[Federal Register Volume 72, Number 189 (Monday, October 1, 2007)]
[Proposed Rules]
[Pages 55723-55729]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-19346]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[Docket No. EPA-R02-OAR-2007-0913; FRL-8474-9]


Approval and Promulgation of Implementation Plans; New York: 
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 New York State 
Implementation Plan (SIP) that 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. EPA is 
proposing to determine that the SIP revision fully implements the CAIR 
requirements for New York. 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 New York pending final 
approval of New York's SIP revision. The CAIR FIPs for all states in 
the CAIR region were promulgated on April 28, 2006 and subsequently 
revised on December 13, 2006.
    The SIP revision that EPA is proposing to approve will also satisfy 
New York's 110(a)(2)(D)(i) obligations to submit a SIP revision that 
contains adequate provisions to prohibit air emissions from adversely 
affecting another state's air quality through interstate transport.
    CAIR requires states to reduce emissions of SO2 and 
NOX that significantly contribute to and interfere with the 
maintenance of the national ambient air quality standards for fine 
particulates and/or ozone in any downwind state. CAIR establishes state 
budgets for SO2 and NOX and requires states, 
which EPA has concluded contribute to nonattainment in downwind states, 
to submit SIP revisions that implement these budgets. States have the 
flexibility to choose the 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, New 
York 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 October 31, 2007.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-R02-
OAR-2007-0913, 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: (212) 637-3901.
    4. Mail: EPA-R02-OAR-2007-0913, Raymond Werner, Chief, Air Programs 
Branch, Environmental Protection Agency, Region 2 Office, 290 Broadway, 
25th Floor, New York, New York 10007-1866.

[[Page 55724]]

    5. Hand Delivery or Courier: Raymond Werner, Chief, Air Programs 
Branch, Environmental Protection Agency, Region 2 Office, 290 Broadway, 
25th Floor, New York, New York 10007-1866. 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 to 4:30, excluding federal holidays.
    Instructions: Direct your comments to Docket ID No. EPA-R02-OAR-
2007-0913. EPA's policy is that all comments received will be included 
in the public docket without change and may be made available on-line 
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 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 Air Programs Branch, 
Environmental Protection Agency, Region 2 Office, 290 Broadway, 25th 
Floor, New York, New York 10007-1866. 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 to 4:30, 
excluding federal holidays.

FOR FURTHER INFORMATION CONTACT: If you have questions concerning 
today's proposal, please contact Kenneth Fradkin, Air Programs Branch, 
Environmental Protection Agency, Region 2 Office, 290 Broadway, 25th 
Floor, New York, New York 10007-1866. The telephone number is (212) 
637-3702. Mr. Fradkin can also be reached via electronic mail at 
[email protected].

SUPPLEMENTARY INFORMATION:

Table of Contents

I. What Action 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 New York'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
    G. Satisfying Section 110(a)(2)(D)(i) of the Clean Air Act
    H. What Other Clarifications Should New York Make in Its 
Program?
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 New York's SIP that was 
adopted on August 28, 2007 and submitted on September 17, 2007. New 
York's revision addresses the Clean Air Interstate Rule (CAIR) and 
obligations under 110(a)(2)(D)(i) for the 8-hour ozone and fine 
particle (PM2.5) National Ambient Air Quality Standards 
(NAAQS). New York had submitted an earlier version of the revision on 
March 30, 2007. EPA is proposing to approve the September revision only 
since it contains the version of New York's CAIR rulemaking that was 
adopted by New York's Environmental Control Board (ECB) on August 28, 
2007.
    In its SIP revision, New York 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 on the SIP 
will be taken by the Regional Administrator for Region 2. In the event 
the proposed approval is finalized, the Administrator of EPA will also 
issue a final rule to withdraw the FIPs concerning SO2, 
NOX annual, and NOX ozone season emissions for 
New York. This action will delete and reserve 40 CFR 52.1684 and 40 CFR 
52.1685, relating to the CAIR FIP obligations for New York. The 
withdrawal of the CAIR FIPs for New York 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 New York. Once the 
SIP is fully approved, EPA no longer 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.
    In addition, EPA is also proposing approval of a revision to New 
York's SIP to address the requirements of section 110(a)(2)(D)(i) of 
the Clean Air Act (CAA). This section of the Act requires each state to 
submit a SIP that prohibits emissions that could adversely affect 
another state. The SIP must prevent sources in the state from emitting 
pollutants in amounts that will: (1) Contribute significantly to 
downwind nonattainment of the NAAQS, (2) interfere with maintenance of 
the NAAQS, (3) interfere with provisions to prevent significant 
deterioration of air quality, and (4) interfere with efforts to protect 
visibility.

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

    The Clean Air Interstate Rule (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 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

[[Page 55725]]

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 provides an explanation of what states must include in SIPs to 
address the requirements of section 110(a)(2)(D) of the 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 2-year clock for EPA to promulgate a Federal 
Implementation Plan (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 without making any 
substantive changes to the CAIR requirements, announced EPA's final 
decisions on reconsideration of five issues, including certain 
technical, allocation, compliance, cost-effectiveness, and timing 
issues, as well as a decision specific to Florida.

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

    CAIR established 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 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 New York's CAIR SIP Submittal

    New York has submitted regulations in its SIP revision, Title 6 of 
the New York Code of Rules and Regulations (NYCRR), Parts 243, 244, and 
245, to implement the CAIR Cap-and-Trade Programs in New York. The SIP 
revision also addresses outstanding obligations under 110(a)(2)(D)(i). 
The acceptability

[[Page 55726]]

of New York's submittal is discussed below.

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 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 today's action, EPA is proposing approval of New York's SIP 
revision that adopts the budgets established for the State in CAIR. The 
Statewide CAIR NOX ozone season budget is 20,632 tons of 
NOX ozone season emissions for phase 1 (2009-2014) and 
17,193 tons for phase 2 (2015 and thereafter), plus an additional 
10,459 tons of NOX ozone season emissions for both phases 1 
and 2 to account for NOX ozone season emissions from ``non-
EGU'' units from the New York NOX SIP Call trading program 
(see V.B. below). The total NOX ozone season budget is 
therefore 31,091 tons of NOX ozone season emissions for CAIR 
phase 1 and 27,652 tons for CAIR phase 2. The Statewide CAIR 
NOX annual budget is 45,617 for CAIR phase 1 and 38,014 for 
CAIR phase 2 for NOX annual emissions. The Statewide CAIR 
SO2 trading program budget is 135,139 for phase 1 (2010-
2014) and 94,597 for phase 2 (2015 and thereafter) tons for 
SO2 emissions. New York's SIP revision sets these budgets as 
the total amount 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. As discussed in Section V.A. above, 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.
    In the SIP revision, New York 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. New York 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 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 of EPA's model 
trading rule. 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.
    New York has chosen to expand the applicability provisions of the 
CAIR NOX ozone season trading program to include all non-
EGUs currently 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 
FIPs 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 to allocate allowances 
to sources in the states if certain requirements are met. Primarily, 
the timing of the submission of NOX annual and 
NOX ozone season CAIR units' allocations to the 
Administrator for recordation and the total amount of NOX 
annual and NOX ozone season allowances allocated for each 
control period must be consistent with the applicable requirements in 
40 CFR 51.123(o) and (aa). 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;

[[Page 55727]]

    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.
    New York has chosen to replace the provisions of the CAIR 
NOX annual and ozone-season model trading rules concerning 
the allocation of NOX annual and ozone-season allowances 
with its own methodology.
    New York's allocation methodology is based on the highest heat 
input (EGUs and non-EGUs) experienced by a CAIR unit for any single 
control period among the three most recent control periods, for which 
data is available. The number of allocations to be allocated to each 
unit will not exceed the unit's control period potential to emit 
(CPPTE), which is defined as the maximum capacity of a CAIR 
NOX unit to emit NOX under its physical and 
operational design during a control period. All fuel types are weighed 
evenly without adjustment of heat input data for fuel type.
    New York is establishing new CAIR NOX Ozone Season and 
CAIR NOX annual set-aside accounts for units commencing 
operation on/or after May 1, 2003 for CAIR NOX Ozone Season 
units, and on/or after January 1, 2003 for CAIR NOX annual 
units. The new unit set-aside accounts will consist of five percent of 
the statewide CAIR NOX ozone season and NOX 
annual budgets for both phases of the CAIR program. Therefore, the new 
unit set-aside includes 1,554 CAIR NOX ozone-season 
allowances during phase 1, and 1,382 CAIR NOX ozone-season 
allowances during phase 2; and 2,280 CAIR NOX annual 
allowances during phase 1 and 1,900 CAIR NOX annual 
allowances during phase 2 .
    If the number of requests for allowances exceeds the number of 
allowances in the new set-aside account, New York will reserve 
allowances in the order in which approvable requests were submitted. 
Requests will be considered simultaneous if received in the same 
calendar quarter. Should approvable requests in excess of the set-aside 
be submitted in the same quarter, New York will reserve allowances for 
those units in an amount proportional to the allowances requested. Any 
unused allowances from the set-aside will flow back to existing sources 
as additional allocations in proportion to their original allocation.
    New York will distribute all allowances at no cost with the 
exception of allowances held in the Energy Efficiency and Renewable 
Energy Technology (EERET) Account. New York is allocating ten percent 
of emission allowances to the Energy Efficiency and Renewable Energy 
Technology (EERET) Account, which will be administered by the New York 
State Energy Research and Development Authority (NYSERDA). Allowances 
will be sold or distributed in order to provide funds to be used to 
support programs that encourage and foster energy efficiency measures 
and renewable energy technologies and cover reasonable costs associated 
with the administration and evaluation of these programs by NYSERDA. 
Any EERET allowances that are not sold or distributed by NYSERDA within 
12 months of the initial allocation to the EERET account, will flow 
back to the New York Department of Environmental Conservation and be 
redistributed to existing CAIR units.

E. Allocation of NOX Allowances From Compliance Supplement 
Pool

    The CAIR establishes a compliance supplement pool (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.
    As a result of emission reductions already achieved in New York, 
the state will not receive any CSP allowances. Therefore, New York will 
not modify the provisions of the CAIR NOX annual model 
trading rule concerning the allocation of allowances from the CSP.

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) 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. 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 decide to adopt none of the opt-in provisions.
    New York has chosen to allow non-EGUs to opt into the CAIR 
NOX annual, CAIR NOX ozone season, and CAIR 
SO2 trading programs. New York's program allows for both 
opt-in allocation methods as indicated in the model rule for opt-in 
units in general and for opt-in units that the owners and operators 
intend to repower before January 1, 2015.

G. Satisfying Section 110(a)(2)(D)(i) of the Clean Air Act

    Section 110(a)(2)(D)(i) of the CAA requires each state to submit a 
SIP that prohibits emissions that could adversely affect another state. 
The SIP must prevent sources in the state from emitting pollutants in 
amounts that will: (1) Contribute significantly to downwind 
nonattainment of the NAAQS, (2) interfere with maintenance of the 
NAAQS, (3) interfere with provisions to prevent significant 
deterioration of air quality, and (4) interfere with efforts to protect 
visibility.
    EPA issued guidance on August 15, 2006, relating to SIP submissions 
to meet the requirements of section 110(a)(2)(D)(i). As discussed 
below, New York's SIP revision is consistent with the guidance and the 
statute.
    New York addresses the first two of these four elements by 
complying with the requirements of CAIR. New York satisfies these 
requirements either by

[[Page 55728]]

relying on the existing CAIR FIPs, or through approval of this SIP 
revision.
    The third element New York addresses is prevention of significant 
deterioration (PSD). In accordance with the guidance issued on August 
15, 2006, states may continue to rely on their existing Nonattainment 
New Source Review (NNSR) and PSD permitting programs to prevent 
significant deterioration of air quality within their own boundaries 
and in adjacent states. New York has met the obligation by confirming 
that the federal PSD and state NNSR permitting programs remain in 
effect and continue to apply for the State's major stationary sources. 
In addition, New York is currently in the rulemaking process for part 
231, New Source Review for New and Modified Facilities, which will be 
submitted to EPA as expeditiously as possible for approval and 
inclusion in the SIP. Part 231 will include 8-hour ozone and 
PM2.5 PSD and NNSR permitting requirements for major sources 
in the state. Part 231 will also use PM10 as a surrogate for 
PM2.5 in the PSD and NNSR programs.
    With respect to the fourth element, visibility protection, and 
consistent with EPA's August 15, 2006 guidance, it is not possible at 
this time for New York to accurately determine whether there is 
interference with measures in another state's SIP designed to protect 
visibility. New York will need to address the visibility protection 
requirements once the regional haze SIP is completed and submitted to 
EPA in December of 2007.

H. What Other Clarifications Should New York Make in Its Program?

    New York should incorporate the definition of ``fossil-fuel fired'' 
under the NOX SIP Call into its CAIR NOX ozone 
season regulation. This revision should specify that the definition 
applies only for purposes of determining applicability for units that 
are not CAIR NOX Ozone Season units under the applicability 
criteria in 40 CFR 96.304. In the final New York CAIR ozone season 
regulation, the definition for ``Fossil fuel fired'' contained in 243-
1.2(43)(ii), does not include this cross-reference to the applicability 
in 243-1.4(a)(3).
    New York agrees with EPA's interpretation of the definition of 
``fossil fuel fired.'' As indicated in the September 17, 2007 SIP 
revision, New York has committed to revise the definition of ``Fossil 
fuel fired'' in its NOX CAIR ozone season regulation as 
discussed above. New York has committed to modify the definition 
simultaneous with revision of its CAIR regulations to address EPA's 
proposed rulemaking revising the cogeneration unit definitions. New 
York will revise the definition of ``fossil fuel fired'' no later than 
the effective date of the NOX CAIR program.

VI. Proposed Actions

    EPA is proposing to approve New York's full CAIR SIP revision 
submitted on September 17, 2007. Under this SIP revision, New York 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. If EPA approves 
New York's SIP revision, 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 New York. This action will 
delete and reserve 40 CFR 52.1684 and 40 CFR 52.1685.
    EPA is also proposing that this revision adequately addresses the 
required elements of 110(a)(2)(D)(i) with the exception of the 
visibility protection requirement. This requirement will be re-
evaluated after the regional haze SIP is completed and submitted to EPA 
in December 2007.

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.


[[Page 55729]]


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

    Dated: September 21, 2007.
Alan J. Steinberg,
Regional Administrator, Region 2.
[FR Doc. E7-19346 Filed 9-28-07; 8:45 am]
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