[Federal Register Volume 72, Number 160 (Monday, August 20, 2007)]
[Rules and Regulations]
[Pages 46388-46394]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-15782]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 52 and 97

[EPA-R04-OAR-2007-0229-200713(a); FRL 8453-6]


Approval of Implementation Plans of Tennessee: Clean Air 
Interstate Rule

AGENCY: Environmental Protection Agency (EPA).

ACTION: Direct final rule.

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SUMMARY: EPA is approving revisions to the Tennessee State 
Implementation Plan (SIP) submitted on September 8, 2006. This revision 
incorporates provisions related to the implementation of EPA's Clean 
Air Interstate Rule (CAIR), promulgated on May 12, 2005, and 
subsequently revised on April 28, 2006, and December 13, 2006, and the 
CAIR Federal Implementation Plan (FIP) concerning Sulfur Dioxide 
(SO2), Nitrogen Oxides (NOX) annual, and NOX 
ozone season emissions for the State of Tennessee, promulgated on April 
28, 2006, and subsequently revised December 13, 2006. On February 8, 
2007, Tennessee requested that EPA only act on a portion of the 
September 8, 2006 submittal as an abbreviated SIP. Consequently, EPA is 
approving an abbreviated SIP revision that addresses the methodology to 
be used to allocate annual and ozone season NOX allowances 
under the CAIR FIPs and opt-in provisions for the SO2, 
NOX annual, and NOX ozone season trading 
programs. EPA is not making any changes to the CAIR FIP, but is 
amending, to the extent EPA approves Tennessee's SIP revision, the 
appropriate appendices in the CAIR FIP trading rules simply to note 
that approval.

DATES: This direct final rule is effective October 19, 2007 without 
further notice, unless EPA receives adverse comment by September 19, 
2007. If EPA receives such comments, it will publish a timely 
withdrawal of the direct final rule in the Federal Register and inform 
the public that the rule will not take effect.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-R04-
OAR-2007-0229, 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. Fax: (404) 562-9019.
    4. Mail: EPA-R04-OAR-2007-0229, 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: James Hou, 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-
2007-0229. 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 through http://www.regulations.gov or e-mail information that you consider to be CBI 
or otherwise protected. 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 and any form of encryption and should be 
free of any defects or viruses. For additional information about EPA's 
public docket

[[Page 46389]]

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 
http://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 http://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: James Hou, 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) 
562-8965. Mr. Hou can also be reached via electronic mail at 
[email protected].

SUPPLEMENTARY INFORMATION: 

Table of Contents

I. What Action Is EPA Taking?
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 Tennessee's CAIR SIP Submittal
    A. State Budgets for Allowance Allocations
    B. CAIR Cap-and-Trade Programs
    C. Applicability Provisions for non-EGUs NOX SIP Call 
sources
    D. NOX Allowance Allocations
    E. Allocation of NOX Allowances from the Compliance 
Supplement Pool
    F. Individual Opt-in Units
VI. Final Action
VII. Statutory and Executive Order Reviews

I. What Action Is EPA Taking?

CAIR SIP Approval

    EPA is approving a revision to Tennessee's SIP, submitted on 
September 8, 2006, that would modify the application of certain 
provisions of the CAIR FIP concerning SO2, NOX 
annual, and NOX ozone season emissions. (As discussed below, 
this less comprehensive CAIR SIP is termed an abbreviated SIP.) 
Tennessee is subject to the CAIR FIPs that implement the CAIR 
requirements by requiring certain electric generating units (EGUs) to 
participate in the EPA-administered Federal CAIR SO2, 
NOX annual, and NOX ozone season cap-and-trade 
programs. The SIP revision provides a methodology for allocating 
NOX allowances for the NOX annual and NOX 
ozone season trading programs. The CAIR FIPs provide that this 
methodology, if approved, will be used to allocate NOX 
allowances to sources in Tennessee, instead of the federal allocation 
methodology otherwise provided in the FIP. The SIP revision also 
provides for individual units not otherwise subject to the CAIR trading 
programs to opt into such trading programs. EPA is approving (1) 
Tennessee's methodology for allocating allowances to units subject to 
the CAIR trading programs under the current applicability provisions in 
the CAIR FIP NOX annual and ozone season trading rules and 
(2) the opt-in unit provisions adopted by Tennessee for the CAIR FIP 
NOX annual, SO2, and NOX ozone season 
trading programs.
    Consistent with the flexibility provided in the FIPs, these 
provisions will also be used to replace or supplement, as appropriate, 
the corresponding provisions in the CAIR FIPs for Tennessee. EPA is not 
making any changes to the CAIR FIP, but is amending, to the extent EPA 
approves Tennessee's SIP revision, the appropriate appendices in the 
CAIR FIP trading rules simply to note that approval.

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

    The CAIR 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 particulates (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 emission budgets 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 
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, 3 
years after the promulgation of the 8-hour ozone and PM2.5 
NAAQS. These findings started a 2-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 certain EGUs to participate 
in the EPA-administered CAIR SO2, NOX annual, and 
NOX ozone-season model 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 CAIR 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 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 the 
corresponding 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.

[[Page 46390]]

    On April 28, 2006, EPA published two more 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 an abbreviated SIP revision may submit limited 
SIP revisions to tailor the CAIR FIP cap-and-trade programs to the 
state submitting the revision. Specifically, an abbreviated SIP 
revision may establish certain applicability and allowance allocation 
provisions that, the CAIR FIPs provide, will be used instead of or in 
conjunction with the corresponding provisions in the CAIR FIP rules in 
that State. Specifically, the abbreviated SIP revisions may:
    1. Include NOX SIP Call trading sources that are not 
EGUs under CAIR in the CAIR FIP NOX ozone season trading 
program;
    2. Provide for allocation of NOX annual or ozone season 
allowances by the State, rather than the Administrator of the EPA or 
the Administrator's duly authorized representative (Administrator), and 
using a methodology chosen by the State;
    3. Provide for allocation of NOX annual allowances from 
the Compliance Supplement Pool (CSP) by the State, rather than by the 
Administrator, and using the State's choice of allowed, alternative 
methodologies; or
    4. Allow units that are not otherwise CAIR units to opt 
individually into the CAIR FIP cap-and-trade programs under the opt-in 
provisions in the CAIR FIP rules.
    With approval of an abbreviated SIP revision, the CAIR FIP remains 
in place, as tailored to sources in the State by that approved SIP 
revision.
    Abbreviated SIP revisions can be submitted in lieu of, or as part 
of, CAIR full SIP revisions. States may want to designate part of their 
full SIP as an abbreviated SIP for EPA to act on first when the timing 
of the State's submission might not provide EPA with sufficient time to 
approve the full SIP prior to the deadline for recording NOX 
allocations. This will help ensure that the elements of the trading 
programs where flexibility is allowed are implemented according to the 
State's decisions. Submission of an abbreviated SIP revision does not 
preclude future submission of a CAIR full SIP revision. In this case, 
the September 8, 2006 submittal from Tennessee has been submitted as an 
abbreviated SIP revision.

V. Analysis of Tennessee'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 under the Acid Rain Program for the years in phase 
1 of CAIR (2010 through 2014) authorizes 0.50 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.
    The CAIR FIPs established the budgets for Tennessee as 50,973 
(2009-2014) and 42,478 (2015-thereafter) tons for NOX annual 
emissions, 22,842 (2009-2014) and 19,035 (2015-thereafter) tons for 
NOX ozone season emissions, and 137,216 (2010-2014) and 
96,051 (2015-thereafter) tons for SO2 emissions. Tennessee's 
SIP revision, being approved in this action, does not affect these 
budgets, which are total amounts of allowances available for allocation 
for each year under the EPA-administered cap-and-trade programs under 
the CAIR FIPs. In short, the abbreviated SIP revision only affects 
allocations of allowances under the established budgets.

B. CAIR Cap-and-Trade Programs

    The CAIR NOX annual and ozone-season FIPs 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 FIPs are similar, there are some 
differences. For example, the NOX annual FIP (but not the 
NOX ozone season FIP) provides for a CSP, which is discussed 
below and under which allowances may be

[[Page 46391]]

awarded for early reductions of NOX annual emissions. As a 
further example, the NOX ozone season FIP 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 FIP 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 FIP are also similar to 
the provisions of the NOX annual and ozone season FIPs. 
However, the SO2 FIP is coordinated with the ongoing Acid 
Rain SO2 cap-and-trade program under CAA title IV. The 
SO2 FIP 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 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.
    Tennessee is subject to the CAIR FIPs for ozone and 
PM2.5 and the CAIR FIP trading programs for SO2, 
NOX annual, and NOX ozone season apply to sources 
in Tennessee. Consistent with the flexibility it gives to States, the 
CAIR FIPs provide that States may submit abbreviated SIP revisions that 
will replace or supplement, as appropriate, certain provisions of the 
CAIR FIP trading programs. The September 8, 2006, submission of 
Tennessee is such an abbreviated SIP revision.

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

    In general, the CAIR FIP trading programs 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 use provisions for 
applicability that are substantively identical to the provisions in 40 
CFR 96.304 and 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.
    Consistent with the flexibility given to States in the CAIR FIP, 
Tennessee has not 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.
    The CAIR FIP provides States the flexibility to establish a 
different NOX allowance allocation methodology that will be 
used to allocate allowances to sources in the States, if certain 
requirements are 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.
    Consistent with the flexibility given to States in the CAIR FIPs, 
Tennessee has chosen to replace the provisions of the CAIR 
NOX annual FIP concerning the allocation of NOX 
annual allowances, with its own methodology. Tennessee has chosen to 
distribute NOX annual allowances, by adopting by reference 
the CAIR NOX annual trading program model rule at 40 CFR 
96.142. EPA is proposing to approve Tennessee's allocation provisions, 
i.e., parts 1200-3-27.10(1) and (2) (section 96.142) of Tennessee's 
CAIR NOX annual trading program.
    Consistent with the flexibility given to States in the CAIR FIPs, 
Tennessee has chosen to replace the provisions of the CAIR 
NOX ozone season FIP concerning allowance allocations with 
its own methodology. Tennessee has chosen to distribute NOX 
ozone season allowances by adopting, with certain revisions, the CAIR 
NOX ozone season trading program model rule at 40 CFR 96.342 
for units subject to the CAIR trading program under the CAIR FIP 
NOX ozone season applicability provisions. EPA is approving 
these Tennessee allocation provisions, i.e., parts 1200-3-
27-.11(2)(c)1.(i) through (iv) of Tennessee's CAIR NOX ozone 
season trading program. Tennessee has indicated that it may 
subsequently seek approval to exercise the option under CAIR of 
expanding the current applicability provisions in the CAIR 
NOX ozone season trading program to include units that are 
not otherwise subject to the trading program but are subject to 
Tennessee's NOX SIP Call trading program. However, under 
today's approval, only the allocation methodology for units covered by 
the current CAIR FIP NOX ozone season provisions is being 
approved, and only CAIR NOX ozone season allowance 
allocations submitted by Tennessee for those units will be recorded by 
EPA. In addition, EPA notes that Tennessee's allocation provisions in 
the abbreviated SIP reference certain applicability provisions in 
Tennessee's rule that have

[[Page 46392]]

not been submitted as part of the abbreviated SIP. Because Tennessee's 
purpose in submitting these allocation provisions is for them to be 
used, in lieu of the CAIR FIP allocation provisions, to allocate 
allowances to units that are CAIR NOX ozone season units 
under the CAIR FIP trading program, EPA interprets the references 
(i.e., ``parts [1200-3-27-.11](2)(a)1. and (2)(a)2.'') as referring to 
40 CFR 97.304(a) and (b), which are the applicability provisions of the 
CAIR FIP NOX ozone season rules.

E. Allocation of NOX Allowances From the Compliance 
Supplement Pool

    The CSP provides 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 State's share 
of the projected emission reductions under CAIR. 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 NOX annual FIP 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 those States.
    Consistent with the flexibility given to States in the FIP, 
Tennessee has not chosen to modify the provisions of the CAIR 
NOX annual FIP concerning the allocation of allowances from 
the CSP.

F. Individual Opt-in Units

    The opt-in provisions allow for 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 
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. The 
rules for each of the CAIR FIP trading programs include opt-in 
provisions that are essentially the same as those in the respective 
CAIR SIP model rules, except that the CAIR FIP opt-in provisions become 
effective in a State only if the State's abbreviated SIP revision 
adopts the opt-in provisions. The State may adopt the opt-in provisions 
entirely or may adopt them but exclude one of the allowance allocation 
methodologies. The State also has the option of not adopting any opt-in 
provisions in the abbreviated SIP revision and thereby providing for 
the CAIR FIP trading program to be implemented in the State without the 
ability for units to opt into the program.
    Consistent with the flexibility given to States in the FIPs, 
Tennessee has chosen to allow non-EGUs meeting certain requirements to 
participate in the CAIR NOX annual trading program by 
adopting by reference EPA's model rule provisions for opt-in units in 
40 CFR part 96, subpart II of the CAIR NOX annual trading 
program.
    Consistent with the flexibility given to States in the FIPs, 
Tennessee has chosen to permit non-EGUs meeting certain requirements to 
participate in the CAIR NOX ozone season trading program by 
adopting by reference EPA's model rule provisions for opt-in units in 
40 CFR part 96, subpart IIII of the CAIR NOX ozone season 
trading program.
    Consistent with the flexibility given to States in the FIPs, 
Tennessee has chosen to allow certain non-EGUs to opt into the CAIR 
SO2 trading program by adopting by reference EPA's model 
rule provisions for opt-in units in 40 CFR part 96, subpart III of the 
CAIR SO2 trading program.
    In adopting by reference the CAIR opt-in provisions, Tennessee has 
included in its rule a full written version of those provisions, which 
contains some technical errors in the language, and does not 
specifically reference the CAIR model rule provisions related to opt-in 
units in other subparts of the CAIR model trading rules. Because 
Tennessee clearly intends to adopt entirely the CAIR model rule opt-in 
provisions and because Tennessee has indicated that it will correct the 
relatively minor errors in the rule text, EPA interprets the Tennessee 
provisions as substantively identical to the CAIR model rule opt-in 
provisions and is therefore approving Tennessee's allowing of opt-in 
units in the CAIR FIP NOX annual, NOX ozone 
season, and SO2 trading programs. Under the approval, the 
opt-in provisions in these CAIR FIP trading programs will apply to 
units in Tennessee.

VI. Final Action

    EPA is approving Tennessee's abbreviated CAIR SIP revision 
submitted on September 8, 2006. Tennessee is covered by the CAIR FIPs, 
which requires participation in the EPA-administered CAIR FIP cap-and-
trade programs for SO2, NOX annual, and 
NOX ozone season emissions. Under this abbreviated SIP 
revision and consistent with the flexibility given to States in the 
FIPs, Tennessee adopts provisions for allocating allowances under the 
CAIR FIP NOX annual and ozone season trading programs. EPA 
is approving Tennessee's CAIR NOX annual and ozone season 
allocation provisions (interpreted as discussed above) for units 
subject to the CAIR trading programs under the current CAIR FIP 
NOX annual and ozone season applicability provisions. In 
addition, Tennessee adopts in the abbreviated SIP revision provisions 
that allow for individual non-EGUs to opt into the CAIR FIP 
SO2, NOX annual, and NOX ozone season 
cap-and-trade programs. EPA is approving Tennessee's allowing for opt-
in units (consistent with the above-discussed interpretation) and 
therefore the application of the opt-in provisions in these CAIR FIP 
trading programs to units in Tennessee.
    As provided for in the CAIR FIPs, these provisions in the 
abbreviated SIP revision will replace or supplement the corresponding 
provisions of the CAIR FIPs in Tennessee. The abbreviated SIP revision 
meets the applicable requirements in 40 CFR 51.123(p) and (ee), with 
regard to NOX annual and NOX ozone season 
emissions, and 40 CFR 51.124(r), with regard to SO2 
emissions. EPA is not making any changes to the CAIR FIP, but is 
amending, to the extent EPA approves Tennessee's SIP revision, the 
appropriate appendices in the CAIR FIP trading rules simply to note 
that approval.
    EPA is approving the aforementioned changes to the SIP. EPA is 
publishing this rule without prior proposal because the Agency views 
this as a noncontroversial submittal and

[[Page 46393]]

anticipates no adverse comments. However, in the proposed rules section 
of this Federal Register publication, EPA is publishing a separate 
document that will serve as the proposal to approve the SIP revision 
should adverse comments be filed. This rule will be effective October 
19, 2007 without further notice unless the Agency receives adverse 
comments by September 19, 2007.
    If the EPA receives such comments, then EPA will publish a document 
withdrawing the final rule and informing the public that the rule will 
not take effect. All public comments received will then be addressed in 
a subsequent final rule based on the proposed rule. EPA will not 
institute a second comment period. Parties interested in commenting 
should do so at this time. If no such comments are received, the public 
is advised that this rule will be effective on October 19, 2007 and no 
further action will be taken on the proposed rule.

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 approves state law as meeting Federal requirements and imposes 
no additional requirements beyond those imposed by state law. 
Accordingly, the Administrator certifies that this rule will not have a 
significant economic impact on a substantial number of small entities 
under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). Because 
this rule approves pre-existing requirements under state law and does 
not impose any additional enforceable duty beyond that required by 
state law, it does not contain any unfunded mandate or significantly or 
uniquely affect small governments, as described in the Unfunded 
Mandates Reform Act of 1995 (Pub. L. 104-4).
    This rule also does not have tribal implications because it will 
not have a substantial direct effect on one or more Indian tribes, on 
the relationship between the Federal Government and Indian tribes, or 
on the distribution of power and responsibilities between the Federal 
Government and Indian tribes, as specified by Executive Order 13175 (65 
FR 67249, November 9, 2000). This action also does not have Federalism 
implications because it does not have substantial direct effects on the 
States, on the relationship between the national government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government, as specified in Executive Order 13132 (64 
FR 43255, August 10, 1999). This action merely approves a state rule 
implementing a Federal standard, and does not alter the relationship or 
the distribution of power and responsibilities established in the CAA. 
This rule also is not subject to Executive Order 13045 ``Protection of 
Children from Environmental Health Risks and Safety Risks'' (62 FR 
19885, April 23, 1997), because it is not economically significant.
    In reviewing SIP submissions, EPA's role is to approve state 
choices, provided that they meet the criteria of the CAA. 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 CAA. Thus, the requirements of section 
12(d) of the National Technology Transfer and Advancement Act of 1995 
(15 U.S.C. 272 note) do not apply. This rule does not impose an 
information collection burden under the provisions of the Paperwork 
Reduction Act of 1995 (44 U.S.C. 3501 et seq.).
    The Congressional Review Act, 5 U.S.C. section 801 et seq., as 
added by the Small Business Regulatory Enforcement Fairness Act of 
1996, generally provides that before a rule may take effect, the agency 
promulgating the rule must submit a rule report, which includes a copy 
of the rule, to each House of the Congress and to the Comptroller 
General of the United States. EPA will submit a report containing this 
rule and other required information to the U.S. Senate, the U.S. House 
of Representatives, and the Comptroller General of the United States 
prior to publication of the rule in the Federal Register. A major rule 
cannot take effect until 60 days after it is published in the Federal 
Register. This action is not a ``major rule'' as defined by 5 U.S.C. 
804(2).
    Under section 307(b)(1) of the CAA, petitions for judicial review 
of this action must be filed in the United States Court of Appeals for 
the appropriate circuit by October 19, 2007. Filing a petition for 
reconsideration by the Administrator of this final rule does not affect 
the finality of this rule for the purposes of judicial review nor does 
it extend the time within which a petition for judicial review may be 
filed, and shall not postpone the effectiveness of such rule or action. 
This action may not be challenged later in proceedings to enforce its 
requirements. (See section 307(b)(2).)

List of Subjects

40 CFR Part 52

    Environmental protection, Air pollution control, Electric 
utilities, Intergovernmental relations, Nitrogen oxides, Ozone, 
Particulate matter, Reporting and recordkeeping requirements, Sulfur 
dioxide.

40 CFR Part 97

    Environmental protection, Air pollution control, Electric 
utilities, Intergovernmental relations, Nitrogen oxides, Ozone, 
Particulate matter, Reporting and recordkeeping requirements, Sulfur 
dioxide.

    Dated: July 31, 2007.
J.I. Palmer Jr.,
Regional Administrator, Region 4.

0
40 CFR parts 52 and 97 are amended as follows:

PART 52--[AMENDED]

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

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

Subpart (RR)--(Tennessee)

0
2. In (52.2220(c) Table 1 is amended as follows:
0
a. Under Chapter 1200-3-14 by adding entry for ``Section 1200-3-14.04'' 
in numerical order,
0
b. Under Chapter 1200-3-27 by adding entries for ``Section 1200-3-
27.10'' and ``Section 1200-3-27.11'' in numerical order.


Sec.  52.2220  Identification of plan.

* * * * *
    (c) * * *

[[Page 46394]]



                                                      Table 1.--EPA Approved Tennessee Regulations
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      State
           State citation                    Title/subject          effective            EPA approval date                       Explanation
                                                                       date
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
                                                                      * * * * * * *
                                                  Chapter 1200-3-14 Control of Sulfur Dioxide Emissions
 
                                                                      * * * * * * *
Section 1200-3-14.04................  CAIR SO2 Annual Trading         11/06/06  8/20/07 [Insert citation of          ...................................
                                       Program.                                  publication]
 
                                                                      * * * * * * *
                                                            Chapter 1200-3-27 Nitrogen Oxides
 
                                                                      * * * * * * *
Section 1200-3-27.10................  CAIR NOX Annual Trading         11/06/06  8/20/07 [Insert citation of          ...................................
                                       Program.                                  publication]
Section 1200-3-27.11................  CAIR NOX Ozone Season           11/06/06  8/20/07 [Insert citation of          ...................................
                                       Trading Program.                          publication]
 
                                                                      * * * * * * *
--------------------------------------------------------------------------------------------------------------------------------------------------------

PART 97--[AMENDED]

0
3. The authority citation for part 97 continues to read as follows:

    Authority: 42 U.S.C. 7401, 7403, 7410, 7426, 7601, and 7651, et 
seq.

0
4. Appendix A to Subpart EE is amended by adding in alphabetical order 
the entry ``Tennessee'' under paragraph 1. to read as follows:

Appendix A to Subpart EE of Part 97--States With Approved State 
Implementation Plan Revisions Concerning Allocations:

    1. * * *

Tennessee

* * * * *

0
5. Appendix A to Subpart II of Part 97 is amended by adding in 
alphabetical order the entry ``Tennessee'' under paragraphs 1. and 2. 
to read as follows:

Appendix A to Subpart II of Part 97--States With Approved State 
Implementation Plan Revisions Concerning CAIR NOXOpt-In 
Units

    1. * * *

Tennessee

    2. * * *

Tennessee

0
6. Appendix A to Subpart III of Part 97 is amended by adding in 
alphabetical order the entry ``Tennessee'' under paragraphs 1. and 2. 
to read as follows:

Appendix A to Subpart III of Part 97--States With Approved State 
Implementation Plan Revisions Concerning CAIR SO2Opt-In 
Units

    1. * * *

Tennessee

    2. * * *

Tennessee


0
7. Appendix A to Subpart EEEE of Part 97 is amended by adding in 
alphabetical order the entry ``Tennessee'' under the introductory text 
to read as follows:

Appendix A to Subpart EEEE of Part 97--States With Approved State 
Implementation Plan Revisions Concerning Allocations

* * * * *

Tennessee


0
8. Appendix A to Subpart IIII of Part 97 is amended by adding in 
alphabetical order the entry ``Tennessee'' under paragraphs 1. and 2. 
to read as follows:

Appendix A to Subpart IIII of Part 97-States With Approved State 
Implementation Plan Revisions Concerning CAIR NOXOzone 
Season Opt-in Units

    1. * * *

Tennessee

    2. * * *

Tennessee

 [FR Doc. E7-15782 Filed 8-17-07; 8:45 am]
BILLING CODE 6560-50-P