[Federal Register Volume 72, Number 239 (Thursday, December 13, 2007)]
[Proposed Rules]
[Pages 70812-70815]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-24167]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 62

[EPA-R09-OAR-2007-1150; FRL-8505-4]


Disapproval of Plan of Nevada: Clean Air Mercury Rule

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: EPA is proposing to disapprove the State Plan submitted by 
Nevada on November 15, 2006. The plan is intended to address the 
requirements of EPA's Clean Air Mercury Rule (CAMR), promulgated on May 
18, 2005 and subsequently revised on June 9, 2006. EPA is proposing to 
determine that the submitted Nevada State Plan does not meet certain 
CAMR requirements and, therefore, must be disapproved.
    CAMR requires States to regulate emissions of mercury (Hg) from 
large coal-fired electric generating units (EGUs). CAMR establishes 
State budgets for annual EGU Hg emissions and requires States to submit 
State Plans that ensure that annual in-state EGU Hg emissions will not 
exceed the applicable State budget. States have the flexibility to 
choose which control measures to adopt to achieve the budgets, 
including participating in the EPA-administered CAMR cap-and-trade 
program. In the State Plan that EPA is proposing to disapprove, Nevada 
has chosen to meet CAMR requirements by participating in the EPA-
administered CAMR cap-and-trade program addressing Hg emissions. 
However, Nevada's plan does not meet the mandatory timing requirements 
for allowance allocations, and differs substantively from certain 
required provisions of EPA's model rule (including the provision 
requiring unrestricted allowance transfer and trading).

DATES: Comments must be received on or before January 28, 2008.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-R09-
OAR-2007-1150, by one of the following methods:
    1. www.regulations.gov: Follow the on-line instructions for 
submitting comments.
    2. E-mail: [email protected].
    3. Mail: EPA-R09-OAR-2007-1150, Andrew Steckel (Air-4), U.S. 
Environmental Protection Agency, Region IX, 75 Hawthorne Street, San 
Francisco, CA 94105-3901.
    4. Hand Delivery or Courier: Andrew Steckel (Air-4), U.S. 
Environmental Protection Agency, Region IX, 75 Hawthorne Street, San 
Francisco, CA 94105-3901. 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-R09-OAR-
2007-1150. 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

[[Page 70813]]

publicly available only in hard copy form. To inspect the hard copy 
materials, please schedule an appointment during normal business hours 
with the contact listed in the FOR FURTHER INFORMATION CONTACT section.

FOR FURTHER INFORMATION CONTACT: If you have questions concerning 
today's proposal, please contact Lily Wong, 75 Hawthorne Street, San 
Francisco, California 94105. The telephone number is (415) 947-4114. 
Ms. Wong 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 CAMR?
III. What Are the General Requirements of CAMR State Plans?
IV. How Can States Comply With CAMR?
V. Analysis of Nevada's CAMR State Plan Submittal
VI. Implications of State Plan Disapproval
VII. Statutory and Executive Order Reviews

I. What Action Is EPA Proposing To Take?

    EPA is proposing to disapprove Nevada's State Plan, submitted on 
November 15, 2006, because Nevada's submitted State Plan does not meet 
certain CAMR requirements necessary for participation in the EPA-
administered CAMR cap-and-trade program. Nevada's plan requires EGUs to 
participate in the EPA-administered CAMR cap-and-trade program 
addressing Hg emissions. However, the State Plan does not meet the 
mandatory allocation timing requirements under 40 CFR 
60.24(h)(6)(ii)(C) and (D) and differs substantively from certain 
required provisions of EPA's model rule at 40 CFR part 60, subpart HHHH 
(including the requirement to provide for unrestricted allowance 
transfer and trading). Furthermore, as an allowance system that does 
not meet the above requirements, Nevada's State Plan fails to state 
that Hg allowances issued under the Nevada CAMR program will not 
qualify as Hg allowances under the EPA-administered cap-and-trade 
program as required by 40 CFR 60.24(h)(7). Consequently, EPA is 
proposing to determine that the State Plan does not meet the applicable 
requirements of CAMR and to disapprove the plan on that basis.

II. What Is the Regulatory History of CAMR?

    CAMR was published by EPA on May 18, 2005 (70 FR 28606, ``Standards 
of Performance for New and Existing Stationary Sources: Electric 
Utility Steam Generating Units; Final Rule''). In this rule, acting 
pursuant to its authority under section 111(d) of the Clean Air Act 
(CAA), 42 U.S.C. 7411(d), EPA required that all States meet Statewide 
annual budgets limiting Hg emissions from large coal-fired electric 
generating units (i.e., EGUs, as defined in 40 CFR 60.24(h)(8)). EPA 
further required all States to submit State Plans that include control 
measures that ensure that total, annual Hg emissions from new and 
existing EGUs do not exceed the applicable Statewide annual EGU Hg 
emissions budget. Under CAMR, States may implement these emissions 
limitations either by participating in the EPA-administered CAMR cap-
and-trade program or by adopting other effective and enforceable 
control measures.
    CAMR explains what must be included in State Plans and sets a 
deadline for submittal to EPA by November 17, 2006. Under 40 CFR 
60.27(b), the Administrator will approve or disapprove the submitted 
State Plans. The purpose of this action is to propose disapproval of 
Nevada's CAMR State Plan.

III. What Are the General Requirements of CAMR State Plans?

    CAMR establishes Statewide annual EGU Hg emission budgets 
implemented in two phases. The first phase starts in 2010 and continues 
through 2017. The second phase starts in 2018 and continues thereafter. 
CAMR requires States to implement the budgets by either: (1) Requiring 
EGUs to participate in the EPA-administered CAMR cap-and-trade program; 
or (2) adopting other EGU control measures of the respective State's 
choosing and demonstrating that such control measures will result in 
compliance with the applicable State annual EGU Hg emissions budget.
    Each State Plan must require EGUs to comply with the monitoring, 
recordkeeping, and reporting provisions of 40 CFR part 75 concerning Hg 
mass emissions. Each State Plan must also show that the State has the 
legal authority to adopt the appropriate emission standards, compliance 
schedules, and other requirements.

IV. How Can States Comply With CAMR?

    Many States have chosen to meet the CAMR requirements by requiring 
new and existing EGUs to participate in the EPA-administered CAMR cap-
and-trade program while many other States have chosen to control 
Statewide annual Hg emissions for new and existing EGUs through an 
alternative mechanism. Each State that chooses an alternative mechanism 
must include with its plan a demonstration that the State Plan will 
ensure that the State will meet its assigned State annual EGU Hg 
emission budget.
    A State submitting a State Plan that requires EGUs to participate 
in the EPA-administered CAMR cap-and-trade program may either adopt 
regulations that are substantively identical to the EPA model Hg 
trading rule (40 CFR part 60, subpart HHHH) or incorporate by reference 
the entire model rule. Alternatively, CAMR provides that a State 
requiring participation in the cap-and-trade program may adopt 
regulations, or an incorporation by reference, that make only limited 
changes to the model rule and must otherwise be substantively identical 
to the model rule. A State Plan may change the model rule only by 
altering the allowance allocation provisions to provide for a State-
specific methodology for allocating Hg allowances. A State's 
alternative allowance allocation provisions must meet certain mandatory 
allocation timing requirements and must ensure that total allocations 
for each calendar year will not exceed the State's annual EGU Hg budget 
for that year.
    A State may submit a State Plan that establishes an allowance 
system that does not meet the above-described requirements for 
participation in the EPA-administered CAMR cap-and-trade program and 
that does not require such participation, and EPA will review the State 
Plan on a case-by-case basis to determine if the plan meets CAMR 
requirements applicable to plans not involving such participation. 
However, such State Plans must state that Hg allowances issued under 
such an allowance system will not qualify as Hg allowances under the 
EPA-administered CAMR cap-and-trade program.

V. Analysis of Nevada's CAMR State Plan Submittal

    The Nevada State Plan requires EGUs to participate in the EPA-
administered CAMR cap-and-trade program. The State Plan incorporates by 
reference some provisions of the EPA model Hg trading rule (40 CFR part 
60, subpart HHHH), but replaces other provisions of the model rule. In 
particular, the State has chosen to replace model rule provisions 
addressing retired units, the standard requirements for sources subject 
to the EPA-administered CAMR cap-and-trade program, the allocation of 
allowances, and the recordation of allowance allocations. Nevada's rule 
also added certain definitions to those in the model rule and adopted 
allowance allocation provisions establishing an alternate allowance 
allocation methodology.

[[Page 70814]]

    Under CAMR, States may establish a different Hg allowance 
allocation methodology and still participate in the EPA-administered 
CAMR cap-and-trade program if certain mandatory requirements are met 
concerning the timing of submission of allocations to EGUs to the 
Administrator for recordation and the total amount of allowances 
allocated for each control period and if the State Plan is otherwise 
substantively identical to the model rule. In adopting alternative Hg 
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 (e.g., whether allocations for each 
year will be determined in advance by an even longer period than under 
the mandatory allowance allocation timing requirements);
    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. See 70 
FR 28627.
    Nevada's alternative allowance allocation methodology effectively 
distributes Hg allowances based upon a unit's actual emissions. 
However, while Nevada's State Plan requires sources to participate in 
the EPA-administered CAMR cap-and-trade program and so does not state 
that Nevada-issued allowances will not qualify as Hg allowances under 
the EPA-administered program, Nevada's method for the allocation of 
allowances does not comply with the mandatory timing requirements of 40 
CFR 60.24(h)(6)(ii)(C) and (D). Under 40 CFR 60.24(h)(6)(ii)(C) and 
(D), allowances for existing units must be allocated generally three 
years before, and allowances for new units must be allocated by October 
31 of, the first control period for which the allowances may be used 
for compliance. Nevada's State Plan also differs substantively from 
certain other provisions of EPA's model rule that are required for 
participation in the EPA-administered CAMR cap-and-trade program. 
Specifically, Nevada's State Plan creates restrictions on allowance 
transfer and trading, fails to state that an allowance does not 
constitute a property right, substitutes the Director of the Nevada 
Division of Environmental Protection for the Administrator, lacks 
deadlines for recordation of allowance allocations, misstates the 
requirements for compliance with the requirement to hold allowances 
covering emissions, allows for Director's discretion to create an 
exception to the requirement that sources maintain records on-site, and 
allows for Director's discretion in specifying the content of CAMR 
permit applications and permits. These inconsistencies of Nevada's rule 
with the requirements of CAMR are discussed in detail in the Technical 
Support Document (TSD) entitled EPA Proposed Analysis of Nevada Clean 
Air Mercury Rule State Plan, which is included in the docket for this 
notice.
    For these reasons, as discussed in detail in the TSD, Nevada's rule 
is not approvable under 40 CFR 60.24(h)(6) and (7).\1\
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    \1\ EPA is acting on the final Nevada CAMR State Plan submitted 
on November 15, 2006. EPA recognizes that Nevada has since proposed 
revisions that would address some, but not all, of the approvability 
issues identified above. EPA is not addressing in this notice 
Nevada's proposed revisions as they have not yet been adopted or 
submitted. However, EPA notes that these proposed revisions do not 
address certain approvability issues, including those allocation 
timing and restrictions on allowance transfer and trading.
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VI. Implications of State Plan Disapproval

    Under 40 CFR 60.27(b), the Administrator must approve or disapprove 
timely submitted State Plans within four months of the deadline for 
their submission to the Administrator, i.e., November 17, 2006 in the 
case of CAMR State Plans. Moreover, under 40 CFR 60.27(c), the 
Administrator must propose a Federal Plan for States that did not 
submit State Plans by the submission deadline or whose timely submitted 
State Plans the Administrator disapproves. The Administrator must 
finalize a Federal Plan for such States under 40 CFR 60.27(d) within 
six months of the deadline for their submission to the Administrator, 
unless in the meantime the State submits a State Plan that the 
Administrator determines to be approvable. EPA's review of Nevada's 
State Plan continued beyond the deadline in 40 CFR 60.27(b) because of 
the complexity of Nevada's rule and because EPA conducted an extended 
dialogue with Nevada in order to understand the State's concerns and to 
try to resolve the issues raised by Nevada's State Plan.
    In a separate action, EPA has proposed a Federal Plan and intends 
to issue a final Federal Plan in the near future. Any final Federal 
Plan will generally apply in those States that did not submit a State 
Plan by November 17, 2006, whose State Plans submitted by November 17, 
2006 have been disapproved by EPA, or whose State Plans submitted after 
November 17, 2006 have not been approved. A final determination of the 
categories of States to which the Federal Plan will apply will be made 
in the notice finalizing a Federal Plan. If EPA finalizes the 
disapproval of Nevada's CAMR State Plan and finalizes the Federal Plan 
as described above, Nevada EGUs will be subject to the Federal Plan. It 
is EPA's intention to work quickly to review any revision of a 
disapproved State Plan, so that an approvable State Plan can be 
approved and take the place of the Federal Plan.

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 disapprove State law as not meeting Federal 
requirements and would impose no additional requirements. 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 disapprove 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 disapprove a State 
rule as failing to implement a Federal standard. It does not alter the 
relationship or the distribution of power and responsibilities 
established in the

[[Page 70815]]

CAA. This proposed rule also is not subject to Executive Order 13045 
``Protection of Children from Environmental Health Risks and Safety 
Risks'' (62 FR 19885, April 23, 1997), because it is not economically 
significant. It also does not concern an environmental health or safety 
risk the EPA has reason to believe may have a disproportionate effect 
on children.
    Executive Order 12898, ``Federal Actions to Address Environmental 
Justice in Minority Populations and Low-Income Populations,'' requires 
Federal agencies to consider the impact of programs, policies, and 
activities on minority populations and low-income populations. EPA 
guidance \2\ states that EPA is to assess whether minority or low-
income populations face risk or a rate of exposure to hazards that is 
significant and that ``appreciably exceed[s] or is likely to 
appreciably exceed the risk or rate to the general population or to the 
appropriate comparison group.'' (EPA, 1998) Because this rule merely 
proposes to disapprove a state rule as failing to implement the Federal 
standard established by CAMR, EPA lacks the discretionary authority to 
modify today's regulatory decision on the basis of environmental 
justice considerations. However, EPA has already considered the impact 
of CAMR, including this Federal standard, on minority and low-income 
populations. In the context of EPA's CAMR published in the Federal 
Register on May 18, 2005, in accordance with E.O. 12898, the Agency has 
considered whether CAMR may have disproportionate negative impacts on 
minority or low income populations and determined that it does not.
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    \2\ U.S. Environmental Protection Agency, 1998. Guidance for 
Incorporating Environmental Justice Concerns in EPA's NEPA 
Compliance Analyses. Office of Federal Activities, Washington, DC, 
April, 1998.
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    In reviewing State Plan submissions, EPA's role is to approve State 
choices, provided that they meet the criteria of the CAA generally and 
CAMR specifically. 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 State Plan for failure to use VCS. 
It would thus be inconsistent with applicable law for EPA, when it 
reviews a State Plan submission, to use VCS in place of a State Plan 
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 
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 62

    Environmental protection, Air pollution control, Electric 
utilities, Intergovernmental relations, Reporting and recordkeeping, 
Mercury.

    Dated: December 3, 2007.
Wayne Nastri,
Regional Administrator, Region IX.
[FR Doc. E7-24167 Filed 12-12-07; 8:45 am]
BILLING CODE 6560-50-P