[Federal Register Volume 82, Number 166 (Tuesday, August 29, 2017)]
[Proposed Rules]
[Pages 40963-40970]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-18290]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
 
 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
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 

  Federal Register / Vol. 82, No. 166 / Tuesday, August 29, 2017 / 
Proposed Rules  

[[Page 40963]]



ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R02-OAR-2017-0425, FRL-9967-04-Region 2]


Approval of Air Quality Implementation Plans; New York; Cross-
State Air Pollution Rule; NOX Annual and SO2 Group 1 Trading Programs

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: The Environmental Protection Agency (EPA) is proposing to 
conditionally approve a revision to the New York State Implementation 
Plan (SIP) addressing requirements of the Cross-State Air Pollution 
Rule (CSAPR). Under the CSAPR, large electricity generating units in 
New York are subject to Federal Implementation Plans (FIPs) requiring 
the units to participate in CSAPR federal trading programs for annual 
emissions of nitrogen oxides (NOX), ozone season emissions 
of NOX, and annual emissions of sulfur dioxide 
(SO2). This action proposes to conditionally approve into 
New York's SIP the State's regulations that replace the default 
allowance allocation provisions of the CSAPR federal trading programs 
for annual NOX and SO2 emissions. At this time, 
EPA is not taking action on the portion of New York's SIP submittal 
addressing NOX ozone season emissions. EPA is proposing to 
conditionally approve New York's regulations for annual NOX 
and SO2 emissions because, while the submitted rules do not 
fully conform to CSAPR, New York is in the process of making further 
revisions to its rules and has provided a commitment to finalize and 
submit them by December 29, 2017. Upon timely meeting of this 
commitment, EPA will propose to convert the conditional approval of the 
SIP revision to a full approval.

DATES: Comments must be received on or before September 28, 2017.

ADDRESSES: Submit your comments, identified by Docket ID number EPA-
R02-OAR-2017-0425, at http://www.regulations.gov. Follow the online 
instructions for submitting comments. Once submitted, comments cannot 
be edited or withdrawn. The EPA may publish any comment received to its 
public docket. Do not submit electronically any information you 
consider to be Confidential Business Information (CBI) or other 
information whose disclosure is restricted by statute. Multimedia 
submissions (audio, video, etc.) must be accompanied by a written 
comment. The written comment is considered the official comment and 
should include discussion of all points you wish to make. The EPA will 
generally not consider comments or comment contents located outside of 
the primary submission (i.e., on the web, cloud, or other file sharing 
system). For additional submission methods, the full EPA public comment 
policy, information about CBI or multimedia submissions, and general 
guidance on making effective comments, please visit http://www2.epa.gov/dockets/commenting-epa-dockets.

FOR FURTHER INFORMATION CONTACT: Kenneth Fradkin, Air Programs Branch, 
Environmental Protection Agency, 290 Broadway, 25th Floor, New York, 
New York 10007-1866, (212) 637-3702, or by email at 
[email protected].

SUPPLEMENTARY INFORMATION:

Table of Contents

I. What is EPA's proposed action?
II. Background on CSAPR and CSAPR-Related SIP Revisions
III. Criteria for Approval of CSAPR-Related SIP Revisions
IV. New York's Submittal and EPA's Analysis
V. EPA's Proposed Action on New York's Submittal
VI. Incorporation by Reference
VII. Statutory and Executive Order Reviews

I. What is EPA's proposed action?

    Pursuant to Section 110(k)(4) of the Clean Air Act (CAA), EPA is 
proposing to conditionally approve portions of New York's December 1, 
2015 SIP submittal concerning CSAPR \1\ trading programs for annual 
emissions of NOX and SO2. Large Electric 
Generating Units (EGUs) in New York are subject to CSAPR FIPs that 
require the units to participate in the federal CSAPR NOX 
Annual Trading Program and the federal CSAPR SO2 Group 1 
Trading Program. CSAPR provides a process for the submission and 
approval of SIP revisions to replace certain provisions of the CSAPR 
FIPs while the remaining FIP provisions continue to apply. This type of 
CSAPR SIP is termed an abbreviated SIP.
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    \1\ Federal Implementation Plans; Interstate Transport of Fine 
Particulate Matter and Ozone and Correction of SIP Approvals, 76 FR 
48208 (August 8, 2011) (codified as amended at 40 CFR 52.38 and 
52.39 and 40 CFR part 97).
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    The New York State Department of Environmental Conservation (DEC) 
amended portions of Title 6 of the New York Codes, Rules and 
Regulations (6 NYCRR) in order to incorporate CSAPR requirements into 
the State's rules and allow the DEC to allocate CSAPR allowances to 
regulated entities in New York. 6 NYCRR Part 244, ``CAIR NOX 
Annual Trading Program,'' has been repealed and replaced in its 
entirety with a new rule, 6 NYCRR Part 244, ``Transport Rule 
NOX Annual Trading Program.'' 6 NYCRR Part 245, ``CAIR 
SO2 Trading Program,'' has also been repealed and replaced 
in its entirety with a new rule, 6 NYCRR Part 245, ``Transport Rule 
SO2 Group 1 Trading Program.'' Attendant revisions were made 
to 6 NYCRR Part 200, ``General Provisions,'' to update the list of 
referenced materials that are cited in the amended New York 
regulations. EPA is proposing to conditionally approve into the SIP the 
revised versions of 6 NYCRR Parts 200, 244 and 245.
    This SIP revision is being proposed for conditional approval as 
opposed to a full approval because of several deficiencies that must be 
addressed as discussed in section IV of this notice. The proposed 
conditional approval of portions of New York's SIP submittal is 
conditioned on DEC meeting the commitment, articulated in its letters 
dated July 14, 2016, March 4, 2017, and July 6, 2017, to make the 
necessary revisions to 6 NYCRR Parts 200, 244, and 245 to meet the 
requirements of the CAA and EPA's regulations for approval of an 
abbreviated SIP revision to replace EPA's default allocations of CSAPR 
emission allowances with state-determined allocations. The July 6, 2017 
letter from DEC committed to submitting a SIP revision by December 29, 
2017. The date supersedes the dates identified in the July 14, 2016, 
and

[[Page 40964]]

March 24, 2017 letters.\2\ Once EPA determines that the DEC has 
satisfied these conditions and EPA approves the revisions (after EPA 
notice and comment), EPA shall remove the conditional approval and this 
SIP revision will at that time receive full approval status. The 
conditionally approved SIP submission will remain part of the SIP until 
EPA takes further action. If New York fails to meet its commitment to 
submit a revised SIP by December 29, 2017 [i.e., the date of commitment 
from the state's July 6, 2017 letter], the conditional approval is 
treated as a disapproval.
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    \2\ In their July 6, 2017 letter, the DEC indicated they needed 
additional time to complete their rulemaking.
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    This action proposes to conditionally approve into New York's SIP 
state-determined allowance allocation procedures for annual 
NOX and SO2 allowances that would replace EPA's 
default allocation procedures for the control periods in 2017 and 
beyond. The proposed approval of this SIP revision does not alter any 
provision of either the CSAPR NOX Annual Trading Program or 
the CSAPR SO2 Group 1 Trading Program as applied to New York 
units other than the allowance allocation provisions, and the FIP 
provisions requiring those units to participate in the programs (as 
modified by this SIP revision) remain in place.
    New York also repealed 6 NYCRR Part 243, ``CAIR NOX 
Ozone Season Trading Program,'' and replaced it in its entirety with a 
new rule, 6 NYCRR Part 243, ``Transport Rule NOX Ozone 
Season Trading Program,'' which was included in New York's December 1, 
2015 SIP submittal. EPA is not proposing to act at this time on the 
portion of New York's SIP submittal addressing 6 NYCRR Part 243. Since 
New York's December 1, 2015 submission, EPA has finalized the CSAPR 
Update rule \3\ to address Eastern states' interstate air pollution 
mitigation obligations with regard to the 2008 Ozone National Ambient 
Air Quality Standard (NAAQS). Among other things, starting in 2017 the 
CSAPR Update requires New York EGUs to participate in the new CSAPR 
NOX Ozone Season Group 2 Trading Program instead of the 
earlier CSAPR NOX Ozone Season Trading Program (now renamed 
the ``Group 1'' program) and replaces the ozone season budget for New 
York with a lower budget developed to address the revised and more 
stringent 2008 Ozone NAAQS. In DEC's July 14, 2016 commitment letter to 
EPA, New York indicated that the State would revise 6 NYCRR Part 243 to 
conform with the final CSAPR Update. For this reason, EPA is proposing 
to act at this time only on 6 NYCRR Parts 200, 244 and 245.
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    \3\ 81 FR 74504 (October 26, 2016).
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    Section II of this document summarizes relevant aspects of the 
CSAPR federal trading programs and FIPs as well as the range of 
opportunities states have to submit SIP revisions to modify or replace 
the FIP requirements while continuing to rely on CSAPR's trading 
programs to address the states' obligations to mitigate interstate air 
pollution. Section III describes the specific criteria for approval of 
such SIP revisions. Section IV contains EPA's analysis of New York's 
SIP submittal, and Section V sets forth EPA's action on the submittal.

II. Background on CSAPR and CSAPR-Related SIP Revisions

    EPA issued CSAPR in July 2011 to address the requirements of CAA 
section 110(a)(2)(D)(i)(I) concerning interstate transport of air 
pollution. As amended (including the 2016 CSAPR Update), CSAPR requires 
27 Eastern states to limit their statewide emissions of SO2 
and/or NOX in order to mitigate transported air pollution 
unlawfully impacting other states' ability to attain or maintain four 
NAAQS: The 1997 annual PM2.5 NAAQS, the 2006 24-hour 
PM2.5 NAAQS, the 1997 Ozone NAAQS, and the 2008 Ozone NAAQS. 
The CSAPR emissions limitations are defined in terms of maximum 
statewide ``budgets'' for emissions of annual SO2, annual 
NOX, and/or ozone-season NOX by each covered 
state's large EGUs. The CSAPR state budgets are implemented in two 
phases of generally increasing stringency, with the Phase 1 budgets 
applying to emissions in 2015 and 2016 and the Phase 2 (and CSAPR 
Update) budgets applying to emissions in 2017 and later years. As a 
mechanism for achieving compliance with the emissions limitations, 
CSAPR establishes five federal emissions trading programs: A program 
for annual NOX emissions, two geographically separate 
programs for annual SO2 emissions, and two geographically 
separate programs for ozone-season NOX emissions. CSAPR also 
establishes FIP requirements applicable to the large EGUs in each 
covered state. The CSAPR FIP provisions require each state's EGUs to 
participate in up to three of the five CSAPR trading programs.
    CSAPR includes provisions under which states may submit and EPA 
will approve SIP revisions to modify or replace the CSAPR FIP 
requirements while allowing states to continue to meet their transport-
related obligations using either CSAPR's federal emissions trading 
programs or state emissions trading programs integrated with the 
federal programs.\4\ Through such a SIP revision, a state may replace 
EPA's default provisions for allocating emission allowances among the 
state's units, employing any state-selected methodology to allocate or 
auction the allowances, subject to timing criteria and limits on 
overall allowance quantities. In the case of CSAPR's federal trading 
programs for ozone-season NOX emissions (or integrated state 
trading programs), a state may also expand trading program 
applicability to include certain smaller EGUs.\5\ If a state wants to 
replace CSAPR FIP requirements with SIP requirements under which the 
state's units participate in a state trading program that is integrated 
with and identical to the federal trading program even as to the 
allocation and applicability provisions, the state may submit a SIP 
revision for that purpose as well. However, no emissions budget 
increases or other substantive changes to the trading program 
provisions are allowed. A state whose units are subject to multiple 
CSAPR FIPs and federal trading programs may submit SIP revisions to 
modify or replace either some or all of those FIP requirements.
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    \4\ See 40 CFR 52.38, 52.39. States also retain the ability to 
submit SIP revisions to meet their transport-related obligations 
using mechanisms other than the CSAPR federal trading programs or 
integrated state trading programs.
    \5\ States covered by both the CSAPR Update and the 
NOX SIP Call have the additional option to expand 
applicability under the CSAPR NOX Ozone Season Group 2 
Trading Program to include non-EGUs that would have participated in 
the former NOX Budget Trading Program.
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    States can submit two basic forms of CSAPR-related SIP revisions 
effective for emissions control periods in 2017 or later years.\6\ 
Specific criteria for approval of each form of SIP revision are set 
forth in the CSAPR regulations, as described in section III below. 
Under the first alternative--an ``abbreviated'' SIP revision--a state 
may submit a SIP revision that upon approval replaces the default 
allowance allocation and/or applicability provisions of a CSAPR federal 
trading program for the state.\7\ Approval of an abbreviated SIP 
revision leaves the corresponding CSAPR FIP and all other provisions of 
the relevant federal trading program in place for the state's units.
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    \6\ CSAPR also provides for a third, more streamlined form of 
SIP revision that is effective only for control periods in 2016 and 
is not relevant here. See Sec.  52.38(a)(3), (b)(3), (b)(7); Sec.  
52.39(d), (g).
    \7\ Sec.  52.38(a)(4), (b)(4), (b)(8); Sec.  52.39(e), (h).
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    Under the second alternative--a ``full'' SIP revision--a state may 
submit a SIP revision that upon approval

[[Page 40965]]

replaces a CSAPR federal trading program for the state with a state 
trading program integrated with the federal trading program, so long as 
the state trading program is substantively identical to the federal 
trading program or does not substantively differ from the federal 
trading program except as discussed above with regard to the allowance 
allocation and/or applicability provisions.\8\ For purposes of a full 
SIP revision, a state may either adopt state rules with complete 
trading program language, incorporate the federal trading program 
language into its state rules by reference (with appropriate conforming 
changes), or employ a combination of these approaches.
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    \8\ Sec.  52.38(a)(5), (b)(5), (b)(9); Sec.  52.39(f), (i).
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    The CSAPR regulations identify several important consequences and 
limitations associated with approval of a full SIP revision. First, 
upon EPA's approval of a full SIP revision as correcting the deficiency 
in the state's SIP that was the basis for a particular set of CSAPR FIP 
requirements, the obligation to participate in the corresponding CSAPR 
federal trading program is automatically eliminated for units subject 
to the state's jurisdiction without the need for a separate EPA 
withdrawal action, so long as EPA's approval of the SIP is full and 
unconditional.\9\ Second, approval of a full SIP revision does not 
terminate the obligation to participate in the corresponding CSAPR 
federal trading program for any units located in any Indian country 
within the borders of the state, and if and when a unit is located in 
Indian country within a state's borders, EPA may modify the SIP 
approval to exclude from the SIP, and include in the surviving CSAPR 
FIP instead, certain trading program provisions that apply jointly to 
units in the state and to units in Indian country within the state's 
borders.\10\ Finally, if at the time a full SIP revision is approved 
EPA has already started recording allocations of allowances for a given 
control period to a state's units, the federal trading program 
provisions authorizing EPA to complete the process of allocating and 
recording allowances for that control period to those units will 
continue to apply, unless EPA's approval of the SIP revision provides 
otherwise.\11\
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    \9\ Sec.  52.38(a)(6), (b)(10(i); Sec.  52.39(j).
    \10\ Sec.  52.38(a)(5)(iv)-(v), (a)(6), (b)(5)(v)-(vi), 
(b)(9)(vi)-(vii), (b)(10)(i); Sec.  52.39(f)(4)-(5), (i)(4)-(5), 
(j).
    \11\ Sec.  52.38(a)(7), (b)(11)(i); Sec.  52.39(k).
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III. Criteria for Approval of CSAPR-Related SIP Revisions

    Each CSAPR-related abbreviated or full SIP revision must meet the 
following general submittal criteria:
     Timeliness and completeness of SIP submittal. If a state 
wants to replace the default allowance allocation or applicability 
provisions of a CSAPR federal trading program, the complete SIP 
revision must be submitted to EPA by December 1 of the year before the 
deadlines described below for submitting allocation or auction amounts 
to EPA for the first control period for which the state wants to 
replace the default allocation and/or applicability provisions.\12\ 
This SIP submission deadline is inoperative in the case of a SIP 
revision that seeks only to replace a CSAPR FIP and federal trading 
program with a SIP and a substantively identical state trading program 
integrated with the federal trading program. The SIP submittal 
completeness criteria in section 2.1 of appendix V to 40 CFR part 51 
also apply.
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    \12\ 40 CFR 52.38(a)(4)(ii), (a)(5)(vi), (b)(4)(iii), 
(b)(5)(vii), (b)(8)(iv), (b)(9)(viii); Sec.  52.39(e)(2), (f)(6), 
(h)(2), (i)(6).
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    In addition to the general submittal criteria, a CSAPR-related 
abbreviated or full SIP seeking to address the allocation or auction of 
emission allowances must meet the following further criteria:
     Methodology covering all allowances potentially requiring 
allocation. For each federal trading program addressed by a SIP 
revision, the SIP revision's allowance allocation or auction 
methodology must replace both the federal program's default allocations 
to existing units \13\ at 40 CFR 97.411(a), 97.511(a), 97.611(a), 
97.711(a), or 97.811(a) as applicable, and the federal trading 
program's provisions for allocating allowances from the new unit set-
aside (NUSA) for the state at 40 CFR 97.411(b)(1) and 97.412(a), 
97.511(b)(1) and 97.512(a), 97.611(b)(1) and 97.612(a), 97.711(b)(1) 
and 97.712(a), or 97.811(b)(1) and 97.812(a), as applicable.\14\ In the 
case of a state with Indian country within its borders, while the SIP 
revision may neither alter nor assume the federal program's provisions 
for administering the Indian country NUSA for the state, the SIP 
revision must include procedures addressing the disposition of any 
otherwise unallocated allowances from an Indian country NUSA that may 
be made available for allocation by the state after EPA has carried out 
the Indian country NUSA allocation procedures.\15\
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    \13\ In the context of the approval criteria for CSAPR-related 
SIP revisions, an ``existing unit'' is a unit for which EPA has 
determined default allowance allocations (which could be allocations 
of zero allowances) in the rulemakings establishing and amending 
CSAPR. A spreadsheet showing EPA's default allocations to existing 
units is posted at www.epa.gov/crossstaterule/techinfo.html.
    \14\ Sec.  52.38(a)(4)(i), (a)(5)(i), (b)(4)(ii), (b)(5)(ii), 
(b)(8)(iii), (b)(9)(iii); Sec.  52.39(e)(1), (f)(1), (h)(1), (i)(1).
    \15\ See Sec. Sec.  97.412(b)(10)(ii), 97.512(b)(10)(ii), 
97.612(b)(10)(ii), 97.712(b)(10)(ii), 97.812(b)(10)(ii).
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     Assurance that total allocations will not exceed the state 
budget. For each federal trading program addressed by a SIP revision, 
the total amount of allowances auctioned or allocated for each control 
period under the SIP revision (prior to the addition by EPA of any 
unallocated allowances from any Indian country NUSA for the state) 
generally may not exceed the state's emissions budget for the control 
period less the sum of the amount of any Indian country NUSA for the 
state for the control period and any allowances already allocated to 
the state's units for the control period and recorded by EPA.\16\ Under 
its SIP revision, a state is free to not allocate allowances to some or 
all potentially affected units, to allocate or auction allowances to 
entities other than potentially affected units, or to allocate or 
auction fewer than the maximum permissible quantity of allowances and 
retire the remainder. Under the CSAPR NOX Ozone Season Group 
2 Trading Program only, additional allowances may be allocated if the 
state elects to expand applicability to non-EGUs that would have been 
subject to the former NOX Budget Trading Program established 
for compliance with the NOX SIP Call.\17\
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    \16\ Sec.  52.38(a)(4)(i)(A), (a)(5)(i)(A), (b)(4)(ii)(A), 
(b)(5)(ii)(A), (b)(8)(iii)(A), (b)(9)(iii)(A); Sec.  52.39(e)(1)(i), 
(f)(1)(i), (h)(1)(i), (i)(1)(i).
    \17\ Sec.  52.38(b)(8)(iii)(A). (b)(9)(iii)(A).
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     Timely submission of state-determined allocations to EPA. 
The SIP revision must require the state to submit to EPA the amounts of 
any allowances allocated or auctioned to each unit for each control 
period (other than allowances initially set aside in the state's 
allocation or auction process and later allocated or auctioned to such 
units from the set-aside amount) by the following deadlines.\18\ Note 
that the submission deadlines differ for amounts allocated or auctioned 
to units considered existing units for CSAPR purposes and amounts 
allocated or auctioned to other units.
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    \18\ Sec.  52.38(a)(4)(i)(B)-(C), (a)(5)(i)(B)-(C), 
(b)(4)(ii)(B)-(C), (b)(5)(ii)(B)-(C), (b)(8)(iii)(B)-(C), 
(b)(9)(iii)(B)-(C); Sec.  52.39(e)(1)(ii)-(iii), (f)(1)(ii)-(iii), 
(h)(1)(ii)-(iii), (i)(1)(ii)-(iii).

[[Page 40966]]



CSAPR NOX Annual, CSAPR NOX Ozone Season Group 1, CSAPR SO2 Group 1, and
                   CSAPR SO2 Group 2 Trading Programs
------------------------------------------------------------------------
                                                         Deadline for
                                      Year of the      submission to EPA
              Units                 control period    of  allocations or
                                                        auction results
------------------------------------------------------------------------
Existing........................  2017 and 2018.....  June 1, 2016.
                                  2019 and 2020.....  June 1, 2017.
                                  2021 and 2022.....  June 1, 2018.
                                  2023 and later      June 1 of the
                                   years.              fourth year
                                                       before the year
                                                       of the control
                                                       period.
Other...........................  All years.........  July 1 of the year
                                                       of the control
                                                       period.
------------------------------------------------------------------------


             CSAPR NOX Ozone Season Group 2 Trading Program
------------------------------------------------------------------------
                                                         Deadline for
                                      Year of the      submission to EPA
              Units                 control period    of  allocations or
                                                        auction results
------------------------------------------------------------------------
Existing........................  2019 and 2020.....  June 1, 2018.
                                  2021 and 2022.....  June 1, 2019.
                                  2023 and 2024.....  June 1, 2020.
                                  2025 and later      June 1 of the
                                   years.              fourth year
                                                       before the year
                                                       of the control
                                                       period.
Other...........................  All years.........  July 1 of the year
                                                       of the control
                                                       period.
------------------------------------------------------------------------

     No changes to allocations already submitted to EPA or 
recorded. The SIP revision must not provide for any change to the 
amounts of allowances allocated or auctioned to any unit after those 
amounts are submitted to EPA or any change to any allowance allocation 
determined and recorded by EPA under the federal trading program 
regulations.\19\
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    \19\ Sec.  52.38(a)(4)(i)(D), (a)(5)(i)(D), (b)(4)(ii)(D), 
(b)(5)(ii)(D), (b)(8)(iii)(D), (b)(9)(iii)(D); Sec.  
52.39(e)(1)(iv), (f)(1)(iv), (h)(1)(iv), (i)(1)(iv).
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     No other substantive changes to federal trading program 
provisions. The SIP revision may not substantively change any other 
trading program provisions, except in the case of a SIP revision that 
also expands program applicability as described below.\20\ Any new 
definitions adopted in the SIP revision (in addition to the federal 
trading program's definitions) may apply only for purposes of the SIP 
revision's allocation or auction provisions.\21\
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    \20\ Sec.  52.38(a)(4), (a)(5), (b)(4), (b)(5), (b)(8), (b)(9); 
Sec.  52.39(e), (f), (h), (i).
    \21\ Sec.  52.38(a)(4)(i), (a)(5)(ii), (b)(4)(ii), (b)(5)(iii), 
(b)(8)(iv), (b)(9)(iv); Sec.  52.39(e)(1), (f)(2), (h)(1), (i)(2).
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    In addition to the general submittal criteria, a CSAPR-related 
abbreviated or full SIP revision seeking to expand applicability under 
their integrated state trading programs (which is allowed for CSAPR's 
NOX ozone season programs only) must meet the following 
further criteria:
     Only EGUs with nameplate capacity of at least 15 MWe. The 
SIP revision may expand applicability only to additional fossil fuel-
fired boilers or combustion turbines serving generators producing 
electricity for sale, and only by lowering the generator nameplate 
capacity threshold used to determine whether a particular boiler or 
combustion turbine serving a particular generator is a potentially 
affected unit. The nameplate capacity threshold adopted in the SIP 
revision may not be less than 15 MWe.\22\ In addition or alternatively, 
applicability may be extended to non-EGUs that would have been subject 
to the former NOX Budget Trading Program established for 
compliance with the NOX SIP Call.\23\
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    \22\ Sec.  52.38(b)(4)(i), (b)(5)(i), (b)(8)(i), (b)(9)(i).
    \23\ Sec.  52.38(b)(8)(ii), (b)(9)(ii).
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     No other substantive changes to federal trading program 
provisions. The SIP revision may not substantively change any other 
trading program provisions, except in the case of a SIP revision that 
also addresses the allocation or auction of emission allowances as 
described above.\24\
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    \24\ Sec.  52.38(b)(4), (b)(5), (b)(8), (b)(9).
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    In addition to the general submittal criteria and the other 
applicable criteria described above, a CSAPR-related full SIP revision 
must meet the following further criteria:
     Complete, substantively identical trading program 
provisions. The SIP revision must adopt complete state trading program 
regulations substantively identical to the complete federal trading 
program regulations at 40 CFR 97.402 through 97.435, 97.502 through 
97.535, 97.602 through 97.635, 97.702 through 97.735, or 97.802 through 
97.835, as applicable, except as described above in the case of a SIP 
revision that seeks to replace the default allowance allocation and/or 
applicability provisions.\25\
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    \25\ Sec.  52.38(a)(5), (b)(5), (b)(9); Sec.  52.39(f), (i).
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     Only non-substantive substitutions for the term ``State.'' 
The SIP revision may substitute the name of the state for the term 
``State'' as used in the federal trading program regulations, but only 
to the extent that EPA determines that the substitutions do not 
substantively change the trading program regulations.\26\
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    \26\ Sec. Sec.  52.38(a)(5)(iii), (b)(5)(iv), (b)(9)(v); 
52.39(f)(3), (i)(3).
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     Exclusion of provisions addressing units in Indian 
country. The SIP revision may not impose requirements on any unit in 
any Indian country within the state's borders and must not include the 
federal trading program provisions governing allocation of allowances 
from any Indian country NUSA for the state.\27\
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    \27\ Sec. Sec.  52.38(a)(5)(iv), (b)(5)(v), (b)(9)(vi); 
52.39(f)(4), (i)(4).
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IV. New York's Submittal and EPA's Analysis

A. New York's SIP Submittal

    On December 1, 2015, New York submitted to EPA an abbreviated SIP 
revision that, if approved, would replace the default allowance 
allocation provisions of the CSAPR SO2 Group 1, CSAPR 
NOX Annual, and CSAPR NOX Ozone Season Trading 
Programs for the state's EGUs for the control periods in 2017 and 
beyond with provisions establishing state-determined allocations for 
those control periods but would leave the corresponding CSAPR FIPs and 
all other provisions of the trading programs in place.
    The SIP submittal includes the following adopted state rules: 6 
NYCRR Part 243, ``Transport Rule NOX Ozone Season Trading 
Program,'' 6 NYCRR Part 244, ``Transport Rule NOX Annual 
Trading Program,'' and 6 NYCRR Part 245, ``Transport Rule 
SO2 Trading Program.'' Previous versions of the rules 
developed for state participation in the Clean Air Interstate Rule \28\ 
(CAIR), i.e., 6 NYCRR Part 243, ``CAIR NOx Ozone Season Trading 
Program,'' 6 NYCRR Part 244, ``CAIR NOX Annual Trading 
Program,'' and 6 NYCRR Part 245, ``CAIR SO2 Trading 
Program,'' have been repealed and replaced in their entirety with the 
new rules. Attendant revisions were made to 6 NYCRR Part 200, ``General 
Provisions,'' to update the list of referenced material that are cited 
in the amended New York regulations. The regulations were adopted on 
November 10, 2015, and effective on December 12, 2015.
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    \28\ 70 FR 25162 (May 12, 2005).
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    As discussed in section I, EPA is not acting at this time on the 
portion of New York's SIP submittal addressing 6 NYCRR Part 243, which 
will be addressed in another rulemaking at a later date. In this 
rulemaking, EPA is addressing NYCRR Parts 244, 245, and 200.

[[Page 40967]]

    New York's Parts 244 and Part 245 allow the State to replace the 
provisions of the CSAPR NOX Annual and SO2 Group 
1 trading program allocation methodology with its own methodology. 
Parts 244 and 245 apply to units that serve an electrical generator 
with a nameplate capacity equal to or greater than 25 megawatts of 
electrical output and sell any amount of electricity. The control 
periods for Parts 244 and 245 run from January 1 to December 31. DEC 
would allocate allowances for control periods beginning on or after 
January 1, 2017.
    For existing units, New York's allocation methodology is based on 
the average of recent emissions (i.e., the average of the 3 last years 
for which data is available) from all New York Transport Rule units. 
Five percent of the statewide budgets for annual emissions of 
SO2 and NOX would be set aside for new units, and 
the remainder of the statewide budgets, but at least ten percent, will 
be allocated to the Energy Efficiency and Renewable Energy Technology 
(EERET) account. If the allocation to the EERET account would be less 
than the prescribed minimum after allocations to existing units based 
on the 3-year average of emissions and an allocation of five percent to 
the new unit set-aside, allocations to existing units would be reduced 
proportionally by the amounts necessary to ensure that ten percent of 
the budget is allocated to the EERET account.
    The DEC will distribute all allowances at no cost with the 
exception of allowances held in the EERET account, which will be 
administered by the New York State Energy Research and Development 
Authority (NYSERDA). The sale of allowances by NYSERDA will be used to 
fund energy efficiency projects, renewable energy, or clean energy 
technology. Any EERET allowances that are not sold or distributed by 
NYSERDA within 12 months of the initial allocation to the EERET account 
will be returned to the DEC for retirement or reallocation.
    As discussed more fully below, in a July 14, 2016 letter to EPA, 
DEC committed to revising 6 NYCRR Parts 244 and 245, and submitting a 
revised SIP submittal no later than July 14, 2017 to address EPA 
comments provided to the DEC via email on June 2, 2016. In the July 14, 
2016 letter to EPA, DEC committed to revising the regulations in 
accordance with an enclosed document entitled ``NYSDEC Responses to EPA 
Comments on New York's Annual CSAPR Rules.'' In a November 28, 2016 
email to DEC, EPA identified additional deficiencies. In a March 24, 
2017 letter to EPA, DEC indicated that the State had commenced the 
regulatory process to correct additional deficiencies identified by EPA 
and committed to complete that process and submit a SIP revision by 
September 15, 2017. In a July 6, 2017 letter, DEC revised the date for 
correcting deficiencies and submitting a SIP revision to December 29, 
2017.
    New York's December 1, 2015 SIP submission, and July 14, 2016, 
March 24, 2017, and July 6, 2017 commitment letters to EPA, as well as 
EPA's comments provided to the DEC on June 2, 2016, and November 28, 
2016 can be found in the electronic docket for this proposed action at 
www.regulations.gov.

B. EPA's Analysis of New York's Submittal

1. Timeliness and Completeness of New York's SIP Submittal
    New York's SIP revision seeks to establish state-determined 
allocations of CSAPR NOX Annual and SO2 Group 1 
allowances, starting with the control periods in 2017. Under 40 CFR 
52.38(a)(4)(i)(B) and 52.39(e)(1)(ii), the deadline for submission of 
state-determined allocations for the 2017 and 2018 control periods is 
June 1, 2016, which under 52.38(a)(4)(ii) and 52.39(e)(2) makes 
December 1, 2015, the deadline for submission to EPA of a complete SIP 
revision establishing state-determined allocations for those control 
periods. New York submitted its SIP revision to EPA by letter dated and 
delivered electronically on December 1, 2015, and EPA has determined 
that the submittal complies with the applicable minimum completeness 
criteria of 40 CFR part 51, Appendix V, Section 2.1. Because the New 
York SIP revision was timely submitted and meets the applicable 
completeness criteria, it meets the criteria under 40 CFR 
52.38(a)(4)(ii) and 52.39(e)(2).
2. Methodology Covering All Allowances Potentially Requiring Allocation
    Sections 244.3 through 244.6, and 245.3 through 245.6 of the New 
York rules provide the allocation methodology adopted by New York in 
the SIP revision. Sections 244.3 through 244.6 replace the provisions 
of 40 CFR 97.411(a), 97.411(b)(1), and 97.412(a) for allocations of 
NOX Annual allowances; Sec. Sec.  245.3 through 245.6 
replace the provisions of 40 CFR 97.611(a), 97.611(b)(1), and 97.612(a) 
for allocations of SO2 Group 1 allowances. New York's 
methodology addresses allocation of allowances that under the default 
allocation provisions for the Federal trading programs would be 
allocated to existing units as well as allowances that would be 
allocated to new units from the new unit set-asides established for New 
York under the Federal trading programs.
    Several provisions of New York's allocation methodology are 
inconsistent with the CSAPR SIP approval criteria, including as 
follows:
     Sections 244.4(b) and 245.4(b) indicate that if the DEC 
fails to submit allowance allocations, EPA will, for the applicable 
control period, allocate the allowances based on EGUs' proportional 
shares of the allocations for the previous control period. CSAPR rules 
do not allow a SIP revision under which EPA would be required to 
compute new allocations on a state's behalf.
     New York's rules do not include provisions for the 
disposition of any otherwise unallocated Indian country new unit set-
aside allowances made available to the State for reallocation.
     EPA believes there is a lack of clarity regarding when 
EGUs would be considered ``existing'' or ``new'' units for purposes of 
determining whether they would receive allocations under Sec. Sec.  
244.3 and 245.3 or under Sec. Sec.  244.5 and 245.5, respectively, and 
also which years of emissions data would be used to determine their 
allocations. For example, given EPA's understanding that New York 
generally intends for covered EGUs to be eligible to receive allowance 
allocations for each year of the programs either as existing units or 
as new units, the provisions in Sec. Sec.  244.3(b)(2) and 245.3(b)(2) 
basing allowance allocations to existing units on three years of 
historical emissions data, combined with the requirements under 40 CFR 
52.38(a)(4)(i)(B) and 52.39(e)(1)(ii) for New York to submit its 
allocations for existing units to EPA up to four years in advance, are 
inconsistent with the provisions in Sec. Sec.  244.5(a)(3) and 
245.5(a)(3) stating that EGUs may receive allocations from the new unit 
set-asides for no more than four years. In addition, Sec. Sec.  
244.5(a) and 245.5(a) describe EGUs commencing operation after May 1, 
2010 as eligible to receive allocations from the new unit set-asides, 
but that date appears to be irrelevant under the procedures set forth 
in the other rule provisions.
3. Assurance That Total Allocations Will Not Exceed the State Budget
    Sections 244.3, Transport Rule NOX Annual Trading 
Program budgets, and 245.3, Transport Rule SO2 Group 1 
Trading Program budgets, set forth the total amounts of CSAPR 
NOX Annual allowances and CSAPR SO2 Group 1 
allowances to be allocated to New York

[[Page 40968]]

units for each control period under the state trading programs.
    Sections 244.3 and 245.3 provide incorrect citations, and therefore 
incorrect CSAPR Phase 2 state budgets, for New York. Part 244 cites the 
North Carolina NOX Annual budget at 40 CFR 97.410(a)(15), 
which is 41,553 tons, instead of the New York NOX Annual 
budget at 40 CFR 97.410(a)(14), which is 21,722 tons. Part 245 cites 
the West Virginia SO2 Group 1 budget at 40 CFR 
97.610(a)(15), which is 75,688 tons, instead of the New York 
SO2 Group 1 budget at 40 CFR 610(a)(9), which is 27,556 
tons. In addition, New York's rules do not exclude the amounts of the 
Indian country new unit set-asides for New York (22 tons under the NOx 
Annual Trading Program and 28 tons under the SO2 Group 1 
Trading Program) from the total amounts of allowances to be allocated 
by the State. As such, New York's rules do not currently provide 
assurance that total allocations will not exceed the amounts of New 
York's budgets under the Federal trading program rules. However, as 
noted below, on November 30, 2015, New York submitted allocations for 
existing units to EPA for the 2017 and 2018 control periods in 
accordance with the intent of its rules. Those allocation amounts were 
based on the correct New York budget amounts, not the higher budget 
amounts indicated by the incorrect CFR references in the state rules. 
Further, in response to EPA's comments on the SIP submission, New York 
subsequently submitted slightly revised allocations that properly 
exclude the amounts of the Indian country new unit set-asides from the 
total amounts allocated. On July 27, 2017, New York also submitted 
allocations for existing units to EPA for the 2019 and 2020 control 
periods that were based on the correct budget amounts. In light of the 
fact that the actual allocations submitted do not exceed the amounts of 
New York's budgets, EPA believes that the incorrect rule provisions do 
not preclude conditional approval of the SIP submission while New York 
works to correct the errors.
4. Timely Submission of State-Determined Allocations to EPA
    Sections 244.4 and 245.4 provide for allowance allocations for 
existing units to be submitted to EPA for the 2017 and 2018 control 
periods by December 1, 2015. New York in fact submitted such 
allocations to EPA on November 30, 2015 (and later adjusted the 
allocations slightly in order to address EPA's comments on the SIP 
submission). Sections 244.5(a)(7), and 245.5(a)(7) indicate that the 
DEC will submit State-determined NUSA allocations to the EPA by October 
31 of the control period.
    The submission deadline of December 1, 2015 precedes the June 1, 
2016 deadline discussed in section III above for existing units for the 
2017 and 2018 control periods. New York, however, has not addressed 
intended deadlines to submit allocations to existing units for future 
control periods beyond 2018. New York's SIP revision meets the criteria 
under 40 CFR 52.38(a)(4)(i)(B) and 52.39(e)(1)(ii) for the 2017 and 
2018 control periods only. EPA notes that New York's revised rules must 
conform with the requirements in 40 CFR 52.38(a)(4)(i)(B) and 
52.39(e)(1)(ii), which require allocations to be submitted up to four 
years in advance of the control period for future years.
    In sections 244.5(a)(7), and 245.5(a)(7) New York has included an 
annual deadline of October 31st of the year of the control period for 
submission of NUSA allocations to EPA. The October 31st date is beyond 
the July 1st annual submission deadline for amounts allocated or 
auctioned to units other than existing units (also discussed in section 
III of this notice). New York's SIP revision therefore does not meet 
the timing requirements for annual submission of NUSA allocations under 
40 CFR 52.38(a)(4)(i)(C) and 52.39(e)(1)(iii).
5. No Changes to Allocations Already Submitted to EPA or Recorded
    The New York rules include no provisions allowing alteration of 
allocations after the allocation amounts have been provided to EPA and 
no provisions allowing alteration of any allocations made and recorded 
by EPA under the federal trading program regulations, thereby meeting 
the condition under 40 CFR 52.38(a)(4)(i)(D) and 52.39(e)(1)(iv).
6. No Other Substantive Changes to Federal Trading Program Provisions
    It is apparent from the overall design of New York's rules that 
they are intended only to establish State-determined allowance 
allocation procedures and otherwise to coordinate with the federal 
trading program rules. However, in their current form the rules contain 
a number of provisions that require revision in order to not 
substantively modify the federal trading program provisions, including:
     As mentioned previously in section II of this notice, 
under an ``abbreviated'' SIP revision, a state may replace only the 
allowance allocation and/or applicability provisions of a CSAPR federal 
trading program. However, the applicability sections of the New York's 
NOX Annual and SO2 Group 1 rules, specifically 
Sec. Sec.  244.1(a) and 245.1(a), incorporate almost the entire CSAPR 
NOX Annual and SO2 Group 1 regulations, not just 
the provisions related to allocations. New York's 244.1(a) incorporates 
40 CFR Sections 97.401 through 97.410 and 97.413 through 97.435. New 
York's 245.1(a) incorporates 40 CFR Sections 97.601 through 97.610 and 
97.613 through 97.635. Similarly, in Sec. Sec.  244.2 and 245.2, 
certain terms used throughout the trading programs, including 
``Administrator'' and ``Designated representative,'' are defined only 
with reference to New York's rules when they should be defined with 
reference to the federal regulations.
     New York's 6 NYCRR Sec. Sec.  244.1(d)(2) and 245.1(d)(2), 
include provisions for DEC to respond to petitions for determinations 
of applicability. Under 40 CFR 97.404 and 97.604, responding to 
petitions for determinations of applicability is an EPA responsibility.
     New York's rules use the term ``Transport Rule'' in Parts 
244 and 245 instead of the term ``TR'' used in the CSAPR regulations as 
originally promulgated (i.e., ``Transport Rule NOX annual 
allowances'' instead of ``TR NOX Annual allowances''). In 
the CSAPR Update, EPA changed ``TR'' to ``CSAPR'' throughout the 
regulations for all the CSAPR trading programs. New York should update 
its rules to replace ``Transport Rule'' with ``TR'', or preferably with 
``CSAPR'' to reflect the nomenclature changes from the CSAPR 
Update.\29\
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    \29\ 81 FR 74504 (October 26, 2016).
---------------------------------------------------------------------------

     EPA has identified several additional instances of 
incorrect cross-references in Parts 244, 245, and 200, as well as 
technical corrections needed to Parts 244, and 245, and 200 to reflect 
the changes from the CSAPR Update. The specific instances are 
identified in EPA's comments, which are available in the docket.
    Except as noted above, EPA has determined that the SIP revision 
meets the requirements of 40 CFR 52.38(a)(4) and 52.39(e) by making no 
substantive changes to the Federal trading program regulations beyond 
the provisions addressing allowance allocations.

V. EPA's Proposed Action on New York's Submittal

    The EPA is proposing to conditionally approve the New York SIP 
revision submitted on December 1, 2015 concerning allocations to New 
York units of CSAPR NOX Annual allowances and CSAPR 
SO2 Group 1 allowances for

[[Page 40969]]

the control periods in 2017 and 2018, and future control periods beyond 
2018. This rule proposes to conditionally approve into the New York SIP 
amendments to 6 NYCRR Parts 244 and 245 that incorporate CSAPR 
requirements into the State rules, and allows the DEC to allocate CSAPR 
allowances to regulated entities in New York. EPA is also proposing to 
conditionally approve the attendant revisions to 6 NYCRR Part 200 to 
update the list of referenced materials cited in the amended New York 
regulations.
    The proposed conditional approval of Parts 200, 244, and 245 is 
based upon DEC's commitment to make the necessary changes, identified 
in the July 14, 2016, March 4, 2017, and July 6, 2017 commitment 
letters, to New York's 6 NYCRR Part 244, ``Transport Rule 
NOX Annual Trading Program,'' Part 245, ``Transport Rule 
SO2 Group 1 Trading Program,'' and Part 200, ``General 
Provisions.'' See section IV B. of this notice concerning New York's 
budget, allowance allocation methodology, timing of submission of 
allocations, replaceable provisions of a CSAPR federal trading program 
under an abbreviated SIP, applicability determinations, and other 
substantive changes to the CSAPR Federal trading program regulations.
    Following the conditional approval of Part 200, Part 244, and Part 
245, allocations of CSAPR NOX Annual allowances and CSAPR 
SO2 Group 1 allowances will be made according to the 
provisions of New York's SIP (as modified by the DEC's July 14, 2016, 
March 24, 2017, and July 6, 2017 commitment letters to EPA) instead of 
40 CFR 97.411(a), 97.411(b)(1), 97.412(a), 97.611(a), 97.611(b)(1), and 
97.612(a). EPA's action on this SIP revision does not alter any 
provisions of the Federal CSAPR NOX Annual Trading Program 
and the Federal CSAPR SO2 Group 1 Trading Program as applied 
to New York units other than the allowance allocation provisions, and 
the FIPs requiring the units to participate in the programs (as 
modified by this SIP revision) remain in place. EPA is proposing to 
conditionally approve Part 200, Part 244 and Part 245 because New 
York's rules (when modified by the DEC as indicated in its July 14, 
2016, March 24, 2017, and July 6, 2017 commitment letters to EPA) will 
meet the requirements of the CAA and EPA's regulations for an 
abbreviated SIP revision and will replace EPA's default allocations of 
CSAPR emission allowances with state-determined allocations, as 
discussed in section IV.B above.
    Under CAA section 110(k)(4), the EPA may approve a SIP revision 
based on a commitment by a State to adopt specific enforceable measures 
by a date certain, but not later than one year after the date of final 
conditional approval. If the State fails to meet its commitment to 
submit a revised SIP by December 29, 2017 [i.e., the date of commitment 
from the state's July 6, 2017 letter], or if the EPA finds the State's 
revisions to be incomplete, or the EPA disapproves the State's 
revisions, the conditional approval will, by operation of law, become a 
disapproval. EPA would notify the State by letter that such action has 
occurred. At that time, the SIP revisions in question would not be part 
of the approved SIP. If that were to occur, EPA would subsequently 
publish a document in the Federal Register notifying the public that 
the conditional approval automatically converts to a disapproval.\30\ 
If, however, the State meets its commitment within the applicable 
timeframe, EPA would subsequently publish in the Federal Register a 
document notifying the public that EPA intends to convert the 
conditional approval to a full approval.
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    \30\ In the event the conditional approval automatically reverts 
to a disapproval, the validity of allocations made pursuant to the 
SIP revision before the date of such reversion would not be 
affected.
---------------------------------------------------------------------------

    Because a FIP already in place satisfies New York's obligations to 
mitigate interstate transport air pollution, should a disapproval 
become finalized as noted above, the EPA will not be required to take 
further action. Additionally, since the SIP submission is not required 
in response to a SIP call under CAA section 110(k)(5), mandatory 
sanctions under CAA section 179 would not apply because the 
deficiencies are not with respect to a submission that is required 
under CAA title I part D.

VI. Incorporation By Reference

    In this rule, the EPA is proposing action that will involve 
adoption of regulatory text that includes incorporation by reference. 
In accordance with requirements of 1 CFR 51.5, the EPA is proposing to 
incorporate by reference revisions to 6 NYCRR Parts 200, 244, and 245 
as previously discussed. The EPA has made, and will continue to make, 
these materials generally available through www.regulations.gov, and/or 
at the EPA Region 2 Office (please contact the person identified in the 
For Further Information Contact section of this preamble for more 
information).

VII. Statutory and Executive Order Reviews

    Under the Clean Air Act, the Administrator is required to approve a 
SIP submission that complies with the provisions of the CAA and 
applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). 
Thus, in reviewing SIP submissions, EPA's role is to approve state 
choices, provided that they meet the criteria of the Clean Air Act. 
Accordingly, this proposed action merely approves State law as meeting 
Federal requirements and does not impose additional requirements beyond 
those imposed by State law. For that reason, this proposed action:
     Is not a ``significant regulatory action'' subject to 
review by the Office of Management and Budget under Executive Order 
12866 (58 FR 51735, October 4, 1993);
     does not impose an information collection burden under the 
provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);
     is certified as not having a significant economic impact 
on a substantial number of small entities under the Regulatory 
Flexibility Act (5 U.S.C. 601 et seq.);
     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);
     does not have Federalism implications as specified in 
Executive Order 13132 (64 FR 43255, August 10, 1999);
     is not an economically significant regulatory action based 
on health or safety risks subject to Executive Order 13045 (62 FR 
19885, April 23, 1997);
     is not a significant regulatory action subject to 
Executive Order 13211 (66 FR 28355, May 22, 2001);
     is not subject to requirements of section 12(d) of the 
National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 
note) because application of those requirements would be inconsistent 
with the Clean Air Act; and
     does not provide EPA with the discretionary authority to 
address, as appropriate, disproportionate human health or environmental 
effects, using practicable and legally permissible methods, under 
Executive Order 12898 (59 FR 7629, February 16, 1994).
    In addition, this rule does not have tribal implications as 
specified by Executive Order 13175, because the SIP is not approved to 
apply in Indian country located in the State, and EPA notes that it 
will not impose substantial direct costs on tribal governments or

[[Page 40970]]

preempt tribal law. Thus Executive Order 13175 does not apply to this 
action.

List of Subjects in 40 CFR Part 52

    Environmental protection, Administrative practice and procedure, 
Air pollution control, Incorporation by reference, Intergovernmental 
relations, Nitrogen Dioxide, Ozone, Particulate matter, Reporting and 
recordkeeping requirements, Sulfur oxides.

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

    Dated: August 18, 2017.
Catherine R. McCabe,
Acting Regional Administrator, Region 2.
[FR Doc. 2017-18290 Filed 8-28-17; 8:45 am]
BILLING CODE 6560-50-P