[Federal Register Volume 73, Number 22 (Friday, February 1, 2008)]
[Rules and Regulations]
[Pages 6034-6041]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-1804]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 52 and 97

[EPA-R05-OAR-2007-0390; FRL-8519-6]


Approval and Promulgation of Air Quality Implementation Plans; 
Ohio; Clean Air Interstate Rule

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: This action approves a revision to the Ohio State 
Implementation Plan (SIP) submitted on April 17, 2007, and revised on 
September 26, 2007. This SIP revision incorporates provisions related 
to the implementation of EPA's Clean Air Interstate Rule (CAIR), 
promulgated on May 12, 2005, and revised on April 28, 2006, and 
December 13, 2006, and the CAIR Federal Implementation Plan (CAIR SIP) 
concerning sulphur dioxide (SO2), oxides of nitrogen 
(NOX) annual and NOX ozone season emissions for 
the State of Ohio, promulgated on April 28, 2006, and revised on 
December 13, 2006. EPA is not making any changes to the CAIR FIP but is 
amending, to the extent EPA approves Ohio's SIP revision, the 
appropriate appendices in the CAIR FIP trading rules simply to note 
that approval.
    The Ohio SIP revision that was submitted on April 17, 2007, was a 
full CAIR SIP revision. In a letter submitted on September 26, 2007, 
Ohio requested that EPA consider the September 26, 2007, submittal as 
two separate submittals, i.e., as a full CAIR SIP and as an abbreviated 
CAIR SIP. Ohio requested that EPA act on specific portions of the 
September 26, 2007, submittal as an abbreviated CAIR SIP. EPA approves 
Ohio's abbreviated SIP revision that addresses the methodology used to 
allocate annual and ozone season NOX allowances to affected 
electric generating units (EGUs), and the opt-in provisions, under the 
CAIR trading programs and the CAIR SIP.
    This action also contains EPA's response to a comment from the 
State of Connecticut following publication of the original direct final 
approval of the Ohio plan on October 16, 2007. We withdrew the original 
direct final rule on December 5, 2007, because of receipt of this 
comment. For reasons expressed in the body of this rule, EPA believes 
the comment from Connecticut is not relevant to this final action and, 
therefore, we are moving forward to approve the Ohio plan. As such, EPA 
will populate the compliance accounts of units affected by the State's 
rule shortly after the effective date of this rule.

DATES: This final rule is effective on February 1, 2008.

ADDRESSES: EPA has established a docket for this action under Docket ID 
No. EPA-R05-OAR-2007-0390. All documents in the docket are listed on 
the www.regulations.gov Web site. Although listed in the index, some 
information is not publicly available,

[[Page 6035]]

i.e., Confidential Business Information (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 through 
www.regulations.gov or in hard copy at the Environmental Protection 
Agency, Region 5, Air and Radiation Division, 77 West Jackson 
Boulevard, Chicago, Illinois 60604. This facility is open from 8:30 
a.m. to 4:30 p.m., Monday through Friday, excluding Federal holidays. 
We recommend that you contact the person listed below before visiting 
the Region 5 office.

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

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

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 Ohio'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. Public Comment
VII. Final Action
VIII. Statutory and Executive Order Reviews

I. What Action Is EPA Taking?

CAIR SIP Approval

    EPA is approving a revision to Ohio's SIP, submitted on September 
26, 2007, that modifies 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.) Ohio is subject to the CAIR 
FIPs that implement the CAIR requirements by requiring certain 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 will be used to allocate NOX allowances to 
sources in Ohio, instead of the Federal allocation methodology 
otherwise provided in the FIP. The SIP revision provides a methodology 
for allocating the compliance supplement pool in the CAIR NOX 
annual trading program. The SIP also allows for individual units not 
otherwise subject to the CAIR trading programs to opt into such trading 
programs in accordance with opt-in provisions of the CAIR FIP. 
Consistent with the flexibility provided in the FIPs, these provisions 
will be used to replace or supplement, as appropriate, the 
corresponding provisions in the CAIR FIPs for Ohio. EPA is not making 
any changes to the CAIR FIP, but is amending to the extent EPA approves 
Ohio'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 particles (PM2.5) and/or 8-hour ozone in downwind 
States in the eastern part of the country. As a result, EPA required 
those upwind States to revise their SIPs to include control measures 
that reduce emissions of SO2, which is a precursor to 
PM2.5 formation, and/or NOX, which is a precursor 
to both ozone and PM2.5 formation. For jurisdictions that 
contribute significantly to downwind PM2.5 nonattainment, 
CAIR sets annual State-wide emission reduction requirements (i.e., 
budgets) for SO2 and annual State-wide emission reduction 
requirements for NOX. Similarly, for jurisdictions that 
contribute significantly to 8-hour ozone nonattainment, CAIR sets 
State-wide emission reduction requirements for NOX for the 
ozone season (May 1st to September 30th). Under CAIR, States may 
implement these 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 
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 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.
    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

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second phase of reductions for both NOX and SO2 
starts in 2015 and continues thereafter. CAIR requires States to 
implement the budgets by either requiring EGUs to participate in the 
EPA-administered cap-and-trade programs or 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, and using a 
methodology chosen by the State;
    3. Provide for allocation of NOX annual allowances from 
the CSP by the State, rather than by the Administrator, and using the 
State's choice of allowed, alternative methodologies; and/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 26, 2007, submittal from Ohio has 
been submitted as an abbreviated SIP revision. As discussed below, Ohio 
requested three of the four provisions for which a State may request an 
abbreviated SIP. The State requested that its allocation of NOX 
annual and NOX ozone season allowances for EGUs under the 
FIP be used instead of the corresponding provisions of the CAIR FIPs in 
effect in the State. The State requested that its allocation by the 
State of NOX annual allowances from the CSP be used instead 
of the corresponding provisions of the CAIR FIPs in effect in the 
State. Finally, the State also provided that units that are not 
otherwise CAIR units may opt individually into the CAIR FIP cap-and-
trade program under the opt-in provisions in the CAIR FIP rules.

V. Analysis of Ohio'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 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 0.5 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.
    The CAIR FIPs established the budgets for Ohio as 108,667 tons for 
NOX annual emissions, 45,664 tons for NOX ozone 
season emissions, and 333,520 tons for SO2 emissions. Ohio's 
SIP revision, approved in today's 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 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

[[Page 6037]]

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 of 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.
    Ohio is subject to the CAIR FIPs concerning SO2, 
NOX annual, and NOX ozone season emissions, and 
the CAIR FIP trading programs for SO2, NOX 
annual, and NOX ozone season apply to sources in Ohio. 
Consistent with the flexibility they give 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 Ohio EPA September 26, 2007, submission is 
such an abbreviated SIP revision.

C. Applicability Provisions for non-EGUs 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 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, 
Ohio has not chosen, in the abbreviated CAIR SIP approved here, 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. However, EPA notes that Ohio has indicated 
that the full SIP revision submitted on September 26, 2007, expands the 
applicability provisions of CAIR NOX ozone season trading 
program in this manner. As such, EPA is not taking final action on the 
non-EGU portion of the State's September 26, 2007, full CAIR SIP 
revision. The full CAIR SIP revision including actions to approve the 
non-EGU portions of the State's CAIR rule will be the subject of a 
separate future action.

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, the size of the 
set-aside.
    Consistent with the flexibility given to States in the CAIR FIPs, 
Ohio has chosen to replace the provisions of the CAIR NOX 
annual FIP concerning the allocation of NOX annual 
allowances with its own methodology. Ohio has chosen to distribute 
NOX annual allowances based upon heat input data from a 
three year period adjusted for fuel type by using fuel adjustment 
factors of 1.0 for coal, 0.6 for oil, and 0.4 for other fuels. Based on 
this methodology, Ohio determined NOX allocations for EGUs 
in the State under the CAIR FIP, and submitted its allocations to EPA 
on April 24, 2007.
    Ohio also has included, in the abbreviated SIP revision, provisions 
regarding set-aside programs for energy efficiency/renewable energy and 
innovative technology projects under the CAIR NOX Ozone 
Season program. The State's energy-efficiency/renewable energy (EE/RE) 
and innovative technology set-aside program provisions establish two 
set-asides for each control period--one set-aside for EE/RE projects 
and one set-aside for innovative technology projects--and specify 
procedures for allocating the allowances in the set-asides. Each set-
aside is limited to one percent of the state trading budget for 
NOX ozone season allowance allocations. Beginning with the 
end of 2009 and every three years thereafter, Ohio EPA will review the 
number of allowances allocated from the set-asides and will, under 
certain circumstances, increase the size of each set-aside in future 
years as necessary, up to a maximum of five percent of the state 
trading budget.
    EPA notes that the set-aside provisions do not explicitly state how 
allowances will be reserved in the set-asides if the total amount of 
allowances requested from a set-aside exceeds the total amount of 
allowances in that set-aside. However, set-aside provisions

[[Page 6038]]

explicitly limit the amount of allowances available from each set-aside 
to one percent of the state trading budget unless Ohio EPA expands the 
set-asides in future years. In addition, Ohio informed EPA, in the 
September 26, 2007, letter, that its guidance for the set-asides 
provides that set-aside allowances will be reserved on a pro-rata basis 
if the total requested allowances exceed the size of the set-aside. 
Ohio has indicated that it will clarify its set-aside provisions 
consistent with this guidance.
    The set-aside provisions also do not explicitly state how a set-
aside will be increased up to five percent of the state trading budget 
if the existing set-aside amounts plus the total amounts allocated to 
units with and without baseline heat input under Ohio's other 
allocation provisions for NOX ozone season allowances 
already equal the state trading budget. However, Ohio's CAIR NOX 
ozone season allocation provisions clearly limit the total allocations 
for each control period of CAIR NOX ozone season allowances 
to the amount of the state trading budget for that control period. 
Further, as written, the provisions for expanding the set-asides cannot 
have any effect on the current allocations, which Ohio has already 
submitted to the Administrator for phase 1 of the trading program. In 
addition, Ohio informed EPA, in the September 28, 2007 letter, that 
Ohio EPA will reduce the total amount of allowances allocated to 
existing units under the other allocation provisions to the extent the 
size of a set-aside is increased in the future. Ohio has indicated that 
it will clarify its allocation provisions consistent with this 
statement in the September 28, 2007, letter.
    Consequently, EPA interprets Ohio's abbreviated SIP to limit, 
consistent with the requirements of 40 CFR 51.123(ee)(2)(ii)(B), the 
total allocations for each control period of CAIR NOX ozone 
season allowances--whether from current or expanded set-asides or under 
the other allocation provisions in the abbreviated SIP--to the state 
trading budget.

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, Ohio 
has chosen to modify the provisions of the CAIR NOX annual 
FIP concerning the allocation of allowances from the CSP. Ohio has 
chosen to distribute CSP allowances using an allocation methodology 
that provides more certainty to unit owners and operators that a known 
quantity of allowances per unit will be available for distribution at 
the beginning of the control period. Ohio also provides owners and 
operators with an incentive for the operation of expensive post-
combustion control equipment year-round and provides incentives for 
early reductions in emissions before 2009. Ohio EPA is required to 
submit allocations from the CSP to the Administrator by July 1, 2009, 
or such time when unit's 2008 emissions data are available so that the 
allocations can be determined. Ohio's abbreviated SIP also states that 
the Administrator will record the allocations by January 1, 2010. While 
Ohio's abbreviated SIP does not explicitly state that allocations will 
be submitted to the Administrator by November 30, 2009, EPA notes that 
units' 2008 emissions data should certainly be available before that 
date and that the allocations need to be submitted by that date in 
order to ensure that the Administrator will complete recordation of 
allowances by January 1, 2010. Further, Ohio has indicated, in the 
September 26, 2007, letter, that it will clarify its CSP provisions to 
provide for a November 30, 2009, deadline for submission of CSP 
allocations to the Administrator. Consequently, EPA considers the Ohio 
abbreviated SIP to meet the requirements of 40 CFR 51.123(p)(2).

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 re-power 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, Ohio 
has chosen to allow non-EGUs meeting certain requirements to 
participate in the CAIR NOX annual trading program, the CAIR 
NOX ozone season trading program and the CAIR SO2 
trading program. Ohio EPA submitted the CAIR SIP program rules, OAC 
3745-109-08 and OAC 3745-109-14 and OAC 3745-109-21, which incorporate 
the opt-in provisions as provided in the final EPA CAIR rule of April 
28, 2006. These rules address opt-ins for NOX ozone season, 
NOX annual, and SO2 annual programs.

VI. Public Comments

    Comment: On November 9, 2007, the Connecticut Department of 
Environmental Protection (CTDEP) submitted comments on EPA's direct 
final rule (DFR) notice approving Ohio's abbreviated CAIR SIP. CTDEP 
encourages EPA to approve the state's CAIR program adopted to meet the

[[Page 6039]]

emission reduction requirements of CAIR. However, it argues that before 
approving state plans, EPA should evaluate individually and in the 
aggregate each state's clean air programs. CTDEP argues that such 
evaluation is necessary to ensure that each state's emissions do not 
significantly contribute to ozone nonattainment in Connecticut. CTDEP 
asserts its belief that the CAIR program does not ensure that the CAA 
section 110(a)(2)(D)(i) requirements to prohibit transported emissions 
that significantly contribute to nonattainment in Connecticut and other 
states will be met. CTDEP expresses concern that EPA is determining 
through this and other similar rulemakings that CAIR programs are 
sufficient to meet States' section 110(a)(2)(D)(i) obligations. CTDEP 
asserts, based on EPA and State modeling for CAIR, that the levels of 
transported pollution remaining after CAIR implementation are large 
enough that, even with local controls, it may be difficult for 
Connecticut to attain the 8-hour ozone NAAQS by 2010. Finally, CTDEP 
questions EPA's determination that highly cost effective controls are 
adequate to address States' section 110(a)(2)(D)(i) obligations as 
compared to ``reasonable cost'' controls that could be achieved to 
effect more stringent NOX reductions.
    Response: EPA does not agree that it is appropriate or necessary 
for EPA to conduct additional analysis before approving the Ohio 
abbreviated CAIR SIP for NOX allowances and NOX 
allowance methodology. Ohio has chosen an abbreviated SIP for NOX 
allowances and NOX allocation methodology, one of four SIP 
elements for which states may request an abbreviated SIP. With an 
abbreviated SIP, the CAIR FIP remains in place for Ohio. EPA's proposed 
approval of Ohio's abbreviated SIP would therefore only have the effect 
of replacing, as provided for in the CAIR FIP, the corresponding FIP 
provisions with the State's preferred allocations and methodology. EPA 
has evaluated this abbreviated SIP revision and determined that it 
complies with the requirements of the CAIR FIP provisions regarding 
abbreviated SIPs. CTDEP does not challenge this determination. Thus, 
CTDEP's comments do not specifically pertain to any aspect of EPA's 
proposed specific action to approve the Ohio CAIR SIP revision. Rather, 
the comments appear to be directed broadly at EPA's decisions with 
regard to States' section 110(a)(2)(D)(i) obligations. These decisions 
were made by EPA in the context of the CAIR rulemaking, which was 
promulgated on May 12, 2005 (70 FR 25162), not in the EPA action to 
approve Ohio's abbreviated CAIR SIP revision. Therefore, CTDEP's 
comments are not relevant to this final action. CTDEP had ample 
opportunity to submit comments both during the comment period for the 
proposed CAIR rulemaking of January 30, 2004 (69 FR 4566), and during 
the comment period for the proposed CAIR FIP of August 24, 2005 (70 FR 
49708). EPA's action to approve Ohio's abbreviated CAIR SIP did not 
reopen either the CAIR or CAIR FIP rulemakings. Consequently, CTDEP's 
comments are not relevant to this rulemaking, or timely with respect to 
the CAIR and CAIR FIP rulemakings. Thus, EPA does not believe it is 
necessary to conduct additional analysis on whether Ohio or any other 
state satisfies the requirements of 110(a)(2)(D) before approving the 
Ohio abbreviated CAIR SIP submission.

VII. Final Action

    EPA is promulgating the rules contained in Ohio's abbreviated CAIR 
SIP revision submitted on September 26, 2007. Ohio is covered by the 
CAIR FIPs, which require 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, Ohio adopts provisions for allocating allowances under the CAIR 
FIP NOX annual and ozone season trading programs. In 
addition, Ohio adopts in the abbreviated SIP revision provisions that 
establish a methodology for allocating allowances in the CSP and allow 
for individual non-EGUs to opt into the CAIR FIP SO2, 
NOX annual, NOX ozone season cap-and-trade 
programs. 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 Ohio. 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 the appropriate 
appendices in the CAIR FIP trading rules simply to note that approval.
    In accordance with 5 U.S.C 553(d), EPA finds that there is good 
cause for these actions to become effective immediately upon 
publication. Ordinarily, a delay in the effective date is provided to 
give affected sources more time to plan for meeting applicable 
requirements. In this case, the various requirements under Ohio's rule 
take effect at fixed times, and an immediate effective date (and nearly 
immediate issuance of allowances under Ohio's allocation rules) will 
provide sources more time to plan for meeting the rules' requirements. 
Thus, an immediate effective date better serves the purposes of 5 
U.S.C. 553 than would a delayed effective date. An immediate effective 
date will provide positive impact from the final rule on sources which 
can utilize the allowances methodology under the State's rule. EPA 
concluded that the Connecticut comment did not oppose approval of 
Ohio's rule and was not intended to delay implementation of the Ohio 
CAIR program. The immediate effective date for this action is 
authorized under both 5 U.S.C. 553(d)(1), which provides that 
rulemaking actions may become effective less than 30 days after 
publication if the rule ``* * * grants or recognizes an exemption or 
relieves a restriction,'' and section 553(d)(3)e which allows an 
effective date less than 30 days after publication ``* * * as otherwise 
provided by the agency for good cause found and published with the 
rule.'' The purpose of the 30-day waiting period prescribed in 553(d) 
is to give the affected parties a reasonable time to adjust their 
planning actions as the final rule takes effect. Today's rule, however, 
does not create any new regulatory requirements such that affected 
parties would need time to prepare before the rule takes effect. 
Rather, today's ``immediate effective'' action provides sufficient time 
for affected sources to plan the use of allowances under the State rule 
through the implementation of the Ohio abbreviated CAIR implementation 
plan.

VIII. 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 would 
impose no additional requirements beyond those imposed by state law. 
Accordingly, the Administrator certifies that this 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 approves pre-existing

[[Page 6040]]

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 rule 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 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 approves a state rule 
implementing a federal standard and to amend the appropriate appendices 
in the CAIR FIP trading rules to note that approval. It 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 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 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 would 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. 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 April 1, 2008. 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, Incorporate by reference, 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: January 11, 2008.
Gary Gulezian,
Acting Regional Administrator, Region 5.

0
For the reasons set forth in the preamble, parts 52 and 97 of chapter 1 
of title 40 of the Code of Federal Regulations 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 KK--Ohio

0
2. Section 52.1870 is amended by adding paragraph (c)(140) to read as 
follows:


Sec.  52.1870  Identification of plan.

* * * * *
    (c) * * *
    (140) Ohio Environmental Protection Agency submitted amendments on 
September 26, 2007, to the State Implementation Plan to control 
emissions from electric generating units (EGU). Rules affecting these 
units include: Ohio Administrative Code (OAC) 3745-109-01 (B)(59) and 
(72), 3745-109-04, 3745-109-08, 3745-109-14, 3745-109-17 (except the 
following: the language in paragraph (A) referencing the state trading 
budget for non-EGUs in 3745-109-17-01(C)(4), paragraphs 
(C)(1)(a)(i)(d), (C)(2)(b), (C)(2)(d), (C)(2)(e), and (C)(2)(f), and 
the language in paragraph (C)(3)(a) referencing non-EGUs), and 3745-
109-21.
    (i) Incorporation by reference. The following sections of the Ohio 
Administrative Code (OAC) are incorporated by reference.
    (A) OAC 3745-109-01(B)(59) ``Energy efficiency/renewable energy 
project''; OAC 3745-109-01(B)(72) ``Innovative technology project''; 
OAC 3745-109-04 ``CAIR NOX allowance allocations''; OAC 
3745-109-08 ``CAIR NOX opt-in units''; OAC 3745-109-14 
``CAIR SO2 opt-in units''; and OAC 3745-109-21 ``CAIR 
NOX ozone season opt-in units''; effective on September 27, 
2007.
    (B) OAC 3745-109-17 ``CAIR NOX ozone season allowance 
allocations''; effective on September 27, 2007, except the following: 
the language in paragraph (A) referencing the state trading budget for 
non-EGUs in 3745-109-17-01(C)(4), paragraphs (C)(1)(a)(i)(d), 
(C)(2)(b), (C)(2)(d), (C)(2)(e), and (C)(2)(f), and the language in 
paragraph (C)(3)(a) referencing non-EGUs.

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 ``Ohio'' under paragraphs 1. and 2. to read as follows:

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

    1. * * *
    Ohio
* * * * *
    2. * * *
    Ohio
* * * * *


0
5. Appendix A to subpart II is amended by adding in alphabetical

[[Page 6041]]

order the entry ``Ohio'' 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 NOX Opt-In 
Units

    1. * * *
    Ohio
* * * * *
    2. * * *
    Ohio
* * * * *


0
6. Appendix A to subpart III of part 97 is amended by adding in 
alphabetical order the entry ``Ohio'' 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 SO2 Opt-In 
Units

    1. * * *
    Ohio
* * * * *
    2. * * *
    Ohio
* * * * *


0
7. Appendix A to subpart EEEE of part 97 is amended by adding in 
alphabetical order the entry ``Ohio'' to read as follows:

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

* * * * *
    Ohio
* * * * *


0
8. Appendix A to subpart IV of part 97 is amended by adding in 
alphabetical order the entry ``Ohio'' under paragraphs 1. and 2. to 
read as follows:

Appendix A to Subpart IV of Part 97--States With Approved State 
Implementation Plan Revisions Concerning CAIR NOX Ozone 
Season Opt-In Units

    1. * * *
    Ohio
    2. * * *
    Ohio
* * * * *
[FR Doc. E8-1804 Filed 1-31-08; 8:45 am]
BILLING CODE 6560-50-P