-1 and 335-3-17.

II. What Is the Regulatory History of CAIR and the CAIR FIPs?

    The CAIR rule was published by EPA on May 12, 2005 (70 FR 25162). 
In this rule, EPA determined that 28 states and the District of 
Columbia contribute significantly to nonattainment and interfere with 
maintenance of the national ambient air quality standards (NAAQS) for 
fine particles (PM2.5) and/or 8-hour ozone in downwind 
states in the eastern part of the country. As a result, EPA required 
those upwind states to revise their SIPs to include control measures 
that reduce emissions of SO2, which is a precursor to 
PM2.5 formation, and/or NOX, which is a precursor 
to both ozone and PM2.5 formation. For jurisdictions that 
contribute significantly to downwind PM2.5 nonattainment, 
CAIR sets annual state-wide emission reduction requirements (i.e., 
budgets) for SO2 and annual state-wide emission reduction 
requirements for NOX. Similarly, for jurisdictions that 
contribute significantly to 8-hour ozone nonattainment, CAIR sets 
state-wide emission reduction requirements for NOX for the 
ozone season (May 1st to September 30th). Under CAIR, states may 
implement these reduction requirements by participating in the EPA-
administered cap-and-trade programs or by adopting any other control 
measures.
    CAIR explains to subject states what must be included in SIPs to 
address the requirements of section 110(a)(2)(D) of the Clean Air Act 
(CAA) with regard to interstate transport with respect to the 8-hour 
ozone and PM2.5 NAAQS. EPA made national findings, effective 
on May 25, 2005, that the states had failed to submit SIPs meeting the 
requirements of section 110(a)(2)(D). The SIPs were due in July 2000, 
three years after the promulgation of the 8-hour ozone and 
PM2.5 NAAQS. These findings started a two-year clock for EPA 
to promulgate a FIP to address the requirements of section 
110(a)(2)(D). Under CAA section 110(c)(1), EPA may issue a FIP anytime 
after such findings are made and must do so within two years, unless a 
SIP revision correcting the deficiency is approved by EPA before the 
FIP is promulgated.
    On April 28, 2006, EPA promulgated FIPs for all states covered by 
CAIR in order to ensure the emissions reductions required by CAIR are 
achieved on schedule. Each CAIR state is subject to the FIPs until the 
state fully adopts, and EPA approves, a SIP revision meeting the 
requirements of CAIR. The CAIR FIPs require EGUs to participate in the 
EPA-administered CAIR SO2, NOX annual, and 
NOX ozone season trading programs, as appropriate. The CAIR 
FIP SO2, NOX annual, and NOX ozone 
season trading programs impose essentially the same requirements as, 
and are integrated with, the respective CAIR SIP trading programs. The 
integration of the FIP and SIP trading programs means that these 
trading programs will work together to create effectively a single 
trading program for each regulated pollutant (SO2, 
NOX annual, and NOX ozone season) in all states 
covered by the CAIR FIP or SIP trading program for that pollutant. The 
CAIR FIPs also allow states to submit abbreviated SIP revisions that, 
if approved by EPA, will automatically replace or supplement certain 
CAIR FIP provisions (e.g., the methodology for allocating 
NOX allowances to sources in the state), while the CAIR FIP 
remains in place for all other provisions.
    On April 28, 2006, EPA published two additional CAIR-related final 
rules that added the States of Delaware and New Jersey to the list of 
states subject to CAIR for PM2.5 and announced EPA's final 
decisions on reconsideration of five issues, without making any 
substantive changes to the CAIR requirements.

III. What Are the General Requirements of CAIR and the CAIR FIPs?

    CAIR establishes state-wide emission budgets for SO2 and 
NOX and is to be implemented in two phases. The first phase 
of NOX reductions starts in 2009 and continues through 2014, 
while the first phase of SO2 reductions starts in 2010 and 
continues through 2014. The second phase of reductions for both 
NOX and SO2 starts in 2015 and continues 
thereafter. CAIR requires states to implement the budgets by either: 
(1) Requiring EGUs to participate in the EPA-administered cap-and-trade 
programs; or (2) adopting other control measures of the state's 
choosing and demonstrating that such control measures will result in 
compliance with the applicable state SO2 and NOX 
budgets.
    The May 12, 2005, and April 28, 2006, CAIR rules provide model 
rules that states must adopt (with certain limited changes, if desired) 
if they want to participate in the EPA-administered trading programs.
    With two exceptions, only states that choose to meet the 
requirements of CAIR through methods that exclusively regulate EGUs are 
allowed to participate in the EPA-administered trading programs. One 
exception is for states that adopt the opt-in provisions of the model 
rules to allow non-EGUs individually to opt into the EPA-administered 
trading programs. The other exception is for states that include all 
non-EGUs from their NOX SIP Call trading programs in their 
CAIR NOX ozone season trading programs.

IV. What Are the Types of CAIR SIP Submittals?

    States have the flexibility to choose the type of control measures 
they will use to meet the requirements of CAIR. EPA anticipates that 
most states will choose to meet the CAIR requirements by selecting an 
option that requires EGUs to participate in the EPA-administered CAIR 
cap-and-trade programs. For such states, EPA has provided two 
approaches for submitting and obtaining approval for CAIR SIP 
revisions. States may submit full SIP revisions that adopt the model 
CAIR cap-and-trade rules. If approved, these SIP revisions will fully 
replace the CAIR FIPs. Alternatively, states may submit abbreviated SIP 
revisions. These SIP revisions will not replace the CAIR FIPs; however, 
the CAIR FIPs provide that, when approved, the provisions in these 
abbreviated SIP revisions will be used instead of or in conjunction 
with, as appropriate, the corresponding provisions of the CAIR FIPs 
(e.g., the NOX allowance allocation methodology).
    A state submitting a full SIP revision may either adopt regulations 
that are substantively identical to the model rules or incorporate by 
reference the model rules. CAIR provides that states may only make 
limited changes to the model rules, if the states want to participate 
in the EPA-administered trading programs. A full SIP revision may 
change the model rules only by altering their applicability and 
allowance allocation provisions to:
    1. Include NOX SIP Call trading sources that are not 
EGUs under CAIR in the CAIR NOX ozone season trading 
program;
    2. Provide for state allocation of NOX annual or ozone 
season allowances using a methodology chosen by the state;
    3. Provide for state allocation of NOX annual allowances 
from the compliance supplement pool (CSP) using the state's

[[Page 38048]]

choice of allowed, alternative methodologies; or
    4. Allow units that are not otherwise CAIR units to opt 
individually into the CAIR SO2, NOX annual, or 
NOX ozone season trading programs under the opt-in 
provisions in the model rules.
    An approved CAIR full SIP revision addressing EGUs' SO2, 
NOX annual, or NOX ozone season emissions will 
replace the CAIR FIP for that state for the respective EGU emissions.

V. Analysis of Alabama's CAIR SIP Submittal

A. State Budgets for Allowance Allocations

    The CAIR NOX annual and ozone season budgets were 
developed from historical heat input data for EGUs. Using these data, 
EPA calculated annual and ozone season regional heat input values, 
which were multiplied by 0.15 pounds per million British thermal units 
(lb/mmBtu), for phase 1, and 0.125 lb/mmBtu, for phase 2, to obtain 
regional NOX budgets for 2009-2014 and for 2015 and 
thereafter, respectively. EPA derived the state NOX annual 
and ozone season budgets from the regional budgets using state heat 
input data adjusted by fuel factors.
    The CAIR state SO2 budgets were derived by discounting 
the tonnage of emissions authorized by annual allowance allocations 
under the Acid Rain Program under title IV of the CAA. Under CAIR, each 
allowance allocated in the Acid Rain Program for the years in phase 1 
of CAIR (2010 through 2014) authorizes 0.5 ton of SO2 
emissions in the CAIR trading program, and each Acid Rain Program 
allowance allocated for the years in phase 2 of CAIR (2015 and 
thereafter) authorizes 0.35 ton of SO2 emissions in the CAIR 
trading program.
    In this action, EPA is proposing approval of Alabama's SIP revision 
that adopts the budgets established for the State in CAIR, i.e., 69,020 
(2009-2014) and 57,517 (2015-thereafter) tons for NOX annual 
emissions, 34,510 (2009-2014) and 29,146 (2015-thereafter) tons for 
NOX ozone season emissions, and 157,582 (2010-2014) and 
110,307 (2015-thereafter) tons for SO2 emissions. Alabama's 
SIP revision sets these budgets as the total amounts of allowances 
available for allocation for each year under the EPA-administered cap-
and-trade programs.

B. CAIR Cap-and-Trade Programs

    The CAIR NOX annual and ozone-season model trading rules 
both largely mirror the structure of the NOX SIP Call model 
trading rule in 40 CFR part 96, subparts A through I. While the 
provisions of the NOX annual and ozone-season model rules 
are similar, there are some differences. For example, the NOX 
annual model rule (but not the NOX ozone season model rule) 
provides for a compliance supplement pool (CSP), which is discussed 
below and under which allowances may be awarded for early reductions of 
NOX annual emissions. As a further example, the NOX 
ozone season model rule reflects the fact that the CAIR NOX 
ozone season trading program replaces the NOX SIP Call 
trading program after the 2008 ozone season and is coordinated with the 
NOX SIP Call program. The NOX ozone season model 
rule provides incentives for early emissions reductions by allowing 
banked, pre-2009 NOX SIP Call allowances to be used for 
compliance in the CAIR NOX ozone-season trading program. In 
addition, states have the option of continuing to meet their NOX 
SIP Call requirement by participating in the CAIR NOX ozone 
season trading program and including all their NOX SIP Call 
trading sources in that program.
    The provisions of the CAIR SO2 model rule are also 
similar to the provisions of the NOX annual and ozone season 
model rules. However, the SO2 model rule is coordinated with 
the ongoing Acid Rain SO2 cap-and-trade program under CAA 
title IV. The SO2 model rule uses the title IV allowances 
for compliance, with each allowance allocated for 2010-2014 authorizing 
only 0.50 ton of emissions and each allowance allocated for 2015 and 
thereafter authorizing only 0.35 ton of emissions. Banked title IV 
allowances allocated for years before 2010 can be used at any time in 
the CAIR SO2 cap-and-trade program, with each such allowance 
authorizing 1 ton of emissions. Title IV allowances are to be freely 
transferable among sources covered by the Acid Rain Program and sources 
covered by the CAIR SO2 cap-and-trade program.
    EPA also used the CAIR model trading rules as the basis for the 
trading programs in the CAIR FIPs. The CAIR FIP trading rules are 
virtually identical to the CAIR model trading rules, with changes made 
to account for federal rather than state implementation. The CAIR model 
SO2, NOX annual, and NOX ozone season 
trading rules and the respective CAIR FIP trading rules are designed to 
work together as integrated SO2, NOX annual, and 
NOX ozone season trading programs.
    In the SIP revision, Alabama chooses to implement its CAIR budgets 
by requiring EGUs to participate in EPA-administered cap-and-trade 
programs for SO2, NOX annual, and NOX 
ozone season emissions. Alabama has adopted a full SIP revision that 
adopts, with certain allowed changes discussed below, the CAIR model 
cap-and-trade rules for SO2, NOX annual, and 
NOX ozone season emissions.

C. Applicability Provisions for non-EGU NOX SIP Call Sources

    In general, the CAIR model trading rules apply to any stationary, 
fossil-fuel-fired boiler or stationary, fossil-fuel-fired combustion 
turbine serving at any time, since the later of November 15, 1990, or 
the start-up of the unit's combustion chamber, a generator with 
nameplate capacity of more than 25 Megawatt electrical (MWe) producing 
electricity for sale.
    States have the option of bringing in, for the CAIR NOX 
ozone season program only, those units in the state's NOX 
SIP Call trading program that are not EGUs as defined under CAIR. EPA 
advises states exercising this option to add the applicability 
provisions in the state's NOX SIP Call trading rule for non-
EGUs to the applicability provisions in 40 CFR 96.304 in order to 
include in the CAIR NOX ozone season trading program all 
units required to be in the state's NOX SIP Call trading 
program that are not already included under 40 CFR 96.304. Under this 
option, the CAIR NOX ozone season program must cover all 
large industrial boilers and combustion turbines, as well as any small 
EGUs (i.e. units serving a generator with a nameplate capacity of 25 
MWe or less) that the state currently requires to be in the NOX 
SIP Call trading program.
    Alabama has chosen to expand the applicability provisions of the 
CAIR NOX ozone season trading program to include all non-
EGUs in the State's NOX SIP Call trading program.

D. NOX Allowance Allocations

    Under the NOX allowance allocation methodology in the 
CAIR model trading rules and in the CAIR FIP, NOX annual and 
ozone season allowances are allocated to units that have operated for 
five years, based on heat input data from a three-year period that are 
adjusted for fuel type by using fuel factors of 1.0 for coal, 0.6 for 
oil, and 0.4 for other fuels. The CAIR model trading rules and the CAIR 
FIP also provide a new unit set-aside from which units without five 
years of operation are allocated allowances based on the units' prior 
year emissions.
    States may establish in their SIP submissions a different NOX 
allowance allocation methodology that will be used to allocate 
allowances to sources in the states, if certain requirements are

[[Page 38049]]

met concerning the timing of submission of units' allocations to the 
Administrator for recordation and the total amount of allowances 
allocated for each control period. In adopting alternative NOX 
allowance allocation methodologies, states have flexibility with regard 
to:
    1. The cost to recipients of the allowances, which may be 
distributed for free or auctioned;
    2. The frequency of allocations;
    3. The basis for allocating allowances, which may be distributed, 
for example, based on historical heat input or electric and thermal 
output; and
    4. The use of allowance set-asides and, if used, their size.
    Alabama has chosen to replace the provisions of the CAIR NOX 
annual model trading rule concerning the allocation of NOX 
annual allowances with its own methodology. Alabama has chosen to 
distribute NOX annual allowances based upon allocation 
methods for existing, replacement, and new units. ADEM defines a 
baseline NOX unit as one that commenced operation on, or 
before January 1, 2004, or submitted an acceptable application to the 
Department before August 1, 2005. For the control periods in 2009 
through 2014, ADEM will allocate NOX allowances to baseline 
CAIR units based in an amount equaling 0.15 lb/mmBtu, or the unit's 
permitted NOX limit, whichever amount is less, multiplied by 
the heat input and an adjustment ratio (to ensure that the total number 
of CAIR NOX Ozone Season allowances allocated under this 
paragraph equals the number of tons of CAIR NOX Ozone Season 
emissions in the State trading program budget) and rounded to the 
nearest whole NOX allowance as appropriate. For units with 
multiple allowable emissions limits, the allowances may be calculated 
based on actual operating data. For each control period in 2015 and 
thereafter, ADEM will allocate allowances equaling 0.125 lb/mmBtu, or 
the unit's NOX limit, whichever is less, multiplied by the 
heat input and an adjustment ratio.
    A replacement unit is defined as a NOX unit, or the 
portion of a NOX unit, which replaces a baseline unit at the 
same facility, and has the same or greater maximum design heat input 
capacity. Allowances will be allocated for replacement units after all 
baseline units have received allowances. These allowances will be 
distributed from the Retired Unit Allowance Pool. After all baseline 
and replacement units have received allocations, ADEM will allocate 
allowances to new units from allowances remaining in the Retired Unit 
Allowance Pool.
    ADEM defines a new unit as one that does not meet the definition 
for an existing unit or a replacement unit. New unit allocations, for 
each applicable control period, will be equal to 0.15 lb/mmBtu or the 
unit's permitted NOX limit, whichever is less, multiplied by 
the heat input and an adjustment ratio and rounded to the nearest whole 
NOX allowance as appropriate.
    Allowances were to be allocated by October 31, 2006, for control 
periods of 2009, 2010 and 2011. Allowances will be allocated by October 
31, 2008, for control periods 2012, 2013 and 2014. By October 31, 2011, 
and subsequently, on October 31 of every third year thereafter, 
NOX allowance allocations will be submitted for the control 
periods in the three years that are four, five, and six years, 
respectively, after the year of the applicable deadline for submission. 
Alabama has chosen not to use set-asides in their NOX annual 
allocations.
    Alabama has chosen to replace the provisions of the CAIR NOX 
ozone season model trading rule concerning allowance allocations with 
its own methodology. Alabama has chosen to distribute NOX 
annual allowances based upon allocation methods for existing, 
replacement, and new units. ADEM defines a baseline NOX unit 
as one that commenced operation on, or before January 1, 2004, or 
submitted an acceptable application to the Department before August 1, 
2005. For the control periods in 2009 through 2014, ADEM will allocate 
NOX allowances to baseline CAIR units based in an amount 
equaling 0.15 lb/mmBtu (0.17 lb/mmBtu, if the unit's maximum design 
heat input is greater than 250 mmBtu/hr), or the unit's permitted 
NOX limit, whichever amount is less, multiplied by the heat 
input and an adjustment ratio (to ensure that the total number of CAIR 
NOX Ozone Season allowances allocated under this paragraph 
equals the number of tons of CAIR NOX Ozone Season emissions 
in the State trading program budget) and rounded to the nearest whole 
NOX allowance as appropriate. For units with multiple 
allowable emissions limits, the allowances may be calculated based on 
actual operating data. For each control period in 2015 and thereafter, 
ADEM will allocate allowances equaling 0.125 lb/mmBtu, or the unit's 
NOX limit, whichever is less, multiplied by the heat input 
and an adjustment ratio.
    A replacement unit is defined as one which replaces a baseline 
ozone season unit at the same facility, and has the same or greater 
maximum design heat input.
    A new unit is defined as a unit that does not meet the definition 
of either an existing unit or a replacement unit.
    NOX ozone season allowances were to be allocated by 
October 31, 2006, for control periods 2009, 2010, and 2011. Only the 
difference between the ozone season allowance allocations and the 2009 
budget trading program will be submitted in 2009. By October 31, 2008, 
allocations for 2012, 2013, and 2014 will be submitted. Finally, by 
October 31, 2011, and October 31 of every third year thereafter, 
allocations will be submitted for control periods in the three years 
that are four, five, and six years after the applicable deadline for 
submission. Alabama has chosen not to use set-asides in their ozone 
season allocations.

E. Allocation of NOX Allowances From Compliance Supplement Pool

    CAIR establishes a CSP to provide an incentive for early reductions 
in NOX annual emissions. The CSP consists of 200,000 CAIR 
NOX annual allowances of vintage 2009 for the entire CAIR 
region, and a state's share of the CSP is based upon the projected 
magnitude of the emission reductions required by CAIR in that State. 
States may distribute CSP allowances, one allowance for each ton of 
early reduction, to sources that make NOX reductions during 
2007 or 2008 beyond what is required by any applicable state or Federal 
emission limitation. States also may distribute CSP allowances based 
upon a demonstration of need for an extension of the 2009 deadline for 
implementing emission controls.
    The CAIR annual NOX model trading rule establishes 
specific methodologies for allocations of CSP allowances. States may 
choose an allowed, alternative CSP allocation methodology to be used to 
allocate CSP allowances to sources in the states.
    Alabama has chosen to modify the provisions of the CAIR NOX 
annual model trading rule concerning the allocation of allowances from 
the CSP. Alabama has chosen to distribute CSP allowances using an 
allocation methodology that allows the Department to allocate up to 
10,166 additional CAIR NOX allowances for the control period 
in 2009. CAIR NOX units that achieve emissions reductions in 
2007 and 2008, that are not necessary to comply with applicable 
emissions limitations during those years, may request early reduction 
credits. The units requesting CSP allocations must submit a request by 
May 1, 2009, to ADEM. Sources are eligible to receive CSP allowances 
only to the extent that that the total number of allowances

[[Page 38050]]

issued does not exceed 15 percent of the total number of NOX 
allowances issued to that unit from the initial allowance allocation. 
Any remaining CSP allowances after the initial distribution will be 
allocated to eligible units on a pro rata basis, provided that no unit 
is issued more allowances than the early reduction credits requested by 
that unit in accordance with ADEM's CSP provisions.

F. Individual Opt-In Units

    The opt-in provisions of the CAIR SIP model trading rules allow 
certain non-EGUs (i.e., boilers, combustion turbines, and other 
stationary fossil-fuel-fired devices) that do not meet the 
applicability criteria for a CAIR trading program to participate 
voluntarily in (i.e., opt into) the CAIR trading program. A non-EGU may 
opt into one or more of the CAIR trading programs. In order to qualify 
to opt into a CAIR trading program, a unit must vent all emissions 
through a stack and be able to meet the monitoring, recordkeeping, and 
recording requirements of 40 CFR part 75. The owners and operators 
seeking to opt a unit into a CAIR trading program must apply for a CAIR 
opt-in permit. If the unit is issued a CAIR opt-in permit, the unit 
becomes a CAIR unit, is allocated allowances, and must meet the same 
allowance-holding and emissions monitoring and reporting requirements 
as other units subject to the CAIR trading program. The opt-in 
provisions provide for two methodologies for allocating allowances for 
opt-in units, one methodology that applies to opt-in units in general 
and a second methodology that allocates allowances only to opt-in units 
that the owners and operators intend to repower before January 1, 2015.
    States have several options concerning the opt-in provisions. 
States may adopt the CAIR opt-in provisions entirely or may adopt them 
but exclude one of the methodologies for allocating allowances. States 
may also decline to adopt the opt-in provisions at all.
    Alabama has chosen to allow non-EGUs meeting certain requirements 
to opt into the CAIR NOX annual trading program, including 
both of the opt-in allocation methods in the model rule.
    Alabama has chosen to allow non-EGUs meeting certain requirements 
to opt into the CAIR NOX ozone season trading program, 
including both of the opt-in allocation methods in the model rule.
    Alabama has chosen to allow certain non-EGUs to opt into the CAIR 
SO2 trading program, and has chosen to incorporate the 
Federal rule by reference.

VI. Proposed Actions

    EPA is proposing to approve Alabama's full CAIR SIP revision 
submitted on March 7, 2007. Under this SIP revision, Alabama is 
choosing to participate in the EPA-administered cap-and-trade programs 
for SO2, NOX annual, and NOX ozone 
season emissions. The SIP revision meets the applicable requirements in 
40 CFR 51.123(o) and (aa), with regard to NOX annual and 
NOX ozone season emissions, and 40 CFR 51.124(o), with 
regard to SO2 emissions. EPA is proposing to determine that 
the SIP, as revised, will meet the requirements of CAIR. As a 
consequence of the SIP approval, the Administrator of EPA will also 
issue, without providing an opportunity for a public hearing or an 
additional opportunity for written public comment, a final rule to 
withdraw the CAIR FIPs concerning SO2, NOX annual 
and NOX ozone season emissions for Alabama. That withdrawal 
will delete and reserve 40 CFR 52.54 and 40 CFR 52.55.

VII. 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 proposes to approve State law as meeting Federal requirements 
and would impose no additional requirements beyond those imposed by 
State law. Accordingly, the Administrator certifies that this proposed 
rule would 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 action proposes to approve pre-existing 
requirements under State law and would 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 proposal also does not have tribal implications because it 
would 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 proposed action also 
does not have Federalism implications because it would 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 will result, as a consequence of that approval, in the 
Administrator's withdrawal of the CAIR FIP. It 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 would approve a State rule implementing a Federal 
Standard.
    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 proposed rule would 
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, Electric 
utilities, Intergovernmental relations, Nitrogen oxides, Ozone, 
Particulate matter, Reporting and recordkeeping requirements, Sulfur 
dioxide.

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

    Dated: July 3, 2007.
J.I. Palmer Jr.,
Regional Administrator, Region 4.
 [FR Doc. E7-13543 Filed 7-11-07; 8:45 am]
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